Victoria moves to rein in labour hire cowboys

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Victoria moves to rein in labour hire cowboys

Victoria’s Labor government plans to regulate the labour-hire industry to “crack down on the exploitation of workers”’

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Victoria’s Labor government announced last Friday that it would regulate the state's labour-hire industry to “crack down on the exploitation of workers”. The Andrews government has also called for a national licensing system.

Key measures to be introduced include:
  • setting up a licensing scheme and developing a code of conduct to regulate labour hire operators
  • making it unlawful for employers in regulated industries to use unlicensed labour hire firms
  • advocating for a national licensing scheme for labour hire operators
  • increasing OHS requirements and regulation of accommodation standards
  • amending the Equal Opportunity Act to ensure it applies to labour hire employees to prevent discrimination

Forsyth inquiry


The announcement is part of the government’s response to the Victorian Inquiry into the the Labour Hire Industry and Insecure Work, which was headed by Professor Anthony Forsyth, an expert in labour law and an academic with RMIT University, Melbourne. The inquiry was set up to fulfil a manifesto election promise by the Victorian Labor party.

In the final report of the August 2016 inquiry, Professor Forsyth found that: “there is a wide spectrum of legal compliance within the labour hire industry in Victoria. At one end of the spectrum are labour hire agencies and arrangements which are highly transparent and compliant with workplace laws, awards and other industrial instruments, health and safety legislation and other applicable legal requirements.

"At the other end of the spectrum are ‘invisible’ labour hire agencies and arrangements, operating almost entirely outside the existing regulatory framework. These have been described as ‘rogue’ labour hire operators, and their activities frequently involve breaches of applicable workplace and safety legislation, award obligations and other regulations.

"The boundaries between labour hire agencies at the two ends of the spectrum are not always clear. There is a range of agencies and arrangements falling between the two extremes.” 

Victoria’s Minister for Industrial Relations, Natalie Hutchins, commented that: “Professor Anthony Forsyth’s independent report added to the damming evidence about rogue operators in the labour hire industry from unions, the community and Four Corners.”

“We will take action to ensure labour hire workers are not treated as second class workers,” she added. 
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The Andrews government also called on Canberra to implement a national labour hire licensing scheme and to tighten provisions in the Fair Work Act to: prohibit employees from misrepresenting direct employees as independent contractors and to take action to prevent underpayment/non-payment; to take action to prevent underpayment/non-payment of award rates, stop unlawful deductions from employees (eg. for accommodation) and sham contracting. 

“The Victorian Government is playing its part in cracking down on dodgy labour hiring practices, but it’s vital that we also have a national approach. It’s time for the Turnbull government to show some leadership and implement a national labour hire licensing scheme.”

It should be noted that the Fair Work Ombudsman has already prosecuted and won numerous underpayments-related cases (e.g. “Court creams Yogurberry: $146K fine for pay fraud”) and has taken enforcement action against employers for sham-contracting situations (e.g. “Not contractors: Oaks to repay $1.9m to cleaners”). 

Meanwhile, the federal government has already introduced a bill to parliament to help tackle employers who exploit employees (“Govt cracks down on widespread worker exploitation”) by, among other things, giving enhanced investigatory powers to the Fair Work Ombudsman.

Critical industry reaction


Reaction from the labour-hire industry was critical.  

The Recruitment & Consulting Services Association (RCSA) CEO Charles Cameron said that RCSA recognises the urgent need for something to be done to address the exploitation of workers in high risk industries however the association does not support licensing of the industry.  

“We need to hit unscrupulous and illegal labour-hire operators where it hurts the most – their back pockets. We already have laws in place that make it illegal to underpay or exploit a worker, which obviously haven’t dealt with the problem, so why would another law change that? Licensing schemes are already in place in various states and territories and have failed to stop the exploitation of workers.” Cameron said. 

He added that not all employment services firms are created equal and proposed licensing will hurt legitimate labour-hire firms. 

“Licensing programs tie legitimate operators up in more bureaucracy and don’t deal effectively with dodgy operators. All this will do is put more pressure and financial restraints on the legitimate firms who are doing the right thing and drive illegal practices to become more inventive in getting around another law.” Cameron said.

Certificates not laws, says peak body


He added that the RCSA supported a “nationally consistent approach” and was working on a certification program to “make it easier” for buyers to determine they are working with legitimate providers. 

“A certification program, backed by buyers of labour hire in high risk industries, will hit unscrupulous and illegal labour-hire operators… certification of employment service providers will result in a market where buyers only buy from clean sellers and dirty sellers cease to exist because nobody is prepared to fund them. The good guys will be rewarded with contracts and the bad guys will be passed over.”

“We need a market solution, not a political solution.” Cameron said. 
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