Same Job, Same Pay: Are your labour hire practices lawful?

The new Same Job, Same Pay (SJSP) laws, which commenced on 15 December 2023 under the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth), amend the Fair Work Act 2009 (FWA) to protect the interests of labour hire workers by requiring that they receive the same rate of pay as permanent employees performing the same role.

The amendments empower the Fair Work Commission (FWC) to make a regulated labour hire arrangement order to compel a labour hire entity to pay all labour hire workers under its employment the “full rate of pay” as received by an employee. Any orders made by the FWC will be in force on and from 1 November 2024, when the SJSP laws concerning the requirement to pay a protected rate of pay come into effect. The SJSP laws do not apply where the host employer is a small business (less than 15 employees), where labour hire workers provide a service rather than labour, or where it is not fair and reasonable in the circumstances to make such an order.

A host employer or its employees, labour hire workers or a union can make such an application to the FWC under the FWA. For the FWC to issue the order, it must be satisfied that:

• the labour hire entity supplies its employees and labour hire workers to perform work for another company, being the host employer
• an employment instrument applies to the host employer and would apply to the labour hire workers if they were directly employed by the host employer.

Under the SJSP framework, a host employer is required to provide relevant wage and pay information where they are potentially subject to a labour hire order so that the labour hire entity can comply with the order by providing the correct rate of pay. A host employer or labour hire entity attempting to avoid their obligations under the amendments will face anti-avoidance measures.

Application by the Mining and Energy Union

The FWC has made its first decision concerning the new SJSP amendments to the FWA.

The Mining and Energy Union (MEU) applied to the FWC for a “regulated labour hire arrangement order” in respect of labour hire workers placed at Batchfire Callide Management Pty Ltd’s (Batchfire) black coal mine. The labour hire workers were provided to Batchfire by WorkPac Pty Ltd and WorkPac Mining Pty Ltd (collectively, WorkPac).

The FWC ordered in favour of MEU, with more than 300 WorkPac workers placed at Batchfire’s mine now to receive pay increases of up to $20,000 by 1 November 2024.

In applying the relevant criteria under the new SJSP framework, the FWC considered that:

• the MEU had standing to represent the subject labour hire workers
• WorkPac supplied employees to perform production work for Batchfire at the mine
• Batchfire is not a small business
• WorkPac supplied employees for the purpose of providing labour rather than services, which was determined by considering that:
  • WorkPac had no involvement in matters concerning the performance of work other than to supply production workers
  • WorkPac does not nor will not direct, supervise or control the production employees it supplies to the mine; Batchfire handles these functions (including managing rosters, assigning tasks and reviewing the quality of work)
  • the production employees supplied do not use WorkPac’s systems, plant or structures to perform their work, they use Batchfire’s
  • there is no evidence WorkPac is or will be subject to industry or professional standards or responsibilities concerning the production employees it supplies to Batchfire, aside from its usual work health and safety obligations as an employer
  • the production work performed by labour hire employees is not of a specialist or expert nature.
• the roles of Batchfire and WorkPac employees at the mine were substantially similar, as evidenced by factors such as their attendance at the same pre-start meeting each day, performance of identical production work, operation of the same Batchfire-owned or leased equipment and machines, wearing the same Batchfire uniforms, and the same requirements to comply with Batchfire instructions and inductions.

Based on this assessment, the FWC ordered a regulated labour hire arrangement order under the SJSP provisions. A draft order was issued to allow interested parties two weeks to provide comments, given this is the first application of its kind under the new SJSP laws.

Key takeaways

It is important for employers who frequently navigate labour hire arrangements to consider the practical implications of the order:

• employers should familiarise themselves with their obligations under the new SJSP framework to assess existing workforce arrangements and consider whether they raise any issues regarding wages. This may help mitigate the risk of labour hire workers seeking an order of this kind where bargained wages have been undercut
• employers should prepare for the financial burden that the new SJSP laws may place on their business. Labour hire arrangements are likely to become more expensive as wages increase, and where an employer fails to comply, litigation will also be costly
• employers should consider the impact of the SJSP amendments before negotiating and entering into new enterprise agreements which may be subject to a regulated labour hire arrangement order.

Conclusion

The SJSP reform to the FWA is an important step toward labour hire workers being treated fairly and paid the same as employees. As the first of its kind, the FWC’s decision offers some insight into how the FWC may approach and apply the new SJSP framework. That said, as the FWC decided the application ‘on the papers’, without a hearing, and in the absence of any material being filed by Batchfire and any opposition by Batchfire to the application or draft orders, the law may well evolve as the FWC further considers the SJSP laws. 

You can read more about the decision here: Application by the Mining and Energy Union (C2024/1506)[HR1].

If you have any questions regarding this article, please get in touch our team below.

Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Share this