Wednesday, 15 November 2023
Fair Work Legislation Amendment (Closing Loopholes) Bill 2023; Second Reading
The original question was that this bill be now read a second time. To this the honourable member for Bradfield moved as an amendment that all words after 'That' be omitted with a view to substituting other words. Subsequent amendments have been moved by honourable members. The question is that the amendment moved by the honourable member for Mayo be agreed to.
The Albanese Labor government was elected on a promise to get wages moving. To do that, we had to close loopholes that were undermining wages and conditions, because for 10 years it was the policy of those opposite when they were in government to do the exact opposite, to leave those loopholes gaping and to make sure that wages went nowhere. This is what this set of workplace relations reforms is all about—fixing that. It contains four main elements: cracking down on the labour hire loophole that's used to undercut pay and conditions, criminalising wage theft, properly defining 'casual work' so that casuals aren't being exploited and making sure gig workers aren't being ripped off.
We announced all four of these policies while we were in opposition more than two years ago, and we took them to the Australian people at the election. They endorsed it when they are elected an Albanese Labor government. But we don't only have a mandate for this legislation; we actually have a responsibility.
These are not radical changes. They're not complicated. If we listen to all the speeches from those opposite, they would have us believe that this is tying the entire economy up in knots. I give our business community a lot more credit than they do. The business community are not stupid. They can deal with these changes that are not complicated and will benefit their workers and, ultimately, the Australian economy, and that means businesses will do better. All we're doing is making the current law work effectively. Closing labour hire loopholes will simply require an employer to pay rates that it has already negotiated and agreed to with its own workers. These are rates of pay that are already set for work being done. They don't have to recalculate, they don't have to change anything, they just have to pay the wages that they agreed to pay. That is not complicated.
Our employee-like reforms simply require workers to have some minimum standards, benchmarked against existing award rates. Those rates are there. They're easy to find, they're well-known right across the business community and they are not hidden in some deep, dark box that will take pages and pages and pages to find. They are there for all the world to see.
Our wage theft reforms will simply strengthen the enforcement of existing rates of pay. Most employers out there don't want to be undercut by bad apples doing the wrong thing. They want an even playing field. and they want to know that they are doing the right thing by their employees without being undercut by dodgy employers.
A new definition of casual employees will clarify what was always intended with casual work , that, if you are working regular and predictable hours, you want to be permanent. You have a pathway available to you to do that. These laws will strengthen current workplace relations framework. It will provide certainty, it will provide fairness and it will provide a level playing field for both businesses and workers.
I've been around the industrial relations are seen for over 30 years of my working life. Hard to believe, I know! I've got to tell you: I've heard it all before. Every time there's any reform to the industrial relations system, I hear it will lower productivity, businesses will close, the pendulum is swinging too far, the sky guy will fall in, it's going to be a disaster. But, do you know what? For over 30 years, it's never happened. Things have gone well, workers have benefited and businesses have benefited.
Casual employment is an issue that is particularly close to my heart. because being employed as a casual is not the Nirvana that many people will have you believe. They say: 'You have the flexibility to work when you want. You can cut your hours. You can do this; you can do that.' Well, I'm telling you it doesn't work like that. It doesn't. Those on that side of the House may never have heard of zero-hour contracts. These exist in our economy. You're employed as a casual, and you are contracted to work zero hours. This means you have to be on call all the time. You can't get another job to prop up your hours, in case your other job calls you in. You can't get a loan. You can't take a holiday, because you may not get enough hours in January or February after you take a Christmas holiday to make up the lost pay. If you work in some institutions, like a TAFE institution, as a casual, you might get employed as a casual from March, the beginning of the academic year, until the end of October, the end of the academic year, and then you are not employed at all over the Christmas period, when the school is out. Sure, everyone says, 'You get leave loading if you're a casual.' Try living on leave loading for four or five months of the year. It's almost impossible, and it's incredibly stressful because you don't know—you really don't know—if you're going to be picked up again in March.
If you're employed as a casual, I'm here to tell you that you don't have any power. It's nice to think that you did, that you could pick and choose your shifts.
You just can't. I was talking to one young man who worked on the docks, on the wharves. He told me he was at the beck and call of his employer. For his girlfriend's birthday, he told his employer that he was unavailable for a long weekend so he could take her camping. He was penalised for that. He didn't get any shifts for a whole month, and they let him know that that was why. Try renting a house and say that you are casually employed. Try getting a car loan. Life is tough. You miss Christmas Day. You miss sporting events with your kids because you have to take that shift just in case there's not another shift. I've heard people tell me they sit by the phone panicking, hoping, waiting for a call to say that they're going to get a shift. That is not a good life. It simply isn't. So we are closing the loophole that leaves people stuck, classified as casuals, even though they work permanent regular hours. It means they can get a job like any permanent employee and all the benefits of job security. We're going to legislate a fair, objective definition to determine when an employee can be classified as a casual.
I did hear some speakers on the other side of the House and on the crossbench say, 'One big thing we're worried about is that the unions are going to come in and force all the employees to be made permanent, and this is going to be terrible and a disaster.' That is just rubbish. That is not true. This can only happen if the employee wants it to happen. No-one will be forced to do anything that they don't want to do.
I understand the need to have casual workers. I come from a small-business family. We were publicans. I know that you cannot know, 'Are we going to have a special function on Saturday night where we're going to have 300 people, or are we not?' I understand the need for a casual workforce and the role it plays in those industries. But there's still a place for people to be permanent. We always employed a core group of permanent people in our pub. Cooks, managers, cleaners, deputy managers or a 2IC—there were always people there all the time that ran the business while the rest of the staff were casual. We get it. But there are so many instances you hear of where people work even five days a week, 52 weeks a year, and they're still casual, without all the benefits of being permanent. So we are going to fix that, and I think that that is a good thing.
On closing the labour hire loophole, again, labour hire has legitimate uses in providing surge and specialist workforces. We know that will continue to be the case, and that's a good thing. There are some good labour hire companies out there. But some companies use labour hire firms to undermine the hard-fought-for wages and conditions of the permanent workforce. You might have two workers working side-by-side doing exactly the same job, with one getting paid a considerable amount less than the other one. We've seen this across lots of industries. I personally have experienced it in my work with the union movement in the aviation industry. The minute an EBA was struck, that particular company disappeared, another labour hire firm would appear and the entire workforce would be moved across on lower wages and conditions. That is not fair, and that is a loophole that we are going to close, because this will give powers to the Fair Work Commission to make orders that labour hire employees be paid at least the wages in a host's enterprise agreement. That is not complicated. That is not hard. It will not reduce productivity. In fact, I could almost guarantee that it will increase productivity, because people will feel valued and they will want to do a good job. It's fair and it's right. If you can run a business, you can understand this. I think it will be well received.
In relation to minimum standards for employee-like workers in the gig economy, our government will extend the powers of the Fair Work Commission to include employee-like forms of work, allowing it to better protect people in this new and emerging form, the platform economy or the gig economy, where people, we know—everybody knows and everybody accepts—are being exploited and they are not being paid minimum standards. We're going to let them continue to work. We're not telling anyone they can't work as a gig worker. We're just going to say that they can have a decent floor of conditions, like any other worker in this country. As the minister says, we are living in the 21st century, and we do not like people to be employed under 19th-century conditions. Again, it will be through the Fair Work Commission, who will be able to set minimum standards for employee-like workers, including in the gig economy. I think that is absolutely a good thing. The bill provides a non-exhaustive list of content that minimum standard orders can cover, including payment terms, deductions, insurance—which is incredibly important—and cost recovery. That will not affect the business in any huge way, shape or form.
Finally, we are going to criminalise wage theft. This is so important, and I cannot believe that those opposite would not support this. We all know—and we've all heard it here from speaker after speaker—that if a worker steals from the till it's a criminal offence, but in many parts of Australia if an employer steals from a worker's pay packet it is not. We have heard terrible stories. You may remember the 7-Eleven scandal, where workers were actually taken to the ATM and made to withdraw money from their own bank accounts and give it to their employers. It was that blatant. But in a lot of other ways wage theft is much more subtle. It is simply underpaying, cash in hand, under the counter or not paying entitlements. My own stepdaughter found, after she left a job, that not a single cent of her superannuation had been paid into her superannuation account—not one single cent. She had zero superannuation after working there for so long, despite the fact that her pay packet said it was going in. I honestly don't think that to this day she has recovered that money. That is theft, and it shouldn't happen. Business owners who knowingly withhold wages should face the harshest penalties.
We must also ensure our new laws do not water down any wage theft laws already put in place by the states, so we are looking at that. The Labor governments in Victoria and Queensland criminalised wage theft because they got sick of waiting for previous federal governments to act on this. Australia does need a national wage theft system to end the rip-offs, and we're determined to deliver on our promise to Australian workers and make wage theft a crime.
I am very proud of these reforms. I think they show workers in this country that we are absolutely serious when it comes to their rights, to their standard of living and to making sure that they are treated with the respect they deserve in the workplace. I've got to say that when I heard the minister stand up and make the very first speech that introduced this bill I nearly cried. As someone sitting in the chamber, I had not heard a minister stand in this chamber and make a speech like that. He talked about workers' rights and he proudly talked about our connection with trade unions, who do an incredible job for workers in this country. He proudly said that this government, an Albanese Labor government, is going to make the world a better place for our workers and ensure they get the respect, dignity and pay they deserve.
I've been in parliament for just over a year, and this is the third major set of changes that's been proposed to the Fair Work Act 2009. As a first-term MP, it's been pretty eye-opening. Industrial relations seems to be the issue that absolutely polarises the major parties on a fundamental, philosophical level. You're either pro-business and horrified by union activity, or you're pro-union and you dislike and distrust business. As a community Independent, I'm not beholden to business or unions and my comments are less political or philosophical—they're pragmatic. I'm just trying to assess whether the bill in front of us is fit for purpose.
I'm 100 per cent supportive of workers' rights, and I believe every worker has the right to be in a safe workplace that provides fair remuneration and support, but I'm also supportive of economic competition and the need for business to have the flexibility to innovate and grow and make hiring decisions that enable this. I'm genuinely worried about the increase in complexity of IR laws and how that affects business. IR laws should be simplified as much as possible to help employers do the right thing. So my comments today will not be about capitalism versus socialism or the rights of the worker versus the rights of the employer. My comments will be about whether this bill is necessary, balanced, fair and if it solves the problems that need solving.
At the outset, I'd like to acknowledge the minister for his comprehensive briefing around the introduction of this bill. He and his office have offered extensive background information and have made themselves available for many conversations with the crossbench. I really appreciate the way this suite of reforms has been approached and discussed.
I also commend the government on the aspirations outlined in the employment white paper released on 23 September. According to the white paper, the government wants full employment where everyone who wants a job is able to find one. It notes that productivity growth must be the key driver of improvements in living standards over the long term.
In this bill, this 284-page document accompanied by a 521-page explanatory memorandum, the minister says he is fixing loopholes that are used by business to undercut Australia's best employers in a race to the bottom. The loopholes identified in the minister's introduction speech were: workers not being paid properly through wage theft, casuals not having a pathway to secure work, EBAs not determining the rates of pay at a workplace, and gig workers and road transport workers not having minimum work standards.
To solve these four loopholes I've just mentioned, the following solutions are legislated in this bill. Wage theft is solved by giving unions greater right of entry to workplaces. The need to give casuals a pathway to secure work is solved by changing the common law definition of 'casual employee' and giving the Fair Work Commission the ability to resolve any disputes. Making sure EBAs determine the rate of pay in a workforce is solved by giving the Fair Work Commission the ability to make a ruling about labour-hire workers if they're being paid less than the minimum rates in a host business enterprise agreement. Finally, ensuring gig workers and road transport workers have minimum work standards is solved by giving the Fair Work Commission the power to make minimum standard orders for workers on digital platforms.
Is this bill actually solving the identified problems? On wage theft, this bill introduces a new criminal offence for intentional wage underpayments, and I have no problem with this. If a business operates by intentionally underpaying its employees, then it should be prosecuted. But I remain concerned that the complexity of the IR system means that employers struggle to understand the correct rates of pay. It's essential that employers that underpay purely by accident because of the confusing and complex IR framework have the opportunity to fix their mistakes rather than being charged.
As well as this new offence, this bill expands the circumstances in which unions can come onto worksites without prior notice. This doesn't seem necessary or appropriate to address wage theft. Currently, any union wanting to enter a workplace to represent a member or attract members already has a straightforward mechanism to do so. Entry without prior notice is already possible, where necessary, to prevent employers from destroying evidence. The Fair Work Commission's data on entry disputes doesn't reveal any problems or overuse of the entry rights, so I can't see any reason we need to expand this entry right. It seems to be an excuse to give more power to unions.
On the definition of casual, the government has said this bill will close the loophole that stops casual workers from having a pathway to permanency. It uses the example of casual workers who've been working 30 or 40 hours a week and whose requests to convert to being a permanent employee have been refused. I'm not convinced this bill addresses this concern. As many speakers before me have said, the Fair Work Act already defines a casual employee in a clear and well-understood way. The act already has a casual conversion entitlement which requires businesses to offer employees an opportunity to convert to a permanent position after 12 months. The government's proposed changes remove this certainty and clarity of definition, and instead propose a new test based on the conduct of the parties. The WA Hotels and Hospitality Association, which is the peak industrial employer body for hotel and hospitality businesses in WA, said the change in this bill makes the definition of a casual 'unclear, problematic and subjective to the person or institutions assessing the relationship.'
The main problem I see with the government's proposal is that this adds ambiguity in an already confusing regulatory space. When talking about the definition of casuals, the explanatory memorandum says, 'A firm advance commitment of permanent work could be identified on the basis of ongoing work performed on a regular systemic, stable or predictable basis.' This increases ambiguity around rostering, with an employer seemingly at risk of representing a role as casual if they roster an employee, for example, on regular weekend work shifts or on the same morning every week. I don't subscribe to the hysteria that this change will mean employers won't offer casual work ever again or that every employer will be at risk of prosecution if they have a regular pattern of rostering, but I don't support this amendment as an effective way to achieve the government's goal. More ambiguity does not lead to greater certainty.
The government says it's closing a loophole that allows business to engage labour hire providers in order to save costs, by paying those contractors less than employees being paid to do the same job. I agree that this is bad practice. Throughout all of our briefings and discussions, it seems clear that this change is aimed at certain businesses and labour hire companies. But these amendments are not limited to labour hire companies and have a much wider impact than the problem articulated. As it's currently drafted it could also include service contracting. If this is not the intention, the drafting needs to be changed.
With the current provisions, unions and others will be able to seek orders obliging employers that supply workers, directly or indirectly, to a host to ignore the rates of pay already agreed in their contracts. The obligation will be to apply the full rate of pay, which includes bonuses and incentives. This could be a real problem for labour hire and service-contracting providers. In a recurring theme with this bill, these changes are confusing and will add complexity to an already complex framework. The additional admin burden for labour hire and host employers, as they try to wade through EBAs and previous agreements to find the correct rate of pay, adds yet another degree of difficulty. Companies will have little time to prepare for this drastic change.
The government has stated repeatedly that workers in the rideshare and food delivery sectors are at risk of exploitation because they're independent contractors and therefore don't have minimum pay and conditions. I want to make it clear that workers should absolutely not be exploited nor exposed to dangerous working conditions, but I'm not sure this bill solves the issue it purports to address. This bill gives the Fair Work Commission the ability to set standards for non-employed workers in the gig economy and for those whose work is facilitated through platforms and websites. The current drafting specifies that an individual must fulfil one of the three criteria to be defined as employee-like. This is too broad. I'll be supporting amendments that require an individual to fulfil at least two of the specified criteria instead of just one. A number of online businesses have noted that this provision undermines the digital platform business model by imposing strict requirements on workers. I believe that we should be supporting innovation and flexibility in new businesses and allowing workers to elect to work as it suits them and get the benefits that flexible work entails.
What else is this bill doing beyond allegedly closing these loopholes? There are a number of provisions in this bill that don't seem to address any loopholes at all. Some provisions seem straightforward and noncontroversial, like schedule 2, which aims to eliminate silica-related diseases, and schedule 3, which relates to PTSD suffered by first responders. As we discussed at length on Monday, I believe these provisions should really pass before the end of the year.
I'm not sure why this bill includes an increase in the rights of union delegates which doesn't seem to address an identified problem, including uncapped paid time off for union training, and making employers engage with union stewards on any issue they may wish to raise. Also, how is any of this helping to address productivity?
But maybe the most important question to ask about this bill goes beyond the detail and wonders: 'Why is this bill needed to ensure that Australians can all be gainfully employed and productivity increases?' The Australian Chamber of Commerce and Industry has come out bluntly and said that this legislation will be bad for productivity. Master Builders Australia has pointed out that the word 'productivity' appears only twice in the whole bill, and only in the context of proposed new powers needed to be exercised in a way to avoid unreasonable impacts on productivity and business viability.
Last month, RBA Governor Michele Bullock said that, with wage growth so strong, productivity will need to improve for inflation to return to target. I'm not sure how adding complexity to an already-complex IR framework will contribute to this aim.
I appreciate that there are some issues that need to be addressed, but I'm unconvinced that there are systemic loopholes that require this sort of drastic and complicated legislative response. I'd be more supportive if this bill was more targeted, if the response to wage theft was limited to increasing penalties, if the response to increasing casuals' pathway to permanence was addressed by reducing the conversion time in the already-clear definition, and if the response to exploiting labour hire workers was focused on the industries of concern. But, to me, it seems like the government is introducing far-reaching changes that go way beyond their claims.
This bill seems to expand the powers of the Fair Work Commission and unions and to reduce the flexibility for workers, while adding complexity for business. If we assume that the majority of business owners are doing the right thing, then these changes will only make life harder and more confusing for them. For those few businesses that are trying to undermine workers' rights, they should absolutely be addressed specifically.
In its current form, this bill is less about closing loops than creating hoops for businesses and workers to jump through.