Contingent workforce employment 2021 risk update

In February, we hosted our Contingent Workforce 2021 Risk Update Webinar, focusing on the most substantial updates to the Fair Work Act since it was introduced in 2009.

Featuring RCSA’s Charles Cameron, Partner from Moray & Agnew Nick Duggal, and former Fair Work Ombudsman Natalie James, the discussion dived deep into the implications for businesses on the change and what it means for:

  • The definition of casual workers
  • Casual conversion and what employers’ obligations are
  • Double dipping, and whether it’s still a risk
  • Outsourcing your contingent workers to labour-hire firms

These changes will directly affect your business and supply chain, creating real challenges for reputation and commercial viability

If you missed the webinar, it’s not too late to watch the recording below or read through the transcript.

The advice and insight from these three risk experts is essential for preparing your business for the year ahead.

Webinar Highlights – Q&A

Nick, there’s been a lot of interest around the omnibus in terms of the proposed IR legislation, could you give us a high-level view in reference to the legislation, specifically around casual and fixed-term employees?

Nick Duggal

There are two key drivers to the bill. The first, as the name suggests, is to build a little bit more flexibility into the labour system to support our recovery from the pandemic, and the second objective connected to that is to create some more certainty around casual employment, in the wake of the WorkPac and Rossato decision, which has created this spectre of double-dipping casual employees.

On the casual employee reform front, there’s an effort to more definitively set out what casual employment is, and to build that around a concept of a firm advanced commitment to give employers more certainty about whether they are hiring a casual or not, and in doing so, trying to eliminate the notion that an employee who’s characterised as casual can, down the track, claim permanent entitlement on top of whatever casual loading they’ve been receiving.

I think the firm advance commitment definition and issue creates some interesting questions for labour-hire and contingent workforce providers. On the enterprise side, what the bill looks to do is simplify the award system. There’s a controversial proposal to temporarily remove the better off overall tests in entering into enterprise agreements, and also some simplification of that process.

They’re the objectives. Obviously, there’s a lot more detail than we could go into in relation to part-time and things like that. As Charles indicated, there’s been a bit of partisanship in relation to the bill and the response, so we don’t know what form it might ultimately be passed in – we’re still not quite sure – so the advice that I’m giving employers at the moment is that, yes, this bill is really important and it’s important to get your house ready. Just because it’s not passed yet doesn’t mean that there are not other things that you should be trying to do to build flexibility into your workforce model. There’s a critical economic need to do that at the moment as the economy recovers generally and repositions itself after the pandemic.

Charles, you’ve obviously been playing a very key and close role from lobbying in reference to this policy in terms of legislation. Are there any key points that are likely to get removed from the legislation from your perspective?

Charles Cameron

Good question Paul. Who knows? Of course the reason we say that is it’s going to come down to three crossbenchers in the upper house. One would expect that one nation would be likely to support it and maybe seek some amendments. We would see one of the one nation Senators, Malcolm Roberts come out, on one hand, saying that I’m with the coal workers and on the other hand, I’m with small business and want to have it both ways arguably. The other of course might be Stirling Griff, so yeah, it’s a bit of a mixed bag there.

One of the things before you contemplate that, if this was a bill that was presented by the labour party, I think people would find it quite confronting. This is a very unique scenario where you’ve got a bill that’s been presented in my opinion by a conservative government.

Employers would probably typically be up in arms about. There are so many elements of this that I actually think as favourable to employees. This idea that there is just a sole focus on the special provisions of the better off overall tests, and maybe dealing with some of the elements around casual employment, misses the fact that there are so many employee-friendly provisions within this bill. For instance, the introduction of criminalisation for underpayments, the greater obligation on employers not to give an employee the right to elect to convert, but actually have to offer permanent employment unless you’ve got reasonable grounds to oppose.

These are, in my opinion, quite significant developments, but you also have the alarmists sitting out there creating articles in the Guardian the other day saying if this IR bill is passed, it will be a public health emergency. Come on.

If we come back to it, I think there might be some playing at the edges here, maybe it’s going to be pulled back from a 12 month conversion period to maybe nine months. Will there be a contemplation of the introduction of some form of arbitration if there’s protracted disagreement over what is a reasonable ground to oppose casual conversion?

I suspect that the government won’t lose the bill over the maintenance of the special better off overall test provisions, which again were limited for two years and, in my view, aren’t really all that they’ve been cracked up to be by the opposition. So they’re probably the three things that might be considered their problems.

Natalie, assuming the bill passes, obviously it’s going to bring in potential challenges and risks for organisations that employ casuals. Irrespective of whether the bill passes, there are obligations, challenges and risks for those same organisations around casuals. For the audience who’s keen to get some guidance and advice, can you expand upon where some of those risks are and what organisations should be doing to ready themselves around engaging casual workers?

Natalie James

There are huge risks and opportunities here. Firstly, it’s interesting that this conversation started with a lot of optimism and hope about a new way of engaging with workplace relations issues, and now we seem to have reverted to type, particularly with the flashpoints around one of the key amendments to the better off overall test – the temporary COVID related one.

I should say, while everyone’s looking at that, don’t overlook the permanent changes to the BOOT, which are designed to make agreement making more accessible. These are also quite significant although maybe matters of degrees. A second thing is something that always comes out the other end of the system by and large because parties don’t necessarily want these pieces of legislation to fail.

There’s so much in this bill – it’s anecdotally being referred to as the ominous bill – and much of it is remedial. It’s patching up different issues or irritants in a system, some of which are longstanding. I think both businesses, employees and unions are keen to see some of these reforms get through, whether you’re on the side of tougher penalties the way it’s been applied or this casuals ambiguity and messiness for us.

As someone who sat on the floor of parliament, when these pieces of legislation have been going through, I’ve watched Senators go from one side to the other. I’ve watched conversations happening in the chamber at the time as people are trying to convince a crossbench senator to walk one way or the other, and I’ve seen things change on the floor. So no one ever knows exactly what the detail is that will come out the other end, and often this is determined about three in the morning after an extended sitting. Fingers crossed, but it makes sense and it actually is capable of implementation, whatever comes out the other end of the sausage-making machine.

There are two elements as to what employers should be doing. And this is almost irrespective of the bill. Think about the amount of wage non-compliance that we’ve seen lately, inadvertent but nevertheless significant. The first is, get your house in order and the second is, consider the foundations of the house and whether they’re actually what you need going forward. In terms of getting your house in order, WorkPac, Skene and Rossato really bells the cat on some longstanding challenges around the fact that the terminology of casual is not defined.

We think we know what it is. It’s kind of like, we know it when we see it. Except when a court looks very closely and interrogates a particular casual arrangement, they might see it differently from what the business did. If the bill gets through these issues, there will be more certainty and much more focus on the formation of that casual relationship, and how the relationship is framed at the very beginning, which will provide employers with more certainty.

But there’s still a definition in the bill that employers will need to meet. What employers should be doing right now is making sure that the hygiene around casual employment is what it should be, the contracts properly reflect the genuine relationship as it has actually asked businesses to provide for potential liability around their casual workforce.

If they’re not real casuals, what are they entitled to and what might that workforce have been entitled to in terms of leave etc. over the last six years. So there are things that businesses need to do today, but if the bill gets through, there will be more certainty about what is casual going forward and there is a mechanism to enable any claims that are considered.

If casuals bring full claims saying, I’m not a casual, give me my leave, that higher pay – the casual loading that most casuals do receive – can be held against the value of that leave, which is what Rossato found couldn’t happen. That’s not a surprising outcome, and I’m going to say it – I don’t think the high court is going to disturb that part of the decision.

Get your house in order around your casual employees and indeed all your employees. We’re seeing a lot of compliance issues with parts of the workforce that haven’t been properly classified or even matched to the right awards or other instruments that apply. Make sure you know, what is your workplace is covered by. What instrument, what classification, and, if they’re a casual or part-timer, are the hours they’re working actually reflecting the formality of their arrangement and the rules.

In terms of asking yourself are your foundations right, in this pandemic BAU world that we seem to be in, I think a lot of organisations are looking at the enterprise agreements or the policies they have in place and are realising that they’re not really fit for purpose for coming in and out of lockdown, for work from home, and there’s a lot of legacy arrangements in place. We see this in our compliance work and our remediations. A lot of the time remediations are occurring because of very old and ambiguous agreements or other arrangements.

It’s a really good time to be asking the question: are the instruments and policies and the infrastructure around our industrial relations fit for purpose for us going forward? Do we really understand where our labour costs are? And what are the opportunities for us to design something that enables us to thrive and be successful in our pandemic BAU? I’m not prepared to say a post-COVID world just yet.

They’re the things that I think employers should be thinking about particularly if you have casual workers on your books. First. A couple of questions in reference to are we recording this event? It will be recorded and we will be sending out a summary of the event and everything towards it.

Nick, there’s a lot of organisations that employ the majority of their casuals via third parties. So via labour-hire firms, consultancies, so on and so forth. Their risks and their obligations, obviously there’s a third-party relationship in place and the potential accessorial liability perspective, can you give a view on is it any different? Are there any additional risks and around organisations that are using labour-hire and other providers to engage their causal workers?

Nick Duggal

I think from the perspective of users of labour-hire, I don’t see that as increasingly risky. There is scope for third party liability of end-users of labour-hire, but really the majority of liability lives with the designated employer in the relationship. That should continue to be the labour-hire provider.

In terms of where this legislation leaves labour-hire, the first point that I would make is that – the current situational climate following on WorkPac and Rossato was pretty messy. We have a federal court judgment that is pretty impractical in terms of being able to manage or quantify costs associated with the casual workforce.

Now, I think something that’s happened is bringing more certainty, even if you’re a bit unhappy with where that certainty falls in terms of how much you would like, which is better than the situation that we’ve got at the moment. I think absolutely something needs to be done about that decision and, if it needs to be legislation, that’s what it needs to be.

The second point that I would make, and this is interesting for labour hiring and tripartite arrangements, is how are those arrangements are analysed in the context of the firm advanced commitment concepts?

Because, in a labour-hire relationship, the employer doesn’t bare the ultimate discretion as to how long work is going to be available, because that’s in the hands of their clients. What then happens if a labour-hire provider is only prepared to give a firm advanced commitment to the length of their contract with their client, which would be quite a sensible thing.

Those contracts tend to turn over after a specified period. Would that be a sufficient basis for such an employer to say, I can’t give you a firm advanced commitment of work beyond that. Therefore your engagement is to remain casual. There was an interesting full bench decision a couple of weeks back in the unfair dismissal context where the full bench made a determination of, look, a labour-hire provider really can’t control a termination which is brought upon by a decision of the end client.

Will a similar approach be taken in relation to the concept of a firm advanced commitment to work? I think that’s the really challenging question. We don’t have a final answer from the legislative perspective on that but I still think that there’s plenty that can be done by both users and providers of labour-hire to really demarcate and define contractually and otherwise what the advanced commitment is and how they’re using their casual workforce –what duration, how is that workforce  curated and things to that affect. All of these things are really important in the current economic environment to be able to benefit from those forms of temporary labor.

Nick, there’s always been confusion around tenure. How long can we engage this person for, when do liabilities kick in and so on? Will this legislation clear up some of that confusion?

Nick Duggal

I think it will draw a line in the sand in relation to when you’ve got to really look at a casual relationship and that will be around the time that the right to convert arises.

We’ve got a number of industries that already have been inbuilt to their award processes this right to apply for conversion, that employers need to proactively notify their employees. There’s some experience on the ground that certainly we’ve had for organisations trying to work within the right to convert and including how that operates in the context of labour higher or tripartite working relationships.

To me, the critical junctions there are six months because that’s when an employee can gain access to unfair dismissal laws if their employment ceases, and then 12 months, because that’s when a lot of these right to convert obligations kick in. I think they’re the two critical points.

We still speak to clients who have had casual employees on their books for eight, nine years. You’ve got to have a bit of scrutiny in your labour model as either an end client or a provider as to what kind of risk you’re taking on if you have a large number of those sorts of relationships, where the workers are close to working full time with the one end client.

Natalie James

It’s interesting isn’t it, because of this question of control. So as a labour-hire entity, one thing that’s really important if the bill becomes the law in its current state is that you control the nature of the formality of the arrangement from the very beginning. That’s important because the bill places all the emphasis on the offer and acceptance and not on what happens after that.

That’s good from a labour-hire company’s point of view. What’s not so good is the conversion elements are triggered by the patterns of work, and the time periods when that regularity might arise and once an employee has been employed for 12 months. As a labour-hire company, you may not control the longevity of that employment, and so the conversion element could arise due to circumstances that aren’t within your control.

But you’re the employer and you’ve got the obligations around conversion. That’s the case under awards now but with the legislation, it makes it universal and so again, it’s kind of about the hygiene and about making sure that you remain in contact with wherever these employees are placed, and you really understand how they’ve been rostered or used, what is the likely duration and having triggers so when you approach the 12-month period, you understand that the obligation is about to arise.

There are a lot of processes around the obligation as well, so you’ve got to make sure you get that right. It’s not just, hey, do you want to be permanent? There’s all this kind of formality around it as it should be and the possibility for exceptions, but then also disputes being raised. There’s still a lot of infrastructure around these entitlements, and I actually think it’s quite well balanced, that the conversion right balances out the focus on the relationship from the very beginning. I do believe these provisions are going to see quite a bit of amendment in the senate.

Natalie, Irrespective of the bill being passed, If an organisation audits their workforce and finds that there’s a lot of people being engaged under a casual, fixed-term or part-time engagement, but for many years, what should they be doing? Do they need to be speaking to these individuals now? Or is there something else they should be doing?

Natalie James

We’re working with a lot of clients who are analysing and using data analytics to look back across their current casual workforce and previous casual workforces firstly, to understand longevity and patterns of work. There are various risk factors to understand whether they should be providing for potential liability. The challenge is that the law and the case law is all based on individual relationships. Rossato ran to 250 plus pages right and it considered two employment relationships.

But employers and businesses have to consider their workforce as a whole. That’s one of the reasons bringing data analytics to this question could be helpful if you’re doing that initial review to understand the cohorts and the risk levels. You want to have visibility of that even if the bill gets passed because you might make a decision that maybe you’d be better off having a workforce that was more part-time based, or full time-based. It depends on the costs to you because of the ongoing cost of monitoring all of this.

I think that businesses should be thinking about this now. It’s always been a latent risk, this issue of what is a genuine casual. A bit like what is a genuine contractor or employee, it’s the same kind of challenge. Because the factors are not objective – it’s not a checklist – you have to weigh a bunch of things and consider all of the elements in a relationship, it’s hard to do it retrospectively from a workforce level.

When I say get your house in order, and consider the foundations part of that is workforce profiling and is the workforce really built the way you need it to be going forward, these are all things that I’d be considering irrespective of the bill, which is a patch-up job around the liability question and particularly retrospective.

Yes, so this and a couple of people have asked questions around.

Charles, if the bill passes, and the worker turns around and says, I’m not interested, I want to continue as a casual worker, under the current proposed bill, do you keep having to speak to that worker around permanent opportunities, or does it flip to the worker after that initial offer?

Charles Cameron

I think this is another really critical point and it’s where we see an extension of employee rights beyond the provisions within the existing awards. That is, six months after it’s open to the employee to have it all revisited. Not only is there the obligation for the employer to make an offer of permanent employment, subject to reasonable grounds for deciding not to make the offer, but you’ve also then got six months thereafter an employee can come back.

That’s probably appropriate, because you know life stages change and business circumstances change. I think it’s another example of where doomsday is just focused upon certain elements without understanding the benefits to employees. The other thing here is that there’s a lot of focus upon the whole, employers are going to say no, they’re not going to offer permanent appointment, they’re going to rely upon these reasonable grounds. It’s just garbage.

I think there’s been a huge evolution of employers and their commitment to employees over the last 10-15 years. There will always be some who might push the edges, but to knock an entire bill that provides certainty and confidence to business and greater benefits to employees on the basis of maybe one or two per cent of the employers who may advertently or inadvertently misuse those provisions, it’s just crazy.

We really need to get beyond this idea that we must say no to anything to protect the one or two per cent of employees that may work for an unscrupulous employer. It’s time to move on. I think there are some really good provisions in here that you know to that point probably do get the balance right.

We’ve been seeing for some time now corporations and employers engaging their professional and IT contractors more and more under different classifications and engagement structures. Not necessarily casually employed by a labour-hire firm, but whether it be a sole trader an independent contractor, a consultancy or a statement of work, and we’re seeing that piece balloon in a lot of organisations especially in the IT and professional space. There’s a belief that it may be slightly easier with an organisation to engage under that model. But from a risk obligation, what do organisations need to do? Can one of you tackle that for us because we’re seeing explosive growth in terms of engaging IT and professional contractors and the non-casual engagements?

Nick Duggal

I think it’s the elephant in the room about reforming casuals, that you still have the uncertainty around independent contractor relationships. If people really want to skirt around casuals now, they’ve still got all of the potential uncertainty and loopholes around independent contracts. That can extend right down to workers on marginal pay rates, like contract cleaner companies getting their cleaners to go and take out an ABN and then engaging them as independent contractors.

I think if you’re going to deal with temporary or contingent workforces and their regulations, you’ve got to deal with the question of independent contractors, because that’s the loophole that still remains now in relation to IT workers, including those engaged as independent contractors. To my mind there’s still got to be some commercial reality, so where your energy should be invested in terms of regularising the contingent workforce.

Now the reality is that a lot of the IT professionals who supply their services on a contingent basis either as casual or independent contractors do so at very healthy market rate,s and those rates in fact stand well beyond what would be the applicable award rates under the professional employees’ award now. I would think there are some really good commercial arguments to be made if they are comparatively better off overall or not at risk of being underpaid compared to any industrial instrument.

This shouldn’t be a focus for strict legal formality in terms of sham contracting or penalties and things like that and that’s what we’re seeing coming out or Rossato. I’ve been involved in cases where people on really high rates pay, you know, hundreds of thousands of dollars per annum are still arguing that they’ve gotten entitlement to double dip and things to that effect.

The proliferation of contingent work in the IT space, including its use by the government – it is a big user of contingent IT workers – is something that demands a bit of commercial sensibility into what extent it needs to be regularised and what kind of outcomes can come out of underpayment cases or penalty cases and things like that.

Natalie James

Firstly, one piece of reassurance, then maybe one challenge on what you just said there. So the reassurance response to your question is, I don’t think in that scenario the criminal penalties are going to be your problem. The criminal penalties apply to dishonest conduct that is systemic.

If you’ve got a workforce then you’re probably going to tick the systemic box, but dishonest to a criminal standard of proof? I think that that’s going to be challenging unless you’ve actually got evidence of a very deliberate mindset and an organisation to disguise a relationship.

Let’s take the contracting example. The Fair Work Ombudsman is not going to pursue a criminal penalty or seek that the DPP does so, except for all but the most extreme and serious examples. I think what business needs to be more concerned about is the increase in civil penalties, and the new value of the benefit former penalty, which effectively enables a judge to decide, well, you made a small error but, across a workforce, it adds up to 12 million, and that becomes part of the equation for setting the penalty. That could be quite lethal and could scale up very quickly just like we’ve seen underpayment scale up to hundreds of millions of dollars.

On the question of people being paid market rates well in excess of awards, Nick you’re a hundred per cent right but you’re a hundred per cent wrong. The nature of our current system, with all of its detail, prescribed rates, different times of night and day mean, we are absolutely seeing very well-paid people, including people who are in IT potentially caught by the professional services award who have been treated as award-free, paid quite high based salaries, but potentially because of the nature of the hours that they’re working could be tripping into overtime and higher rates of pay.

The challenge is that the business has got no records because this is not necessarily a cohort that is clocking in and clocking off. The business has a gut feel that we’re paying market rates, we’re paying high salaries, how could we be underpaying these people. But we’ve seen court litigation successful with respect to highly paid commission workers in the financial sector, and that is because businesses haven’t got what I describe as demonstrable compliance.

They don’t have records or any sort of evidence as to hours worked. There’s a reversal of onus about records in the Act now in the absence of employer records. This means an employee can come forward and say, I worked every Sunday and I worked until midnight. IT workers sometimes are doing this as a server falls over or there’s an urgent requirement for assistance. The hours they’re working mean that there are entitlements that at certain points in time might have taken them over that fortnightly or monthly salary or whatever it was they’re on. Even if it didn’t, the business isn’t in a position to defend the claim.

I think what a lot of businesses are grappling with right now are these sorts of well-paid professional cohorts, who are not clock on clock off workers, is how do we give ourselves comfort and confidence of the other evidence to demonstrate this demonstrable compliance concept?

Nick, you’re right, it’s probably the best argument ever, particularly with many of us working from home now meaning that we might be tapping on and tapping off on many different sorts of hours, but it’s the best argument ever for questioning the time and materials basis of our award system, which inherently values some hours that people work more than other hours based on assumptions that we’re going into an office and some hours are less hospitable than others. Those concepts were settled decades ago, when there were fewer women in the workplace, there were fewer households with multiple people working and probably fewer blokes taking care of kids.

This legislation is not getting near any of those pieces of legislation that are at the heart of the foundation of our workplace relations system. And so the challenge and the danger is that for those sorts of workforces you still have to have some sort of visibility of award coverage classification and hours worked, or you don’t have demonstrable compliance. While I don’t think the Fair Work Ombudsman will be trying to put you in jail if there are complaints, you might still find yourself the subject of investigations or claims by employees based on their assertions of actual hours worked with little to defend them with.

Can I just get an understanding, if the company is engaging a worker, a consultancy or a labour-hire firm, with outcomes-based payments, is the risk significantly diminished around these perspectives?

Natalie James

I think the real question Paul is, what’s their genuine status. If they are a genuinely cheap independent contractor, then you’re off the hook, because the award system does not apply to that arrangement. But if there’s any doubt about their independent contractor status, then they might be captured by the time and material system that values different hours of the day differently. In that sense the arrangement might be outcomes-based. If they’re an employee, they’re entitled to the hours that they’ve worked.

We’ve certainly worked with clients during remediations in IT, with the professional services award, and we’ve worked in other areas where people assumed that workers are not captured when they are. Going back to the beginning, have confidence in the status question, and that will get you there. But if there’s any question that someone’s an employee and potentially captured by an award, then if the arrangement is outcomes-based it doesn’t make any difference at all, they’re still entitled to overtime, potentially Sunday rates. You then need to have a sense of the hours they’re working.

Charles, obviously labour-hire licensing isn’t in the front page at the moment while this is going on, but has there been any changes on momentum from a labour-hire licensing perspective?

Charles Cameron

It’s probably been disrupted by the omnibus IR bill. The government’s view that it’s probable quite sensible that they would like to focus upon this bill at getting some of these very important provisions through to give certainly to business and benefits to employees as well. Where are we at? We suspect that the discussion paper, which has really been formed over the last few months, we expected to be put out for commentary last year will be presented shortly after the passing of this bill, assuming that it is passed.

I don’t think that will allow enough time to receive the results and then determine what national labour-hire license you would look like – even though there was a commitment to introducing that national labour-hire licensing scheme. It’s not all the government’s fault; the majority of this is the fact that the states are increasingly reluctant, that being Queensland and Victoria, to relinquish their schemes unless it’s the highest common denominator and there are some really bad provisions within the Victorian scheme that must be addressed.

I think you’re going to end up in an impasse. I don’t think the government really wants to enter into a major constitutional battle. I think what we expect is that we’ll see the discussion paper and then there will probably be some commitment to a process after the next election. Of course the election result will be quite interesting given some of the ALP’s IR platform, which interestingly was admitted by Sally McManus, was a complete cut and paste of the union’s policy the other day.

At least it’s out of the closet that’s the case, it’s just a pity that they didn’t pick up the how-to guide to actually implement those policies because I think there’s a whole heap of issues around those as well, but that’s another rabbit hole.

There have been some questions about recent cases and potential implications. You mentioned earlier about a full bench decision Nick, and we didn’t let you expand on it at the time. Can you expand upon that?

Nick Duggal

What that decision related to is that an employee in a labour-hire arrangement had their employment ceased, and the cessation of that employment was at the direction of the end client. What’s unique about this situation is that you have labour-hire where the person who is making the decision to effectively end the employment, because they don’t want the labour anymore, is actually not a direct party to the labour arrangement.

In the first instance, the labour-hire provider said, well I can’t be liable for unfair dismissal because it wasn’t my decision to dismiss the worker. The commissioner at first instance said, well we don’t accept that you’ve got that kind of loophole, that because you’re a labour-hire provider that whenever your client wants to end the relationship that you’ve got no responsibilities. So we still find that the dismissal is unfair, and I think there was an order for reinstatement. This is obviously very challenging for a labour-hire provider because they can’t then put that worker back in the appointment that they had.

Charles Camron

I think it was implied that they could and should go to the client and actually direct them to take them back, which was essentially implausible really. Is that not what the full court found, that it was actually implausible?

Nick Duggal

Yeah, it entirely defeats the purpose of an end client using labour-hire if you end up with the employer style obligations to the employee. That was turned around by the full bench, who took a more favourable view of the position that the labour-hire provider is in. That they really can’t control the dismissal nor viably offer reinstatement.

What I would take from that decision for labour-hire providers is that, you don’t have a complete get out. You can’t just be in complete disregard of unfair dismissal laws if you’ve got permanent employees or you’ve got casual employees who could be considered permanent under unfair dismissal laws. But it does give them some comfort that there’s some recognition of the nature of the position that they’re in by the Fair Work Commission.

I think the hope would be that recognition would then carry over to whether an employer can be regarded as being able to offer firm advanced commitment for work. What we’ve been trying to do for clients since Rossato, including in areas where there’s a right to notify employers that they can convert and consider any application reasonably, is in the contractual materials for labour-hire providers to contextualise the nature of the position that they’re in.

That that they are a provider, that the nature of the labour that they can offer is contingent upon the needs of their clients, and that often the needs of their clients are based around the length of their service agreement. The hope would be as we go down this legislative path that there’s recognition for that, in terms of a firm advanced commitment from work.

Natalie, we’ve said a few times today that employers should be doing the right thing regardless, but irrespective whether the employers are doing the right thing regardless, what’s the government doing around funding and resources around enforcing compliance?

Natalie James

That’s a really interesting question. The bill contains a number of measures ramping up penalties. We’ve talked a little about the criminal penalties; there are increases in civil penalties as well. The Fair Work Ombudsman has been given quite a significant increase in funding – the biggest increase. Big ups to Sandra Parker, she did better than me. The biggest increase in the last decade, the biggest single increase – I think it’s around 40 million dollars over four years.

Some of that money is for an employer advisory service. Some of it is just for general guidance and the like. But some of it is for dealing with these large corporate underpayments that we’ve been seeing come forward. We’ve seen the Fair Work Ombudsman say formally, look, this is not our usual area of focus. The Fair Work Ombudsman has traditionally focused on blatant non-compliance. Businesses that are deliberately not meeting their obligations and small to medium businesses who struggle with the complexity of the law and need help.

That’s where the federal government’s been focused. Now suddenly, we see hundreds of millions of dollars worth of underpayment coming from large corporates and a Fair Work Ombudsman saying,  firstly these are really complicated and they go back a number of years.

These are the many of our clients we’re helping grapple with these scenarios when they’re having to do complex look backs often in the absence of all of the records that they possibly should have had. The Fair Work Ombudsman got extra money to deal with those large style corporate underpayments, and some different infrastructure in the legislation as well that really will involve the FWO publishing policies. We don’t really know what they say yet, but there’s this concept of deferred litigation, which is different from an enforceable undertaking, and obviously not actual litigation, but a different enforcement outcome for an inadvertent but nevertheless significant underpayment by a large business.

We’ve got five minutes left, and so to try and finish on a high – there’s been a lot covered today, but is there one or two key points that you would advise the listeners or the viewers to do following today’s session, so they go back to their organisations. What should they be doing, whether it’s to prepare for the change which is impending or anything else. So, Nick, you’re usually very quick to think about these things, what piece of advice would you give to listeners?

Nick Duggal

I’ve just got one comment of bringing some optimism to the discussion, and then to suggestions. If we go back to what was happening during the pandemic, we had a one really significant piece of legislation which was job keeper which was really effective, really quick.

A lot of what we saw to contend with what businesses face was what they were doing on the ground – creatively, from a contractual perspective. It’s important to remember that even though a return to type in terms of federal legislation is disappointing, there’s no reason why, at an enterprise level, that employers and employees in individual businesses can’t take faith and keep the good bargain that works so well through last year.

Try to be creative and push the envelope with your lawyers about what can be achieved flexibly at an enterprise level, and then keep your hygiene right in terms of implementing that contractually. Stay positive and stay entrepreneurial.

Natalie James

I’ll echo what Nick said really. Nick said go to your lawyers, which you definitely should do, but – the engagement. We’ve seen amazing arrangements nutted out through workplaces engaging with their people about what’s possible, what’s fair. We’re in difficult circumstances, particularly those of us who are back in lockdown, so we do rely on those relationships. So I think if you engage with your people many things are possible and that helps you with that whole, get your house in order, consider your foundations. Because our ideas might come about changes you might make that are far easier than what you might have thought when you’ve got that engagement at the employee level, so that’s what I’d be suggesting.

Charles Cameron

If you’ve got any money left after you’ve employed 27 lawyers over a period of three years. I’m going to go back to what I’ll always say, which is if you are going to continue to use third party workforce service providers, make sure you’re working with sophisticated ones. I’ll go to Nat’s point earlier, there’s a lot of infrastructure and process that will shift around casual conversion.

If you don’t work with somebody who really knows their stuff, it can potentially fall into your lap. So yes, this is good for employees, justice will be more accessible for employees, but that means you need to make sure that you’re working with the best, whether they’re lawyers or whether they’re third-party workforce service providers.

I actually think we’ll see a greater attraction of using third parties because it’ll become so complex to hire people directly – that is a great irony. I think of the unions continuing to push to make casual employment less attractive.

 

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If you would like to find out more about how we can help with your contingent workforce solutions please contact us here.

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