On the 22nd of November, the Federal Opposition Leader, Anthony Albanese, introduced the Fair Work Amendment (Same Job, Same Pay) Bill 2021 into Parliament.
Essentially, this bill seeks to ensure casual workers, sourced by labour hire companies, are paid the same entitlements as their permanent counterparts. Should the bill pass, these labour hire companies as well as organisations that hire casual workers will need to re-examine their use of casual workers.
In this article, we answer some of the burning questions our readers have had about the bill, what it means for the future of contingent work and whether it’s likely to pass.
What’s in the bill?
The main points are as follows:
- If a casual worker does the same job and works the same hours as a permanent employee, they’ll need to be paid the same.
- The casual worker would also need to receive the same entitlements – for instance, public holidays.
- The obligation only kicks in if the engagement is longer than three months – meaning temp workers (those that are hired to fill in a short vacancy) aren’t included.
- Will only apply to companies with over 15 staff.
What is the state of casual workers at this point in time?
As we’ve outlined in our latest workforce risk report, the state of casual employees has already shifted significantly.
The Fair Work Act 2009 (Cth) (FW Act) now offers a definition for casual work, which centres more on the relationship outlined in the contract at the start of the engagement, rather than the actual work behaviours through the engagement. The amendment also stipulates that casual workers can’t retroactively receive permanent entitlements (such as leave) in addition to a casual loading rate, if they’re found to be an employee.
Finally, employers now need to offer casual workers a permanent contract if they’ve been engaged for 12 months (if the engagement is determined to be ongoing). The onus is on them to contact the worker to offer this arrangement. These changes came into effect September 2021.
It remains to be seen how this proposed bill will factor into these casual conversion changes. Although labour hire firms need to offer permanent employment after 12 months, they often do so on a reduced rate. What will happen if they’re compelled to offer casual workers a rate equivalent to permanent staff?
What will this new bill mean for labour hire firms and companies?
Should the bill pass into law, it could significantly alter the viability and attractiveness of hiring contingent workers. The onus would be on labour hire agencies to ensure that the casual workers they engage on behalf of their client are paid the same amount as permanent workers doing the same job.
Although labour hire companies will be responsible for providing the worker with a higher rate, that cost will inevitably be passed on to the employers. Agencies will likely try to recoup costs under contracts with higher rates.
Employers will have an additional administrative burden, as they’ll need to provide the hourly rate of relevant permanent employees. They’ll also need to take reasonable steps to ensure the labour hire organisation is complying with requirements in the bill.
These factors may lead many organisations to rethink their use of contingent labour.
What will this bill mean for workers?
For jobs where there is a significant difference in pay between casuals and permanent staff, the Bill would be of substantial benefit to these workers. This kind of disparity is most prevalent in blue collar environments, such as mining, construction and retail.
Additionally, these workers will gain access to entitlements, such as holiday leave, training opportunities, employee discounts and access to shares programs, to name a few.
In the white collar industry, particularly in tech, contractors are often paid more than their permanent counterparts. These workers may benefit less should the Bill pass.
Why are industry groups opposed to this bill?
A number of industry groups, including the RCSA, have called the Bill ‘unworkable’, and criticised the lack of consultation. Their biggest concerns are:
- Making jobs less secure for permanent staff – Under the Bill, labour hire companies would need to adjust the terms and conditions for their on-hire permanent staff.
- More broad than just labour hire companies – Any business that provides workers for another entity would fall under this Bill, not just labour hire companies.
- Removes the ability for workers and employers to reach an agreement that suits their particular circumstances – For instance, having terms and conditions imposed on the worker by the labour hire company, rather than their host employer.
- Large administrative burden – Labour hire employers would need to manage each worker under multiple agreements.
- Increase time to hire – Employers and agencies would need to assess the terms and conditions of each worker’s agreement before they start work.
According to Ai Group, the bill is “unwarranted, unfair and unworkable”. Their primary criticism is that the Bill is far too broad regarding which workers are targeted, as well as what offering the same conditions implies.
“For example, if a business implements an employee share scheme for its employees, how can a labour hire / contracting firm be expected to offer its employees shares in another company?”
Other organisations see it as trying to fix a problem that doesn’t exist. With many labour hire workers being paid higher than the average employee, the Bill is seen as creating unnecessary processes without a clear benefit.
What’s likely to happen?
Now that the Bill is submitted to parliament, the incumbent Liberal government is likely to refuse to allow it to be debated, meaning it dies on the floor. However, many experts see introducing this bill to parliament to be a political manoeuvre, designed to highlight that the incumbent government is not willing to engage on this important issue.
Will the Bill pass should Labor win the next election? It may struggle getting past the senate in its current state, and could also undergo substantial rework to have a better chance.
If you would like to discuss this Bill and how it would affect your organisation, you can reach me here. I look forward to speaking with you.