Today, we’re excited to introduce you to a new content series here at the CXC Global blog, where we’ll be covering topical issues of the day relating to labour laws, workforce trends and issues affecting the labour market. Our focus will be largely on contingent and ‘non-traditional’ worker categories, and the new industries, technologies and legislative changes that have arisen in the modern workforce.
This will be a regular feature on the blog so make sure you bookmark us, so you’re always across trending topics of the day, on labour activity in Australia. Or, click here & sign up to receive our monthly blog round-up.
First up, the latest news on sham contracting, the gig economy, and vulnerable worker protections – three scenarios that are deeply interrelated.
Sham Contracting
Defined as the situation where workers are incorrectly categorised as ‘contractors’ when technically they’re ‘employees’, sham contracting is on the rise in Australia, given the proliferation of online gig marketplaces. And the biggest concern is around the unfair treatment of workers, particularly in relation to underpayment (often beneath the minimum wage) and loss of other basic worker rights, like insurance when injured on the job.
Both sides of politics are having a say on this one. This weekend just past, Labor workplace spokesman Brendan O’Connor believes sham contracting is becoming too common.
“In the case of Deliveroo riders and Uber Eats workers, they are getting a third of the minimum wage,” Mr O’Connor told Sky News on Sunday. As a result, under Labor, there’s a real consideration for mandating minimum wage.
And the Fair Work Ombudsman is taking action against those in breach of the Fair Work Act 2009.
Mostly, it appears the legislation in Australia today hasn’t stayed up-to-date with the changing workforce dynamic: with the massive growth in gig working, especially at the hands of online platforms like Uber, Deliveroo and the like, Australia is still trying to come to terms with new working arrangements that aren’t technically ‘employer-employee’.
The FWO and the ATO are clamping down on employers who misclassify workers as contractors in order to side-step their statutory obligations. Or those who simply don’t know. These include obligations such as payroll tax, superannuation, insurance and legal pay rates. They’re seeing it more and more, and they’re taking action – in the form of $63k fine per breach. Ouch. We recently published further insights about sham contracting right here.
The Gig Economy
Probably the biggest change that’s happened to the workforce in modern history, the Gig Economy has greatly commodified working. And according to the International Labour Organisation, there are two broad categories of workers in the gig economy:
- There’s ‘Crowdwork’: which relates to task-related work completed via online platforms. Typically, these platforms put in contact an indefinite number of organisations and individuals through the internet, potentially allowing connecting clients and workers on a global basis. Think Freelancer, Expert360.
- And, there’s ‘Work on demand via apps’: where work is undertaken via apps, and the organisations that own & manage those apps, are involved in setting the standards of service and in selecting the workforce. Think Uber, UberEats, Deliveroo, Foodora, Airtasker.
The latest news from the gig economy includes the Fair Work Ombudsman’s recent claim against food delivery company, Foodora. The FWO claims that in 2015 and 2016, three Foodora workers were misclassified as independent contractors, when in fact, they were employees of Foodora. By breaching sham contracting laws, and misrepresenting these workers, Foodora is sitting as the latest test case upon which the industry is looking closely. You can read more about it here.
End of the day, a dramatic change needs to happen. Workers need protections under the new realm of ‘gig working’ and companies need to understand, and abide by, their obligations if the new order of work, is to work.
Vulnerable Worker Protections
There are many arguments calling for greater protections for gig economy and other non-traditional workers. And with good cause. There have been notable cases of exploitation or breach of worker rights here in Australia, and from some big brands including Caltex, Napolean Perdis, Lush Australia, Rockpool… all from very recent times.
Some of the reasons for litigating to protect workers include:
- The likely increase of gig-economy apps, spreading to other industries like hospitality, even disability
- The similarity of these workers to Labour Hire workers, given the recent rise of protections for Labour Hire Workers. It’s a potential roadmap for gig economy workers, the only difference being Labour Hire workers are employees, whereas gig economy workers are typically contractors
- Zero protections for worker injury whilst on the job
… amongst many others.
As organisations try to adapt to the gig economy, workers are being disenfranchised in the process. It seems apparent that organisations are either embracing the changes of this new world or are struggling to manage a workforce that is increasingly seeking to ‘gig’ outside of their regular job. The key issue here is this: how does the gig economy fit into the existing system in Australia, which simplistically, is employees and independent contractors?
More on this topic next week….
