I want what she’s having!
The classic line from the movie When Harry Met Sally sums up human behaviour. We always want what others around us have.
Having sat through countless Enterprise Agreement negotiations, I have faced regular claims from unions to include a ‘labour hire clause’ in the Agreement. The long-held view of most employers has been to push back on that notion, with the business lens of having the flexibility to bring in labour hire to subsidise an employee workforce when required, and for the commercial arrangement around pay rates for labour hire employees being something that was not part of discussions. This has all changed.
The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 has brought about significant changes to the Australian employment landscape, particularly the amendment associated with same job, same pay requirements for both employers and labour hire organisations. This amendment aims to ensure that labour hire employees are remunerated at the same rate that the employees of the host employer are paid if they are performing the same role.
Under the new legislation, employers and labour hire organisations are now required to pay employees equally for performing the same job. This means that workers hired through a labour hire organisation must receive the same wages, entitlements, and working conditions as their counterparts who are directly employed by the host company.
Lessons for Employers
Calculate the rates
As this piece of legislation has played out, it has proven difficult to calculate and compare the rates of pay between labour hire and host employer employees. In a recent matter (“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (188V) v Paper Australia Pty Ltd T/A Opal – [2023] FWC 2129 | Fair Work Commission) the union claimed that the wages and conditions paid to labour hire employees was not equal to those paid to employees of the host employer. In this instance the employer was able to successfully argue that all entitlements (allowances, bonus and higher overtime rates) resulted in the labour hire employees being paid at least what the host employer’s employees are paid. Regardless of the outcome of this matter, it demonstrates that calculating the wages and conditions is not simple.
Compliance is key
It is essential for employers, both labour hire and host employers, to review their current employment practices and contracts to ensure they are in line with the new legislation. Both labour hire and host employers have responsibility to ensure that payment terms are understood and are applied equally. Failure to comply with the same job, same pay requirements could result in costly penalties and legal action.
Transparency is crucial
Employers should be transparent about the wages, entitlements, and working conditions offered to both host employees and labour hire employees. Clear communication and fairness in remuneration are vital to maintaining trust and morale among workers but is also vital for employers to meet their requirements under this amendment.
Proactive approach
Employers should proactively engage with labour hire organisations to ensure that both parties are aware of their responsibilities under the new legislation. Regular monitoring and review of employment practices can help prevent any potential breaches and ensure compliance.
Closing Loopholes
The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 could potentially see an end to the union claim for ‘labour hire clauses’ in Enterprise Agreements, but the requirement to ensure same job, same pay is happening sits firmly with employers.
Setting it as part of legislations, means that Employers must take proactive steps to ensure compliance, with the risk of civil penalties against both host employers and labour hire employers for such things as breaches to ‘anti-avoidance’ provisions.
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If you would like more information or want to learn more, please contact us here and a Mapien Workplace Strategist will be in touch ASAP.