New Labour Hire Regulations
What You Need To Know: Insights from Karen Ansen at Ignite HR
Important updates about the Australian Federal Government's proposals for labour-hire regulation. The Department of Employment and Workplace Relations recently issued two discussion papers signalling their plans.
What does the regulation propose?
The proposed regulation aims to extend its influence beyond standard labour-hire arrangements to encompass what is known as 'workforce contracting arrangements'. Classic labour hire typically involves a provider who employs workers, manages their wages and entitlements, and then on-hires the worker to a host business. These arrangements provide companies with additional short-term labour to meet their fluctuating demands.
In contrast, 'workforce contracting arrangements' occur when a business decides it is more advantageous to use a third-party contractor to supply the labour needed to fulfil a specific function within the company instead of directly employing workers.
This arrangement typically includes contracts that provide ongoing labour services over an extended period (i.e., 1-4 years), and the contractor or their representatives generally supervise the work. However, it's essential to note that the proposed regulation will not apply to 'genuine subcontracting arrangements'. These arrangements involve a subcontractor hired to perform specific work over which they have complete control and legal responsibility.
What are the host's obligations under this proposed regulation?
If an organisation's contracting arrangement falls under this regulation, the 'host' or business will have several key responsibilities. These include ensuring that the provider has a license, cooperating with the labour-hire regulator in enforcement activities, and consulting with the provider to guarantee that they are meeting their 'same pay, same job' obligations for their staff performing the work of the contract.
What is the timeline for this new scheme?
The national labour-hire licensing scheme is likely to be operational in 2025. This transition will involve moving away from established State schemes towards a federal system.
However, the 'same pay, same job' obligations may be implemented sooner by 2024.
What does 'same job' mean under this scheme?
Under the scheme, a 'same job' situation arises when an employee of the provider performs contract work for the host and any of the following conditions apply:
The employee would be covered by an enterprise agreement binding the client if the client directly employed them.
The employee performs the same duties as an employee covered by a modern award.
The employee performs the same tasks as a person directly employed by the client.
What does 'same pay' mean for 'same job'?
If a 'same job' situation arises, the host must ensure that the employee receives the 'same pay'. This pay rate includes overtime or penalty rates, casual loadings, monetary allowances, incentive-based payments, bonuses, and other separately identifiable amounts.
Breaching these obligations could lead to severe penalties, with corporate bodies potentially liable for a maximum fine of $82,500 per breach. Further, criminal offences may apply if a host knowingly or recklessly engages an unlicensed provider.
This regulatory landscape is continually evolving, and staying informed is essential. Here at Ignite HR, we are committed to providing timely updates and guidance on these changes and adapting to these shifts with as little disruption as possible.
As always, don't hesitate to reach out if you need further clarification or assistance.
