#changetherules & ‘Australia needs a pay rise’ rallies – what are they all about?

Featured

Today, the Australian Council of Trade Unions (ACTU) held large protest rallies in Melbourne, Sydney and other cities as part of a program of protests occurring around the country this month. The union movement is seeking to highlight its concerns about various inter-connected issues: wage stagnation, insecure work, exploitation of vulnerable workers through ‘wage theft’ and the nature of Australia’s regulatory framework for the relationship between businesses, workers and unions.

Under the banners of ‘Australia needs a pay rise’ and #changetherules, the ACTU argues that the Fair Work Act 2009 provides insufficient support for unions to do their job: organising and representing workers, and bargaining to improve pay and conditions. For the union movement, while the legislation does enable collective bargaining to occur, there are too many impediments: limits on their access to work sites, procedural and substantive ‘hoops’ to jump through in order to take strike action, and a focus on bargaining at the level of the individual ‘enterprise’.

The last of these is a particular bug-bear, as unions argue the economy has changed fundamentally since enterprise bargaining was introduced in the early 1990s. Capital has constantly re-invented itself through a range of complex business models, so unions want to be able to bargain across newer incarnations such as franchise structures, supply chains and ‘gig economy’ platforms.

For employers and the business community, unions have all the legislative rights they need (the Fair Work Act was, after all, introduced by the last Labor Government and has been amended very little in the last ten years). Despite this, business groups contend, private sector union membership in Australia has fallen to below 10% so workers are voting with their feet when it comes to joining unions.

As we head towards the 2019 federal election, the current debate around workplace reform in Australia is shaping up to be as significant as the last major contest of ideas in this area: the ACTU’s ‘Your rights at work’ campaign of 2006-07, and the change of government which it precipitated following the Howard Government’s radical Work Choices experiment.

I’ll use this blog to examine the issues more closely as the debate unfolds over coming months …

 

Advertisements

The Labour Law Down Under Blog site has a new home: https://labourlawdownunder.com.au/

This Blog site was refreshed, upgraded and relaunched on 10 March 2019.

Visit the new site at: https://labourlawdownunder.com.au/ for the latest news and opinions on all aspects of Australian workplace relations, employment and labour law.

What shall we do about labour hire?

This is an edited version of my presentation to the Australian Labour Law Association National Conference on the Gold Coast, 10 November 2018, updated to reflect some recent developments.

Throughout the Victorian Government Inquiry into Labour Hire (conducted in 2015-16), it became apparent to me that there are two sets of issues – relating to different sectors of the labour hire market – that need to be addressed.

First, there are blatantly exploitative practices by what I regard as ‘rogue’ labour contractors.

  • The regulatory response here is predominantly the introduction of licensing schemes to prevent disreputable operators from entering the market.

Second, there are different problems in what I regard as the ‘mainstream’ or reputable part of the labour hire industry. These issues have been created by the shift, since the inception of staffing agencies 20-30 years ago, from their original purpose in helping businesses source supplemental labour – to the increasing reliance on labour hire almost as a replacement of the permanent workforce.

  • The regulatory response in this case is evolving in a more piecemeal manner – examples include the recent decision in WorkPac Pty Ltd v Skene [2018] FCAFC 131 giving annual leave entitlements to continuous labour hire casuals, and the federal Labor Opposition’s policy to introduce the principle of ‘equal treatment’ for labour hire workers.

Exploitation by rogue labour contractors or ‘gangmasters’

Let’s look at the exploitative end of labour hire first. In recent years we’ve seen the emergence of disreputable labour hire contractors – especially in industries like horticulture, meat processing and cleaning.

Labour hire is used extensively in the fresh food supply chain. Australia’s Working Holiday Visa scheme is specifically designed to provide this transient labour force.

(See my recent post on changes to this visa program which are likely to increase the scope for exploitation of overseas backpackers: https://labourlawdownunder.wordpress.com/2018/11/06/governments-changes-to-working-holiday-visas-ignore-widespread-evidence-of-exploitation/)

Workplace law contraventions involving these workers, as well as international students and (to a lesser extent) Australian nationals, frequently arise when third party contractors are involved in supplying workers.

  • These operators take advantage of technology to shield themselves from identity – e.g. by use of a mobile phone and internet ads, with no physical place of business or way of tracking them down.
  • Therefore there’s little prospect they’ll be pursued by the Fair Work Ombudsman (FWO) and other regulatory agencies.
  • Exploitative practices include underpayment of award wages; sub-standard accommodation; dangerous conditions, e.g. on farms and in meat processing plants; dangerous transportation to work sites; failure to properly deal with workplace injuries; and ‘cash-in-hand’ arrangements.
  • Much evidence in recent years has confirmed all of this: investigations by the FWO, reports by several federal Parliamentary committees, three state labour hire inquiries and a growing body of academic research.

(The term ‘gangmasters’ has also been used to describe the operators who engage in these forms of exploitation in the United Kingdom, see: http://aph.org.au/history-repeats-regulatory-responses-to-industrial-era-gangmasters-and-modern-day-worker-exploitation/)

The main regulatory response has been the introduction of labour hire licensing schemes in Queensland, South Australia and Victoria.

  • The rationale behind licensing is that entry to the labour hire sector is far too easy. Therefore, some barriers are needed to prevent unscrupulous operators from acting as providers of labour hire services.
  • These new state laws require labour hire providers to meet strict standards before they can obtain a licence to operate.
  • They need to show they are operating a legitimate business (including a ‘fit and proper person’ test for key office-holders) – and that the business is compliant with awards, other workplace and safety laws, and accommodation requirements.
  • Significant penalties apply to those operating without a licence, and to host users of the services of unlicensed providers.
  • At present, only the Queensland scheme has fully commenced. In Victoria, the Labour Hire Licensing Authority has been established but the licensing requirements don’t come into effect until November 2019.
  • Regrettably, it looks like the SA scheme will not come into operation at all. The Marshall Liberal Government has introduced a bill to repeal the former Labor Government’s legislation, arguing that it doesn’t sufficiently address worker exploitation. But how would anyone know? Labour hire licensing hasn’t been given an opportunity to operate in SA, much less having a period during which its effects might be monitored and assessed.

In practical terms, a lot of the focus has been on how the state licensing laws define the kinds of ‘labour hire services’ that are covered by the new requirements.

  • The breadth of these definitions, especially in Queensland, has meant that many arrangements that on their face involve ‘the supply of an individual to perform work’ to another party are caught – even though they are not conventionally understood as labour hire arrangements.
  • Much of this has been addressed through regulations in Queensland and Victoria, which exclude things like secondments and transfers of employees within corporate groups from the operation of their labour hire licensing laws.
  • There are still some anomalies. However it’s difficult, when crafting legislation intended to address unscrupulous practices, to specifically target only the illegitimate operators.

These definitional issues might be ironed out if the federal Opposition gets an opportunity to implement its proposal for a national labour hire licensing scheme, after the next election.

Addressing the differential treatment of labour hire workers

Moving now to what I described earlier as the mainstream labour hire sector, many problems have arisen for workers because of the evolution of labour hire from a strategy for businesses to ‘plug gaps’ – to a way of replacing permanent workers.

We can see this in the strategy utilised by Amazon, which is reportedly almost 100% reliant on labour hire agencies to provide staff for its new ‘fulfilment centre’ in Dandenong in Melbourne’s south-east.

(See the Sydney Morning Herald’s coverage at: https://www.smh.com.au/business/workplace/in-amazon-s-hellscape-workers-face-insecurity-and-crushing-targets-20180907-p502ao.html)

In the Victorian Inquiry, I heard evidence from many reputable labour hire companies – the likes of Adecco and Chandler Macleod.

Often these kinds of providers pay above-award rates of pay, sometimes even the site EBA rates – and they have good processes for safety inductions and monitoring at the host site.

But workers for mainstream labour hire companies gave evidence of significant disadvantages they suffer from this form of engagement, including:

  • Ending up as a long-term casual employee (often at the same site for several years)
  • Being on-call and reluctant to refuse work, even when required at short notice
  • No ability to plan care and family responsibilities
  • No certainty of income and therefore inability to meet mortgage or rental payments
  • Blurred responsibilities between their labour hire employer and the host (which plays out in a range of areas, e.g. unfair dismissal, OHS, managing return to work from injuries)
  • Working alongside direct employees but on lower pay rates because they’re not covered by the host’s EBA

I found that ‘many workers accept labour hire engagements as the only choice open to them [but] would prefer permanent positions’. I also observed that labour hire staff are in many ways treated like a ‘second class’ of worker.

Given the constraints on Victorian legislative power, there were limited options open to the Inquiry to address any of this. I recommended the adoption of an industry Code of Practice, to promote best practice arrangements on issues like rostering arrangements and processes leading to dismissal. Clearly there are limits on the effectiveness of a voluntary code to address these problems for labour hire workers.

In considering more robust regulatory responses, we need to understand that the metamorphosis in the nature of labour hire over the last 30 years is the result of a deliberate business model to make work more temporary. This is not only an Australian phenomenon. As a new book by US scholar Louis Hyman illustrates, it originated in the home of free enterprise but has caught on globally.

(See ‘Temp: How American Work, American Business, and the American Dream Became Temporary’, available at: https://www.penguinrandomhouse.com/books/554240/temp-by-louis-hyman/9780735224070/)

We also need to see that labour hire forms part of the broader strategy of businesses to distance themselves from responsibility for minimum employment standards – what Professor David Weil of Brandeis University calls the ‘fissuring’ or work.

However we are now seeing some indications of a backlash against the modern incarnation of labour hire in Australia.

One sign of this is the WorkPac v Skene decision, where the Full Federal Court dealt with the applicability of National Employment Standards (NES) entitlements to a labour hire casual (keep in mind that around 80% of labour hire workers are engaged as casuals).

  • The Full Court found that in determining whether a casual employee is entitled to annual leave under the NES, their contractual designation as ‘casual’ and receipt of a casual loading is not definitive.
  • Where a casual employee can show they were engaged with a firm advance commitment to continuing work according to an agreed or fixed pattern of work, they are entitled to annual leave (or payment out on termination). (See: http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCAFC/2018/131.html)
  • The decision has implications for other NES entitlements currently denied to casuals, e.g. personal/carer’s leave, paid compassionate leave, & redundancy pay.
  • That’s as things stand – there’s another WorkPac test case now before the Federal Court. The federal Government is supporting the company’s argument that a casual employee was a true casual at common law, and therefore not covered by NES entitlements; alternatively, that his 25% loading included clear offsets of 11% for annual leave & 5% for personal/compassionate leave.

Then there is the federal Opposition’s policy on labour hire, announced in July:

  • If elected in May next year, the ALP will require that labour hire workers receive the same pay and conditions as directly employed workers they work with – and protect directly employed workers from being replaced by labour hire staff.
  • No detail has been given about how these major reforms would be implemented.
  • For example, would ‘equal treatment’ be achieved through an automatic extension of a site EBA to any labour hire staff engaged at the host business? Or would it be necessary for employees to prove they are doing comparable work to that of the direct employees?
  • Would there be an outright prohibition on the dismissal of the host’s direct employees, where this is to be followed by the engagement of agency workers to perform the same work (something like the current prohibition in section 358 of the Fair Work Act on termination of an employee and re-engagement as a contractor)?
  • Or could we see some kind of workforce cap imposed on the number of labour hire workers in a particular business or workplace, such as the 20% limit that applies under Italian law?
  • Labor has also said that its policy won’t affect small businesses using agencies to source workers on a temporary basis or to provide specialist skills.

What we can see here is an objective of returning the concept of labour hire to its original purposes.

This would clearly present a major disruption to the labour hire business model that has developed in recent years in Australia.

Not surprisingly, business groups have been very active in defending what they see as the legitimate use of labour hire.

But in an interesting twist this week, Coalition members of a House of Representatives Committee examining the mining industry and regional economies have supported recommendations to address the rising use of casual labour hire by resource sector businesses.

They want a review of current arrangements ‘with a view to amending the Fair Work Act, in order to prohibit the move towards replacing directly-employed, full time workers with “permanent casual” employees, and other similar casualised employee types’. This is not far off federal Labor’s policy position!

With the ACTU pushing for the right of unions to bargain with host businesses (rather than just the direct labour hire employer), we’re going to see a lot more focus on this area as we head into next year’s election.

Overall, there is a need not just to address the exploitative end of labour hire through licensing – but also to ‘call time’ on the long-term entrapment of labour hire employees in insecure work and second class treatment in the workplace.

 

 

New ABS figures show Australian unions have halted membership decline, but the battle is far from over

Australian Bureau of Statistics (ABS) data published today show that union membership density has remained essentially the same over the last two years.

(ABS, Characteristics of Employment, Australia (Cat. 6333.0, August 2018), see: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6333.0Main+Features1August%202018?OpenDocument)

15.5% of the nation’s workforce were trade union members in August this year, down only fractionally from the 15.6% figure in August 2016.

In 1992, 40% of Australian workers were in unions. The decline since then has been precipitous, and consistent with the experience in many comparable countries. However we are now seeing a slowing of the rate of falling union membership.

The 2016 and 2018 statistics are quite consistent in relation to who joins unions. As the ABS’s Chief Economist said today, union members ‘are more likely to be over 40, female, and working full-time’.

(see: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/6333.0Media%20Release1August%202018?opendocument&tabname=Summary&prodno=6333.0&issue=August%202018&num=&view=)

Across both years’ data sets, union membership was highest in the education and training, public administration and safety, and electricity/gas/water/waste industries; and (in terms of occupational groupings) among professionals, machinery operators and drivers, and community and personal service workers.

So why is union membership stabilising? The ABS figures don’t tell us this, but the reasons could include that unions have clearly made inroads in appealing to women workers and professionals – two groups that were historically less inclined to join.

The last few years have also seen heightened attention on ‘wage theft’ and wage stagnation (on the latter, see a new book – also published today – on The Wages Crisis in Australia, co-edited by Andrew Stewart, Jim Stanford and Tess Hardy: https://www.adelaide.edu.au/press/titles/wages-crisis/).

In light of these developments, for some workers the value of union membership may have become more obvious. And the ABS figures illustrate the continuation of the union ‘wage premium’ (median earnings for union members were $1300 per week compared with $1025 for non-members).

The union voice has also been much more prominent, at least over the last 18 months as Sally McManus has elevated the ACTU’s #changetherules campaign in the national debate.

But several other features of today’s data hammer home why the union movement still has a long road ahead. Casuals now make up 25% of Australian employees; labour hire employees, 4%; and 8% of workers are independent contractors.

So the challenge remains, as an Italian observer recently put it in the context of the gig economy, to ‘organise the unorganisable’.

(Lorenzo Zamponi, ‘Bargaining with the Algorithm’, Jacobin (June 2018), see: https://www.jacobinmag.com/2018/06/deliveroo-riders-strike-italy-labor-organizing)

One gets the sense, though, that Australian unions are more up for the fight than they have been in quite a while.

Victoria votes: a guide to the major parties’ 2018 election policies on work and industrial relations

(Photo above: Victorian Trades Hall Council, 15.11.18, advertisement supporting Labor proposal for industrial manslaughter offence under Victorian law)

Ahead of the state election on Saturday 24 November, I thought a quick look at the positions of Labor, Liberal and the Greens on workplace issues might be useful.

Labor

Given that Victoria has referred most of its legislative powers over industrial relations to the Commonwealth, the state Labor Government has had a busy agenda in this area over the last four years. The following are among the key measures implemented since 2014:

Further policy commitments announced by Labor include:

  • Criminalising ‘wage theft’: Labor will pass legislation to impose criminal liability upon employers who deliberately withhold wages, superannuation or other employee entitlements (or falsify employment records). The penalties will include maximum fines of almost $200,000 for individuals, just under $1 million for corporations, and up to 10 years’ imprisonment. (see: https://www.premier.vic.gov.au/dodgy-employers-to-face-jail-for-wage-theft/) The arguments about the need to address underpayments through new forms of liability, in addition to those currently found in the federal Fair Work Act, are examined in a recent paper by University of Melbourne academics Professor John Howe and Melissa Kennedy, which also considers some of the constitutional barriers to implementing a state wage theft law. (see Kennedy’s shorter article on the issues here: https://pursuit.unimelb.edu.au/articles/can-victorian-labor-really-make-wage-theft-a-crime?)
  • Introducing an industrial manslaughter offence under the Occupational Health and Safety Act: according to the Premier, ‘[e]mployers whose negligence leads to the death of an employee will face up to 20 years in jail under tough new laws to be introduced by a re-elected Andrews Labor Government.’ (see: https://www.premier.vic.gov.au/workplace-manslaughter-laws-to-protect-victorians/)
  • Holding a review of the private security industry to crack down on ‘dodgy operators’ (see Workplace Express, 6 November 2018).
  • Public sector bargaining: reintroducing a bill to overcome the limitations in content of enterprise agreements for Victorian departments, agencies, etc arising from the 1995 decision in Re AEU (see Workplace Express, 21 November 2018).

Liberal

It hasn’t been easy to track down specific policy commitments from the Liberal Party on employment issues.

Shadow Minister Robert Clark’s website (http://www.robertclark.com.au/robert/about-robert/) has few recent media releases on industrial relations. Mostly these relate to IR issues in the fire services (see below), or concerns about union behaviour in various industrial disputes over the last few years.

It was noted in Melissa Kennedy’s article (see above) that on 24 July this year, Mr Clark indicated that while the Liberals hadn’t yet decided whether to support imprisonment for deliberate underpayments, he would prefer to see wage theft dealt with by the FWO under federal law.

The Opposition has announced a firm commitment to hold a Royal Commission into Victoria’s fire services. This is a response to the Andrews Government’s handling of employment relations, and particularly the negotiation of new enterprise agreements, for the Country Fire Authority (CFA) and Metropolitan Fire Brigade (MFB). The Liberal policy states that:

A Liberal government will respect and protect the CFA and its volunteers. We’ll end Labor’s attempts to give control over the CFA to the firefighters union. We’ll hold a Royal Commission to get to the bottom of the bullying, intimidation and manipulation that’s entrenched in our fire services. We’ll give CFA volunteers the same rights to cancer compensation as paid firefighters, and we’ll legislate to guarantee the rights of CFA volunteers and strengthen the Volunteer Charter.

(see: https://getbackincontrol.com.au/respecting-the-cfa-and-volunteers/)

The proposed CFA agreement featured heavily in the last federal election campaign in 2016, and led to the Turnbull Government implementing special legislation to shore up the position of volunteer firefighters (Fair Work Amendment (Respect for Emergency Services Volunteers) Act). The proposed MFB agreement has also been controversial and is now before the Fair Work Commission for approval. The federal Government intervened in those proceedings to oppose approval.

Greens

The Greens have outlined the following positions on employment and industrial relations (see IR spokesperson Nina Springle’s site here: https://greens.org.au/vic/person/nina-springle/portfolios#ir):

The cost of living in Victoria is on the rise, and at the same time, job insecurity has never been higher. The Greens are committed to transitioning to a greener, jobs-rich economy; supporting workers’ rights in a changing economy; [and] tackling the gender pay gap …

Victorian governments have failed to keep pace with the changing nature of work, from dramatic increases in labour hire, to the rise of the gig economy. The Greens are committed to ensuring that workers rights are protected wherever they work, and that people’s livelihoods are not left at the mercy of markets that too often focus on maximising profits at the expense of workers.

These fairly general statements of principle can be viewed in a broader context: at the federal level, the Greens are currently pushing Labor to commit to a more robust system of industry-based bargaining (rather than limiting access to sectoral bargaining to low-paid workers).

In other words, the Greens are pitching themselves as ‘truer’ to union values than Labor, as they have often done in the past.

(see the Greens’ national Employment and Workplace Relations policy here: https://greens.org.au/policies/employment-and-workplace-relations)

What will happen?

Aside from the policies, one thing is clear: as in 2014, Labor and the union movement are in sync (the UFU aside), with union activists campaigning hard on the ground for the re-election of the Andrews Government. Trades Hall and its supporters get ever-more adventurous with their campaigning, handing out ‘(mis)fortune cookies’ and ‘lucky lobster scratchies’ at train stations around Melbourne in the last few weeks (including some deep in Liberal heartland).

The ABC has looked closely at Labor’s wage theft proposal and the Liberal Party’s position on this issue, here: https://www.abc.net.au/news/2018-11-19/underpaid-workers-call-bosses-to-be-jailed-victoria/10505482

And for more insightful analysis than I’m capable of about what might actually happen on election night, see Tim Colebatch’s article published on Inside Story, here: https://insidestory.org.au/is-victoria-reverting-to-type/

Foodora case: first definitive Australian ruling that a gig worker was an employee

The Fair Work Commission (FWC) has determined that former Foodora delivery rider, Josh Klooger, was an employee whose employment was terminated unfairly.

(Klooger v Foodora Australia Pty Ltd [2018] FWC 6836, 16 November 2018, see: https://www.fwc.gov.au/documents/decisionssigned/html/2018fwc6836.htm)

This is the first time that an Australian tribunal or court has determined in favour of the employment status of a platform worker, following two previous FWC rulings that Uber drivers were independent contractors.

(see: https://labourlawdownunder.wordpress.com/2018/10/27/what-does-collective-representation-look-like-in-australias-gig-economy/)

The Foodora case is all the more interesting in the wake of the company’s sudden departure from the Australian market in August this year.

Mr Klooger was perhaps not an entirely typical food delivery rider: at various times during his relationship with Foodora, he progressed from regular delivery work to operating a ‘substitution scheme’ (enabling other riders to work via his Foodora account) and was later employed full-time as a ‘Driver Manager’.

However the relationship soured when he began engaging in activism on behalf of Foodora riders, including through the media and the Transport Workers Union (TWU), in early 2018.

In his ruling, addressing Mr Klooger’s work as a regular rider, Commissioner Cambridge of the FWC applied the well-established common law ‘multifactorial test’ to the circumstances of the relationship between the parties.

Employee or contractor?

Key factors informing the FWC’s conclusion that Mr Klooger was an employee included the following (emphases added):

The service contract [although designating him as a contractor] contains many provisions which are similar in form and substance to those that would ordinarily be found in an employment contract document. The service contract contains clauses dealing with, inter alia, rostering and acceptance of jobs, the attire that is to be worn during the performance of services, the specific nature of the engagements to be undertaken including requirements that the putative contractor is to comply with all policies and practices of the principal, treating all reference to ‘employees’ as a reference to “the contractor”. [para 72]

Foodora had considerable capacity to control the manner in which the applicant performed work, and it fixed the place of work and the start and finish times of each engagement or shift. The control that Foodora possessed and exercised over the manner in which the applicant performed work was reflected by the metrics that were used in the batching system which ranked the work performance of inter alia, the applicant. The operation of the batching system meant that in order to maintain a high ranking the applicant would be required to perform a certain number of deliveries during any particular engagement, to work a minimum number of shifts in a week, and work a number of Friday, Saturday or Sunday nights. [para 73]

The applicant did not have a substantial investment in the capital equipment that he used to perform his delivery work. The bicycle that he used for delivery work was also used generally for non-work-related bicycle activities. [para 78]

… [T]he substitution scheme operated in clear breach of the service contract, and in one case at least, it apparently facilitated the performance of work contrary to Australian Law. Foodora should not have permitted the operation of the substitution scheme. In these circumstances, the substitution scheme, as an example of sub-contracting, should not represent a proper or acceptable basis for validation of the characterisation that should be determined for the relationship between the applicant and Foodora. [para 87]

Foodora presented the applicant to the world at large as an emanation of its business. Clause 4 of the service contract established an expectation that the applicant would dress in Foodora branded attire, and utilise equipment displaying the livery of the Foodora brand. [para 89]

In conclusion:

… the applicant was not carrying on a trade or business of his own, or on his own behalf, instead the applicant was working in the respondent’s business as part of that business. The work of the applicant was integrated into the respondent’s business and not an independent operation. The applicant was, despite the attempt to create the existence of an independent contractor arrangement, engaged in work as a delivery rider/driver for Foodora as an employee of Foodora. [para 102]

Unfairly dismissed?

Having established that Mr Klooger was an employee, the FWC next considered the merits of his unfair dismissal claim. It was found that Foodora’s claimed justification – that it ended his engagement because he would not hand over administrator control for the Melbourne rider chat group in breach of the IP provisions in the service contract – lacked a proper basis.

Rather, the evidence showed that:

… the substantive and operative reason for the dismissal of the applicant was his conduct involving public agitation and complaint about the terms and conditions that Foodora imposed on its delivery riders/driver, particularly culminating in the applicant’s appearance on the television program “The Project”. [para 112]

Further, the process by which Mr Klooger’s services were ended (abruptly, by email and without warning), was plainly unjust and manifestly unreasonable.

Given that reinstatement was not possible as the employing entity is now in voluntary administration, the FWC awarded him compensation of A$15,559.

Broader implications

The FWC also made these more general observations, which may be interpreted as putting other gig platforms on notice that their ‘contracting model’ (i.e. putative assumption of workers having contractor status) will be questioned in future cases:

As in this case, the corporation (Foodora) stipulated the requirement for individuals to obtain an Australian Business Number and to create, at least the appearance, that the individual operates a business of their own. The corporation then avoids the many responsibilities and obligations that it would normally have as an employer. The responsibility for compliance with many important regulatory obligations including but not limited to taxation, public liability insurance, workers compensation insurance, statutory superannuation, licensing and work health and safety, is transferred from the corporation to the putative contractor. [para 105]

Contracting and contracting out of work, are legitimate practices which are essential components of business and commercial activity in a modern industrialised economy. However, if the machinery that facilitates contracting out also provides considerable potential for the lowering, avoidance, and/or obfuscation of legal rights, responsibilities, or statutory and regulatory standards, as a matter of public interest, these arrangements should be subject to stringent scrutiny. Further, if as part of any analysis involving the correct characterisation that should be given to a particular relationship, an apparent violation of the law, or statutory or regulatory standards is identified, as a matter of public interest, any characterisation of the relationship which would avoid or minimise the likelihood of such violation should be preferred. [para 106]

This precedent is an important one, and is likely to lead to more cases being launched by or on behalf of gig workers. A number of Australian unions are actively seeking to represent the interests of these workers, although we are yet to see a case establishing collective bargaining rights like the High Court appeal involving Deliveroo heard in the UK this week.

(see: https://www.theguardian.com/business/2018/nov/14/deliveroo-riders-rights-court)

There was speculation, when Foodora ‘flew the coop’ a few months ago, that the prospect of this unfair dismissal ruling and the commencement of enforcement proceedings by the Fair Work Ombudsman (since discontinued) were pivotal factors in the company’s decision to leave.

The company also faced significant potential tax liabilities. It was reported recently that the Australian Taxation Office has ruled that Foodora workers were employees (according to the company’s administrators: see Workplace Express, 9 November 2018).

On the same day as the FWC’s unfair dismissal decision was handed down, Foodora riders agreed to a proposal by the German parent company Delivery Hero of an A$3 million part-payment of their outstanding debts (see Workplace Express, 16 November 2018).

Under pressure from the TWU, the Federal Government has made its most critical comments of a platform operator to date. Jobs Minister Kelly O’Dwyer stated that:

… Delivery Hero, must do the right thing and meet all the entitlements owed to riders …

There are no excuses for companies treating genuine employees as contractors.

Delivery Hero has a moral obligation to ensure all Foodora riders receive their full entitlements and I’ve asked my Department to look at all legal options to hold them accountable for payments due to any riders found to have been employees.

(reported in Sydney Morning Herald, 16 November 2018, see: https://www.smh.com.au/business/workplace/foodora-creditors-vote-to-accept-less-than-half-of-debts-claimed-20181116-p50gic.html)

Foodora’s legacy in Australia may well end up being two-fold: not only has it has left other platforms with an unhelpful precedent, it has stirred the political pot in a pre-election context which could result in legislative amendments to address the concerns unions are highlighting about gig work.

Labor will get rid of the federal Building Code

Last weekend it was reported in The Australian that the federal Opposition will replace the Code for the Tendering and Performance of Building Work 2016, with a new set of procurement guidelines for the construction industry focused on safety standards and apprenticeships.

This follows an earlier announcement that Labor will abolish the specialist industry regulator, the Australian Building and Construction Commission.

Cast your mind back to the last election in 2016. The Coalition’s legislation to ‘restore the rule of law’ through re-establishment of the ABCC was one of the triggers for the double dissolution poll (see: https://theconversation.com/explainer-what-are-the-abcc-and-registered-organisations-bills-56676). However, regulation of the building industry hardly featured as an issue during the campaign.

The re-elected Turnbull Government secured passage of the ABCC bill through Parliament in late 2016, a victory for then-Employment Minister Michaelia Cash. The 2016 Code followed soon after, a further measure to loosen the powerful grip of the Construction, Forestry, Mining and Energy Union.

The Code requires companies seeking to be selected for federally-funded building projects to comply with detailed requirements, including ensuring that their enterprise agreements do not include ‘union-friendly’ clauses or other provisions that limit workplace flexibility and productivity.

This is a ‘soft law’ mechanism which attempts to use the disincentive of ineligibility to tender for lucrative construction contracts in order to bring about cultural change, and in particular, to prevent companies from bending to the will of the CFMEU.

In an article published in the Sydney Law Review earlier this year, I contended that the Code (and the broader Coalition scheme for construction industry regulation) is grounded in a narrow view of the concept of the rule of law which stresses the need for compliance with legal rules. The Coalition takes aim at the ‘lawlessness’ in this sector typified by the CFMEU’s disregard for legal restrictions on industrial action and union rights of entry to building sites.

I also made the following observations:

… in many more respects, the 2016 Code has nothing at all to do with the rule of law. Rather, it seeks to promote other aspects of the Government’s workplace relations agenda, particularly its desire to dilute the power and influence of trade unions. …

Arguably, the 2016 Code is the Coalition Government’s most potent statement of anti-union intent — especially the extensive attempts to preclude union involvement in the workplace through the agreement content restrictions and freedom of association requirements. These provisions of the 2016 Code go well beyond ensuring neutrality in the choice presented to employees as to whether they should join a union or become involved in union activities (or not). Rather, the 2016 Code restrictions seek to prevent employers from offering any support for, or tolerance of, union involvement in the workplace — right down to prohibiting the display of union flags or symbols and union involvement in employee inductions — under the pain of possible ineligibility for Commonwealth-funded building work.

(see: http://www8.austlii.edu.au/cgi-bin/viewdoc/au/journals/SydLawRw//2018/4.html)

Sure enough, in February this year, the ABCC issued guidance on interpretation of the Code which sought to ban the display on building sites of ‘images generally attributed to, or associated with an organisation [i.e. union], such as the iconic symbol of the five white stars and white cross on the Eureka Stockade flag’.

It’s seriously removed from the reality of how this industry works to think that imposing a ban on union flags on cranes and Eureka insignia on hard-hats will change anything. As I concluded in the article:

… the special scheme of construction regulation has been in place for almost 15 years without any real change in the nature of industrial relations practices on building sites.

When last in government, Labor angered construction unions by maintaining separate regulation of the industry through a watered-down version of the Howard-era regulator. Shorten Labor is seeking to make a more fundamental shift that is in tune with the broader union narrative of the need to #changetherules.

Cochlear and ResMed disputes highlight limitations of the Fair Work Act collective bargaining system

In a recent post, I started to examine the last ten years of enterprise bargaining in Australia through the lens of the recently published book Collective Bargaining under the Fair Work Act. (see: https://labourlawdownunder.wordpress.com/2018/11/01/how-do-things-look-after-almost-a-decade-of-collective-bargaining-under-the-fair-work-act/)

I explained that a combination of legislative design flaws, unhelpful judicial interpretations and deliberate employer strategies have contributed to the fall in collective agreement coverage since the 2009 legislation came into effect.

All these factors are present in the case studies of the Cochlear and ResMed disputes that are the main focus of my chapter in the book, co-authored with Professor Bradon Ellem of the University of Sydney Business School.

We wanted to consider whether the Fair Work Act has been effective in preventing US-style ‘union-busting’ in Australia.

Many years of experience has shown that, in systems where the right to engage in collective bargaining is dependent on showing majority employee support through a workplace ballot, fertile ground is provided for union-busting. That is, vigorous employer campaigning to prevent a union from ever gaining the right to represent employees in bargaining.

The United States system under the National Labor Relations Act is the gold standard of this approach. An entire industry of consultants and lawyers has evolved, devoted to helping employers block union ‘recognition’ drives.

The framers of our legislation seemed to be mindful of this. They gave the Fair Work Commission (FWC) the power to make a majority support determination (MSD) – compelling a reluctant employer to bargain – on the basis of any reliable evidence. Mostly the FWC has relied on union petitions to be satisfied there’s majority support for bargaining among a particular group of employees, with ballots sometimes ordered (e.g. if there’s doubt about the legitimacy of a petition).

So overall, the Australian model has avoided the kinds of anti-union tactics that have undermined collective bargaining in (primarily) ballot-based systems like the US and the UK.

However, our case studies explored two major companies which have still been able to avoid entering into an enterprise agreement – despite the statutory provisions that compel negotiations to occur, and the efforts of the Australian Manufacturing Workers Union (AMWU) to ‘bring them to the table’.

It’s worth noting that these are two quite similar companies in many ways:

  • They are both engaged in high-tech manufacturing for the health care industry: Cochlear’s bionic ear implants, and ResMed’s devices to treat sleep apnoea and other respiratory conditions.
  • They are both located in north Sydney, in or near business parks where many global electronic, bio-tech and pharmaceutical firms have their Australian bases.
  • They have the same kind of attitudes towards human resource management, direct employee engagement and the role of unions.

Cochlear was an emblematic example of employer resistance to bargaining in the Howard era. It was also part of the Rudd Government’s rationale for including the MSD provisions in the Fair Work Act:

  • The AMWU obtained a MSD for the company’s manufacturing workforce soon after the legislation came into effect (August 2009).
  • Cochlear opposed the MSD and raised the prospect of uncertainty in the business if employees voted to involve the AMWU.
  • Almost 60% of employees indicated they supported bargaining in a ballot. Once the FWC issued the MSD, the focus shifted to the negotiation process.
  • The company and the AMWU took around nine months to negotiate a complex ‘bargaining protocol’. The parties then held many meetings and exchanged proposals between 2010 and 2012, but didn’t reach agreement.
  • In 2011, the union applied for an order claiming that the company was going through the motions or ‘surface bargaining’ (among other alleged breaches of the good faith bargaining obligations). Cochlear also alleged bad faith, in the form of the union’s non-adherence to the bargaining protocol.
  • In a lengthy decision in 2012, Commissioner Cargill determined that both parties had fought hard but generally they hadn’t breached the good faith obligations – with some exceptions, e.g. the company at times hadn’t responded to the union’s proposals quickly enough. (see: https://www.fwc.gov.au/documents/decisionssigned/html/2012fwa5374.htm)
  • On the issue of alleged surface bargaining, the Commissioner did not make an order requiring Cochlear to put any proposals to the union, because Justice Flick’s decision in Endeavour Coal Pty Ltd v APESMA prevented this. While negotiating parties must engage genuinely in the process and not simply reject the other party’s proposals, under section 228(2) of the Fair Work Act bargaining representatives do not have to make concessions or ultimately conclude an agreement. (see: http://www7.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2012/764.html)
  • Very little has happened since the 2012 decision. It is understood that the parties have continued negotiating, but there’s still no enterprise agreement at Cochlear.

ResMed has adopted a different, highly litigious strategy to opposing recognition of the AMWU for bargaining and other purposes:

  • The union has been trying to get an agreement for ResMed’s production employees at its Bella Vista site since 2009.
  • The union applied for a MSD in 2012. This triggered extensive litigation between the parties over more than five years.
  • ResMed argued the FWC had no jurisdiction to make a MSD, as the union needed to show (under section 236) that it has the right under its rules to cover all employees who would be subject to a proposed enterprise agreement.
  • The FWC found that a union only needs coverage rights over one employee to act as bargaining representative and obtain a MSD. But ResMed appealed that point all the way to the Full Federal Court (and sought to take it to the High Court, which refused special leave to appeal).
  • ResMed’s other main line of attack has been to challenge the AMWU’s very right to represent the company’s manufacturing workforce under the union’s rules.
  • The company made an application under the Fair Work (Registered Organisations) Act for an order that the union is not to have representational rights over those workers. This was partly based on an argument that the AMWU’s rules relate to employees engaged in ‘old’ metals manufacturing processes, rather than modern bio-tech manufacturing.
  • A Full Bench of the FWC rejected ResMed’s application, and with it, the further argument that a union should only have the right to represent workers if a majority wants that (union representational rights under the Registered Organisations Act are not based on that kind of ‘majoritarian’ principle). (see: https://www.fwc.gov.au/documents/decisionssigned/html/2016fwcfb22.htm)
  • The Full Federal Court rejected ResMed’s appeal, noting there was ‘an air of desperation’ about the company’s arguments.
  • However the point is: the union has had to go to extraordinary lengths, time and expense to prove it has the right to cover workers it has always represented.
  • As we say in the chapter: ‘ResMed’s strategy, lifted straight from the playbook of the most determined US union-busters, has … proved successful: the company has had very few legal wins, but for [nearly 10] years it has avoided sitting down to bargain with the union.’

What lessons did we draw from these case studies?

Most obviously, the cases show that the Fair Work Act can’t prevent determined, well-resourced employers from thwarting union attempts to represent and bargain on behalf of workers. Antipathy to the role of unions is a remnant of the Howard era (think of the big banks, telcos and mining companies) which has not been fully eradicated.

This points to some clear limitations in the legislation itself – e.g. it doesn’t adequately address surface bargaining tactics, and if one party wants to string things out (while technically complying with the good faith bargaining rules) they can do so. There is no end point to negotiations: the limited avenues to arbitration have also arisen as a problem in long-running public sector bargaining disputes at federal and state levels in recent years. ‘Last-resort arbitration’ was rejected by both the 2012 Fair Work Act Review, and the Productivity Commission Review in 2015. However, the Labor Opposition has committed to provide parties with greater access to arbitration in protracted disputes (possibly based on some of the Canadian models). (see: https://theconversation.com/qantas-case-shows-the-need-for-interest-arbitration-4436)

There is another factor – not explored in our case studies – that might also explain the success of these two employer strategies of union non-engagement. This is the question of union strength at the workplace level. Majority support for collective bargaining (and therefore, for the role of the AMWU) has not been definitively tested at ResMed. Although it has at Cochlear, the employees and their union haven’t used the weapon of protected industrial action to pursue their objectives. The company’s past indications that union involvement could jeopardise job security may explain the reluctance of Cochlear production workers to take strike action in support of an agreement. However it perhaps also reflects the union’s limited penetration ‘on the ground’: an issue unions will still have to address, even if the ACTU’s #changetherules campaign leads to favourable legislative changes.