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.

Government’s changes to working holiday visas ignore widespread evidence of exploitation

Yesterday the Federal Government announced an expansion of the visa programs for working holiday makers including overseas backpackers. Many producers in the fresh food supply chain have become highly dependent on these workers in recent years. The changes include:

  • allowing subclass 417 and 462 visa-holders to work with the same agricultural employer for up to 12 months (previously, the limit was 6 months); and
  • enabling these visa-holders to stay a third year in Australia if they undertake specified types of work in regional Australia for 6 months during the second year (previously, only a second year could be obtained if at least 88 days’ regional work was performed in the first year).

(see the Department of Home Affairs’ announcement with further details here: https://www.homeaffairs.gov.au/News/Pages/changes-working-holiday-maker-visa.aspx)

The new visa rules were announced by Prime Minister Scott Morrison on day one of his pre-election tour of Queensland. The PM indicated that the changes, along with others affecting the Seasonal Workers Program (SWP), are about ‘backing agriculture’ and getting Australia’s growers ‘access to the labour they need to ensure their businesses are successful’.

(see the transcript of the PM’s doorstop interview here: https://www.pm.gov.au/media/doorstop-member-forde)

My concern about all this is that the Government has done very little to address the various forms of exploitation that it is widely known are suffered by working holiday makers, as well as international students and participants in the SWP from Pacific nations.

Exploitative practices include underpayment of award wages, sub-standard accommodation, dangerous conditions on farms and in meat processing plants, dangerous transportation to work sites, failure to properly deal with workplace injuries, and ‘cash-in-hand’ arrangements.

A mountain of evidence in recent years has confirmed all of this: investigations and inquiries by the Fair Work Ombudsman, reports by several federal Parliamentary committees, the Queensland and South Australian inquiries into labour hire and my own Inquiry into the Labour Hire Industry for the Victorian Government (see: https://economicdevelopment.vic.gov.au/inquiry-into-the-labour-hire-industry).

There is also now a large number of academic studies on migrant worker exploitation, including the Wage Theft in Silence report released last week by Bassina Farbenblum and Laurie Berg of the Migrant Worker Justice Initiative (see: https://www.mwji.org/).

A common thread in the exploitation of working holiday visa holders is that the 88 day requirement for a second year on the visa has resulted in many overseas backpackers accepting work almost on any terms it is offered or expected.

In other words, they are so desperate to get their employer’s sign off on the 88 days that they will not question obvious underpayment, directions to perform unsafe tasks, or other abuses (if indeed they are aware that their employer is acting unlawfully).

The scope for mistreatment will be enhanced now that the prerequisite for obtaining a third year on the visa is pushed out to a six-month period of work.

To date, the Federal Government’s measures to address worker exploitation have been to increase penalties for serious Fair Work Act breaches, impose liability on franchisors and parent companies for contraventions by the direct employer in certain circumstances, and prohibit ‘cash-back’ payments of the kind identified in the 7-Eleven underpayment scandal. It also established the Migrant Workers Taskforce chaired by Professor Allan Fels AO.

It would have been preferable to see the Government announce some more practical and immediate steps to combat worker exploitation affecting working holiday visa holders – or at least some recognition that the problem exists – rather than simply expanding the scheme for the benefit of regional producers.

A national labour hire licensing scheme would be one such measure, to eradicate the rogue labour contractors who blatantly underpay many backpackers and international students. At present we have new labour hire licensing laws operating in Queensland, partially commenced in Victoria, and on hold in South Australia pending efforts by the Liberal Government to repeal that state’s legislation.

An excellent rating, information and advice website for overseas backpackers looking to meet the 88 day requirement has been set up by the brave Rosie Ayliffe, mother of British backpacker Mia Ayliffe-Chung who was tragically murdered in a Queensland hostel during her time performing regional work in 2016 (see ‘Tom and Mia’s legacy’ here: https://www.88daysandcounting.com/).

How hard would it have been for the Australian Government to set up a website like that?

How do things look after almost a decade of collective bargaining under the Fair Work Act?

Last night I spoke at a seminar for Melbourne University’s Centre for Employment and Labour Relations Law (hosted by law firm Lander & Rogers). Professor Shae McCrystal of Sydney Law School and I were there to talk about our new co-edited book (with Professor Breen Creighton): Collective Bargaining under the Fair Work Act, published by Federation Press (http://www.federationpress.com.au/bookstore/book.asp?isbn=9781760021849).

On the same day, the Business Council of Australia had entered the workplace reform debate – essentially chastising the ACTU for pursuing a divisive agenda through its #changetherules campaign, including a return to industry-wide bargaining (see BCA Chief Executive, Jennifer Westacott’s speech here: http://www.bca.com.au/media/australia-at-work-managing-adjustment-and-change). It’s interesting because the BCA drove the shift to enterprise-based bargaining in the late 1980s/early 90s, with the support of the ACTU under Bill Kelty.

Earlier this week, federal Labor’s Shadow IR Minister Brendan O’Connor indicated that any move towards multi-employer bargaining would be focused on improving outcomes for low-paid workers (‘those who are not getting a fair share’). It seems Labor does not want to make sectoral bargaining generally available, or do anything that might lead to ‘industrial chaos’ (see the transcript of O’Connor’s interview on Sky News here: https://www.brendanoconnor.com.au/news/latest-news/eoe-transcript-tv-interview-sky-news-speers-on-sunday-sunday-28-october-2018/).

Anyway back to our book: most of its content pre-dates the debate triggered by #changetherules, but it does provide an evidence base for some of the concerns that the ACTU has raised about the Fair Work Act bargaining scheme.

Essentially, the chapters in our edited collection seek to address different aspects of this fundamental question: given that the Fair Work Act (at least on paper) provides reasonably strong support for bargaining, how is it that collective agreement coverage has gone backwards in the last 10 years?

Initially coverage rose from just under 40%, to 43.4% of the workforce in 2010 – but then dropped back to 36.4% by 2016. A figure I found quite astonishing is that in 2017, only 13% of all private sector employees were covered by an enterprise agreement – down from 19% in 2013 (based on research by Alison Pennington, Economist at the Centre for Future Work). Although on another view it’s not that surprising, with private sector union membership now sitting at just below 10%.

The book identifies several inter-connected explanations for the legislation’s failure to fulfil its objective of encouraging collective bargaining. They include:

  • design flaws and limitations in the statutory provisions – e.g. the horrible complexity of the low-paid bargaining rules (as a result these have barely been used), and the limited grounds for arbitration of intractable disputes;
  • the tactics and strategies some employers have adopted to avoid entering into an enterprise agreement – or to limit the impact of agreements on their workforce;
  • judicial interpretations which have facilitated employers achieving those goals, such as the Full Federal Court’s 2015 decision in CFMEU v John Holland that gave rise to the ‘small cohort’ agreement strategy (making an agreement with a handful of workers, but with a wide scope so it can later apply to larger groups in others parts of the employer’s business) – and the FWC Full Bench decision (also in 2015) in Aurizon Operations Limited which has led to more employers successfully applying to terminate expired agreements.

We didn’t really set out, in the book, to argue for any particular reforms to address these issues (although some contributors do so in relation to discrete aspects of the system).

In my next post, I’ll use the chapter I wrote with Professor Bradon Ellem of Sydney University’s Business School to start exploring the ‘where next’ question. We did case studies of two long-running disputes – Cochlear and ResMed – which highlight further limitations of the Fair Work Act bargaining system.

These case studies also prompt another question: how much is the recent decline of agreement-making down to the legislation, compared with other factors such as limited union strength ‘on the ground’ in many workplaces?

 

What does collective representation look like in Australia’s gig economy?

I’ve posted below a presentation I gave to the SERI Outreach Conference in May last year. It takes a preliminary look at some aspects of the evolving approach to regulation of the gig economy in Australia – and in particular, how established unions and at least one newer collective worker group are seeking to represent the interests of gig workers.

There have been some significant developments since then, including the following:

  • Two unrepresented Uber drivers have brought unfair dismissal claims, in which it was determined that they were independent contractors (not employees), so their claims could not proceed: Kaseris v Rasier Pacific V.O.F. [2017] FWC 6610; Pallage v Rasier Pacific Pty Ltd [2018] FWC 2579
  • Foodora departed from Australia in August 2018. It was facing the prospect of an unfair dismissal claim (which is still proceeding against the company’s administrators), and an investigation by the Fair Work Ombudsman, both of which would set important precedents on the employment status of food delivery riders.
  • The Victorian State Government recently established an Inquiry into the On-Demand Workforce: https://www.premier.vic.gov.au/new-inquiry-to-investigate-the-gig-economy/

The discussion below highlights examples of efforts to provide collective voice and representation for workers engaged in platform work. I’m collecting evidence of more recent examples so there will be further posts on this topic.

 

The Future of Work in Australia: Balancing Innovative Service Provision
and the ‘Social Licence to Operate’

Professor Anthony Forsyth, RMIT University Law School, Melbourne

Presentation for the 2017 SERI Outreach (Annual Conference on International Comparisons) – ‘Is my employer an algorithm? Does Uber redefine the employer’s notion? Protections in Gig-Economy and Post-Industrial Corporations’

Scuola Europea di Relazioni Industriali and Economia&Lavoro, Rome, 18-19 May 2017

Introduction

The gig economy has definitely arrived in Australia. Global players like Uber, Deliveroo and Foodora have established Australian operations in the last few years – while local brands such as Airtasker have also emerged to occupy a significant place in the ‘gig’ market-place.

The evolution of platform-based work presents unique challenges in Australia because of our strong tradition of protecting minimum employment standards. The ‘triple-level’ approach – National Employment Standards for all employees, modern awards applying at sectoral level, and enterprise-specific collective agreements – is distinct. It has the potential, along with protective regulation of workplace health and safety, workers’ compensation and superannuation entitlements, to put a handbrake on the innovation that is occurring in the expanding gig economy.

As in other countries, gig companies have established in Australia on the basis of a contracting model – i.e. an assumption that the people they engage to provide services are independent contractors. However in a country with a long-standing legacy of fair treatment in the workplace (our principal statute is called the ‘Fair Work Act’), there was always going to be a backlash.

The position gig operators have adopted on employment rights raises a number of broader questions. First, as International Trade Union Confederation General Secretary Sharan Burrow recently put it – in the context of the imminent arrival in Australia of Amazon – there is the issue of the ‘social licence to operate’ (she questioned whether Amazon in other countries ‘was doing enough to respect workers’ rights, safety and paying enough tax’).[1]

Secondly, there is what I describe as the ‘regulatory conundrum’ of achieving a balance between social protection and fostering innovation – or as the European Commission has put it, the collaborative economy can ‘make an important contribution to jobs and growth … if encouraged and developed in a responsible manner’.[2]

I will illustrate exactly what ‘responsibilities’ arise in the context of Australian employment law – and how unions are responding to the rapid growth of gig work – before addressing the broader issues highlighted above.

Overview of Australian labour relations and the regulatory framework

First, some brief background, briefly, about the Australian system of labour regulation. For most of the last century, we have had a very strong framework of protection for employees and support for trade unions – when compared with many other countries.

The Fair Work Act 2009 provides 3 inter-connected sources of minimum employment rights:

  1. National Employment Standards (NES):
  • 10 statutory entitlements for all employees – these include various leave entitlements (e.g. 4 weeks’ paid annual leave), the right to advance notice of dismissal, and severance pay
  1. Modern Awards:
  • a legal mechanism for setting wages and employment conditions across entire industries (there are 122 modern awards in operation)
  • e.g. in relation to food delivery workers, the relevant modern award (if they are classified as employees) is the Road Transport and Distribution Award 2010
  • modern awards set down a further 10 minimum terms and conditions (in addition to the NES), including minimum wages; regulation of hours of work and rostering; additional payments for overtime/weekend work (known as ‘penalty rates’, e.g. 1.5 times the hourly rate of pay – these have been very important traditionally in Australia, but are now under pressure with the shift to a 24/7 economy)
  1. Enterprise Agreements
  • the ability to make an agreement to apply for ‘all or part of a single business’ was introduced in the early 1990s (essentially, to give employers the opportunity to vary industry-level award conditions, and obtain flexibility leading to improved productivity at firm-level)
  • given that most gig operators treat their workers as contractors, not employees, this form of regulating wages and employment conditions is not really relevant at this stage (but it could be as unions increasingly seek to represent these workers)

There are two key institutions which have a role in the Fair Work system:

  • Fair Work Commission (FWC) – as well as settling a wide range of employment disputes, the FWC sets the national minimum wage to apply from 1 July each year (now A$17.70/hour = €11.98 or A$672.60 for a 38-hour week, standard for full-time employees, = €455.24)
  • Fair Work Ombudsman (FWO) – provides advice and information about employment rights and obligations, but more importantly is responsible for enforcing the NES and awards; FWO could therefore investigate and bring enforcement proceedings on behalf of any workers in the gig economy, if it can be established they are employees (with the potential for recovery of up to 6 years’ underpayment and civil penalties)

The upshot of all this is that the stakes are very high for gig companies – their business model would be significantly undermined if workers were categorised as employees. If that were to occur (on the application of the common law test),[3] most likely they would be treated as casual employees who miss out on most of the NES entitlements, e.g. they do not get annual leave. Nevertheless they would be entitled to the minimum wage, a 20-25% casual loading, penalty rates for overtime/weekend work, and union representation in bargaining for an enterprise agreement. Long-term casuals may also be entitled to challenge unfair dismissal.

Snapshot of the gig economy in Australia

It is estimated that around 0.5% of the workforce or just under 80,000 workers are engaged through ‘peer-to-peer’ platforms like Uber, Airtasker and Deliveroo.[4] That is relatively small in overall terms, but there has been very rapid growth in this sector in a fairly short time. Uber driver numbers tripled in 2015 (there are now 18,000 in Melbourne alone), and the number of jobs posted on Freelancer has risen 25-30% each year.

The federal Government welcomes the shift to the ‘sharing economy’ model, e.g. the Employment Minister recently told Uber (after a briefing with the company): ‘Wow, you are the reality of where the future of work is going!’[5] State governments around Australia deal with regulation of accommodation provision and the taxi industry – mostly, these laws have been adjusted to allow Airbnnb and Uber to operate.

The Productivity Commission has noted that gig or peer-to-peer work is mainly task-based, with consequent potential to change the nature of the employment relationship. Platforms offer considerable benefits to workers, including flexible working hours and the opportunity to supplement income. However, this may come at the cost of employment security, stability of income and health and safety protections.[6] Further, some workers may have to accept engagement as an independent contractor to remain in their chosen industry (e.g. journalists, designers).[7]

The inevitable backlash

For these reasons, not everyone is so excited about the advent of gig working in Australia. We definitely have our share of sceptics and doomsayers, e.g. the Dean of Sydney University Law School (Professor Joellen Riley) expressed concern last year that digital platforms: ‘are just creating a new way for the wealthy people to ring their bell for the workers to come running and do very basic tasks’.[8]

This reflects the concerns of the union movement, which has become active in seeking to organise and represent gig workers. Some Australian unions see the gig economy as a tremendous opportunity to reach a new generation of younger workers, with social media becoming a powerful organising tool. We are also seeing self-organisation among worker groups to improve working conditions, e.g. Uber drivers, along the lines of the recent Foodora protests in Turin.[9]

Examined below are some of the issues that are arising in relation to a selection of gig operators in Australia, and the ways in which unions and more informal worker organisations are responding.

Uber

The Transport Workers Union (TWU) is the established union with coverage of Uber and other ride-share drivers. Its starting position was to oppose the emergence of Uber, which it saw as a threat to the safety standards and jobs of drivers in the taxi industry.[10] In 2015, TWU National Secretary Tony Sheldon stated that: ‘Nobody wants to hold back technology’s tide, but we need a serious national discussion about how the dividends of technology are fairly distributed.’[11] The union has since sought to advocate on behalf of Uber drivers, calling for recognition of their rights to collective bargaining, dispute resolution and protection from unfair dismissal.[12]

Perhaps reflecting the TWU’s minimal success in representing Uber drivers (unsurprisingly, given the union has struggled historically to sign up taxi drivers), a new group called ‘RideShare Drivers United’ (RSDU) has emerged recently. It held a driver’s strike and protest in Melbourne on 11 April this year, in which it claimed 1200-1500 drivers participated.[13] RSDU’s key claims include the following:

  • Uber drivers are making as little as A$11.00 per hour after expenses, and before they deduct their own tax and allow for superannuation (this hourly income is substantially less than the minimum wage)
  • drivers are therefore working up to 16-hour shifts to make ends meet
  • Uber has cut fares by up to 30% in some cities, guaranteeing this will lead to higher incomes for drivers, but the opposite has occurred
  • RSDU is seeking an increase in base rates, compensation for fluctuations in petrol pricing, and a 12-hour cap on daily working time.

In response, Uber maintains that the RSDU has not formally made contact with the company to discuss its concerns, and that it holds roundtable meetings with driver partners to obtain feedback and answer questions.[14]

RSDU appears to be operating in Melbourne, Perth, Sydney and the USA. It offers free membership, and aims ‘to help unite [Uber and Lyft] drivers anywhere in the world with fellow drivers right next door, to help change our situation right here right now!’ Through the RSDU driver app, drivers are alerted any time a ‘collaborative action’ is planned for their area or when a ‘vote’ is required for future collaborative events/actions. Although utilising modern communication methods, RSDU’s philosophy bears all the hallmarks of traditional trade unionism:

Download and share the RSDU app among other drivers. Let’s all stand together and ensure that our rights to a fair days [sic] work are not exploited. It is only through large scale collaborative effort that we can send a strong message to the ride share companies. A message they can not [sic] ignore.[15]

Airtasker

Airtasker is similar to platforms like TaskRabbit through which jobs or tasks which consumers want performed are matched with people who are available to do the work (there is also Freelancer for professional services). Airtasker states that it is ‘a trusted community marketplace for people and businesses to outsource tasks, find local services or hire flexible staff in minutes – online or via mobile’.[16]

Through their Airtasker accounts, ‘job-posters’ create tasks by providing details and indicating the rate to be paid (payment is per task, and the advertised rate must include Airtasker’s 15% fee). Workers interested in completing the task can pitch for it at the advertised rate or seek to ‘bid down’ the rate of pay which has been offered.[17]

The peak union body in the state of New South Wales, Unions NSW, has run a quite effective campaign over the last year arguing that Airtasker ‘has used a cloak of innovation and progress to re-introduce archaic and outdated labour practices, circumventing minimum wage rates and removing employee safety nets.’[18] Unions NSW further contends that:

  • Airtasker relies on its User Agreement description of a worker being selected by a job-poster as ‘winning’, to establish a ‘task contract’ which does not involve Airtasker and is an independent contractor relationship between job-poster and worker[19]
  • this is despite Airtasker’s Marketplace Rules specifying various forms of control (e.g. deactivation of an account if the rules or agreement are violated)[20]
  • by allowing businesses to hire task-based workers through ‘Airtasker Business’, the company is effectively ‘acting as a labour hire agency’ and ‘should be required to comply with the regulations and legislation that govern labour hire firms including the classification of these workers as employees of Airtasker’[21]
  • far from being novel or innovative, Airtasker’s business model ‘is no different to a combination of unregulated Taylorism within a Dickensian marketplace where workers compete for bite-sized fragments of labour’.[22]

Airtasker’s CEO Tim Fung recently told a Senate Committee (examining corporate avoidance of the Fair Work Act) that the company has around 1.2 million users and paid A$75 million to workers for performing tasks in 2016, after its 15% commission. He stated that Airtasker does not check whether people bidding to perform work through the platform are independent contractors, or whether they have an Australian Business Number (ABN).[23] Fung argued that the bidding process usually involved workers bidding around 30% higher than the job-poster’s proposed rate, and the agreed price ends up somewhere between the two.[24] In contrast, Unions NSW claims that workers generally ‘bid down’ to secure work from job-posters.[25]

Unions NSW has achieved some success recently in its Airtasker campaign. In what was described as a ‘world first’ for the gig economy, the company has agreed to provide certain minimum conditions for workers performing services through the platform, including:

  • recommended payment at above comparative award rates
  • development of a dispute resolution process in conjunction with Unions NSW and the FWC
  • offering workers an insurance product (similar to workers’ compensation insurance)
  • implementing ‘best practice’ health and safety standards for the benefit of workers and job-posters.[26]

Safety issues have been a major focus of union concerns about Airtasker. Prior to the recent agreement it reached with the company, Unions NSW had highlighted the lack of protection provided to workers for personal injury or damage to their property when performing tasks for job-posters through the platform – and the absence of any verification of licences for workers carrying out trades-qualified tasks such as electrical, plumbing and building work.[27]

While Unions NSW expressed the hope that its recent progress with Airtasker would be reflected in arrangements with other gig companies, Sidekicker and Freelancer have already indicated they will not follow this lead. These companies maintain that ‘unlike Airtasker they have stringent policies in place to protect contingent workers’:[28]

  • Sidekicker provides services in hospitality, events, promotions, administration and retail. It says that minimum rates are set for workers, who are usually directly employed through an inbuilt tool which does not permit customers to pay below-award rates.[29]
  • Similarly, Freelancer claims that it ‘has steps in place to ensure Australians can’t bid less than the minimum wage ($17.70) on the platform. “There’s an error message if you try and do that” …’.[30]

Deliveroo and Foodora

These two food delivery companies have expanded rapidly in Australia. Deliveroo, for example, signed up 1200 restaurants in its first 10 months of operation. It faces fierce competition not only from Foodora, but also UberEATS, JustEat and Delivery Hero.[31]  It is in this sector of the gig economy that union activity has, arguably, been the strongest in Australia – especially in Melbourne – alongside a union-client law firm.

The newly-formed Young Workers Centre (YWC) of the Victorian Trades Hall Council has actively sought to engage with, organise and represent food delivery workers through its ‘Rights for Riders’ campaign.[32] YWC argued, in its submission to the Senate Inquiry into corporate evasion, that the gig economy is simply ‘sham contracting rebadged’:[33]

Young people working in the gig economy are largely engaged as independent contractors with their own [ABN]. The gig economy is characterised by temporary short term work, where workers have no guaranteed hours of work or income , and do not benefit from the protection of minimum conditions of employment [under the NES and awards]. … [Many of them, however] are in reality economically dependent on a single client or are dependent contractors in that they have no authority over their own work.

This contracting arrangement deliberately shifts responsibility for working costs (bikes or cars and their maintenance, phone costs and internet data plans) and employer responsibilities (superannuation, tax and insurances) from the employing company to workers.[34]

YWC presented a number of case studies in its submission, including a comparison of weekly income received by food bike couriers under three different Deliveroo contracts, with the applicable rates under the Road Transport and Distribution Award and federal superannuation legislation. This analysis showed a shortfall (described as ‘wages stolen per week’) of between A$72.91-A$158.91 in income and A$32.20 in superannuation.[35]

YWC is working with plaintiff law firm Maurice Blackburn, to collect evidence of mistreatment among food delivery workers with a view to running a test case (on employment status), possibly as a class action. This may include proceedings to establish that workers have been deliberately misclassified as contractors (i.e. ‘sham contracting’ under sections 357-359 of the Fair Work Act).[36]

Deliveroo maintains that its riders can achieve higher pay than the award minimum of almost $23 per hour for a casual (paid at 1.5 times that rate on Saturdays and double time on Sundays). The company has utilised various rider contracts to date in Australia, with payment arrangements including a flat ‘drop rate’ (i.e. fee per delivery) and a combination of base hourly rates plus delivery fees.[37] The company’s Australia Manager Levi Aron says:

We are confident with our model, and the way our model works and working with independent contractors. Unfortunately there was a lot of misinformation last year: our riders get paid per drop, so they are not being paid per hour but by the drop, per delivery. So what we do with our drivers is we work with them to educate them about when those busy times are – we know, obviously, it’s busy on a Thursday night or a Friday night, Saturday night – and which suburbs are busy, where you want to go. We work with our riders to allow them to make as much money as they possibly can while working as a Deliveroo rider.[38]

The regulatory conundrum: innovation -v- the social licence to operate

To sum up, then, the gig economy contracting model is now being subjected to considerable re-assessment in Australia. There was intense interest in the UK Employment Tribunal decision in late 2106 finding Uber drivers were ‘workers’ for purposes of certain employment legislation.[39] An Australian test case is likely before too long.[40] The prospect of reclassification of gig workers as employees through such cases is a more realistic proposition than addressing the issue through legislation, at least while the current (conservative) federal Government remains in office. There is little, if any, discussion in Australia of adopting an intermediate category of ‘gig worker’ (falling between employee and independent contractor).  The major development to date has been the vigorous activity of some unions in attempting to gain traction with young gig workers, and (to a lesser extent) spontaneous worker self-organisation. Social media has figured prominently in union organising efforts.

It seems fairly clear from various evidence sources internationally that gig workers are, mostly, not self-employed entrepreneurs but rather low-income workers for whom this way of performing labour is their main source of income – or is being done to supplement income from their main job.[41] Although it has not yet been measured empirically, it seems reasonable to assume that this conclusion would also hold true in Australia. As Unions NSW has put it, the flexibility of the gig economy ‘shouldn’t have to be intrinsically linked with a wage discount or reduction of key workplace standards and safety nets like workplace insurance, superannuation’ and fair dispute resolution processes.[42]

As against this, there is anecdotal evidence that some workers obtain significant benefits from gig engagement, mostly related to flexibility and control over working time. Further, there is no doubt that the exponential growth of the Australian operations of many gig companies reflects shifting consumer preferences – they have found a firm place in the market for a reason. The platforms argue against constraining this unique form of innovation through regulatory intervention which might ‘kill it off’. In considering any regulatory response, it must also be borne in mind that there is no uniform ‘gig sector’. Gig players provide different services, and the relationships they form with workers vary considerably.

However, in addition to the compelling view that innovation should not come off the back of worker exploitation,[43] there is a broader range of issues that need to be considered regarding the sustainability of these new business models. In Australia, these wider social implications include:

  • the question of fairness in retirement incomes as a consequence of superannuation obligations not being triggered due to the nature of gig engagements (i.e. a worker engaged through several different platforms may not meet the $450 per month threshold for superannuation payments from any one of them)[44]
  • the impact on the national tax base and the federal budget if gig employers are able to bypass employment regulations, leading to informal arrangements under which tax is notionally the worker’s responsibility (but may not end up being remitted at all)
  • the irregular nature of task-based work, and the income which arises from it, may compound the already significant hurdles young people face in entering the Australian housing market (or even just affording rental payments).

Overall, it is hard to resist the conclusion that gig engagement in its present form involves a level of transferring of risk from business to the individual, with potentially detrimental – and largely unforeseen – impacts on society. The weighing up of regulatory options to address employment issues must address the question of what conditions should be attached to the social licence to operate for gig companies, in Australia and globally.

References

[1] Ben Schneiders and Royce Millar, ‘Unions vow to take on Amazon as its harsh reputation precedes it’, Sydney Morning Herald, 22 April 2017.

[2] European Commission, A European Agenda for the Collaborative Economy, Brussels, 2 June 2016, 2 (see also 16).

[3] This test assesses employee or contractor status based on the reality of the relationship between the contracting parties (rather than how they have described the relationship), with regard to factors including the level of control that is exercised over the work being performed; method and frequency of payment; whether tax and superannuation are deducted; whether the worker supplies their own equipment, carries risk or stands to gain profit, can delegate work to others, is engaged in genuine entrepreneurial activity, etc.

[4] See further Jim Minifie, Peer-to-Peer Pressure: Policy for the sharing economy, Grattan Institute, April 2016.

[5] ‘Govt makes ‘future of work’ IR battleground for election’, Workforce, 22 April 2016.

[6] Productivity Commission, Digital disruption: what do governments need to do?, Research Paper, 2016.

[7] Ibid; see also Minifie, 2016.

[8] Anna Patty, ‘Fears gig-economy threatens loss of 100 years of workplace rights’, Sydney Morning Herald, 19 May 2016.

[9] Arianna Tassinari and Vicenzo Maccarone, ‘Striking the Startups’, Jacobin, January 2017.

[10] TWU, TWU demonstration against Uber over safety and unfair competition, 21 April 2015, at: http://www.twu.com.au/home/media/twu-demonstration-against-uber-over-safety-and-unf/

[11] Patty, 2016.

[12] ‘TWU on Uber and Taxi Council: ‘Let’s clean up this disgrace of an industry’’, Workforce Daily, 3 July 2015.

[13] ‘Uber drivers signal further strikes after Melbourne ‘log-off’’, Workplace Express, 12 April 2017.

[14] Ibid.

[15] RSDU, Mission Statement, at: http://ridesharedriversunited.com/ (emphasis added).

[16] See: https://www.airtasker.com/

[17] Unions NSW, Innovation or Exploitation? Busting the Airtasker Myth, 2016, 3.

[18] Ibid, 1.

[19] Ibid, 3.

[20] Ibid, 4.

[21] Ibid, 10.

[22] Ibid, 11.

[23] An ABN is an identifying number issued by the Australian Taxation Office when a business is registered with it for tax purposes. Businesses often insist that a worker accept engagement on the basis that they have an ABN, which is erroneously taken (of itself) to establish contractor status.

[24] ‘Airtasker says its bidders not employees’, Workplace Express, 19 April 2017.

[25] Ibid.

[26] ‘FWC gets Airtasker disputes bid’, Workplace Express, 1 May 2017; see also David Taylor, ‘Airtasker agrees to minimum working conditions for ‘gig economy’ contractors’, ABC News, 2 May 2017; Anna Patty, ‘Airtasker and unions make landmark agreement to improve pay rates and conditions’, Sydney Morning Herald, 1 May 2017. This followed Airtasker’s agreement, late last year, to increase its minimum rate by 45%: AAP, ‘Airtasker job outsourcing site raises hourly rate after Unions NSW report’, The Guardian, 18 October 2016.

[27] Unions NSW, 2016, 9; ‘Airtasker says its bidders not employees’, Workplace Express, 19 April 2017.

[28] ‘Unions pursuing others in gig space after Airtasker deal’, Shortlist, 8 May 2017.

[29] Ibid.

[30] Ibid.

[31] Michael Bailey, ‘Deliveroo boom faces Fair Work reality check’, Australian Financial Review, 9 August 2016. On the global food delivery market see Carsten Hirschberg et al, The changing market for food delivery, McKinsey & Company, November 2016.

[32] See: http://www.youngworkers.org.au/rights4riders and http://www.youngworkers.org.au/rights4ridersfaq

[33] YWC, Young Workers Centre Submission: Inquiry into Corporate Avoidance of the Fair Work Act, January 2017, 3.

[34] Ibid, 6 (emphasis added).

[35] Ibid, 6-7; the analysis is based on the assumption of a 21-year old rider, averaging 5 deliveries per shift, with 3 shifts per week on weeknights and 1 shift on a Saturday night (attracting applicable award penalty rates).

[36] Bailey, 2016; see also James Norman, ‘App employment not an easy gig’, The Sunday Age, 13 November 2016.

[37] Bailey, 2016.

[38] Eli Greenblat, ‘Reinventing Business’, The Australian (Food), March 2017.

[39] Aslam and Farrar v Uber B.V., Uber London Ltd and Uber Britannia Ltd (Case Nos: 2202550/2015 and Others, 28 October 2016; now the subject of an appeal). See also Dewhurst v Citysprint UK Ltd (Case No: 2202512/2016, 5 January 2017); and Pimlico Plumbers Limited v Mullins Smith [2017] EWCA Civ 51.

[40] ‘Uber’s UK court setback sure to have Australian sequel: experts’, Workplace Express, 4 November 2017.

[41] See for example Valerio De Stefano, The rise of the ‘just in time workforce’: On-demand work, crowd work and labour protection in the ‘gig economy’, Conditions of Work and Employment Series No. 71, International Labour Office, Geneva, 2016; Charted Institute of Personnel and Development, To gig or not to gig? Stories from the modern economy, Survey Report, CIPD, March 2017.

[42] Unions NSW, 2016, 11.

[43] Janine Berg and Valerio De Stefano, ‘It’s time to regulate the economy’, speri.comment: the political economy blog, 18 April 2017; like the YWC (see above), these authors contend that ‘‘gig economy’ work is simply twenty-first century casual work rebranded’.

[44] See Alice Uribe, ‘Super must adapt to the rise of the ‘gig economy’’, Australian Financial Review, 1 February 2017, where the Association of Superannuation Funds of Australia argued that superannuation entitlements must become more flexible and available to ‘on demand’ workers with ‘portfolio careers’.