'Same job, same pay' labour hire provisions still waiting for first test

The Same Job, Same Pay provisions – contained in Part 2-7A of the Fair Work Act 2009 (Cth) (FW Act) - commenced on 15 December 2023, as part of the Federal Government’s “Closing Loopholes” amendments.

At their core, these provisions enable the Fair Work Commission (Commission) to make a regulated labour hire arrangement order (RLHAO) that labour hire workers receive the same “rate of pay” as host employees covered by an enterprise agreement (or other prescribed instrument) at the workplace, when undertaking work covered by that agreement.

For those familiar with industrial relations and the introduction of these provisions, it is well-known the laws were intended to be used against major employers who operated internal labour hire entities. In May 2023, the ACTU named BHP, Qantas, Qube and CIMIC as four examples in a research note supporting the legislation (Same job, less pay: the exploitation of outsourcing loopholes, ACTU Research Note – May 2023).

It is therefore unsurprising that BHP and Qantas are at the centre of cases expected to test the scope and application of these provisions. In the meantime, the first RLHAO decision has been handed down by the Commission.

Same Job, Same Pay

At their simplest, the Same Job, Same Pay provisions set out “qualifying criteria” for when an RLHAO must be made, and “disqualifying criteria” which will prevent an order being made, even when the qualifying criteria are satisfied.

Qualifying criteria:

• The application must be made by a person with standing. This can be an employee of the host site, a labour hire worker, the host employer, or a registered organisation with coverage of the employees or labour hire worker.

• There must be a “covered employment instrument” that applies to the host employer that would apply to the work being done by the labour hire worker. This will be a question of fact.

• The host must not be a small business. While this may appear straightforward, the issue can become complex in some corporate structures.

Disqualifying criteria:

• The performance of work is for the provision of services, not the supply of labour. This is like the multi-factor tests previously used to assess whether a person was a contractor or employee. It requires consideration of, in effect, the degree of control that the host employer has over the work performed by the labour hire worker and assessment of the nature of the work being performed.

• Making the order would not be fair and reasonable in all the circumstances. This considers pay arrangements, any history of industrial arrangements, and any corporate relationships

We expect the “disqualifying” criteria will be the most contested in RLHAO disputes.

The MEU decision

To date there has only been one decision relating to the new laws, Application by the Mining and Energy Union [2024] FWCFB 299 (MEU decision), which was unopposed. Other applications commenced (including against Thiess, a subsidiary of CIMIC), have been resolved without contest or are yet to be heard.

Notwithstanding that the matter was uncontested, the MEU decision is useful as the Commission has succinctly set out its observations as to how the RLHAO provisions will be applied.

The Commission confirmed the process was to firstly assess the “qualifying criteria” and, if these were met, to then consider whether any ‘disqualifying criteria’ applied, as follows:

• Does the applicant in the matter have standing to bring the application?
• Can the Commission be satisfied, based on evidence or logical grounds, that the qualifying criteria are met? This requires a state of satisfaction that:
  • the labour being supplied is principally for the benefit of the host entity, whether directly or indirectly
  • there is a “covered employment instrument” which applies to the host
  • the “covered employment instrument” would apply to the labour hire workers in relation to the work being performed. This requires:

• • assessment of the nature of the work being performed, including required qualifications, tasks undertaken, and skills exercised; and then
  • determining by reference to coverage and classification whether that work is covered by the employment instrument.

• Is the employer a small business within the definition provided in the FW Act?
• Is the Commission satisfied the performance of work is not the provision of service rather than the supply of labour? This requires determining if the performance of work requires something “more than” the provision of labour.
• Only if there are submissions regarding whether the order is “fair and reasonable” will this disqualifying factor be considered.
• Does the order sought meet the mandatory requirements of the Act?

The Commission applied this approach to the MEU application and unsurprisingly made the RLHAO as:

• The applicant Mining and Energy Union had standing.
• WorkPac provided labour hire workers to Batchfire for Batchfire’s benefit.
• Batchfire had a relevant enterprise agreement.
• The Batchfire agreement would apply to work performed by the WorkPac workers.

The Commission then considered whether WorkPac was providing services or labour, ultimately being satisfied that the arrangement was for the supply of labour. In considering this, the Commission found:

• WorkPac did not have any involvement in matters other than supplying workers.
• WorkPac did not control, direct or supervise its workers on the Mine. It was Batchfire who managed rosters, assigned tasks and supervised work.
• WorkPac workers used Batchfire systems, plants and structures to perform work.
• The work was not specialist or expert.

As no submissions were made regarding whether the order was fair and reasonable, this was not considered.

Once satisfied of the above, the Commission observed it was required to make the RLHAO sought by the MEU due to the operation of section 306E of the FW Act.

Given the facts of the matter and that there was no contest, the scope of the “Same Job, Same Pay” provisions remain untested.

BHP Coal and the MEU & AMWU set for test case

This looks set to change as BHP Coal Pty Ltd (BHP Coal) and the MEU & the Australian Manufacturing Workers’ Union (AMWU) look set to argue a major case for a RLHAO before the Full Bench of the Commission.

The case is expected to be highly complex and heavily contested. It involves 13 separate applications: six separate labour hire providers, including BHP’s own labour hire entities, and three BHP Bowen Basin mines. It has been reported that approximately 1,700 workers would be covered by the applications.

BHP Coal is opposing the application on two key grounds:

• The performance of the work by the supplied workers is for the provision of a service, rather than the supply of labour.
• It is not fair and reasonable in all the circumstances to make the RLHAO, taking into account pay arrangements, industrial instruments and the nature of the relationship between BHP Coal and the employers of the supplied workers.

This means the “disqualifying factors” will likely be examined in detail in this matter and the decision will provide guidance on the scope and application of the new provisions including what is meant by “fair and reasonable” within this context.

While the hearing date has not yet been set, evidence for both sides is currently expected to be filed in the second half of 2024. The case can be monitored on the Commission’s website.

Flight Attendants’ Association of Australia and Qantas

At the same time, the Flight Attendants’ Association of Australia (FAAA) has brought RLHAO applications against two entities which provide workers to Qantas, including a Qantas labour hire entity. It currently appears these applications will be opposed by Qantas. The grounds for the opposition have not yet been detailed. It may be that this case is heard before the BHP Coal matter given it is smaller in size.

It is clear that the Same Job, Same Pay provisions are most likely to be contested on the “disqualifying factors,” particularly the questions of the supply of services versus supply of labour, and the yet to be explored concept of “fair and reasonable.”

Enterprise agreement coverage of the work being performed also stands to be a point of interest, given it is necessary to determine if the work being performed by a labour hire worker is covered by an enterprise agreement.

Employers who utilise or rely on labour hire as part of their workforce planning who want to understand their potential risks of a RLHAO application, should proactively assess:

• The nature of the services being engaged through labour hire and whether these include services that go beyond the supply of labour.
• How labour hire personnel are engaged, managed and instructed when performing the work.
• Coverage of existing “employment instruments,” particularly enterprise agreements over the work being performed by labour hire services.

This may identify issues within existing labour hire engagement and procurement practices where strategic changes could be made to mitigate the risks of an RLHAO being sought or made.

Employers should also ensure that their commercial contracts for labour hire have been reviewed and updated to account for these new provisions and risks.

Beth Robinson is a partner at Kingston Reid in Melbourne, specialising in employment law and occupational health and safety.  Shannon Walker is a special counsel at Kingston Reid in Melbourne, specialising in employment and industrial law. Kevin Jarrett is an associate at Kingston Reid in Melbourne.