
Issue No 54		19 May 2000

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Trades Hall

Regulating the Agents

Read the NSW Labor Council's submission to the parliamentary inquiry into the Employment Agents Act.

EXECUTIVE SUMMARY

The growth of precarious employment in Australia is spreading across all groups in the workforce . This growth is not only limited to the Private Sector. Federal and State governments have been outsourcing their operations across a number of Government Departments and Agencies, often in the attempt to reduce costs. Labor Council submits that the shift towards labour hire (a particular category of precarious employment) is undermining security of employment and replacing permanent workers with casual/precarious employment.

In the current environment, Labor Council believes legislation covering Employment Agents in New South Wales should remain, if not strengthened to ensure that employers are held accountable if they act in a way that exploits their employees. Labor Council also supports the Construction, Forestry, Mining and Energy Union's (CFMEU) proposals in their submission.

Labor Council submits that an outcome of the National Competition Policy Review must be the retention of the Employment Agents Act and the continued regulation of employment agents in New South Wales. We are opposed to a further deregulation of the industry. Labor Council submits that there has been a dramatic increase in the number of licensed employment agents which indicates a strong and competitive industry.

INTRODUCTION

Labor Council is the peak trade union body in NSW, representing 70 affiliated unions with a combined coverage of more than 800,000 workers. One of the Council's key objectives is to protect and promote the interests of all workers. This includes full-time, part-time and casual workers. A key component of the casual workforce employment is sourced through employment agents/labour hire firms and Labor Council is concerned with the increasing incidence of precarious arrangements which are replacing permanent jobs across the economy.

Over the last ten years, there has been a significant growth in casual/temporary and part-time employment in Australia. By 1994 it was estimated that about one quarter of Australia's employees were casuals . The growth and extent of temporary employment in Australia has outstripped all other OECD countries except for Spain. Part of this growth has been in the labour hire/ employment agency sector .

The Employment Agents Act 1996 was introduced to regulate the large number of licensed private employment agents in New South Wales. According to the Department of Fair Trading the number of employment agent licences have increased from 942 in 1991 to 2248 at present. This represents an increase of 138% over nine years. With this increase there has been a great incidence of uncertainty about the employment conditions of employees engaged by labour hire firms/employment agents.

OPTIONS FOR REVIEW

Scope of the Act (Issue 5)

Labor Council supports the CFMEU's proposal to clarify the intent of the Act in relation to labour hire firms. We believe there is a need to strengthen and extend the existing legislation to ensure that employees whose services are used by a labour hire firm/ employment agency are not worse off than what they would have been by the Principal Organisation using the agency. The Labor Council is seeking changes to State Industrial Relations laws which would guarantee this right.

Labor Council submits that the Employment Agents Act should include adherence to a Code of Conduct as a condition of registration. This Code of Conduct could be similar to the current Job Network Code of Conduct. The Act should also ensure that organisations providing retrenchment or outplacement services are covered by the legislation, and therefore that these services also adhere to the Code of Conduct. Further, Labor Council supports the creation of appropriate penalties for labour hire firms/ employment agents who breach the Code of Conduct.

Currently, the Queensland Government is reviewing their own Employment Agents Act. Labor Council calls on the NSW State Government to consult with all other State Labor Governments to-where possible - achieve a co-ordinated approach on this important employment issue.

Retention of the Act (Issue 24)

Any proposal to deregulate employment agents would in our view make it easier for unscrupulous operators to take advantage of employees. It could also lead to workers being forced to pay to get jobs.

The NSW Labor Council submits that any move to abolish the Act would strip away what little ammunition the Government has against unscrupulous operators. The Employment Agents Act specifically prohibits job-seekers being charged a fee to be placed in work, however the current penalties are too low.

The Labor Council believes the Act should be revamped to make licensing requirements more stringent including the revocation of licences from companies who fail to meet their legal obligations under awards/ agreements approved by Industrial Tribunals.

Industrial Relations Issues (Issue 6)

A recent case in the Australian Industrial Relations Commission re-inforces the legal status of labour-hire employees and the limited rights they possess. A full bench of the AIRC in Fox V Kagan Batman Tafe AIRC1257/99 M Print S0253 overturned a decision of Cmr Simmonds and found that a TAFE had the right to dismiss a labour hire employee. This employee could not claim unfair dismissal against the TAFE, because she had been engaged by a labour hire company, Advanced Australian Workplace Solutions (AAWS).

By overturning Cmr Simmonds decision the AIRC has confirmed that companies who use the services of workers from Labour hire companies have no responsibility for those labour hire employees, even though they can sometimes set the workers duties, hours of work and daily directions.

The case also highlights the limited status of labour-hire employees in relation to superannuation, workers compensation and other employment entitlements. With these very limited rights the employees have in this industry, tighter regulations are necessary to ensure at least some recourse of action can be taken against those employers who exploit their workforce.

Establishment of objectives (Issue7)

Labor Council views the establishment of a set of objectives as paramount to the review of this legislation as the current Act does not set out any objectives. It would appear that the implied objective of the Act is to protect consumers who seek employment through the services of an employment agent. This in our view is compatible with an objective which is to ensure employees of labour hire firms/ employment agents are paid wages and conditions which meet minimum legal standards.

The Objectives should be specifically stated by the legislation and should be developed in consultation with the Labor Council and the RCSA. Further, we recommend the setting up of and Industry Committee to oversee the workings of the Act. Such an Industry Committee could also make recommendations to the Minister in relation to the cancellation and suspension of licenses.

The Act should include a requirement for agents to inform clients of their rights under the Act, including their industrial rights. The conduct of business of Employment Agents is set out in Part 3 of the Act however there is no obligation on the part of employment agents to inform clients of their industrial rights under the current Act.

Occupational Health and Safety and Workers Compensation

Labor Council supports the CFMEU's submission in relation to Occupational Health and Safety and Workers Compensation. In addition, a recent article by Michael Quinlan outlines the emergence of a new type of labour hire contract which has obvious OHS implications. According to Quinlan, Hold Harmless contracts are a "corporate lawyer solution" that attempt to shift risk and liability to another party rather than addressing the central problem of managing safety when outsourcing. This means that the more powerful party to a contract, such as a large buyer of outsourced labour, is able to transfer costs and risks to the weaker party, such as a small labour-hire firm.

Employers in the USA, where such contracts are widespread, have been found to be liable for OHS incidents when they have outsourced all their labour to labour-hire firms. The courts have been willing to find the owner and operator of the workplace liable, not the firm supplying the labour. Clearly, the obligations of agencies towards the workers they contract out or place in their client's workplaces must be defined in the Act with respect to Occupational Health and Safety and Workers Compensation

Unfair Competition in the Industry

Whilst some Labour Hire firms and Employment Agents are able to exploit their workforce (including below award rates), these companies will continue to have an unfair competitive position in the market place against those companies who abide by their legal obligations. There is an unfair price advantage for organisations who exploit their workforce.

In order to have a level playing field in this industry and ensure that competition is fair, the Employment Agents Act needs to contain measures where action can be taken against Labor Hire Firms and Employment Agents who continue to exploit their workforce.

LABOR COUNCIL OF NSW RECOMMENDATIONS

As our submission outlines, there are a number of areas where agency workers are unprotected with respect to their workplace rights. Therefore, Labor Council supports legislative reforms which will bring about more protections for workers who are employed through labour hire firms and employment agents.

Specifically, we make the following recommendations:

� Labor Council submits that the Employment Agents Act should be retained and extended in particular to clarify the intent of the legislation in respect of labour hire employees so that such firms are clearly covered by the Act.

� Labor Council supports the establishment of Objectives in the Act in consultation with the industry which would ensure: (a) that Labour Hire Firms/ Employment Agents meet their minimum legal employment standards;eg, complying with awards and industrial agreements, (b) requirement to inform clients/employees of their industrial rights under the Act.

� Labor Council supports the proposal to increase regulation for labour hire firms/ employment agents to require them to match enterprise agreement/ award standards of the firm or business their client is placed in.

� Labor Council supports the setting up of an Industry Committee to oversee the workings of the Act and the establishment of a Code of Conduct as a condition of registration.

� Labor Council supports the submissions of the Construction, Forestry, Mining and Energy Union to the review of the Employment Agents Act.

View entire issue - print all of the articles!

Issue 54 contents

Interview: South of the Border
Victorian Trades Hall chief Leigh Hubbard on life under Bracks, militant unionism and why more people march in Melbourne.

Politics: Jeff Shaw's Second Wave
The full text of the NSW Industrial Relations Minister's speech to Labor Council announcing the Carr Government's IR reform agenda.

Unions: Reith's Laws: Just Say NO
The ACTU has called on Labor and the Democrats to reject Workplace Relations Minister Peter Reith's anti-industry bargaining Workplace Relations 2000 Bill out right.

History: A Breed Of Their Own
Labour historian Greg Patmore explains what makes his fraternity tick - and why they're still going strong and making history.

International: Sony's Asian Showdown
The Japanese electronic giant Sony is threatening to shutdown production facilities in Indonesia - where a prolonged strike has cost it US$200milliom - and move to next door Malaysia where electronic workers are banned from forming a union.

Human Rights: Good Guys, Bad Guys
Everywhere we look -in our newspapers, on the television, in reports by business leaders, academics and politicians - advocacy of human rights seems to be on a collision course with governmental and business interests.

Review: New Workers, New Challenges
A new wave of thought is arguing that working life is changing - but this doesn't necessarily deal unions out the action.

Satire: Rain Man Withdraws Endorsement of Qantas
After the third major safety incident in the space of a year, Qantas has lost the confidence of the most famous public supporter of its once unblemished safety record, the autistic star of Rain Man, Raymond.

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