Queensland’s Labour Hire Licensing Bill: A Report Card on the Parliament’s F&A Committee’s Public Hearing.

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I’ve just finished viewing the televised replay of the Queensland Parliament’s Finance & Administration Committee’s public hearing regarding the Labour Hire Licensing Bill conducted in Brisbane on Thursday, 22nd June 2017. It makes absorbing viewing for anybody, with about four hours to spare and an interest in novel regulation that sets the benchmark for labour hire regulation in other states and territories.

Here are a few of my impressions of what happened.

Regulating for the Mood

About twenty presenters came forward to give evidence to the Committee regarding what they hoped the Bill might achieve; what they thought it would achieve; and what they thought it would fail to achieve.

I thought the Queensland Council of Unions’ opening comment pretty much set the prevailing mood:

If this industry had been able to regulate itself, obviously this sort of legislation would not be necessary.

A hit. A very palpable hit!

Although it’s not as if the industry hasn’t asked to be given the tools that would allow it to do that in the form of a nationally applicable prescribed industry code under the Competition and Consumer Act, or well-founded requirements for an industry developed certification scheme.

The QCU advanced a fill-the-gaps view of the role of labour hire that might have been true about 40 or 50 years ago, when the supply of “temps” to fill in for temporary work absences or overloads was bread and butter business for the industry.

However, that view doesn’t provide a satisfactory foundation upon which to base this legislative scheme, because it fails to appreciate the demands for flexibility and adaptability in contemporary supply chain operations. And it ignores the need for the more sophisticated auxiliary labour arrangements that are required to support those operations.

The QCU then went on to equate most types of outsourcing and casualisation to labour hire, without much distinction as to whether the business model used was one of labour hire or something else.

But that might not have mattered a great deal, because the Bill, itself, doesn’t seem to recognise that there is a distinction, which is a pity.

In failing to make a distinction between supply and use models of workforce services, the Bill spoils its own attempt to meet either of its objectives and will leave workers exposed to exploitation by the unscrupulous labour hire provider, who reinvents itself as an unscrupulous labour workforce contractor – that is to say, the other type of gangmaster that the Bill hasn’t quite come to grips with, yet.

Support for Objects

Virtually all presenters accepted that the objects of the Bill, namely to protect workers from exploitation and to promote the integrity of the labour hire industry, were worthy of regulatory support.

Although Ai Group did make a submission that the Bill should not include the object of protecting workers from exploitation, I didn’t get the sense that Ai Group was advocating carte blanche for labour hire providers.

Rather, it seemed to me that Ai Group was taking the more sophisticated position that regulatory protection and enforcement were properly the province of the regulatory bodies at both State and Federal level that already have lead agency responsibility, and substantial power under their governing legislation, to enforce compliance and to prosecute non-compliance.

The Ai Group objection, as I understood it, was that the Bill merely added additional layers of regulation and punitive measures that were not justified and that would disturb the complex balance of rights and responsibilities that existing regulation already created.

I sensed that Ai Group was contending that the purpose of protecting workers from exploitation, under this legislative proposal, would have been better served by concentrating efforts on promoting the integrity of the industry. That is to say, by supporting positive measures to promote the industry.

That view was supported by other presenters, who felt that the chief executive’s enforcement powers were limited to checking-up to make sure that license holders were complying with legislation that was the responsibility of other bodies; and that it amounted to little more than vicarious activity conducted on behalf of regulators, who had the primary responsibilities – if not to actual interference in other regulators’ territory.

Nevertheless, the Anti-Discrimination Commission of Queensland came out strongly in support of the Bill. Though we later heard from the Queensland Law Society that the ADCQ was already sending anything that looked “industrial” to the Fair Work Commission or the QIRC; and that the QLS thought that was the proper approach.

The point about how the Bill should be targeted was made in a slightly different manner, but convincingly, by the RCSA representatives, who contended that regulatory effort and resources would be dissipated to the point of uselessness under a universal scheme and would be far better directed towards improving standards of business conduct and industry performance in sectors, where it was needed most.

Other Presenter Highlights [with observations]

The following are a few of what, for me, were highlights of the presentations made to the Committee.

Unions Team (QCU, NUW, AMWU & United Voice)

Unions will likely intervene in licence applications if they know applicants aren’t complying with their obligations and the chief executive would be assisted by having information that the unions could supply.

The unions could not imagine how a licence scheme could operate on a limited sector basis.

[ACW: Although quite clearly it does under the UK Gangmasters Licensing Scheme.]

The FWO doesn’t have the resources to enforce its legislation.

ADCQ

A broad-based scheme rather than a limited sector scheme is preferred.

An amnesty arrangement may be needed to encourage vulnerable workers to come forward and leave exploitative arrangements without fear of prosecution.

Ai Group

If the Committee wants to know why exploitation has continued in spite of existing regulatory measures, it should ask the relevant regulators … and their political masters.

The wide meaning given by the Bill to labour hire services provider will have the consequence that small business plumbers, who provide back up support for each other will need to have labour hire licences.

[ACW: A good point! The same could be said for doctors and medical staff who provide roster cover for each other. Hardly seems to warrant licensing. Hope someone will remember to specifically exclude them in the regulations. It’s going to be a long list!]

Unions, having an active interest, will tie up licence applicants in review proceedings.

Group Training Organisations that are already regulated under the Further Education and Training Act 2014 should be exempted from the requirements to hold licences.

[ACW: This seems to be a good point. GTOs and PEOs under the Act already have employer responsibilities and are well regulated. Because they have an obligation to pay their trainees/apprentices (within the meaning of cl. 8 of the Bill), they are brought within its coverage.

The training organisations that need to be regulated are the ones that aren’t regulated under the Act and don’t have those obligations; and which are sometimes found aligning themselves with gangmaster businesses. These are the type of training organisations that are often at the centre of jobs scams which the ACCC prosecutes. But, unfortunately they’re not caught by the Bill and the Bill does nothing to protect workers from exploitation at their hands.]

AMMA

A true calculation of the regulatory burden of reporting needs to take account of the fact that workers may have been engaged in multiple short-term projects within a single reporting period.

There is a difference between recording the information and making it publicly available through reports. Some of the information will be sensitive personal information.

RCSA

The meaning given by the Bill to labour hire services provider is too broad and will catch businesses that should not be caught.

It will also result in many exploitative direct-hire arrangements, such as were identified in the 7-Eleven investigation, not being caught by the Bill.

The Bill will fail to achieve its objectives, unless its coverage is targeted to the sectors most at risk.

The proposed $2 million that will be spent annually on maintaining the scheme would only be a drop in the ocean under a universal coverage scheme.

The Bill doesn’t fix a window of time for interventions. Under clause 94(2)(a)(ii), interventions can be made within 28 days of the intervenor becoming aware of the decision – which could be any time at all.

[ACW: The position might not be quite so dire as that. Cl. 94(2)(a)(ii) applies to a cl. 93(1) applicant – i.e. a person to whom an information notice is required to be given and who will most usually be the applicant. The “open” time frame only applies if the applicant has not been given the information notice. A third-party intervenor, such as a union or welfare organisation, would be a cl. 93(2) applicant and therefore caught by the 28-day period that runs from the day when the decision is published in the Register. See cl. 94(2)(b)].

Users of labour hire services need to be engaged in the process, though the Bill does not give guidance about that.

Investment in enhancing industry performance – e.g. through schemes such as the certification scheme proposed by RCSA – will be more effective in improving standards, providing assurance and represent a better investment in combatting exploitation and promoting the integrity of the industry.

HIA

Unlike professional business licensing schemes, the Bill proposes no competency standards. All the proposed scheme does is duplicate existing compliance obligations under the overlay of licensing regulation.

Information placed on the public register may be appropriated for industrial purposes such as union recruitment programmes.

 [ACW: There is perhaps a greater risk of information in the reports being used for that purpose, though one would want to know what additional matters are likely to be prescribed by regulation for inclusion on the public register.]

Business competitors may become third party intervenors in licence applications.

[ACW: That seems unlikely in light of cl 94(3), which excludes other licence holders from intervening. However, there seems to be nothing to stop a licence holder separately incorporating a “social conscience” that would not need to have a licence and would therefore be able to intervene. It also seems possible that businesses that might not require licenses under the current scheme – e.g. harvest contractors who do not supply workers; but who assemble workforces to undertake short term projects and therefore provide a (substitutable) service in competition with labour hire providers – could intervene to protect their own patch. Note that under the GLA scheme, these types of harvest contractors ARE included in the licensing scheme coverage.]

Growcom

The meaning given by the Bill to labour hire services provider is too broad and will catch businesses that should not be caught – e.g. a farmer who loans a worker to his mate, Farmer Fred down the road.

[ACW: This could even apply (technically) to a farmer who provides workers to fight a bush-fire on a neighbouring property. Remember that, under cl 7(1), the farmer doesn’t have to be in the business of providing workers – it’s enough if, in the course of conducting his own business (running and protecting his farm), he supplies his worker to another person.  I doubt that regulations are ever going to be able to carve out all the exceptions that would be required under the flawed definition of labour hire services provider that presently appears in the Bill].

Harvest contracting appears not to be caught. Growcom pleaded with the Committee to make sure the definitions are clear because these alternative business models will become more common if they are not captured by the scheme.

Clause 93, which permits intervention by interested parties, is susceptible to the making of vexatious complaints.

Salvation Army & Freedom Partnership

Protection against exploitation needs to be extended to catch the exploitative practices of workforce logistics providers such as accommodation and transport providers.

The Salvation Army would use the information contained in cl. 31 reports to provide pastoral care and outreach to workers.

[ACW: Whilst there are few, who would dispute the value of the work done by the Salvation Army and its Freedom Partnership connexions, other observers, of a secularist persuasion, may entertain doubts and fairly ask, “Who else might want to make use of this information; and for what purposes?”]

Some labour hire providers have claimed to be a church in order to lure workers into exploitative arrangements.

[ACW: This is a grim reminder of the practices of the Nineteenth Century “Sugar Slave” recruiters who, by preventing to be missionaries, reportedly lured Polynesian workers on board their vessels to sing hymns; locked them in the hold and took them off to Queensland to work as indentured labourers. There is much ugly history that Queensland is perhaps still trying to live down. 

These are stories that should not be forgotten and there is a need to take account of them in order to better appreciate the policy behind the Bill. It is vital that the Parliament gets this legislation right.]

All parties need especially to be aware of the hardship and vulnerability to exploitation to which workers are exposed during “down time” due to wet weather or other work interruptions, when workers continue to incur high accommodation expenses that they are then unable to pay. The risk of slipping into debt bondage in such circumstances is high.

Queensland Law Society

QLS cautions against casting the regulatory net too widely and too heavily.

The Committee is correct to note that exceptions could easily be created by regulation made under clause 7(4). But we will need to see the regulations.

[ACW: That is true as a matter of legislative mechanics; but the real problem is that no one will think of all the situations that require regulatory exclusion. Who would have thought about the chicken sexers (excluded under GLA exclusion regulations); or Growcom’s Farmer Fred Down-the-Road; or the bushfire example, the plumbers, or the doctors providing roster cover for each other?]

Any information published about workers’ locations should be limited to broad geographical (regional) reporting using ABS regions, rather than reporting towns or addresses. Privacy needs to be taken into account to a greater extent than is presently indicated by the Bill.

QCAT is not well-resourced to deal with industrial questions that might arise in respect of licence applications, conditions, or interested-party interventions.

The Bill should be as comprehensive as possible in order to avoid everything being left to regulations, or the exercise of administrative discretions.

The Bill should include detailed criteria to guide the exercise of the chief executive’s discretions.

[ACW: At the moment, the Bill only says that conditions imposed by the chief executive are not to be inconsistent with the Bill. That falls a long way short of the requirements of the Legislative Standards Act 1992, which requires that legislation should make rights and liberties, or obligations, dependent on administrative power only if the power is sufficiently defined and subject to appropriate review. On this point, Queensland’s Legislation Handbook explains at para 7.2.1:

 “Depending on the seriousness of a decision made in the exercise of administrative power and the consequences that follow, it is generally inappropriate to provide for administrative decision-making in a Bill without stating criteria for making the decision …”

I don’t think anyone’s suggesting that the consequences of imposing licence conditions, or failing to comply with them, are not serious matters. So, where are the criteria?)

If the regulations deal with substantive issues, then there must be ample opportunity for public response and time to advise clients affected by the new laws before they take effect.

The Bill might also make provision for sunset review.

Report Card

In summary, whilst there was much fruitful discussion, there is still much work yet to be done.

Perhaps the greatest weakness in the legislative proposal is the fact that the Bill is not yet supported by the level of detail that is needed to guide the exercise of discretion, or to understand the true scope of the Bills’ coverage, or to establish standards and conditions for the holding of licenses.

Anyone who is interested in a more technical review of the issues raised at the public hearing, might like to read my companion post: Queensland’s Labour Hire Licensing Bill: Issues arising from the FAC Public Hearing 24/6/2017 (forthcoming).

It will remain the case that, until we see the regulations and perhaps until we know what some intervenor says are the conditions that should be imposed upon a license holder, we just will not know how the terrain of the labour hire industry may be likely to change under the influence of this proposed legislation.

 

Andrew C. Wood, Hon FRCSA (Life)

 

Queensland’s Labour Hire Licensing Bill 2017: What about the conditions?

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Anyone interested in how Queensland’s new Labour Hire Licensing Bill 2017 will affect the labour hire industry, would do well, right now, to call for some frank and open discussion about the conditions, which the Queensland government intends to impose on license holders. That’s because the only thing standing in the way of a radical overhaul of the labour hire industry is the chief executive’s discretion concerning what those conditions will be and how they will be imposed.[1]  And we have not yet heard much about it.

Unlike some other jurisdictions, where licensing conditions are established by legislative instrument,[2] Queensland intends to establish conditions merely by exercise of administrative discretion.

There is little guidance in the Bill about what the conditions might be, other than that they must not be inconsistent with the broad objects of the Act, which are to protect workers from exploitation and to promote the integrity of the labour hire industry. So pretty much anything that can satisfy those broad criteria is up for discussion.

The width of the license conditions is hinted at by provisions, which say that they can include, but are not limited to, the imposition of bonds and requirements for compulsory insurance.[3]

Very little more is said about the conditions in the explanatory memorandum to the Bill; and nothing of note was said by the honourable Minister, when introducing the Bill to Parliament.

The ability of strangers, claiming an interest in protecting workers from exploitation or promoting the integrity of the labour hire industry, to intervene if they are dissatisfied with the grant of a license (or the sufficiency of any conditions attaching to it) gives further grounds for concern, as it exposes the licensing and appeals processes to the contested agendas of industrial parties and social reformers.

Queensland’s workers and businesses, and those dealing with them, are entitled to know what they can expect; and at the moment, nobody is saying much.

So, here’s a short list of some conditions that could conceivably be imposed under this scheme; and about which some pertinent questions should perhaps be asked:

  • restrictions on providing workers during industrial disputes[4]
  • abolition of temp-to-perm/ contractor-to-perm and agency switching fees[5]
  • restrictions on restraints of trade that protect agencies’ worker connections and client connections[6]
  • restrictions on the use of payroll companies to pay workers’ remuneration[7]
  • prohibitions on charging fees for services provided to workers equivalent to those contained in the employment premiums provisions of Queensland’s Industrial Relations Act and its Private Employment Agents (Code of Conduct) Regulation 2015[8]
  • restrictions on advertising – including requirements for local advertising[9]
  • restrictions on the supply and acquisition of labour hire services that might presently fall outside the scope of matters that can be included in modern awards and enterprise agreements.[10]

There are, of course, many other conditions that could be imposed under the broad discretion that is to be given to the Chief Executive. Casual conversion requirements and provisions of the type contended for in the Secure Employment Test Case (2006) readily come to mind.

The real concern in all of this, is that the conditions may be used as means to circumvent the delicate, though sometimes precarious, balance which the Fair Work Act 2009 (Cth) establishes about what matters pertain to employment and are matters in respect of which industrial parties may engage in lawful industrial action.

Neither is it entirely clear that the mechanisms set out in section 26 of the Fair Work Act, or in section 109 the Constitution, would operate to strike down conditions of the type mentioned in the list on the grounds of inconsistency, where the conditions are imposed by administrative action on a case by case basis only. That, however, is a question for another time.

For the moment, it’s enough to note that the Bill leaves much still to be explained. And it is time that proponents of the Bill did so – in my opinion.

Andrew C. Wood

 

[1] Clause 29(1) of the Bill gives the chief executive a discretion to impose, vary or revoke conditions on a licence for the reasons, and in the circumstances, the chief executive considers appropriate.

[2] See e.g. the Gangmasters (Licensing) Act 2004 (UK) on which some attempt has been made to model the Queensland Bill; and the Gangmasters (Licensing Conditions) Rules 2009 (UK) (“G(LC) Rules”) for which there is no equivalent in Queensland and for which the chief executive’s discretion is to substitute.

[3] See clause 29 (2) of the Bill.

[4] See cdtn 10 of the G(LC) Rules.

[5] See cdtn 12 of the G(LC) Rules.

[6] See cdtn 9 of the G(LC) Rules.

[7] See cdtn 11 of the G(LC) Rules.

[8] See cdtn 7 of the G(LC) Rules.

[9] See Conduct of Employment Agencies and Employment Business Regulations 2003 (UK) reg. 27A.

[10] The explanatory memorandum to the Fair Work Act 2009 made it clear that terms containing a general prohibition on engagement of contractors, labour hire personnel or casuals were not intended to be regarded as “permitted matters”. See also R v Commonwealth Industrial Court; ex parte Cocks (1968) 121 CLR 313 regarding restrictions or qualifications on employer’s right to use independent contractors or labour hire workers.

Queensland’s Labour Hire Licensing Bill 2017: Accommodating the Ridiculous?

I had to have a chuckle, when I read the reporting requirements of cl 31 (2) (i) and (j) of Queensland’s new Labour Hire Licensing Bill 2017. Those paragraphs require labour hire services providers to give some pretty detailed and possibly intrusive information about their workers’ accommodation and other mundane arrangements.

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