The Recruiters’ Casebook and WorkAccord Get Together for a Free Short Webinar Series

The Recruiters’ Casebook and WorkAccord are getting together to present two free webinars as they test their new webinar platform.

We’d love you to join us and give us your feedback.

Webinar 1

Competition & Consumer Law Brief – The New Playing Field.

Friday, 21 September 2018, 10.00 am to 10.30 am AEST.

Modern Universal Business Concept Icon SetAs job-based employment seemingly evolves toward job-based entrepreneurship in the freelance, contracting and gig economies, it’s becoming increasingly important for recruitment, contracting and staffing businesses to keep up to date with competition & consumer law developments that impact their sector and their incorporated workers.

In this free session,  Andrew C. Wood will present a short briefing to business owners & managers, consultants and contractors about the role of the ACCC in creating and supporting a fair and level playing field.

Andrew will cover the following topics:

  • Authorisations and protective notifications
  • Banning orders, penalties & remedies
  • Cartel prohibitions
  • Collective bargaining and the proposed small business class exemption
  • Misleading job ads
  • Statutory guarantees and unlawful attempts at exclusion
  • Unconscionable conduct
  • Unfair standard form, small business contracts
  • Unsolicited services (and claims for payment).

Register Now

 

Webinar 2

Transaction to Transformation

Friday, 28 September 2018, 10.00 am to 10.30 am AEST.

Modern Universal Business Concept Icon SetThe “factory model” of services production and supply, based on efficiency in repeating similar transactions has been disrupted by Artificial Intelligence. Astute suppliers in the recruitment, contracting & staffing industry are already talking about a major shift from transaction to transformation.

But what does that look like? How is it managed? How is progress measured? How is it supported by business models and the terms and conditions that underpin them? And is the transaction still important?

In this free introductory level webinar that has been designed for recruitment, contracting & staffing agency business owners and managers, we will begin to explore some of these questions and set a pathway for future discussion.

Register Now

Please send a shout out to your friends and colleagues. We look forward to seeing you there!

MegaMan

 

Andrew C. Wood

Collective Bargaining in the Freelance, Contracting and Gig Economies

Young people work in modern office.As job-based employment seemingly evolves toward job-based entrepreneurship in the freelance, contracting and gig economies, we may soon witness the emergence of new models of workforce organisation and worker representation. That is, if the ACCC’s plan to grant a class exemption allowing small businesses to bargain collectively with their customers and suppliers goes ahead.

Collective bargaining, in this context, involves two or more competitors getting together to negotiate with a supplier or customer (the “target”) about terms, conditions and/or prices.

It is distinguished from bargaining under the Fair Work Act in that the parties who get together are not employees; they are actual business competitors.

They include many contractors and freelancers, working in the on-hire and gig environments.

They may be technology contractors, medical locums, project managers, professional science & engineering contractors, designers & creatives, book-keepers, contract cleaners, contract logistics operators, or translators.

Indeed, they may be any small business that undertakes professional, skilled, or trade work that is done by workers who perform their work in, and as part of, their own businesses.

Recruitment, contracting, and staffing agencies would therefore do well to follow this new development closely; and begin to think about the challenges and opportunities that the ACCC’s proposal presents.

For example, what might an on-hire or IT contracting agency expect from a scheme that allows a pool of  its IT contractors to bargain collectively with it on price, terms and conditions of engagement?

Who might represent them? Should the current restriction on trade union representation apply? If it did, might we witness the emergence of contractor “guilds” that would be able to operate outside the Fair Work bargaining framework?

How might the ACCC’s concept of joint procurement bargaining play out, if it allowed that same pool of IT contractors to bargain simultaneously with their IT contracting agency and its clients?

What might small recruitment agencies, working in the creative or medical locum industries, gain from being able to bargain collectively with clients on price, terms and conditions of supply – without the need for any notification or authorisation?

What might the competition impact be on medium and larger businesses, who fall outside the scope of the class exemption; or who may be the targets of collective bargaining?

How might the role of industry associations develop to support members looking for collective bargaining resources and solutions?

These are just a few questions that recruitment, contracting, and staffing agencies (and their industry associations) might now be asking. No doubt there are many others.

The ACCC would like to hear about them by 21 September 2018.

 

Andrew C. Wood

ACCC Proposed Class Exemption to Allow Agribusiness Collective Bargaining: Unintended Labour Market Consequences?

Strawberry Harvest in Central CaliforniaEarlier this year, I was asked to outline 10 steps that providers and users of labour hire services could take to prepare for the anti-competitive labour hire licensing schemes that were about to start in South Australia and Queensland (and more recently, Victoria).  

It now looks like step #9  – Anticipate and adjust to changes in the market – may prove especially important if the ACCC’s plan to grant a class exemption allowing agribusinesses to negotiate collectively with their suppliers goes ahead.

Step #9 highlighted the importance of appreciating that:

  • not everyone would get a licence;
  • this would leave gaps in the market, especially in regional areas, that would require new networked services supply models; and
  • consolidation and rationalisation would occur around licensed providers, giving them  increased market power and a significant market advantage over licence applicants, many of whose applications are still pending.

The ACCC’s plan to allow a collective bargaining class exemption would “provide a ‘safe harbour’, so businesses that qualify can collectively bargain without the risk of breaching competition law”. 

That would significantly offset any increase in market power or competitive advantage that a licenced provider might obtain.

Buyers and sellers of labour hire services should now be thinking strategically about how that offset could be harvested to best advantage to produce service and pricing models, which do not simply drive prices down again to levels that compromise the ability of reputable labour hire providers to meet safety net, decent work, and accommodation standards.

The relationship between sustainable business modelling, bargaining, and labour exploitation was beginning to be explored in the Fels Wage Fairness Panel Inquiry into the 7-Eleven Franchise.

Although there is still much work to be done, the ACCC’s plan is likely to advance the discussion of that relationship … but only if labour hire, contracting, and staffing services providers join the debate.

The ACCC is inviting submissions on its proposed plan by 21 September 2018.

 

Andrew C. Wood

 

 

 

Preparing Stormy Labour Hire Licence Challenges in the “Sunshine State”

dog with an umbrella going for a walkIn an earlier post, I forecast that a rough “Storm Season” could be brewing for some Queensland labour hire providers, if indications coming from Labour Hire Licensing Queensland and the Hon. Grace Grace MP, Minister for Industrial Relations are anything to go by.

In this post, we look at some essential preparations that providers can make in order to meet or avoid a worst case scenario.

If your agency is one of the 500 or so, whose application for a labour hire licence seems to have been held up; or if you’ve been issued with a licence but are facing objections, or have concerns about whether a licence may be vulnerable to suspension or cancellation either because of incorrect information (e.g. about the use of visa workers) supplied with the application, or because of non-compliance with one of the myriad of relevant laws – it might be worth taking a few steps to prepare for what could turn out to be a worst case scenario.

These are not nice topics to have to write about. Many might worry that “rocking the boat” could put them “on the regulator’s radar”. However, it’s sometimes good to address them head on, and to briefly outline some of the preparations that you might begin to make.

Finding out what’s going on with the delays

One of the worst things about delayed applications is that you won’t necessarily know what’s happening. Rumours abound, and speculation runs rife. It is often best to try to get to the facts – or at least as many of them as you can discover.

Broad inquiries

At a broad level, the problem might be addressed by having your industry association raise the issue of general delay with the regulator and seek information about why the scheme does not seem to be working as smoothly as planned.

It would be reasonable to ask the regulator for some general information about the results of its State-wide audits, conducted back in May and June 2018. So far it hasn’t said a lot about those.

Your members of Parliament might similarly ask questions and seek information from the responsible Minister.

Information obtained, at that broad level, might not quite put your mind at ease; but it should yield some context that will help you to plan your next steps. Importantly, it will put the providers’ interest “in the game”, without singling out any particular applicant or licence holder.

Provider-specific Inquiries

At a provider-specific level, the lack of information can often be addressed by an exploratory call to the regulator.

You might point out that the regulator’s website says that it anticipates that licence application decisions will be made within 28 business days from the date the application was lodged. You could (politely) ask whether there is any reason (that the regulator can tell you) why your application seems to be taking longer. You could ask when you might expect to receive a decision.

If there are particular circumstances that require an answer sooner rather than later – e.g. an upcoming tender – you could let the regulator know about that, so that you are not disadvantaged against other tenderers by having your application still undecided.

Right to Information (Freedom of Information) and Information Privacy

In some cases, you might consider exercising your rights to obtain information under the Right to Information Act  or the Information Privacy Act.

You can ask the regulator how you would go about doing that. You might even ask the regulator whether it would consider giving you informal access, which is usually simpler and faster than making a formal application.

Queensland’s Office of the Information Commissioner provides a great resource on Busting Myths about the Right to Information. It’s worth reading if you want to know more about the process.

Even if you make a formal application, you might not get every piece of information because some information may be exempt – e.g. some complaint information; but if there are objections or complaints in the wind, you may be able to find out the general nature of them and then begin to prepare your case to address them – either upon inquiry by the regulator; or by correction procedure, if the information is personal information; or upon formal internal or external review (discussed below).

Dealing with adverse decisions

Information Notices

If you receive an adverse decision – e.g. a suspension or cancellation decision; a licence refusal; or the imposition of adverse conditions – you should receive an “information notice” given by the Chief Executive under the Act.

An information notice  is a notice stating—

  • the decision; and
  • the reasons for the decision; and
  • that the person has a right to have the decision reviewed under s. 93; and
  • how, and the period within which, the person may apply for the review.

The information notice will provide a good place to start, because it should outline the matters you will have to address.

QCAT Information Notice

A different type of information notice, called a QCAT Information Notice, must be given by the Chief Executive, when providing a decision after review under s.97 of the Act.

Receipt of a QCAT Information Notice triggers the right to appeal to QCAT (Queensland’s Civil and Administrative Appeals Tribunal) under s. 98.

s. 93 Review

The Act provides for decisions of the Chief Executive to be reviewed internally by someone other than the person who made the original decision.

Review applications have to be made in the approved form and within 28 days after being given the Information Notice.

When applying for review, you should set out your grounds and state the decision that you want the Chief Executive to make. That becomes important later on, when the Chief Executive has to decide whether to give you a QCAT Information Notice, in case you should want to appeal further.

Obviously, the strength of your review submission depends on the extent of your preparation and the quality of the advice and support you have received in preparing your submission. This is an area where you might do well to have your legal support team well prepared in advance.

s. 96 Stay of Decision

A “stay” is an order that suspends a decision and stops it coming into effect, while review rights are pursued.

Merely applying for a review of the Chief Executive’s decision, or appealing from a review decision, does not stay the decision.

To get a stay, you would have to apply IMMEDIATELY to QCAT.

Being in a position to apply immediately, probably requires you to have done some advance preparation and to have your legal support team well briefed so that they can move quickly.

You might need to ask QCAT to stay the decision for long enough to allow a review decision to be made by the Chief Executive under s.97 (see below) plus additional time to enable an appeal to QCAT to be concluded in case the s.97 review decision is adverse, and you wish to appeal under s. 98 (see s.98 appeals below).

S. 97 Review Decision

The Chief Executive, must, within 21 days after receiving a review application:

  • review the original decision;
  • make a review decision; and
  • give notice of the review decision (a “review notice”).

If the Chief Executive does not give a review notice within the 21 days, the Chief Executive is taken to have made a review decision confirming the original decision.

That would mean that you should track the 21 days very carefully.

s. 98 Appeals

If the review decision is not the decision you wanted, you should receive a QCAT Information Notice.

You then have 28 days from the day when you were notified of the review decision to commence your appeal.

A QCAT Information Notice must state the following—

  • the decision;
  • the reasons for the decision;
  • you have a right to have the decision reviewed by the tribunal;
  • how, and the period within which, you may apply for the review;
  • any right you have to have the operation of the decision stayed under s. 22 of the QCAT Act.

Just keep in mind that failure to comply with those requirements does not invalidate the decision.

Failure to make any decision at all – s. 22 Judicial Review Act.

Occasionally, a decision maker might fail to make a decision within the time specified in the Act which confers decision making authority; or if no time frame is specified, within a reasonable time.

What is a reasonable time, depends on all the circumstances.

The Act does not stipulate a timeframe within which the Chief Executive is to make a licence application decision. But remember that the Regulator anticipates being able to make decisions within 28 business days of receiving the application for a licence. That would tend to suggest that there may be some licence applicants, who might now be wondering what their rights are if the Chief Executive fails to make a decision within a reasonable time.

Under s. 22 of the Judicial Review Act 1991 (Qld), a person who is aggrieved by the failure of the Chief Executive to make a decision can apply to the Court for a statutory order of review in relation to the failure to make the decision on the ground that there has been unreasonable delay in making the decision.

The order will not confer the licence; it will merely direct the Chief Executive to make a decision. However, the Court can additionally make:

  • an order declaring the rights of the parties in relation to the making of the decision; and
  • an order directing any of the parties to do, or to refrain from doing, anything that the Court considers necessary to do justice between the parties.

Other remedies

In any given case, there may also be other remedies that might be available.

Hopefully, you will not need them. But it is always a good idea to canvass them with your legal support team; and to do so well in advance of the time when you might need them so that you can move quickly and with confidence.

 

Andrew C. Wood

Rough Storm Season Brewing for Queensland Labour Hire Providers?

Multiple eletric lightning strikes over river in BrisbaneOne might wonder what sort of Storm Season could be brewing for Queensland’s labour hire providers.

When Queensland’s labour hire licensing scheme commenced on 16 April 2018, many labour hire providers jumped right in and lodged their applications. Since that time, approximately 2,400 applications have been approved, with a further 600 still waiting for approval as at 10 August 2018.

What’s interesting about those 600 pending applications is that about 500 of them date back to the lodgement cut-off date of 15 June 2018. Two hundred go back as far as April and May. Nine of them date back to Day 1 of the scheme.

A quick scan of the pending applications list also suggests a significant representation from amongst labour hire providers to the horticulture and farming sectors.

Is this “normal”?

Labour Hire Licensing Queensland’s website advises:

How long does it take?

Once you have made your application and paid your licence fee it is anticipated a decision on your application will be made within 28 business days.[i]

So, why is it taking so long for these applications to be processed?

Let’s have a look at what might be going on behind the scenes.

On 4 May 2017, just three weeks after the scheme commenced, Labour Hire Licensing Queensland (LHLQ) issued a bulletin, highlighting problems it had identified with several applications and signalling its intention to take action on a number of complaints.

We have identified several applications in which we suspect inaccurate information has been supplied about the supply of visa workers.

We work closely with other State and Commonwealth Government agencies to ensure the accuracy of information received, including the Fair Work Ombudsman, Australian Border Force (Home Affairs), Workplace Health and Safety Queensland, WorkCover Queensland, Queensland Fire and Emergency Services and local councils.

Labour hire providers must ensure that they are providing accurate information in their applications to enable us to properly assess their suitability to obtain a licence. Strong penalties apply for providing false and misleading information. We will suspend licences obtained as a result of the provision of incorrect or misleading information, and will cancel licences granted to those who are no longer fit and proper persons.

We will also be acting on a number of complaints received from the public about unscrupulous labour hire operators.[ii]

Now let me be perfectly clear about this – just because an application has not been processed and has been outstanding since April or May does NOT mean that the applicant is an “unscrupulous labour hire provider”, or that it has provided incorrect information in connection with its application.

Applicants on the pending application “Green List”, who lodged their applications on or before the 15 June cut-off date, can continue to provide labour hire services until a decision is made and the application is removed from the list. If the licence is granted, they will move to the register of licence holders. If it is refused, they have review and appeal rights; and can apply for a stay whilst the decision is reviewed.

However, on the same day, LHLQ issued a second bulletin in which it announced its intention to conduct a visitation program for “labour hire providers, users and workers to provide information about their obligations and rights under the new laws”.

Somewhat ominously, the bulletin concluded:

During the visits, we’ll conduct audits to ensure applicants and licensees have provided accurate information in their applications and have kept the required evidence to support their declarations (e.g. fit and proper person declaration).[iii]

Shortly thereafter in May, and without any further fanfare, LHLQ suspended the licence of one provider – RJP Contracting Service Pty Ltd. The reasons were not published at the time.

Finally, on 7 August 2018,  Industrial Relations Minister, Grace Grace, confirmed that RJP’s licence had been cancelled. The reason stated was that RJP:

…was found to have provided false information about the supply of visa workers on their application and had also breached the Fair Work Act 2009.

The Minister continued:

Labour hire providers should be aware that if you do the wrong thing, you’ll be found out and you’ll be dealt with accordingly,

We make no apologies for taking a tough stance against dodgy operators or unlicensed operators, who don’t do the right thing by their workers.[iv]

The decision to cancel RJP’s licence may yet be overturned on review or appeal. That matter should not be regarded as having been concluded and it still has some way to run.

But why has there been only one suspension and cancellation if the problems were as widespread as LHLQ indicated back in May? And what might LHLQ’s decision forecast for other providers?

On one optimistic view, RJP was the only provider to have come unstuck in the LHLQ audit sweep.

On another, it looks like LHLQ could be running a sort of test case to see how well its processes work, getting all its ducks lined up in readiness for more refusals, suspensions and cancellations to come.

And if that is the case, some Queensland labour hire providers could be in for a rough Storm Season come November.

 

Andrew C. Wood

 

[i] https://www.labourhire.qld.gov.au/i-provide-labour-hire/licensing

[ii] https://www.labourhire.qld.gov.au/news-media/news/correct-information

[iii] https://www.labourhire.qld.gov.au/news-media/news/compliance

[iv] https://www.labourhire.qld.gov.au/news-media/media-releases/labour-hire-provider-loses-license-operate-queensland

Three States of Accord (and its Opposite)

Close up of Business people shaking hands, finishing up meeting, business etiquette, congratulation, merger and acquisition conceptMuch of my work, when I am rehabilitating parties’ terms of business,  requires me to reflect on the nature and quality of their agreement (and its opposite). We are often taught that agreement is good and that disagreement or conflict is bad. However, adopting an accord-centred approach, it seems possible to reflect a little more deeply.

Accord =   the relational aspect of agreement. Often overlooked in traditional contract making, it represents the heart and spirit of the parties’ agreement – their shared and separate hopes – the ‘what’ and the ‘why’ of their commitments in ways that also authentically represent the “who”.

Discord = active disagreement, often manifesting in open conflict and disputes – but sometimes containing the potential for accord in narratives thickened around threads of the “absent-but-implicit”.

Dys-cord = unhealthy agreement, the illusion of agreement, often reflecting power imbalances – may represent the compromise that everyone is unhappy with – might also represent the type of “one-up” approach to contract-making and negotiating that tips the parties towards conflict and bickering over the contract at the first upset. Although dys-cordant agreements can be legally enforceable, they often leave the parties with a lingering sense of discontent and distrust that may lead to non-co-operation and eventually undermine their true “loyalty to the bargain”. Dys-cordant agreements are inclined to “leave value on the table” – especially intangible value.

I wonder how much of what passes for agreement is something less than true accord? And how, as collaborative lawyers, we can use our skills to help our parties resolve discord and make healthier agreements.

Andrew C. Wood

Qld’s Labour Hire Licensing Scheme: the “incorporated worker exception” – pass or fail?

Pass or Fail

This is the second in a series of posts in which I examine the detail of the worker exceptions created by reg. 4 of Queensland’s Labour Hire Licensing Regulation 2018. In this post, I look at the “incorporated worker” exemption in reg. 4(1)(b) and invite you to consider whether it should be given a “pass” or “fail”.

Some background

In October last year, and in commentary about the coverage of the Act, I drew attention to the difficulties posed for micro-business, incorporated independent contractors. The specific difficulty that I foresaw was that, if the incorporated entity supplied its worker to another person to do work, then it would need a licence.

The issue was taken up in submissions to government about the content of the regulations; and specifically about whether an exemption from the need to hold a licence could be carved out, using the power granted under s. 8(2) of the Act to exclude classes of individuals from the definition of worker.

Such an exemption was possible on the basis that, if the provider supplied persons, who were not workers within the meaning of the Act, it followed that the provider did not provide labour hire services and therefore did not need a licence.

An exemption would have relieved hundreds, perhaps thousands, of small “incorporated workers”, who operate through their own corporate entities, from the need to hold a labour hire licence.

To its credit, the Government does seem to have accepted those submissions in part.

However, in my opinion, the incorporated worker exception created by regulation 4(1)(b) of Queensland’s Labour Hire Licensing Regulation 2018 is so narrow that it will not provide the relief most were hoping for; and may end up disadvantaging many incorporated workers and adding to an already excessive red tape burden.

The incorporated worker exception

Regulation 4(1) sets out four classes of individuals, who are excluded from the definition of worker under s.8.  Paragraph (b) of that regulation establishes the “incorporated worker” exception in terms:

(b) for a provider who is a corporation—an individual who is an executive officer of the corporation and the only individual the provider supplies, in the course of carrying on a business, to another person to do work;

Three key points

Three key points need to be noted about this provision.

Firstly, the exception, applies to a corporation that is (or, but for the exception, would be) a provider – i.e. the corporation that, in the course of carrying on a business, supplies, to another person, a worker to do work.

Secondly, for the individual to qualify for the exception, and for the provider to rely on the exception as a means of avoiding the need to hold a licence, the provider must supply only that individual and no other individual. If the corporation supplies another person, it will need a licence.

Note that the expression used is individual and not worker. That will mean that the exception cannot rely on the other reg.4 exceptions to reduce the number of supplied persons to one.

For example: You could not get around the one person requirement by saying, “Well, I do supply another person; but that person is not a “worker”, because I pay them annual wages above the high-income threshold”.

Thirdly, the individual, who is supplied, must be an executive officer of the corporation.

Who is an “executive officer”

An executive officer is defined in the Act to mean any person, by whatever name called and whether or not the person is a director of the corporation, who is concerned, or takes part, in the management of the corporation.

One-person corporations

So, we are really talking about a one-person corporation – or an “incorporated worker”.

These are the workers that are sometimes called “On-hired Contractors (Incorporated)” or “Pty Ltd Contractors”.

The exception does not apply to partnerships or to other unincorporated businesses; and it is not targeted at labour hire providers, who may be supplying more than one individual to perform work.

Is there a problem?

Yes.

One of the key indicators of a genuine independent contracting relationship is the ability for the contractor to delegate the work.

The one-person requirement means that the incorporated provider no longer has the power to delegate, because delegation would involve supplying a second individual to do the work.

Neither could the provider merely substitute another individual to do the work, because that also would involve supplying a second person.

Two problems flow from that.

  1. The inability to delegate, or substitute, may greatly impede the capacity to perform the work – especially if the work involves roster or “on duty” cover arrangements, where professional and skilled trade workers may “stand in” for each other from time to time.
  2. Removal of the power to delegate or substitute may result in the so-called “corporate veil” wearing so thin that incorporation may cease to offer much protection from liability and allegations of sham contracting.

Pass or fail?

Whilst the exception might assist some small incorporated contractors, it may prove to be too restrictive, and to be attended by too much risk, to be attractive as an escape route from the need to hold a licence.

At the same time, the exception will create a headache for non-exempt labour hire providers, because there may be a cohort of individuals, within their on-hire workforces, who are not workers and are therefore not to be included in the provider’s reports under s.31 of the Act. For those providers, the exception will only add to their already excessive red tape burden.

At the moment, and in its present form, I’d have to give it a fail.

What do you think?

Andrew C. Wood

Queensland’s Labour Hire Licensing Scheme: Regulatory exceptions to “worker” definition open a can of worms.

Just days before its labour hire licensing scheme was due to start, Queensland finally released its labour hire licensing regulations. Although it consulted briefly on the content of the regulations, it did not consult on the drafting. That is a pity because some agencies are now looking at the regulatory exceptions to the definition of worker that are set out in regulation 4 and wondering if they are excused from the need to hold a licence.

In my opinion, opting not to seek a licence on the basis of a regulation 4 exception is a high-risk strategy. It is one that I doubt many risk-averse clients would be prepared to buy into – especially in view the high penalties and prison sentences that apply to dealing with an unlicensed provider.

This is the first of a series of posts in which I will break down the exceptions and show why they need to be handled with care.  In this post, we will look in detail at the high-income employee exception.

Subsequent posts will examine:

  • the “incorporated worker” exception;
  • the “secondee” exception; and
  • the “internal labour hire” exception.

Some basics

First, let’s look at the basic structure of the legislative scheme that leads to regulatory exceptions being created.

  1. Section 10 of Queensland’s Labour Hire Licensing Act 2017 (“LHLA(Q)”) makes it an offence to provide labour hire services without a licence.
  2. Section 11 of the LHLA(Q) makes it an offence to acquire labour hire services from an unlicensed provider.
  3. These provisions depend heavily on the definitions of provider, labour hire services and worker.
  4. They also depend heavily on the definition of supply; but there is no definition for that. We will have to wait for the courts to tell us what supply means.
  5. However, section 7(1) of the LHLA(Q) sets up the definitions of provider and labour hire services.
  6. A provider is a person, who provides labour hire services.
  7. A person provides labour hire services if, in the course of carrying on a business, the person supplies, to another person, a worker to do work.
  8. Section 8 of the LHLA(Q) defines the term, worker.
  9. An individual is a worker for a provider if the individual enters into an arrangement with the provider under which—
    • the provider may supply, to another person, the individual to do work; AND
    • the provider is obliged to pay the worker, in whole or part, for the work.
  10. However, an individual is not a worker if the individual is, or is of a class of individual, prescribed by regulation. So, we must turn to the regulations.
  11. Regulation 4 of Queensland’s Labour Hire Licensing Regulation 2018 (“the Regulations”) sets out four classes of individuals, who are excepted from the s.8 definition of worker.
  12. Those individuals are not workers.
  13. Because they are not workers, if the provider ONLY supplies those classes of individuals, then it has not supplied a worker and it should not need a licence – i.e. it has not provided labour hire services. That is because labour hire services necessarily involve the supply of a worker.
  14. If the provider supplies (or ever wants to supply) other classes of individuals, who are workers, then it will need a licence.
  15. If the provider supplies individuals, whom it thinks are not workers (but who really are workers because they are not exempt) and it did not have a licence, then it will have breached the prohibition against supplying labour hire services without a licence; AND its client will likely have breached the prohibition against acquiring labour hire services from an unlicensed provider.
  16. Now a provider might already have a licence, because it has wanted to supply (non-exempt) workers.
  17. When it gets to reporting time, it will need to distinguish its non-exempt workers from its exempt workers, because many of its s.31 and s.32 reporting obligations relate only to workers (as defined) – i.e. non-exempt workers.
  18. So, to manage all this, providers need to have a thorough understanding of the scope of the Regulation 4 exceptions – and they are not as straight forward or benign as they might first appear!
  19. Additionally, clients of providers need to have a high degree of confidence in their providers’ ability to work through the detail of the exception on which they are relying and to get it right!

The “high income employee” exception

Let’s break the high-income employee exception down and examine it with some interposed commentary in which I’ll make observations and pose a few questions for you to consider if you’re thinking about relying on this exception. Here it is, taken from regulation 4:

4. Individuals who are not workers—Act , s 8 

  1.  For section 8 (2) of the Act, the following individuals are prescribed—

   (a)  an individual employed by a provider—

The exception relates only to individuals, who are employed by a provider:

  • What if you are on-hiring an incorporated worker – the entity, rather than the individual?
  • What if the individual is employed by someone else and you are merely an intermediary as contemplated by LHLA(Q) s. 7(2)?
  • What if the individual is not employed; but is an independent contractor of yours, or works in some other capacity?

(i)  whose annual wages are equal to or more than the amount of the high-income threshold under the Fair Work Act 2009 (Cwlth), section 333; and

The threshold is set by reference to an amount of annual wages.

There are no pro rating provisions in the Regulations. The Regulations have only borrowed the threshold figure from s.333 of the Fair Work Act. They have not borrowed any of the FWA provisions that apply the threshold to part time work, or to work for a period of less than a year as a rate of earnings.

In any event, it turns out that wages are different from earnings, which is the expression used for the high-income threshold provisions of the Fair Work Act.

Although the term, annual wages is not defined, the term wages is. It has the meaning given in the Workers’ Compensation and Rehabilitation Act 2003 (Qld).

  • What if your worker does not receive wages; but receives a distribution from a discretionary trust or partnership; or directors fees or dividends from an incorporated entity?
  • What if your worker receives wages from other employers?
  • Do you have the means to investigate those matters?

Wages and earnings include and exclude different things. For example,

  • wages include overtime payments; earnings don’t – unless the overtime is “guaranteed”.
  • wages exclude compulsory superannuation; earnings include it.
  • wages exclude the value of non-monetary benefits; earnings include it.

There are other important disparities between the two expressions.

You might have a worker, who has the benefit of a high-income guarantee under the FWA; but who fails to meet the annual wages threshold under the Regulations; and vice versa.

  • Have you identified all the components of annual wages that need to be taken into account or excluded in order to determine whether the annual wages threshold applies to each of your workers?
  • Can you adjust for any allowances that are not expressly excluded by the Workers’ Compensation and Rehabilitation Act 2003 (Qld)? Do you know what they are?
  • Can you say how the annual wages threshold applies at any given point in time before year end in relation to:
    • a part-time employee with agreed hours?
    • a part time employee with no agreed hours?
    • an employee receiving (or entitled to) overtime?
  • Can you make an accurate conversion from the annual wages threshold to the hourly rate you are paying your worker (especially if you have structured it as an all-in rate)?
  • Do you do your conversion on the basis of a 38 hour week, or on some other basis – e.g. the hours actually worked?
  • How do you account for commissions, incentives and bonuses (both discretionary and non-discretionary)?

(ii)  other than under an industrial instrument under the Industrial Relations Act 2016 or a modern award or enterprise agreement under the Fair Work Act 2009 (Cwlth).

Employees, who are employed under any of these instruments do not fall within the range of the regulatory exception. So,

  • Does employment in circumstances where a “jump up” clause applies to the employment constitute being employed under such an instrument?
  • Have you accounted for the range of professional awards that may apply to the employment? Some of the Modern Awards for professionals and other high income occupations or classifications that could bear upon your calculations could be:
    • Health Professionals and Support Services Award 2010
    • Higher Education Industry—Academic Staff—Award 2010
    • Medical Practitioners Award 2010
    • Nurses Award 2010
    • Professional Diving Industry (Industrial) Award 2010
    • Professional Employees Award 2010

There are others.

As you will quickly see, the failure to deal with these matters by including proper machinery provisions in the regulations has left providers (and their clients) dangerously exposed, if they choose to rely on them.In many cases, they will create false comfort and only the illusion of exemption.

Safe to assume?

Is it safe to assume that the Queensland Government would apply the machinery provisions of the Fair Work Act in order to make some sense of all this?

It might try to. It might even say that it intended to. But, in my opinion, the drafting of this regulation has not lived up to the intent. One can’t put in what the Government left out!

Common sense?

Is it safe to assume that a Court would adopt a “common sense” view of the Regulations and “write in” all the missing features that might help get a labour hire provider “across the line”?

In my opinion, it is not. It is more likely that a Court would say that the Regulation, in its current form, lacks the necessary machinery to make it fully workable. In that respect, legislative drafting is a bit like software coding – there might have been a lot of common sense in having something included; but unless it has been written into the program, it’s not going to work as intended.

A “commercial” approach?

Is it safe to assume that clients will accept an unlicensed provider’s (self-serving) interpretation of the Regulations; and that they will accept, without question, that every worker whom the provider on-hires – whether to that client or someone else – receives the annual wages threshold, such that the provider does not need a licence?

I doubt it.

What’s more, I doubt that it’s terribly “commercial” for a provider to place itself on a path, where it can only ever supply exempt workers; and set itself up to have to jump through the application hoops sometime down the track, when it does want to supply a non-exempt worker, and has to explain to the regulator how it’s been operating up to that point.

I doubt that clients, who are sophisticated enough to require the services of high-income employees will consider it an attractive commercial proposition to seek supply from an unlicensed provider, when there are properly licensed providers in the market.

And I don’t know how “commercial” it will be for national and inter-state providers to rely on an exemption that only operates in Queensland and not in South Australia.

It looks to me like the regulatory exception for employees, who earn above the high-income wages threshold does little more than open a can of worms.

What do you think?

CAN OF WORMS 1

 

 

Andrew C. Wood

Independent contractors & incorporated workers: Hair-splitting, fact sensitive inquiries needed under new labour hire licensing laws

The position of independent contractors and incorporated workers under Queensland’s and South Australia’s new labour hire licensing laws is complex and warrants closer attention than it has received to date. Detailed, fact sensitive inquiries into supply arrangements are required; and there will be a lot of “hair-splitting” between now and the time, when these laws are eventually interpreted by the courts.

In this post, I’ll try to explain why; and highlight some of the issues that staffing agencies will need to consider if they are on-hiring independent contractors in either State and need to get on top of the new laws.

Different approaches

First off, there is a difference in approach between Queensland and South Australia – at the moment, at least. That may change, when Queensland finally gets round to making its regulations.

The difference in approach arises not so much from the definition of “worker”, which is essentially the same in both States, as from the way in which the two States have captured the type of supply that is considered to be a supply of labour hire services.

In Queensland, a person provides labour hire services if the person supplies a worker to do work for another person. That casts a very wide net. Queensland has not yet tried to explain what “supplies” means, or to qualify it in any way. It may do so in its regulations, which are yet to be published.

In South Australia, a person provides labour hire services if the person supplies a worker to do work for another person in and as part of that other person’s business or commercial undertaking.

The addition of those words is what makes the difference.

South Australia has been trying, with limited success, to explain what that means and has produced what has been described as quite possibly the longest explanatory note in any Act of Parliament – albeit a note that has virtually no legal effect!

South Australia’s use of the “integration test”

The integration test is most often used as a test to distinguish employees from independent contractors. An employee, and the work that an employee performs, is understood as being integrated into the employer’s business. It is performed in and as part of the employer’s business.

However, South Australia seems to be trying to use a form of the integration test (work is performed in and as part of the client’s business) to distinguish its concept of labour hire from a general contracting situation, where a worker performs the work in and as part of a different business (e.g, the plumbing business of a plumbing worker’s employer), or the worker’s own business (e.g. an I.T contractor’s own I.T. business).

The “plumber” example given in s.7 of the South Australian Act was its first attempt to explain what it has been trying to do.

The “plumber” example

Guy runs a plumbing business and has an employment contract with Tracey under which Tracey is paid to come to work each day at the plumbing business and be assigned work. Corey runs a grape growing business at which there is a problem with the plumbing. Corey enters into a contract with Guy to diagnose and fix the problem at the business and so Guy sends Tracey to Corey’s grape growing business to do the work. Guy does not provide labour hire services in sending Tracey to do work at Corey’s business.

The reason why Guy does not provide labour hire services is that Tracey performs the plumbing work in and as part of Guy’s plumbing business; not in or as part of Corey’s grape growing business.

The additional examples given on the South Australian website also go some way towards explaining what that State is trying to do. The I.T. examples may be helpful.

South Australia’s I.T. examples

A large retailer contacts an IT recruitment agency, requesting fulltime IT support for a big project. An IT consultant is provided to the retailer for 6 months. The consultant is paid by the recruitment agency and the retailer pays the recruitment agency directly. These IT consultants are part of the retailer’s work force for the 6 month contract and therefore the recruitment agency would need to be licensed.

Compare that with the example of where a licence is NOT needed in South Australia:

A law firm contacts an IT company about setting up their IT systems. After several discussions, the IT company is contracted to set up the law firms systems. The IT company uses its own IT consultants for 2 weeks. The IT company invoices the law firm at the conclusion of the work. These IT consultants are providing a specific service to the law firm under the direction of the IT company, as IT company employees.

Challenges posed

There are several difficulties with the South Australian examples of situations where a labour hire licence is not needed, in my view.

Supply through a staffing agency

The South Australian examples do not deal with a situation, where the worker is engaged or supplied through a staffing agency.

  • Tracey is simply the direct employee of a plumbing company.
  • The IT consultants are simply the direct employees (or independent contractors) of an I.T. company.
  • No example is given of a case, where Tracey is engaged as an independent contractor through a firm that is not a plumbing company, but is a staffing agency of some description.
  • No example is given of a case, where an I.T. consultant is engaged as an independent contractor and supplied through a staffing agency.

Those are serious omissions, because the examples given fail to address, directly, the very question that is most likely to be of concern to staffing agencies and to the workers and clients, who deal with them.

Can an independent contractor ever be supplied in the sense required by the S.A. Act?

On one view, a genuine independent contractor can never be “supplied” in the sense required by s.7 of the South Australian LHL Act, because a genuine independent contractor, acting as such, performs the work in and as part of his/her own business.

That presents South Australia with a problem, because it sets up an apparent inconsistency with LHLA(SA) ss. 7(3), which says that a person provides labour hire services “regardless of whether the worker is an employee”.

If that is supposed to indicate that independent contractors are included, you’ll immediately see how the problem arises. How can an independent contractor, who performs work in and as part of the worker’s own business, simultaneously perform the same work in and as part of someone else’s business?

South Australia appears to be trying to get around that inconsistency by saying  (in its I.T. consultant example) that integration into the customer’s work force, as distinct from integration into its business or commercial undertaking, might be enough.

To that extent, it could be trying to equate a work force to a business or commercial undertaking. Though that would be tricky because it may look, to some, like an attempt to stretch the meaning of the Act.

No example of supply of an incorporated worker

Neither do the examples deal with a case, where the worker is what in the UK is called, an incorporated worker.

RCSA calls these workers, On-hired Contractors (Incorporated). APSCo_AU calls them Pty Ltd Contractors.

What they’re called doesn’t matter so much as what they do; and how they structure themselves to do it.

  • In this instance, one has to look closely at the relationship between the worker, the worker’s incorporated entity and the staffing firm.
  • These relationships are set out in Fig. 1. below.

Pty Ltd Contractor Diagram

The arrangements between

  • labour hire agency, incorporated entity & principal (worker); and
  • incorporated entity, worker (principal) and labour hire client –

exhibit the triangular relationship, which the LHLA(SA) & explanatory materials identify as a “labour-hire” relationship.

This is so, regardless of any contractual relationship between the incorporated entity, the worker, and the labour hire client; and regardless of the intermediation of the labour hire agency – see ss.7(3)(b) and (c) of the LHLA(SA).

It therefore seems possible that, in some cases, both the staffing firm and worker’s incorporated entity may be involved in supplying the worker to the client to perform the work; and both may require a licence if, as a matter of fact, the work is performed in and as part of the client’s business or commercial undertaking.

Queensland

Although a late starter in addressing the shortcomings of its ambitious coverage, Queensland is starting to address the issue and has conducted a consultation about the exceptions that might be provided by its regulations. That consultation has now closed and we  await the outcome with interest.

However, it’s worth noting that Queensland is actively considering a limited exemption for those cases where the worker is a director or owner of their own business. That might not let the staffing agencies off the hook, if they’re on-hiring these owner/operator workers (incorporated workers); but it may provide some respite for the worker’s incorporated entities. And that would be welcome.

Of course, it begs the questions: “If Queensland is now thinking about the need for such an exemption, why has South Australia not dealt with it”; and “Are we yet to see more elements of the South Australian scheme unfold?”

So, it’s a case of wait and see. Hopefully, we’ll know the outcome well in advance of Queensland’s 16 April 2018 kick off, because the transition period is only 60 days.

What staffing agencies might now have to consider

The type of issues that staffing agencies might now have to consider in each case include:

How the worker is engaged and paid by his/her own incorporated entity

  • Is the worker engaged as an employee or as an independent contractor of his/her incorporated entity?
  • Is the worker paid for the work; or does the money reach the worker by some other means?
    • Does the worker work as a director and get paid a director’s fee?
    • Does the worker receive dividends as a shareholder, or distributions under a trust, instead?

Who the staffing agency contracts to provide the services (e.g.  I.T services)

  • Is it the staffing agency itself?
    • That is to say is the “staffing agency” really a services (e.g. IT services, engineering services, nursing services, cleaning services, fruit harvesting services…etc)  contracting company?
    • If so, does the “staffing agency” need a licence at all?
    • Even it it does not need a licence, does any sub-contractor, who supplies a worker to it need a licence?
    • If it has positioned itself as a services contractor, rather than as labour hire provider, is the attempted positioning borne out by the reality of the situation?
  • Is it the worker’s company; or the individual worker? The staffing agency needs to look closely at its method of engagement for this.
    •  Some methods engage only the worker’s entity and leave it to the worker’s company to secure the attendance and performance of the worker. These methods are probably more consistent with the notion that the worker is performing the work in and as part of the workers own business.
    • Some methods engage both the worker’s entity and the worker.  These may be more likely to tend towards a labour hire supply of the worker by the staffing agency. That is because the staffing agency will have an arrangement with the individual, who performs the work that may make the individual a worker of the staffing agency.
    • Some methods have only the worker as the services provider. The worker’s entity may act as a type of service entity or contract manager for the worker – handling payroll, the worker’s engagements and expenses, and co-ordinating arrangements between the staffing agency and the worker. These are more likely to involve both the staffing agency and the worker’s entity in a labour hire supply – in which case both may need a licence.

How  the worker operates when at work

This is going to require staffing firms to have a good grasp of the composition and structure of their clients’ work forces.

  • Do you know the boundaries of your clients’ work forces; or even how they are established?
  • Think about it. How many separate work forces might work at a hospital or community health service? Are they all business or commercial undertakings? Might some of them be operating under non-business or non-commercial government or NFP programs? Would that exclude them from the South Australian coverage?

Fact sensitive investigations likely to be needed

Unless South Australia creates a regulatory or administrative exemption for incorporated workers, staffing agencies are going to have to conduct fact sensitive investigations into the arrangements, which they have with their incorporated workers and into the arrangements; which those workers have with their own companies.

Essentially, that involves a hair-splitting, case-by-case investigation in which the staffing agency would examine its own documentation and also examine the documentation of the arrangements that exist between the worker and his/her own company.

My guess is that, in many cases, that documentation will be scanty or ambiguous.

They are also going to have to undertake fact sensitive investigations into the structure and composition of their client’s businesses, commercial undertakings (and work forces) to work out if the individual workers are integrated into any of them – i.e. whether they are supplied in the sense that they perform their work in and as part of those businesses, commercial undertakings, or work forces.

And they are going to have to make judgements about whether the work forces that their workers augment have the necessary business or commercial character.

All of that might not be as easy as it sounds. (Did it sound easy?)

In the JP Property Services Case, it required a Supreme Court decision to determine whether after hours cleaners were integrated into the workforce of  the supermarket, where they worked. The Court held that they were not, because they worked after hours. The result would have been different if they had worked to augment the supermarket’s cleaning workforce during business hours – cleaning up spillages etc!

That’s what I mean by “fact sensitive inquiries”. That’s the level of “hair-splitting” that will be required to make sense and apply these laws.

As a lawyer, I can look forward, with professional interest, to the type of arguments that will be had; but I don’t envy the businesses or the workers, who are going to have them and will now have to carry the burden of a legislative scheme that shows the signs of having been rushed and poorly thought through in the detail of its application.

Man with Magnifying Glass (2)

 

Andrew C. Wood

 

Qld Treasury Consultation Papers on Regulations to Support Labour Hire Licensing Act: Quick Observations

Queensland Treasury has just released two consultation papers on the regulations to support that State’s Labour Hire Licensing Act 2017.

One paper deals with operational issues (including the fit and proper person test and reporting); the other is about coverage and exclusions.

Looks like there needs to be some work done; and that an attempt will be made to resolve with policy what can’t be resolved by regulations.

Coverage problems are now surfacing; and the consultation papers are still strangely silent on anything much to do with licence conditions.

Licence fees range between $1,000 and $5,000.

Reporting requirements may be expanded – but, it would be a good idea to start with a clear statement of why the government needs additional (including confidential) information; how it proposes to handle it; and what it proposes to do with it.

Some regulatory solutions to the challenges posed by a hastily assembled Act seem possible; but they will not be easy to achieve. Internal labour hire within corporate groups is proving to be “particularly problematic”, as the government tries to work itself out of a tight corner.

Submissions are due by 2 February 2018.

You can read about the release and find the consultation papers here.

https://www.treasury.qld.gov.au/fair-and-safe-work/industrial-relations/regulation-labour-hire-industry/consultation-labour-hire-licensing-act/

Businessman & Newspaper

Andrew C. Wood