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

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

Will your outsourced payroll arrangements alter your requirements to have a labour hire license? Probably not.

As attempts by Australia’s labor states to create a multi-jurisdiction, labour hire licensing scheme gain critical mass, it is becoming more important, and perhaps a little easier, to make comparisons and ask questions at a practical level rather than merely at a policy or ideological level.

One such question, which seems to be causing concern amongst industry participants, relates to the involvement of payroll providers in labour hire arrangements. Kudos, therefore, to the industry participants, who have appreciated the detail and complexity of the legislation well enough to formulate the following question:

Will our outsourced payroll arrangements alter our requirements to have a labour hire license?

The answer is, “Probably not”.

Let’s say you provide labour hire services – i.e. you engage a worker and supply that worker to another person (a host) to do work.

Your engagement of that worker creates an obligation – and it’s your obligation – to pay your worker for her or his work. You can’t escape that obligation by entering into a pay-when-paid-by-client arrangement. And, importantly, you can’t escape it by outsourcing your payroll function to a third-party payroll provider. It’s still your source obligation; and it is sourced in the work/wage or work/remuneration bargain that you made with your worker.

Neither, in most cases, can you transfer your worker to the payroll company. As the High Court has reminded us:

No worker is an asset in the employer’s balance sheet to be bought or sold.

So, whilst ever you continue to engage the worker, you have a payment obligation – even if a payroll company is going to perform it for you.

Now, I’ve heard it suggested from time to time, that terms and conditions of appointment of a payroll provider often attempt to shift responsibility for engaging the worker onto the payroll provider. They might say something like:

 You, the payroll provider, agree that you employ the worker and are responsible for all employer obligations.

In my opinion, you will have to be especially careful if your terms of business say anything like that – and that’s so regardless of whether you are the payroll provider or the labour hire provider.

The work/wage or work/remuneration bargain is made between the engager and the worker. It’s not something that you can transfer on paper – even if you have a paper consent from the worker and payroll provider – because the paper transfer and consent might not reflect the reality of the situation if it’s actually you, who continue to supply the worker to your client and are getting paid for it.

Even though there may be some very limited circumstances in which you could successfully transfer a worker’s engagement to a payroll company, it may still be important for you to ensure that you have a licence.

Remember, you can’t transfer a worker whom you haven’t first engaged. How did the worker become engaged with you in the first place? Did you advertise, or hold out that you were willing to provide labour hire services? Under all three state schemes, you must not advertise or hold yourself out as willing to provide labour hire services unless you have a licence that is in force.

If your attempt to appoint a payroll provider is designed to circumvent or avoid an obligation imposed upon you by the labour hire licensing legislation, you may also have committed an avoidance offence. Your client, and indeed your payroll provider, may be obligated to report the attempt as an avoidance arrangement under the reporting provisions of the legislation.

If you DO successfully transfer the worker to the payroll company, remember:

  • It’s probably not just the payroll function that you have transferred – it’s likely to be pretty much the whole show; and it might be difficult to know what your client will be paying you for.

Ask yourself: Are you still providing what you agreed with your client you would provide? If you’re no longer providing what you agreed with your client to provide, you might find that your agreement with your client (including its terms and conditions) will be swept aside by a court, as happened in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd.[i]

  • Perhaps you’re being paid a type of pay-as-you-go placement fee and you’re really acting in the role of a private employment agent (PEA) providing placement services.

Ask yourself: Do your terms of business support that characterization of your arrangement; and do they accurately reflect the arrangement?

  • Even if that is the case, you may still require a labour hire license if, as a PEA, you are doing anything more than merely providing a recruitment or placement service.

For example: If you are arranging safety inductions, PPE,  accommodation,  transport, message handling to coordinate worker attendance at the worksite etc, you will not have the benefit of the private employment agent exception under the Queensland and South Australian legislation; and you may be caught by the extended coverage provisions in the Victorian legislation that relate to PEA’s, who arrange accommodation; or Contractor Management Companies, who recruit and place independent contractors.

  • You may also require a PEA licence in those states and territories that still have them.

Ask yourself: Do you need and do you have a PEA licence?

  • Your arrangement is likely to convert the payroll provider into a labour hire provider if the payroll provider now has to supply the worker to the user or “host”.

Ask yourself: Does your payroll provider have a labour hire licence? If not, you may need to consider whether you have an ancillary liability arising from placing workers with unlicensed labour hire providers. The ancillary liability penalties can be as severe as those imposed upon the principal offender.

  • You may have made a type of split placement – i.e. you have placed the worker operationally with the host, but administratively with the payroll provider. In doing so, you may have implicated your client in the offence of dealing with an unlicensed labour hire provider if either you or your payroll providers are unlicensed.

If your attempt to transfer the worker to the payroll company was NOT effective, – and there may be a number of reasons why it will not be effective – then you would clearly remain the labour hire provider. You will need a licence – even though the payroll provider is paying the worker.

The interactions between payroll arrangements and the coverage and avoidance provisions of the labour hire licensing legislation are complex and are affected by nuances in definitions, exclusions and extensions. That will mean that payroll providers (and labour hire providers) will need to exercise special care to understand the effects of a transfer of payroll responsibility from a labour hire provider. They will need to be thoroughly familiar with the legislation and will need to scrutinize the terms and conditions upon which the transfer of payroll responsibility takes place.

But wait! There’s more…

So far, we’ve only been discussing the situation where a labour hire provider appoints a payroll provider. There’s also the possibility that the payroll provider might be appointed by the client (host) or even by the worker. There’s the additional possibility that the payroll provider is, in fact, the worker’s own incorporated entity. That’s a whole other story!

Teacher 3

 

 

Andrew C. Wood

 

[i] [2015] FCAFC 37 per North and Bromberg JJ at [paras 215 to 218].

This is an opinion piece intended to promote public discussion. It is not, and should not be relied on as legal advice. If you do want legal advice, please seek it from a lawyer, who is familiar your industry and with the laws that apply in the jurisdictions where you carry on business. Your industry associations or local Law Societies may be able to help you to find professional legal advisors, who can assist you.

 

Uber drivers confirmed as “employees” by UK Employment Appeal Tribunal.

silhouette-of-scaleOn 10th November 2017, the UK Employment Appeal Tribunal delivered its judgment in Uber & Ors v Aslam & Ors [PDF].   The decision will be of interest to agencies and workers operating in the “Gig economy. Here is a brief summary.

Background

Members of the Uber Group had appealed from an earlier decision of the Employment Tribunal, which found that Uber drivers in London were “workers” within the meaning of the Employment Rights Act 1996, the Working Time Regulations 1998 and the National Minimum Wage Act 1998; and that any Uber driver who had the Uber app switched on, was within the territory in which they were authorised to work (London) and was able and willing to accept assignments was working for Uber London Ltd.

Appeal

A key ground in Uber’s appeal was that the Employment Tribunal had mischaracterised the true relationship between Uber and its drivers – that rather than being one of employment, it was one of agency in accordance with which Uber provided booking services as agent for its drivers.

Uber pointed to provisions in its suite of contracts and terms of businesss, which it contended supported its view.

Outcome

The Employment Appeal Tribunal disagreed and dismissed Uber’s appeal. At the time of writing it is understood that Uber intends to take a further appeal to the UK Supreme Court.

Take-away points

In the meantime, there are a few quick points that can be made about the EAT decision.

  1. It is the reality of the situation that matters. The Appeal Tribunal said:

[The Employment Tribunal] was entitled to disregard the terms in the written agreements and the labels used therein.

…the true agreement between the parties was not one in which [Uber London Ltd] acted as the drivers’ agent.

  1. Control still matters. The Appeal Tribunal said:

 The [Employment Tribunal]…was entitled to look at all factors to determine whether this was a case in which the … Uber drivers were entering into contracts with passengers as part of their own business undertakings. Seeing that they were subjected to control on the part of [Uber London Ltd] was an indication that they were not.

  1. These matters will continue to be decided on a case by case basis. The Appeal Tribunal said:

Inevitably the assessment [the ET] had carried out was fact-and context-specific.

Moving forward

It will be interesting to see what the Supreme Court makes of this.

Whilst, it would seem possible, in theory, to construct an agency relationship of the type which Uber contended for in this case, one might wonder whether Uber would have done better to construct the agency and booking service between it and the riders, rather than between Uber and the drivers.

It could also be important to recognise that this might not really be a case, where the Employment Appeal Tribunal said that the written documentation doesn’t matter … it’s perhaps more a case of making sure that the written documentation gets it right – i.e. that it reflects the true relationship between the parties.

 

Andrew C. Wood

 

Labour Hire Licensing Acts (Qld & SA): Application to incorporated independent contractors

Blackboard IICsWith Queensland’s Labour Hire Licensing Act 2017 set to commence on 16th April 2018, and South Australia’s even earlier on 1 March 2018, it would be worthwhile for agencies, who on-hire incorporated independent contractors, to review their contractor arrangements to see how they might be affected. 

Provider of labour hire services

It has been assumed that, in a traditional tripartite arrangement, the agency is the party who enters into a commercial arrangement to supply a worker to a client. That’s reflected in the definition of  labour hire services provider contained in s. 7 (1) of the Qld Act.

“A person (a provider) provides labour hire services if, in the course of carrying on a business, the person supplies, to another person, a worker to do work.”

South Australia’s equivalent provision is similar in its focus on the supply of a worker to another person.

Application to incorporated independent contractors

But those provisions are just as capable of applying to incorporated independent contractor entities that supply their nominated workers to the agencies, or at the agency’s direction, to the agency’s clients.

APSCo Taxonomy

These are the type of contractors that, in APSCo’s taxonomy, are referred to as “Pty Ltd Contractors” and described –

“An independent contractor that is an incorporated company, which employs an individual to perform services and supplies them to an end user client. Alternatively, a third party company may act as the incorporated entity structure (i.e. payroll service provider). The company is responsible for the individual’s superannuation, tax and any insurances (as applicable and agreed between the parties).”

 Supply terminology

A question immediately arises as to whether the pronoun, them, refers to the individual or to the services.

If the reference is to the individual, then the APSCo definition seems pretty clearly to contemplate that, in the course of carrying on its business, a Pty Ltd Contractor supplies workers to another person to perform work.

If that supply comes within the meaning of “supply” as it is used in the Act, then it would seem to follow that the Pty Ltd Contractor is a provider of labour hire services and requires to be licensed.

Risk of offence if no licence

It would also seem follow that the agency that acquires the services of a Pty Ltd Contractor may commit an offence (Person must not enter into arrangements with unlicensed providers), if the Pty Ltd Contractor does not hold a labour hire provider’s licence granted under the relevant Act and is not exempt.

If, instead of referring to the workers, the pronoun them refers to the services, it will still be necessary to examine the arrangements under which the services are performed in order to determine whether they are performed by the individual working in the end-user’s business. If that is the case, there may be a supply of a worker to the end-user and the Pty Ltd Company would need to be licensed, as would the agency.

RCSA

In RCSA’s taxonomy these workers are referred to as “On-hire Contractors (Incorporated)” and described –

“An individual independent contractor engaged as an employee of a company which is typically controlled by the same individual as a sole or joint Director. There are examples where the individual will be an employee of a larger, multiple employee, company where the company nominates a key person for the completion of the work on assignment.”

Nomination terminology

The RCSA definition of On-hire Contractors (Incorporated) does not use supply terminology. Instead, it uses the terminology of “nomination” often associated with one of the key tests of a genuine independent contracting relationship – namely the power to delegate.

However, it may amount to the same thing as a supply if the nomination results in an individual’s services being provided “to help the client conduct its business in the same way, or much the same way, as it would through an employee”.[i]

Risk of offence

In that case, the incorporated entity, in the course of its business, is likely to be supplying its nominated person to the end user and therefore required to be licensed.

Once again, there would be a similar risk of committing the offence if the agency secures the services of On-hire Contractors (Incorporated) that are not licensed under the Act.

Industry definitions not determinative

Of course, neither the RCSA definition nor the APSCo definition is determinative of the question that needs to be asked. They simply represent attempts, from within the industry, to describe a common work model. To that extent, they both provide useful insights that may help agencies to analyse more closely the arrangements that they have with this class of workers and determine the extent to which the licensing requirements of the Act will need to be met.

The problem stems not from the RCSA definition, nor from the APSCo definition, but rather from the largely unexplored and unintended consequences of the Acts.

Administrative consequences

If the Acts do apply in the way their coverage provisions suggest they might, the administrative consequences – understood in terms of the cost and effort of administering a scheme that requires incorporated independent contractors to be licensed – are enormous and have been greatly under estimated.

A regulatory solution

One simple solution might be to exempt this particular class of worker (or provider) by regulations made under the Acts.

However, one difficulty with the Queensland Act is that it might not be available unless the supply of a worker by the incorporated entity is not a dominant purpose of the business ordinarily carried on by it. That might not be so easy to establish, given the type of entity that we are discussing.

Need to examine contractual arrangements

One further issue, which agencies will need to look at closely, concerns the contractual arrangements that exist between the agency, the worker, and the worker’s incorporated entity.

It will be vitally important to correctly identify whether it is the agency, the worker or the worker’s incorporated entity that is providing the substantial services – be they IT services, event planning services, design services, project management services, etc – to the client.

This may not always be clear, or accurately reflected, in the documentation that exists to support those contractual arrangements – if, indeed, any documentation exists at all.

Need to examine payment “obligations” between incorporated entity and worker

Finally, given the restricted definition of worker contained in both Acts,  it may also be necessary for agencies to examine closely the arrangements between the incorporated entity and the worker, which give rise to any obligation on the part of the incorporated entity to pay the worker, in whole or in part, for the work.

In that respect, it may become important to be able to distinguish payments made by the incorporated entity to the worker for the work from shareholder dividends, trust distributions or other remuneration that is not so clearly “for the work”.

Again, there may be limited documentation – and what documentation there is between the incorporated entity and its nominee may be inaccurate or unclear. In many instances, it might not be the sort of documentation that would usually be provided to agencies – though there may now be some incentive to ask for it!

Time is running

These are just some of the issues that agencies who work in this space will need to consider and resolve in the six months or so that remain before the legislation commences.

Given the number of contractors potentially involved and the variety of the arrangements under which they may work, that is not a very long time.

 

Andrew C. Wood

 

 

[i] For a discussion of this point see Wood, AC,  H.R. & Recruiters’ Casebook,  Lessons for Labour Hire Providers: JP Property Services Pty Ltd v Chief Commissioner of State Revenue (2017) 21 October 2017 https://recruiterscasebook.com/2017/10/21/lessons-for-labour-hire-providers-jp-property-services-pty-ltd-v-chief-commissioner-of-state-revenue-2017/

 

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

Man reading newspapers with superimposed punctuation symbols uid 1461028

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 pretending 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)

12 month non-solicitation clause held enforceable against ICT on-hire employee: First lessons.

silhouette-of-scaleThe decision of the NSW Supreme Court in Thinkstorm Pty Ltd v Farah [2017] NSWSC 11 (per Lindsay, J) which was handed down on 30th January 2017, is instructive for what it tells us about the enforceability of non-solicitation clauses in professional on-hire employee contracts.

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