Independent Contractor Characterization Hangs in the Balance

Back in April, I reported on two cases presently before the High Court, which have put the spotlight back on the distinction between employment and independent contracting. Since then, the High Court in Rossato[1] has questioned the extent to which the characterisation of a work relationship can be determined by anything other than strictly “by reference to the legal rights and obligations which constitute that relationship”.

The High Court preferred to rely on the contract to determine whether any “firm advance commitment” had been made for the purpose of deciding if work was casual, rather than characterising the relationship according to a sense of its “practical reality” gained from consideration of “all the circumstances”.

Notwithstanding that Rossato was not a case about the distinction between employment and independent contracting, its effect seems to have spilled over into the Fair Work Commission, with the Full Bench deciding, on 13 August 2021, to put the case of Deliveroo Australia Pty Ltd v Diego Franco [2021] FWCFB 5015 on hold until the two cases presently before the High Court that do concern the distinction between employment and independent contracting have been decided.

Although submissions have been filed in both High Court cases, a decision might be some months away. In the meantime, the status of some platform workers, whose contracts state that they are “independent contractors” will remain uncertain.

Andrew C. Wood

[1] WorkPac Pty Ltd v Rossato [2021] HCA 23.

ACCC Class Exemption for Small Business Collective Bargaining Starts Tomorrow

Photo by Anna Shvets on work desk showing people’s hands and notes as they negotiate a deal

The ACCC’s small business collective bargaining class exemption, which has been coming for some time, is now set to start on 3 June 2021.

The exemption makes it lawful for some small businesses to engage in collective commercial bargaining without contravening Australian competition laws.

It will be interesting to see what use staffing agencies are able to make of it in banding together to negotiate with customers and suppliers. If you are an on-hire agency, your independent contractors may also be able to band together to negotiate with you.

Other applications might permit some platform workers to band together to negotiate with their platform controller.

Be careful, though. There are some limits that you will need to stay within and there is a notification process.

Have a read of the determination and share your thoughts? What uses do you see for the new exemption?

Andrew C. Wood

ACT Notifies Labour Hire Licensing Regulation 2021 … finally!

Mere days before the scheduled commencement of the ACT’s Labour Hire Licensing Scheme, the regulations have finally been notified. Unlike the regulations in other states, they don’t set out exemptions or fees.

For the exemptions, you have to go to the Labour Hire Licensing(Exempt Workers) Declaration 2021 (No1). Does that sound like there might be more? That’s hard to say.

But for starters. the following are not “workers”:

·        public servants;

·        high income workers provided that they’re not covered by an award of enterprise agreement under the FWA;

·        in-house employees on secondment;

·        internal labour-hire employees working within a group of related entities;

·        employed directors and senior managers of corporations with no more than two directors provided that the director or senior manager is the only person who is supplied by the corporation to undertake work for another person.

There are definitions that refine some of these exceptions.

For the fees, you have to go to the Labour Hire Licensing (Fee) Determination 2021 (No 1). Could be more of those too!

The application fee under s. 24 of the Act is $2,900. But keep in mind that there may also be a licence fee if a licence is  ssued. There will probably be questions. But it’s a start.

Andrew C. Wood

Not Quite the Registration Scheme the Aged Care Royal Commission Recommended for Personal Care Workers

Cut out paper people in a pair of hands

The Australian Government’s response to the recommendations of the Royal Commission into Aged Care Quality and Safety has accepted most of the recommendations in the Commisison’s final report delivered in March this year.

Last night’s budget and supporting measures forecast that changes are afoot, with a promised review of the Aged Care Quality Standards to consider “appropriate regulatory levers to require providers to ensure staff are appropriately trained.”

Recommendation 77

Back in March, 2021 the Aged Care Royal Commission delivered its final report into the Australian Aged Care system and recommended a registration scheme for the personal care workforce that was to include:

  • a mandatory minimum qualification of a Certificate III
  • ongoing training requirements
  • minimum levels of English language proficiency
  • criminal history screening requirements
  • a code of conduct and power for a registering body to investigate complaints into breaches of the Code of Conduct and take appropriate disciplinary action.

Commissioner Briggs additionally recommended that the government consider whether registration should be established under the National Registration & Accreditation Scheme (“NRAS”).

Government Response

Although the government has accepted Recommendation 77 “in principle”, it has determined not to establish the scheme under the NRAS due to concerns that the “NRAS requirements would be disproportionately burdensome for personal care workers and present a significant ongoing cost.”[1]

Nevertheless, it has agreed:

  • to establish a single care and support sector code of conduct (Code) across the aged care, veterans’ care and disability support sectors for implementation by 1 July 2022; and
  • to deliver a nationally-consistent centralised pre-employment screening check with a register of cleared and excluded workers, in the aged and veterans’ care sectors, commencing 1 July 2022.

To that end, the government has included, in its latest budget, provision of $105.6 million to introduce the code of conduct, screening check and register.[2]

Workforce Development

The government additionally accepted:

  • Recommendation 80 – Dementia and palliative training for all workers; and
  • Recommendation 81- Ongoing professional development for the aged care workforce.

It has indicated that it will respond to aged care workforce development needs through its Growing a skilled, high-quality workforce to care for older Australians measure and will invest $338.5 million over 3 years “to grow, train and upskill the aged care workforce to drive improvements to the safety and quality of care”.[3]

So, the clock is now ticking and there is just a little over twelve months to see what the changes will mean for recruitment and staffing services in the agency sector.

Andrew C. Wood

[1] Australian Government Response to the Final Report of the Royal Commission I=into Aged Care Quality and Safety (11 May 2021) at p.51. accessed 12 May 2021.

[2] Budget Paper No. 2, Budget Measures 2021-22 (11 May 2021) at p.125. accessed 12 May 2021.

[3]Workforce (Pillar 4 of the Royal Commission response) – Growing a skilled and high quality workforce to care for senior Australians (11 May 2021) accessed 12 May 2021.

Telstra Group Describes Textbook Example of How to Use Leverage to Remediate Modern Slavery Risks

Photo by cottonbro on Hands shuffling bank notes on a table.

If you have the time to do it, browsing through the 2,000 plus modern slavery statements published to date on the Australian Register can yield huge dividends in terms of discovering how others identify and remediate risks of modern slavery in their supply chains.

If you don’t have time to do it, The Recruiters’ Casebook will try to bring you examples that recruitment and staffing firms would do well to note.

Here’s a textbook example of how Telstra Group used its leverage to address risks which it discovered in its supply chain. The Commnwealth’s Guidance for Reporting Entities on the Modern Slavery Act 2018 (p.51) explains that “Leverage means your ability to influence the other entities to change their behavior.”

Pay special attention to:

  • how the risk was identified
  • what the risk was
  • what justification the supplier put forward
  • why Telstra Group considered the practice was unacceptable
  • what Telstra Group did about it
  • how the supplier responded
  • what the subsequent outcome has been.

Telstra engaged an independent third party to conduct site audits of one of our suppliers’ labour practices. The audit revealed evidence of practices resembling debt bondage in their Hyderabad operations in India. Under the arrangements, employees were bound to repay training costs incurred as part of their recruitment. While the supplier asserted such practices were both common and legal in India, we took the view that it was not acceptable and in breach of our Supplier Code of Conduct.

We wrote to the supplier and asked them to remove this bond immediately for all employees delivering services to Telstra and all new hires. The supplier agreed to this request.

We also asked that the bond be removed for all other employees of the supplier including those who do not perform Telstra work. The supplier agreed not to take any action to enforce the service bond provisions under existing employment contracts and to issue all employees with new contracts that do not contain service bond provisions. A follow-up audit found the changes we requested had been implemented. We were also pleased to see evidence that throughout the COVID-19 pandemic, the supplier has continued to pay all employees 100 per cent of their wages.

Telstra Group Modern Australian Slavery Statement published 13 April 2021

“Debt Bondage”

In this example, Telstra Group is only saying that the supplier’s practise resembled debt bondage.

The Commonwealth’s Guidance for Reporting Entities on the Modern Slavery Act 2018 (p.78) explains that “debt bondage” occurs “where the victim’s services are pledged as security for a debt and the debt is manifestly excessive or the victim’s services are not applied to liquidate the debt, or the length and nature of the services are not limited and defined.”

Nevertheless, Telstra was sufficiently concerned about the practice to do something about it – and without getting involved in technical legal arguments about definitions.

The outcome shows what can be achieved when all parties co-operate to remediate practices that may have adverse impacts on workers and which may be questionable under values and principles of good workforce governance and supply chain stewardship.

What would you have done if you had discovered the practice or something similar in your supply chain or service network?

Andrew C. Wood

“Modern Slavery Clauses”: the Good, the Bad and the Downright Dangerous.

Photo by Travis Saylor on Metal gate chained up and locked.

Browse through the 2,000 plus modern slavery statements published to date on the Australian register. You might see that there has been considerable interest in the use of “modern slavery clauses”. These clauses aim to remediate risks that are caused or contributed to by reporting entities or to which they are directly linked through their operations or supply chains. 

Although such clauses can help remediate risks and create a solid foundation for cooperation between suppliers and their customers, some caution is still needed.  That’s because the quality of the modern slavery clauses that have been described in the published statements ranges from well-tempered to confused to downright dangerous.

How do you tell the difference? You need to start with a clear understanding of what prohibitions exist and what Australia’s Modern Slavery Act requires.

Distinguishing good from bad

Did you know that the Act doesn’t actually prohibit modern slavery? That’s done by the criminal law.

Did you know that the Act doesn’t actually require you to eliminate modern slavery from your supply chains? It only requires some entities to report on the risks of modern slavery in their operations and supply chains and actions to address those risks.

Now think about some of the modern slavery clauses you might have seen:

  • the ones that reference so-called “duties of care” supposedly set out in the Act;
  • the cut-and paste ones that require you to warrant that your supply chain is free from slavery, servitude, forced or compulsory labour and human trafficking as defined by the Modern Slavery Act 2015; [1]
  • the ones that require you to comply with all your legal obligations, including WHS, but which forget to say anything meaningful about modern slavery and the Criminal Code;
  • the ones that require you to warrant that you will comply with all rules or international treaties signed by any government authority in relation to corporate social responsibility; but which fail to appreciate that, under our law, those rules only become binding in Australia once they are passed into domestic legislation – and they are often passed into domestic legislation subject to reservations or variations;
  • the ones that include indemnities and hold-harmless provisions.

There are plenty of other examples of poorly constructed clauses out there!

Consequences of breach

Have you ever thought about what the consequences of a breach of these clauses might be? Can your customer refuse your claims for payment? Can you customer terminate your supply agreements? Have you even supplied what you agreed to supply (e.g., services free from any connection to forms of modern slavery through your operations or supply chains)? Can your customer sue you for damages?

Poorly designed modern slavery clauses do nothing to address modern slavery risks. They attempt to shift the burden of compliance in one direction. In doing so, they provide false comfort to parties who rely on them. They add unnecessary costs to transactions in which they are deployed.

A better approach

So, learn how to identify them. Explain to your customers why you can’t or won’t sign them, and help your customers to understand the important contribution that you can both make to combatting modern slavery, not only through well designed modern slavery clauses, but more importantly, through well-designed workforce governance controls and practices

Andrew C. Wood

[1] The MSA 2015 is actually and Act of the UK Parliament! The Australian MSA (Modern Slavery Act 2018 (C’th) doesn’t actually define these terms. They’re defined in the Criminal Code. “Modern Slavery” is given an extended meaning in the MSA (C’th).

Still no closer to a concept of “joint employment” in Australia

Two Fair Work Commission decisions handed down in January 2021 confrm that we are still no closer to recognising a concept of “joint employment” in Australian employment law.

Both decisions involved challenges to the Commission’s unfair dismissal jurisdiction.

In Don Allan v Cleanaway Waste Management Company T/A Cleanaway Port Adelaide Solid Waste Services [2021] FWC 20 (5 January 2021), the challenge came about because the applicant for reinstatement, who had previously worked with the respondent employer through a labour-hire firm, was unable to satisfy the minimum employment period necessary to entitle him to seek reinstatement. He argued that time spoent in service of the labour-hire firm should be aggregated with time spent in direct employment of the respondent. To support his contention, he argued that the labour-hire firm and its client had been his joint employers.

In Toni Bou Lattouf v Bechtel Australia Pty Limited [2021] FWC 142 (25 January 2021), the challenge came about because the applicant, an Australian citizen who had been working overseas for a foreign entity within the Bechtel Group at the time of his dismissal, could not establish that it was the Australian entity named as respondent, rather than the foreign entity, that was his employer. To get around the difficulty, he argued that the Australian entity was jointly his employer with the foreign entity.

In both cases, which were heard by Deputy President Anderson in Adelaide, the applicants were unsuccessful. The reasons were similar. It comes down to this (as held in the Cleanaway decision):

Joint Employment

[78] Nor do I accept the proposition that Mr Allan was jointly employed by both Tecside and Cleanaway. There is no legal foundation on which a claim of joint employment in respect of the same work can be made or sustained under Australian law. I adopt the observations of Hampton DP in Costello v Allstaff Industrial Personnel (SA) Pty Ltd [33] and the later observations of a full bench of this Commission in FP Group v Tooheys on this point where it was said:[34]

“the application of a concept of joint employment to labour hire arrangements would involve a very considerable development of the common law…we do not consider that the Commission’s role as a statutory tribunal extends to engagement in the development of the common law. That is a matter for the courts.”

[79] Such an approach is consistent with observations made by a separate full bench in French Accent:

“[26] Moreover, the nature of the ultimate question is such that in any given case that is not clear cut, reasonable judicial minds may differ as to the correct answer in any given case. This was explicitly recognised in Roy Morgan. This necessarily means that there is an area of uncertainty for businesses that wish to engage only on the basis of independent contract and not on the basis of employment. Any change to the present approach is a matter for the legislature. Our duty is to continue to apply the established general law approach until legislation or the High Court requires otherwise.” (emphasis added)

Neither the legislature nor the High Court has shown much sign of requiring otherwise to date.

Andrew C. Wood

Modern Slavery Reporting for Labour Hire and Workforce Services Providers: The Basics

If you’re a labour hire or workforce services provider, you’ll likely be receiving requests for information about what steps you’ve taken to combat risks of modern slavery in your supply chains or operations.

You might even be large enough to have to prepare your own modern slavery statements, and you could be requesting similar information from your suppliers. 

That’s because Australian entities that have a consolidated revenue of $100 million or more must lodge statements under the Modern Slavery Act 2018 (Cth),

For most of them, the extended lodgment date is 31 March 2021. But a few entities will have different reporting dates – some as soon as 31 December 2020. You can check it out here.

So, over the coming weeks, we’ll be posting some short updates and commentary in the RCSA-hosted Labour Hire Licensing & Regulation LinkedIn Group. Be sure to look in on us regularly. And if you have questions, don’t hesitate to ask.

Andrew C. Wood

Modern Slavery Reporting about How Labour Hire Workers Are Used

Lately, I’ve been developing a range of modern slavery reporting resources for Australian labour hire and workforce services providers. Amongst the materials provided by the Commonwealth government, I came across this piece of guidance, which had me scratching my head:

Under the Act reporting entities are not required to report on modern slavery risks associated with how their customers use the products or services they purchase. For example, a mining company is not required to report on whether the overseas smelter that purchases its ore uses forced labour. Similarly, landlords and lessors are not required to report on modern slavery risks associated with the operations and supply chains of lessees.

Commonwealth Modern Slavery Act 2018: Guidance for Reporting Entities, p.34

So, I asked the Border Force Modern Slavery Business Engagement Unit if it had a view on how that piece of guidance might be applied to labour hire and workforce services providers.

You will see the issue, immediately. Labour hire providers supply workers. So, the use to which customers put those workers may have a direct impact on risks of exposure to modern slavery practices.

The Modern Slavery Business Engagement Unit was great. They got back to me straight away. Here is their reply:

We would expect that labour hire agencies required to report under the Modern Slavery Act address possible modern slavery risks associated with the use of workers they provide to other businesses in their modern slavery statements. These workers are usually employees of the labour hire agency and their provision to other businesses forms part of the labour hire agency’s operations.

Reply 2 November 2020

So, if you are a labour hire or workforce services provider, it seems that will need to give some thought to whether your customers’ use of your workers might expose them to the risk of modern slavery practices, and you’ll need to report about that.

Andrew C. Wood

Victoria’s Public Health and Wellbeing Act Amendment – Are we asking the right questions?

A lot of attention has been given recently to claims that the Victorian Government is attempting to extend the current state of emergency for another twelve months. But to my mind, it’s the amendments to the threshold sections that warrant the greater parliamentary and public scrutiny.

To be fair, the amendment to section 198 – the duration section – only provides that the total aggregate length of a state of emergency can be extended to 12 months. If you’re dealing with an event that will last longer than the current six-month limit, there would seem to be some sense in that.

However, the amendment to section 199 is more troubling. It proposes to reduce the threshold required for the Chief Health Officer to authorise emergency powers from a belief that it is “necessary” to a belief that it is merely”reasonably necessary” to do so.

Further amendents would allow a state of emergency to be declared even where the rate of community transmission of COVID-19 in Victoria is low, or there are no new cases of COVID-19 for a period of time. 

We’ll have to see what happens. In the meantime, you can read the explanatory memorandum here: