Senator David Pocock's additional comments

Introduction

1.1This legislation was first introduced into parliament on 4 September last year. Months of consultation on the high-level principles and areas of reform preceded the introduction of the legislation.

1.2It has subsequently been examined in detail with this inquiry receiving 178submissions and seven public hearing days. My office and I have had dozens of meetings with stakeholders, hosted four legislation-specific roundtables and two larger community town hall consultations.

1.3I thank the committee for their diligent work over many months and all the stakeholders, workers, unions, business owners and their representatives, who participated. Your contributions are invaluable and help deliver better legislative outcomes.

1.4The Closing Loopholes Bill 2023, in its original form, contained a vast omnibus of reforms that when taken together were too much for the crossbench, with our limited resources, to diligently consider in detail in the timeframe sought by government. This was especially the case given other significant pieces of legislation were being simultaneously brought before the parliament.

1.5This is why Senator Lambie and I, with the support of Senators Tyrrell and Thorpe, sought to split the bill into more manageable parts.

1.6When legislation is rushed and not subject to proper scrutiny the risk of unintended consequences is high. This is especially the case in industrial relations law with its far-reaching impact across our communities and the workers and businesses they include.

1.7The breadth and depth of these impacts also helps explain why industrial relations law is one of the most contested of any field of regulation in the country. This is despite many shared aspirations and outcomes, as statements from the peak representative bodies show.

1.8The Australian Council of Trade Union’s (ACTU) ambition to return ‘balance and fairness to our industrial relations system’ and view that ‘all workers should be treated fairly’[1] is hardly worlds apart from the Business Council of Australia’s (BCA) desire for ‘Australians to have safe, high-paying, sustainable jobs that reward people for their hard work, skills and experience’.[2]

1.9At issue is how those outcomes are achieved.

1.10In a high cost-of-living environment, people need to be able to earn a fair wage, have both flexibility and security of employment as fits their personal circumstances, and be secure that their workplace safety and rights are adequate and enforceable.

1.11We also need to make it easier to do business in Australia, especially for Australia’s 2.5 million small businesses. This means simplifying regulation, reducing red tape, fostering innovation, prioritising productivity growth, and giving business the best chance to compete domestically and on the world stage, including for government procurement.

1.12There are elements of this bill that I strongly support on behalf of my community. Clearly, gig work needs to be regulated and safety in the road transport sector is paramount. I note the work of the Transport Workers Union and their safe rates campaign and commend their approach in looking to work with employers to agree a model that works for everyone. It's crucial that we get the regulation of the new gig sector right and recognise that safety needs to be achieved through more than just workplace relations regulation.

1.13Australian cities, including my hometown of Canberra, need far better active travel infrastructure to keep couriers safe. This of course also has huge spin off benefits for the environment and people’s physical health.

1.14Driver monitoring technology has a critical role to play in managing fatigue and promoting heavy vehicle driver safety, although I recognise it raises its own concerns around privacy and appropriate use.

1.15Following the successful splitting of the bill last year, my additional comments focus on those remaining aspects of the legislation that have been raised with the committee and with my office, which also offer constructive suggestions on how to improve the legislation. I am committed to working through the remaining parts of the legislation with the government and that is what I am doing, in consultation with affected stakeholders, small business owners and members of my community. It is clear that further amendments are required to the legislation before I could contemplate supporting its passage through the parliament.

Casuals

1.16Casual employment is a significant feature of Australia’s industrial relations framework, used by a wide variety of businesses around the country from large to small.

1.17Some 2.7 million Australians are employed as casuals and a further 1 million are independent contractors.[3]

1.18This legislation seeks to introduce a new definition of 'casual employee' into the Fair Work Act. It sets out a number of factors or tests to determine if someone meets this new definition.

1.19It also introduces a new conversion pathway for casual employees to become permanent employees if they have worked for six months, or 12 months for small business employers, through an amendment to the National Employment Standards (NES).

1.20Evidence tendered to the committee outlines concerns from workers and unions that some employers are abusing casual employment to create insecure work environments.

1.21The committee heard from a local Canberran, David, who ‘worked 10 casual jobs—eight at once—over five years, five of them within the Public Service’. He said, ‘This proposed legislation would have had a material and meaningful impact on my life. It would have provided me with a viable pathway to stable, ongoing employment and professional development opportunities that I'm now playing catch-up with’.[4]

1.22Another local Canberran, Claire, spoke of her experience working as a casual for Services Australia and the obstacles she had faced converting to permanent employment. Claire told the committee, ‘I would love to be a permanent employee. I'm passionate about the work I do. I love helping people, and it would be great if we had a clear pathway to be able to obtain a permanent position’.[5]

1.23Both Claire’s and David’s testimony highlighted what appears to be an issue with the Australian Public Service merit list process, as highlighted by the Community and Public Sector Union (CPSU).

1.24The CPSU has recommended that the Bill be amended (66AACC) to ensure there is no barrier to conversion for APS employees as well as requiring the Commonwealth to review the employment arrangement and, where the criteria for conversion are met, to run a merit process and advertise the position as ongoing—and if successful to employee the incumbent casual employee as permanent.

1.25The almost unanimous view expressed by employers and their representatives is that a business will always seek, where possible, to convert casual staff to permanent employment as it is in their own interests to do so.

1.26They also advised that in the vast majority of cases where conversion is offered, casual employees decline to accept.

1.27Casual employees, across all demographics from students to working parents to semi-retirees, are said to value the additional take home pay that comes from casual loading and the flexibility in working hours.

1.28The point has been made that, over several decades, casual employment has not increased as a proportion of the employment base.

1.29The Department of Employment and Workplace Relations (department) had no data on the number of casual conversion requests being denied by employers.[6]

1.30Data provided by a range of large employers of casual staff suggests that there is generally low take up of casual conversion offers. In one business, more than 90 per cent of conversion offers are declined–because employees prefer the flexibility and loading with casual employment. In another business, with a more mature employee base, around 50 per cent of conversion offers are accepted. In a third business, less than 1 per cent of those casuals offered conversions were accepted. In the recruitment industry the pattern is similar:

At the end of 2022 RCSA surveyed its membership on the impact of casual employment law changes introduced by the former Government. All on-hire casual employees who met the eligibility for conversion (worked a regular pattern of hours for the last 6 months and could continue working that regular pattern of hours without significant change) were offered the opportunity to convert to permanent employment. Just 3.2% of those offered conversion to permanent employment took up that offer.[7]

1.31This is opposed by union representatives who argue a shorter time frame is necessary and appropriate, and that both worker- and employer-led conversion pathways should be made available.

1.32Critically for business, and especially small business, it has been argued that there needs to be a right to refuse conversion on broader grounds if doing so is fair and reasonable, and that this could be achieved by amending s.66AAC(4) to include a provision comparable to the current s.66H of the Fair Work Act 2009 which relieves an employer from the conversion obligation if there are fair and reasonable grounds to do so.[8] Smaller businesses often lack the predictable income flow and certainty of future viability to commit to offering casuals’ permanent employment. A concern has been raised that not offering scope for small businesses to refuse conversion requests on fair and reasonable grounds might cause them to avoid employing casuals at all, given the risk of being forced to offer permanency with no recourse. The small business community is particularly concerned about this issue given many small businesses rely on casual employment, especially in their earlier years as employers.

1.33In assessing eligibility for conversion, employer stakeholders argue the original employment contract should be a consideration in conversion appraisal, recognising the established and recognised role of employment agreements in Australian industrial relations settings.

1.34Of arguably greater concern to businesses are the potential impacts from the new proposed definition of casual employment. Concerns have been raised that, standing as drafted, the legislation could lead to legitimate casual employees being deemed permanent, making employing people as casuals very difficult going forward.

1.35It is important to note that this is not the intention of the legislation and no party is arguing to put an end to casual employment.

1.36As the Australian Council of Trade Unions (ACTU) notes: ‘Casual employment will continue to be an available and valid form of engagement where it is genuine and reflects the mutual understanding and preferences of both parties’.[9]

1.37The focus is on ensuring that this new definition of casual employment is workable and that eligible employees who want to convert to permanent employment can do so.

1.38The Business Council of Australia (BCA), Australian Chamber of Commerce and Industry (ACCI), Australian Industry Group (Ai Group) and Council of Small Business Organisations Australia (COSBOA) have proposed a range of small amendments to the bill intended to negate any unintended consequences. These include:

amending s.15A(2)(c) to insert the word ‘may’ before the word ‘indicate’ and make consequential amendments to the note, to recognise that the factors identified in 15A(2)(c) will not, in practice, always indicate the relevant type of commitment is present while also not precluding consideration of those factors where relevant.

amending s.15A(2)(C)(i) to Insert the words ‘or not offer’ after the word ‘offer’, giving employers the right to offer or not offer work just as casual employees have the right to accept or not accept such an offer.

deleting the words ‘irrespective of the terms of that contract’ in section 15A(2)(b) to ensure that the contract can continue to be a factor in determining whether or not someone meets the definition of casual while still guarding against sham contracting arrangements.

1.39Another important consideration highlighted in submissions and in evidence given by the department during public hearings is ensuring that the bill does not unintentionally preclude the continuation of on hire recruitment.

1.40This is of particular concern in the ACT where the Australian Public Service (APS) is reliant on temporary contracts to plug gaps and manage surge workforce needs on special projects.

1.41As the Recruitment, Consulting and Staffing Association (RCSA) note in their submission that in ‘Australia, the on-hire industry employs more than 500,000 people; the majority of whom are casual employees’.[10] RCSA submitted:

In an on-hire context, where work opportunity and placement lengths are dictated by a staffing firm’s clients, the removal of the ability to confidently engage workers on regular and predictable hours as casuals leaves engagement as a fixed-term permanent as the only real engagement option for them. The rigidity and restriction introduced by the government last year to fixed-term contracts will make that a challenging scenario for many on-hire placements. For example, a maternity leave role with a client may be initially filled as a 6-month role, but the client’s permanent employee may decide during their period of leave to extend the period they need at home with their new child. Restrictions on fixed-term contract engagements mean that if an on-hire firm’s client has to extend the contract more than twice, the worker, if they stay in the position, will be deemed to be a permanent ongoing employee of the on-hire firm, even if their placement was only temporary.[11]

1.42RCSA also highlights the risk from the ‘introduction of an evaluation of post-contractual conduct, coupled with civil penalties for misrepresenting casual employment, would create a significant level of risk for on-hire firms in engaging workers as casuals, particularly when they know from the outset that workers will have regular shifts each week or month’.[12]

Recommendation 1

1.43Ensure casual employees in the APS are not excluded from the casual conversion process.

Recommendation 2

1.44Noting the preference from business and their representatives to only have one, yearly casual conversion pathway, the government should at a minimum consider amending the Bill to harmonise the criteria and process for both employee and employer-led casual conversion pathways.

Recommendation 3

1.45Consider amending the Bill to introduce a high-income exclusion from the existing National Employment Standard obligation to notify casuals of their conversion right at the 12-month point.

Recommendation 4

1.46Include a right to refuse casual conversion on fair and reasonable grounds.

Recommendation 5

1.47Amendments to section 15A outlined above.

Recommendation 6

1.48Remove clause 15A(4) or limit its application in such a way as to remove any adverse unintended consequences for recruitment firms offering temporary casual employment contracts with specific end dates.

Intractable bargaining

1.49The amendments to Part 5A of the bill introduced and passed in the lower house seek to address a concern identified by the United Firefighters Union and outlined in great detail in their supplementary submission.

1.50The union’s concern is to ensure that intractable bargaining provisions are not misused, and that progress made negotiating an agreement can be preserved should it come to the point of arbitration by the Fair Work Commission (FWC). Put simply, they don’t want time wasted or workers' pay and conditions going backwards. This has also been raised with me as a concern by the Australian Salaried Medical Officers' Federation, with the potential to impact bargaining currently underway for a range of medical professionals in Canberra.

1.51The amendments aim to rectify what the union describes as ‘a number of unintended consequences’ that ‘have become apparent in the application of the intractable bargaining legislation’ since the passage of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022.

1.52Employer groups also harbour concerns about the provisions being misused by unions in the bargaining process and are advocating for 270A to be deleted. Victorian Treasurer Tim Pallas MP has proposed a range of amendments to the amendments passed in the lower house to effectively introduce a better off overall consideration.

1.53I again take this opportunity to note the fundamental point of agreement between unions and employers that effective bargaining delivers the best results for all parties, while recognising the disagreement between them about how best to achieve this objective.

Right of entry

1.54The bill amends existing right of entry provisions to enable registered organisations to obtain an exemption certificate from the FWC to waive the minimum 24 hours' notice requirement for entry to a workplace if they reasonably suspect one or more of their members have been or are being underpaid.

1.55I note that the Commission already has the power to give permit holders an exemption certificate in some circumstances, which allows them to enter without notice.

1.56Testimony by the department confirmed that the ‘existing requirement in section 493 of the Fair Work Act would apply, which states: The permit holder must not enter any part of premises that is used mainly for residential purposes’.[13]

1.57Employer groups have questioned whether the proposed change is necessary while unions argue it is imperative to help prevent wage theft.

1.58Some small additional safeguards proposed around the granting of exemption certificates and penalties for misuses of these provisions have merit and would help strike a better balance, especially for small business people.

Recommendation 7

1.59Amend the proposed changes to s.519 of the FW Act (Item 122 of the Bill) to require the FWC to be satisfied that advance notice of entry would preclude an effective investigation and strengthen penalties for misuse.[14]

Definition of employment

1.60The legislation seeks to return employment law to how things operated prior to the High Court’s ruling in the CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 cases by re-introducing the 'multi-factorial' test previously applied by courts and tribunals in characterising a relationship as one of employment or as principal-and-contractor.

1.61As summarised by the secretariat, ‘The bill would amend the FW Act to require that the ordinary meaning of 'employee' and 'employer' be determined by assessing the real substance, practical reality, and true nature of the working relationship, so as to consider the 'totality' of the employment relationship’.

1.62Employer groups have expressed serious concern about the impacts of this change, arguing it creates uncertainty and will effectively put an end to independent contractors.

1.63The Master Builders Association has expressed particular concerns about the impacts on the building and construction industry, which relies heavily on independent contractors. One local small-scale Canberra builder said:

We are a mum and dad residential builder almost in our mid-fifties. We have been in business for nearly 30 years. We are currently facing a large number of daily challenges created by the Covid pandemic. From labour and material shortages to massive price hikes. Staying in business is extremely tough and stressful. If this legislation goes through, we will simply have to shut shop. The implications and the red tape will no longer be manageable or even possible for a small business.[15]

1.64All peak employer groups have called for this section to be deleted. Failing that, they have argued it should be amended to delay the start date until 1 July 2025, be amended to make clear that the change should not alter existing contractual arrangements, and implement an amendment that provides that a regulated worker is not an employee if subject to an MSO (be it either an employee-like or road transport contractor) or if they are a contract carrier under chapter 6 of the Industrial Relations Act 1996 (NSW).

Recommendation 8

1.65Amend the Bill as outlined above.

Regulating the gig economy

1.66Some of the most harrowing testimony presented to this senate committee inquiry was from a delegation of drivers accompanying the TWU.

1.67Senators listened as Mr Robert Ireland, Mr John Waltis, Mr Warren Thompson, Mr Frank Black and MrYavuz Cikar spoke of friends, relatives and colleagues who had been killed or taken their own life in the course of their employment.

1.68Mr Ireland said, ‘In 2003, a trucking mate of mine, Gary, took his own life—he wasn't the only one’.

1.69Mr Waltis recalled ‘A person called JC was the last person who died at Scott's. I was only there three or four years. We had five or six deaths in that three or four years’.

1.70Mr Cikar spoke of the death of his nephew, a gig worker killed in 2020:

Burak was 30 years old, a very brave young man…When we sent his body back to his parents in Turkey, we had to wrap him up in plastic film to hold his body together, so they wouldn't see anything; we did everything we could to cover that.[16]

1.71This testimony highlighted how important and how urgent it is to better regulate both the existing traditional road transport sector and the new gig economy.

1.72Driver and courier safety is paramount. And while new minimum standards, better pay and conditions and more expert specialisation on the Fair Work Commission will help, they won’t entirely solve the problem. We need a more holistic response that also considers key elements like better active travel infrastructure so couriers can cycle safely in dedicated lanes, more comprehensive in-cab monitoring for heavy vehicle drivers using technology for safety while respecting worker rights and privacy. The life-saving technologies that companies like Canberra-based Seeing Machines are developing is truly groundbreaking. When we see fatalities on our roads continuing to get worse, not better, bigger changes are needed. According to the Australian Automobile Association, the past six months have been the deadliest on our roads since 2010. This can’t go on.

1.73I applaud the constructive work that has occurred between the TWU, gig platforms and the government in seeking to devise a regulatory framework for this new industry that will work for all parties.

1.74This collaboration notwithstanding, there remain a number of outstanding issues relating to the detail of the bill.

1.75There has been significant debate over the final shape of the new minimum standards that all parties agree are needed. Gig platforms are pushing for this list to be exhaustive, arguing that this would provide the strongest and clearest guardrail for the FWC noting the current non-exhaustive list in s536KL goes further than what currently occurs for employment relationships.

1.76They argue that things like representation, Delegates Rights and Cost Recovery should not be able to be included in a minimum standards order and superannuation should be explicitly excluded. They have also argued for the removal of subsection (2) within 536KM saying the FWC will only ever include terms it considers appropriate and the inclusion of a clause that requires the FWC to ensure an MSO or MSG only includes terms that are necessary to achieve the Minimum Standards Objective.

1.77Unions are concerned that any exhaustive list would enable employers to find ways to circumvent the new requirements, and that people choosing gig work as a career will miss out on financial security in their retirement if superannuation is excluded.

1.78As this is the first time that this new industry is being regulated in Australia, there is a compelling argument to start by making the list exhaustive and if the proposed review of the legislation finds that the exhaustive list is being circumvented, the government could proceed with amending this part to make the list non-exhaustive.

1.79Another important change echoed by business peaks is the need to avoid specifying digital labour platform operators by name in issuing an MSO and to ensure that the coverage of an MSO can only apply to classes of businesses rather than individual businesses. This would guard against individual businesses being targeted.

1.80Sensible technical amendments have been proposed to Section 536KL dealing with the list of terms that may be included in a MSO, including replacing ‘payment terms’ with ‘payment for the performance of work under a contract for services’ and replacing ‘deductions’ with ‘deductions from amounts payable under a minimum standard order’.[17]

1.81Concerns have also been raised that s40J in the Road Transport Industry Contractual chain provisions have the potential to capture digital labour platforms where they perform B2C delivery work for major retailers and grocery chains, such that contractual chain orders and employee-like Minimum Standard Orders could both apply to the same platforms and workers.

1.82Importantly, as the Bill introduces a definition of “industrial action” for regulated workers there also needs to be a prohibition on regulated workers or the parties that engage them taking industrial action in support of the proposed new collective agreement or in connection with the making or variation of a MSO.

Recommendation 9

1.83Work with state and territory governments to significantly improve and increase investment in dedicated cycleways and other active travel infrastructure, including through the federal budget process.

Recommendation 10

1.84Commit to revisiting the National Road Safety Strategy this year to examine what immediate actions and investments need to be made so that jurisdictions hit their targets for reduced road fatalities and urgently implement enhanced data sharing between jurisdictions.

Recommendation 11

1.85Amendments to Part 16 as outlined above.

Recommendation 12

1.86Remove all references and comparisons to employment. The Bill should not require the FWC to compare platform workers to employees.

Recommendation 13

1.87Exclude livestock transportation.

Recommendation 14

1.88The employee-like aspect of these reforms, as drafted, go far beyond the scope of capturing the gig platform courier drivers and would impact sectors like personal and aged-care providers. It is important that the reforms only capture those they intend to. For this reason, section 15P(1)(e) should be amended to require that the person satisfies two or more characteristics in order to be an employee-like worker and should include a general carve out for building and construction contractors (who are not intended to be caught by the changes).

The right to disconnect

1.89Just as with debates around regulating the use of everything from vapes to artificial intelligence, it is critical that legislation changes to keep pace with changing times.

1.90It is clear that smartphones and other new technologies have fundamentally changed how we live and work, especially our level of accessibility. As our mental health continues to decline, and especially for young people, sensible guardrails are needed for workers’ wellbeing.

1.91This is, however, a new area of regulation with very broad impacts across the workforce and I am anxious to ensure any changes are carefully thought through and tested for any unintended consequences.

1.92I note that drafting for the proposal to establish a statutory right to disconnect has not yet been publicly released for any form of consultation, or subject to the committee’s scrutiny process through this inquiry, and that is of concern.

1.93I believe additional safeguards are warranted to guard against these provisions being used vexatiously. I also believe additional resourcing is needed to develop guidance, particularly for small businesses, on this new right and its application.

Recommendation 15

1.94That the amendment be publicly released for consultation and that it include provisions to guard against vexatious complaints.

Recommendation 16

1.95That additional resourcing be allocated to develop and disseminate guidance for small businesses on the right to disconnect.

Review

1.96The reforms contained in this legislation represent significant changes to the operation of the Fair Work Act with wide ranging implications across the economy.

1.97Some reforms also seek to regulate industrial relations in unprecedented ways, including most notably for gig workers and by introducing a new right to disconnect.

1.98For these reasons it is imperative that the government thoroughly and independently reviews the operation of the act following commencement, with a particular focus on identifying and rectifying any unintended consequences and on improving the operation of the amendments where relevant.

1.99The review must start no later than 2 years after commencement, be completed within six months and tabled in the parliament within 15 sitting days of receipt.

Recommendation 17

1.100Include a provision to cause a review of the amendments to the Act as outlined above.

Senator David Pocock

Participating Member

Senator for the Australian Capital Territory

Footnotes

[1]Australian Council of Trade Unions, Submission 110, p .7.

[2]Business Council of Australia, Submission 14, p. 4.

[3]Australian Bureau of Statistics, Characteristics of Employment, Australia, August 2023.

[4]David, Public Service Delegate, Commonwealth and Public Sector Union (CPSU), Proof Committee Hansard, 10November 2023, p. 5.

[5]Claire, Public Service Delegate, CPSU, Proof Committee Hansard, 10November 2023, p. 5.

[6]Ms Tara Williams, Assistant Secretary, Assistant Secretary, Safety Net Branch, Department of Employment and Workplace Relations, Proof Committee Hansard, 22 January 2024, p. 21.

[7]Recruitment, Consulting and Staffing Association (RCSA), Submission 47, p. 3.

[8]Australian Chamber of Commerce and Industry (ACCI), Submission 130, paragraph 2.33

[9]Australian Council of Trade Unions, Submission 110, p. 5.

[10]RCSA, Submission 47, p. 3.

[11]RCSA, Submission 47, p. 5.

[12]RCSA, Submission 47, p. 7.

[13]Ms Sarah Godden, Chief Counsel, Workplace Relations Legal Division, Department of Employment and Workplace Relations, Proof Committee Hansard, 22 January 2024, p. 48.

[14]ACCI, Submission 130, p. 24.

[15]Master Builders Association, Will the new laws negatively impact your ability to make a living? (accessed 1 February 2024).

[16]Mr Robert Ireland, Mr John Waltis and MrYavuz Cikar, all appearing in a private capacity, Proof Committee Hansard, 3 October 2023, p. 9, 10 and 11 respectively.

[17]ACCI, Submission 130, pp. 38–39.