CHAPTER 2
Key Issues
2.1
The question of legislative protection for TCF outworkers was at the
core of this inquiry. Numerous submitters, including the Textile Clothing and
Footwear Union of Australia (TCFUA), the Australian Council of Trade Unions
(ACTU) and FairWear, were supportive of the bill and urged the parliament to
implement it on the basis that it would provide much needed additional
protection for outworkers in the TCF industry.[1]
2.2
Other submitters claimed there was no evidence to support the notion that
outworkers in Australia today require special protection. For example, the
National Retail Association (NRA) claimed '[t]here is no compelling evidence
justifying the need for the radical changes proposed'.[2]
Similarly, the Australian Chamber of Commerce and Industry (ACCI) argued '[t]here
is no evidence-based policy rationale for the measures'.[3]
2.3
The primary themes around which the arguments for and against the
legislation were based included:
-
the need for legislation to extend protections for outworkers;
-
the potential for the legislation to impact on manufacturing in
Australia; and
-
the proposed process for recovering unpaid amounts due to
outworkers.
2.4
These issues are discussed below.
The need for legislation to extend protections for outworkers
2.5
Organisations such as the TCFUA and FairWear argued that outworkers in
the TCF industry in Australia continue to experience exploitation and poor
working conditions.[4]
Ms Shelley Marshall, an academic specialist in the field of informal work
and home-based outworkers at Monash University, concurred and stated in her
submission:
Previous research shows that there is a strong impetus for
special protective measures for outworkers in Australia as they are amongst the
most vulnerable workers in Australia. They work in an industry in which there
is a widespread culture of non-compliance with labour laws and unacceptably low
labour standards. The work is often informal. Informality has gained increasing
international attention because it is linked with poverty, low job quality, low
productivity, low revenue for the government and is a persistent feature of both
developed and developing economies.[5]
2.6
The TCFUA described the 'precarious circumstances' in which outworkers are
employed[6]
and the lack of control these type of workers have over the work they perform:
[Outworkers] do not design or direct the production of the garment
nor dictate when they are to be paid. They are commonly placed under significant
pressure to complete work to urgent, unrealistic or shifting deadlines. Despite
having an entitlement to the payment of overtime penalty rates under the TCF
Award, many outworkers work excessively long hours both during the week and on
weekends without additional compensation. Many work through injuries and
illnesses sustained as a result of overwork, repetitive strain and poor working
environments.
Such vulnerability to exploitation is a product of outworkers
as a class being largely hidden and operating outside of the mainstream work
environment (i.e. outside of established, medium to larger size factories). As
a category of workers, outworkers most commonly are women from Non English
Speaking Backgrounds, (often recently arrived migrants) with limited economic
resources and negligible bargaining power.[7]
2.7
In addition, the TCFUA furnished the Committee with photographs
depicting the unsatisfactory conditions in which TCF outworkers often work,
both in their own homes and in sweatshops.[8]
2.8
The Committee also heard from several outworkers who described their
experiences in the TCF industry. Their descriptions outlined low rates of pay,
slow or no payment for work, poor working conditions, long hours and the
inability to negotiate effectively with their employer. Ms Nguyet stated:
I have been working as an outworker for 21 years. I make a
range of different lace fashion dresses for several different labels from the
high end of the clothing market. The garments I make are complex with different
colours of material needing to be sewn together. It takes me around one hour to
finish a garment. I have a lot of experience working at home as an outworker.
My pay is very low, around $5 or $6 per hour, without benefits. That is the
reason why, sometimes, I refuse an order because of the very complex garments.
There are too many colours to match and I feel too much pressure. This salary
came with the first time I was given an order to complete.
It is common for me to be given 100 garments to complete in
one week. It is one hour of complex work for one complex garment. I told my
employer that I can only handle 50 garments a week. This means my income is now
very low. My body is tired and one of my legs is very sore, so I cannot handle
the heavy workload anymore. My hopes for the future are the same as my friends.
Others who are working at home like me would like to get fair wages and better
conditions. We want the government to help improve our conditions at work so we
can keep working and contributing to Australian society.[9]
2.9
Ms Anh Dang and Ms Susan Tran also shared their experiences as
outworkers:
I have been working for one employer for four years, but I
have not got any entitlements. My employer pays me about $5 per hour. Whether I
can make enough money or not depends on how difficult the job is. Sometimes I
have to work day and night but I cannot make enough money because the work is
so difficult to do. I virtually have to work 12 hours per day, including
weekends. I do not have enough time for my daughter. I do not have enough time
for myself. With the little money, not only do I need to spend very carefully
on my living expenses but I also need to pay for other working expenses such as
power, cotton, machine and other costs when the machinery is broken. My boss
normally pays me two or three weeks after the delivery. If the work has any
mistakes for any reason, I do not get paid until I have fixed all the orders.
The employer wants me to show him my ABN before I can get the job. My life is
so difficult. Sometimes I ask the boss for more money but he says can't pay
more. If I ask too much he would stop the work and give to other people. I do
not want to stop working or find another job because of my age. My daughter is
in year 10 and I have to keep working to make money to raise her and pay for the
rent.
I hope my work is more stable and I can make enough money for
my living and have some rights and entitlements so I do not have to worry so
much if my boss stops his work or make me redundant.[10]
And:
In 2006 I discovered that my first son had autism. That was
the time I started working from home. At the end of 2006 I gave birth to my
second son and he also had the same problem as the first one. The reason I work
from home is because I want to look after both of my two sons.
My husband left because he could not put up with his sons. My
life is so difficult. Over the years I worked for different labels, different
factories. They pay me by piecework. I estimate my pay to be about $4 an hour
without any other entitlements. Recently some employers asked me to have an ABN
number—to set up a company to have a propriety limited—and employ some other
workers in my home. Since they know it is hard for me to get to work, they were
able to convince me to get paid in cash, but the cash pay is much lower. I have
to work from home but, because of the low pay, I have to work very long
hours—between 12 and 15 hours per day without holiday pay or super or other
entitlements. On one occasion my employer did not pay me for four months, which
they blamed on the fact that the principal company had not paid them. After
that, my employer said they would pay me a bit at a time until they caught up.
I am working here in Australia where workers have entitlements and rights, but
unfortunately I do not have those. I hope that I can get the same rights and
entitlements as the workers in the factory.[11]
2.10
However, submissions in favour of the legislation did not go
unchallenged. The Australian Chamber of Commerce and Industry (ACCI) opined:
Apart from references in the Minister’s second reading speech
to a November 2011 Channel 9 story in a Melbourne TCF "sweatshop"
and a July 2011 Sunday Herald Sun report on "sweatshops and
outworkers producing school uniforms for Victorian families for as little as $7
an hour", there are no examples provided in the extraneous materials
as to the precise deficiencies of the existing legal framework, what
recommendations these proposals are based on (such as from the Productivity
Commission or a dedicated independent inquiry by the Federal Government) and how
the proposed measures will reduce possible exploitation of workers in the TCF
industry.[12]
2.11
The Council of Textile and Fashion Industries of Australia (TFIA) had
'serious concerns' about the bill and felt that:
The arguments for introducing the legislation are based on
research conducted nearly 5 years ago not current evidence and fail to
acknowledge the gains made in the 10 years of existing legislation and the 4
years of investment by the Federal Government in Ethical Clothing Australia.[13]
2.12
The debate about the treatment of TCF outworkers and whether this
warranted special legislative protection was related to another matter raised
during the course of the inquiry regarding the status of outworkers as either
independent contractors or employees.
Independent contractors versus
employee outworkers
2.13
The difference between independent contractors and employee outworkers,
and the deeming provisions proposed in the bill to address this question, was
the subject of debate during the course of the inquiry.
2.14
The question of whether outworkers are independent contractors or
employees was described by Slater and Gordon Lawyers (Slater and Gordon) as 'the
key issue which has been grappled with over the course of the development of
outworker regulation in Australia'.[14]
Slater and Gordon continued:
...the regulatory response to date in this country indicates
broad and widespread acceptance that outworkers should be entitled to the
benefits of employment, irrespective of the arrangements under which they are
engaged. It is evident from the laws examined below that most jurisdictions in
Australia have put this issue beyond doubt through the use of statutory deeming
provisions. Even where no deeming provision applies, such as the federal
jurisdiction, awards impose obligations on contractors that are identical to
those which apply to employers of outworkers. This approach also reflects an acceptance
of the same principle.[15]
2.15
Some small businesses and industry groups argued that TCF outworkers in
Australia were, and should continue to be treated as, independent contractors.
Small business owners engaged in the TCF industry claimed that TCF outworkers
chose to be independent contractors.[16]
These submitters voiced their concern that the amendments proposed in the bill
would penalise outworkers by restricting their ability to determine their own
hours of work and other work conditions, such as rates of pay, as independent
contractors.[17]
2.16
The example given by The Ark Clothing Co. was indicative of these:
[The Ark Clothing Co.] design, wholesale and retail women's
fashion in Melbourne where we directly employ approximately 40 staff. We use
reputable manufacturers to make our clothes, who in turn use machinists who
have been running their own businesses (registered with ABN) from their homes.
We have serious concerns that the amendments will
inadvertently harm the very workers they seek to protect by restricting their
ability to operate as independent and autonomous businesses. We believe that
these amendments are responding to an outdated view of the industry, and that
most of the workers this Bill seeks to protect do not see themselves as
outworkers or employees, but as independent contractors working from home
businesses.
Most of these home-based operations are mainly women-owned
businesses working from home out of choice. Many have invested significant
funds into these businesses in preference to working as an employee in a
manufacturing plant or other out-of-home workplaces because of a desire to take
control of their working hours and conditions. They are able to adapt to the
seasonal nature of their work by bringing in other family members or friends to
help with heavy workloads, or by working longer hours during these times. The
home-based nature of their work means they are still available to look after
and supervise their children as required.[18]
2.17
Similarly, the TFIA argued:
It is inappropriate for all outworkers to be subject to many
of the provisions of the Fair Work Act 2009 regardless of their circumstances
and the nature of their businesses. Further, many outworkers operate legitimately
as independent contractors and there are prudent tax and business reasons why
they might wish to continue to operate in this way.
Many outworkers run successful businesses and have done so
for many years. The current regulatory framework is proving inflexible and does
not cater for those home based businesses that are successful and profitable.
In some cases, the need for those home based businesses to begin receiving
employment-like benefits poses a risk to the continuing operation of their
businesses.[19]
2.18
The AiG was strongly opposed to the deeming provisions proposed in the
bill because, in the AiG's view, '[i]t is not legitimate or fair to deem
contractors to be employees in circumstances where parties have agreed to enter
into a contractor arrangement'.[20]
2.19
Conversely, FairWear claimed that '[o]utworkers wish to be treated as
employees' and 'do not consider themselves to be "entrepreneurs"'
despite often being told they must get an ABN or incorporate a proprietary
limited company in order to receive work.[21]
FairWear believed that the complex contracting arrangements for outworkers
typical of the TCF industry necessitated 'the legislative protections provided
for in this Bill'.[22]
2.20
FairWear was one of many submitters that were strongly supportive of the
proposed deeming provisions.[23]
Some of these submitters went further and suggested the deeming provisions in
the bill required strengthening to further improve protections for TCF
outworkers.[24]
2.21
Some submitters were concerned that as drafted the amendment may not
capture all outworkers. For example, Dr Michael Rawling believed there was
an 'apparent loophole'[25]
in the bill and drew attention to the South Australian state deeming provisions
as a possible alternative approach, describing these as 'the broadest deeming approach
of all the state jurisdiction statutory outworker protection regimes'.[26]
Dr Rawling continued:
Most relevant...is the fact that the South Australian state jurisdiction
deeming approach is the only state jurisdiction deeming regime which is explicitly
designed to ensure that "no outworker is inadvertently beyond their reach by
operation of the corporate veil".[27]
2.22
Dr Rawling proposed specific amendments to the bill intended to ensure
that outworkers who operate as a company or with a corporate structure would be
captured by the deeming provisions.[28]
2.23
Other organisations also recommended the deeming provisions be widened[29]
'to ensure that outworkers in all forms of supply chains are covered'.[30]
The TCFUA stated:
The TCFUA believes that as far as possible, the provisions
(which are enabling in intent) should have the widest possible application.
However, it remains concerned that some outworkers within the TCF industry may
not be captured by the legislation and therefore will not be entitled to the
same protections as other outworkers. In particular, these concerns go to both
the complexity of the provisions themselves and the potential for deeming not
to apply where an outworker’s connection or nexus to a corporation within the
supply chain cannot be sufficiently established. In the TCFUA’s view, such an
outcome would undermine the clear policy objective behind the provisions to
legislate protections for outworkers as a class of worker.[31]
2.24
In response to claims that the bill would prevent outworkers from
choosing to be independent outworkers, DEEWR stated:
The Department is aware of concern amongst industry
stakeholders about the impact of removing the distinction between contractors
and employees. However, it is important to note that there will be minimal
impact on business in relation to additional costs for increased wages and
entitlements as employers and principals are already obliged under the TCF
Award to meet these minimum standards.
Rather, the Bill will remove the distinction between
outworkers who are employees and contractors in relation to their ‘terms and
conditions of employment’, when the distinction is not relevant to the manner
in which they are entitled to be treated under the TCF Award. This will help
improve the visibility of the minimum entitlements of contract outworkers and
should assist in improving compliance.
The extension of the [Fair Work] Act to contract outworkers
will also provide this group of vulnerable workers with important additional
workplace protections under federal law.[32]
2.25
The department elaborated at the public hearing:
Senator BACK: ...Can you explain to me so that I am
clear on it whether, under the provisions of the proposed bill, an outworker
can still present themselves as a contractor for the purposes of undertaking
their work, or does this preclude them from that course of action?
Mr Thompson: For the purposes of the Fair Work Act,
the contractor in your question will be an employee for that act. How that
applies for other pieces of legislation is not really a matter that is covered
by the bill.
Ms Wyborn: The specific issue that I suppose you are
getting to is whether the person can present themselves as an independent
contractor for the work that they are doing. The answer is yes, but the effect
of this piece of legislation will be to deem them to be an employee for the
purposes of this piece of legislation.[33]
2.26
With respect to the deeming provisions and their scope, DEEWR
acknowledged the Minister's statement during his second reading speech that the
government is considering whether changes are required 'to ensure the greatest
possible reach of the deeming provisions so that no outworker is inadvertently
beyond their reach by operation of the corporate veil'.[34]
The Committee was also informed that '[t]he Department is examining these
issues'.[35]
Committee view
2.27
It is clear to the Committee, based on the evidence presented to this
inquiry as well as that provided to past Senate Committee inquiries, that the
mistreatment and exploitation of outworkers is a long-standing problem that
continues to blight the textile, clothing and footwear industry in Australia.
The Committee is appalled that this remains the case.
2.28
As outlined in Chapter 1, governments of various political persuasions
have in the past attempted to improve working conditions for and extend the
protections afforded to TCF outworkers, however, these attempts have been
unsuccessful in eliminating the systemic mistreatment of these vulnerable
workers.
2.29
It is the Committee's view that outworkers in the TCF industry should be
deemed as employees for the purposes of the Fair Work Act. The Committee shares
the view of Deputy President Riordan when he stated:
An outdoor worker does not lose the status of employee and
the protection of the Award merely because she is required by a maker-up or his
agent to register a business name or to engage in dubious devices in an attempt
to co-operate in achieving an evasion of responsibilities, rights and duties...[36]
2.30
The Committee also notes the Senate Economics References Committee reached
a similar conclusion in 1996.[37]
2.31
As such, the Committee supports the deeming provisions in the bill as a
mechanism to resolve the ongoing exploitation and mistreatment of outworkers by
extending operation of the FWA as it applies to their terms and conditions of
employment and by providing additional workplace protections under federal law.
2.32
However, the Committee also sees merit in the recommendation from some
submitters, for example Dr Michael Rawling, FairWear and the TCFUA, that these
provisions be broadened to ensure all outworkers in the TCF industry are
captured. The Committee notes that this is an issue already being considered by
the government: the Committee therefore recommends that the government revise
the deeming provisions in the bill to ensure that the deeming provisions apply
to all outworkers in the TCF industry, including those operating as a company
or under a corporate structure.
Recommendation 1
2.33
The Committee recommends that the Commonwealth Government revise the
deeming provisions in the bill to ensure that these provisions apply to all
outworkers in the TCF industry, including those operating under a corporate
structure.
Potential impact on manufacturing in Australia
2.34
Some submitters expressed concern about the potential impact of the
proposed amendments on manufacturing in Australia.[38]
They argued that clothing manufacture is already facing significant challenges
to remaining in Australia and the proposed legislation represented yet another
such challenge. The Australian Industry Group (AiG) stated:
Over the past decade we have witnessed the TCF industry in
decline particularly because of aggressive competition from cheap imports and
burdensome regulation and red-tape imposed on Australian manufacturers. The
decline is obvious from the falling labour market statistics, which are likely
to be reflected in the prevalence of outworkers in the industry. It is without doubt
that the proposed amendments, particularly in our current global economic
climate and with a high Australian dollar, will place a further burden on local
manufacturers.[39]
2.35
Other submitters, particularly small local businesses engaged in the TCF
industry, shared concern about the potential negative impact on local
manufacturing.[40]
The Ark Clothing Co. Pty Ltd eloquently described the fears of some small businesses:
...it will result in the death of manufacturing (already
grossly diminished) in the clothing industry in Australia. We will have no
choice but to join the long list of others who have decided to have their
clothing made offshore as a direct result of this legislation.[41]
The Bill makes complex and technical amendments to the Fair
Work Act 2009, some of which appears to result in changes which are not
practical, will add costs throughout the supply chain and create uncertainty in
existing commercial arrangements.[42]
2.36
In response to this type of claim, the TCFUA stated:
We are probably not quite as pessimistic about the future of
the industry as that. We think there is the capacity for the Australian
textile, clothing and footwear industry to survive and in fact grow in some
sectors. Critically important is the ability to differentiate our industry from
low-wage countries and countries that are doing high-volume mass production of
cheap products. So I think you are right in one sense: I do not think it is
likely that we are going to see the type of large clothing factories that make
very cheap products in the Australian system going into the future.
...
It is the case that the industry is under extraordinary
pressure. The pressure we have seen in terms of job losses is primarily as a
result of reduced tariffs, increased imports from low-wage countries, the
effect of the high Australian dollar and of course some slump in retail in
clothing and footwear. Also, as reported in yesterday's Financial Review, there
has been a bit of a slow or ineffective response from the local industry to
internet sales and in its capacity to move into that type of approach to
selling products. We think that is where the industry is struggling. It is not
as a result of these laws.[43]
2.37
The department informed the committee that its examination of the
potential impacts of the bill had indicated there was unlikely to be a negative
effect on the manufacturing sector. Indeed, DEEWR explained that in all
likelihood other factors had already resulted in 'low-end...short-run'
manufacturing moving offshore and therefore, the department did not expect to
see significant changes in local manufacturing as a consequence of the bill:
Senator BILYK: We have heard from some other witnesses
that there is a great chance that the manufacturing industry within Australia
may well, for lack of better terminology, go down the gurgler or people might
move offshore or any of these things might happen if the bill goes ahead. I am
just wondering if you have any comments to make in regard to that. In my eyes,
having a safe workplace and decent working conditions does not necessarily mean
that the industry will not survive. Do you have any comments to make about the
bill in regard to that area?
Mr Thompson: ...in our research behind the bill we did
not come across any strong evidence either way, really. Certainly there were
those arguments and then there were arguments the opposite way as well. There
were arguments that, yes, this will lead to the impact of manufacturing going
offshore. The other side of the argument was that a lot of the manufacturing
that could go offshore, because it came out of factories, has already done so.
With respect to low-end manufacturing, short-run work that is done largely by
outworkers, if it could have gone it already has. There is probably always
going to be some market left for outworkers in Australia.[44]
2.38
DEEWR also argued that 'providing fair workplace protection is not
inconsistent' with achieving 'economic growth, employment and productivity
goals' through a strong manufacturing sector[45]
and stated:
...it is not a penalty on industry participants to meet their
obligations under the law to ensure the fair and equitable treatment of workers
in the TCF industry. The fact that some parties breach their legal obligations
and are thus receiving an unfair advantage supports rather than undermines the
rationale for these measures. Industry participants should take steps to ensure
that as far as possible the industry as a whole is complying with the law in
relation to the engagement of TCF outworkers. This will ensure that the legal
rights and entitlements of outworkers are protected and that there is a level
playing field and competitiveness across the industry.[46]
Committee view
2.39
The Committee acknowledges the challenges, such as a strong Australian
dollar and ubiquitous low-cost imports, currently facing the manufacturing
sector in the Australian TCF industry. However, the Committee notes the finding
in the Green report about a positive outlook for the Australian TCF industry.[47]
The Committee also agrees with DEEWR's argument that competitive advantage is
not an acceptable reason for failing to comply with legal obligations and withhold
work entitlements and protection from TCF outworkers. The Committee believes that
the need to extend workplace rights and protections for vulnerable outworkers
outweighs concerns about the potential loss of some local clothing
manufacture.
Process for recovery of unpaid amounts
2.40
A number of submitters were critical of the process for recovery of
unpaid amounts proposed in the bill.[48]
The NRA described the recovery of unpaid amount provisions as 'unacceptable'
and argued:
The proposition that liability is created by a retailer's participation
"in a chain or series of arrangements for the supply or production of
goods" is in our view completely untenable.[49]
2.41
AiG stated:
It is not legitimate or fair to hold businesses accountable
for the actions of others when they have no control or knowledge of those
actions and indeed may never have any contractual relationship with that other
party.[50]
2.42
Other submitters were supportive of the recovery of unpaid amount
provisions,[51]
although many of these felt the provisions placed an onerous burden of proof on
outworkers and that this should be rectified.[52]
The Committee heard about the complex supply-chains frequently found in the TCF
industry and that these supply-chains would make it very difficult for an
outworker to identify an "indirectly responsible entity". FairWear
explained:
Recovering outworkers under payment or non payment from their
direct employer is often extremely difficult. Apart from the circumstances
where the employer disappears or becomes insolvent, in some cases it is
difficult to identify who is the employer. Many outworkers know very little
about their employer, and have only simple contact details. This is
particularly pronounced for outworkers who have their work delivered to them by
their employer. They may have no address for the employer at all.
The recovery of money provisions ensures outworkers can
recover the money owed to them directly from the principal contractor in the
supply chain (usually the Fashion House) who gave out the work to the first
layer of sub-contractors. The principal contractor can in turn seek to recover
this money from the sub-contractor who failed to pay the outworker correctly in
the first place.
...
FairWear is concerned that the Bill currently suggests
outworkers would need to provide detailed information about their supply chain
in order to make a successful claim. It is unrealistic for an outworker to
access such information, as in most cases the outworker only has a name (and
possibly an address) of their immediate employer. They do not know who the
potential contractor gets work from, or any other details of the supply chain
other than the name of the label. The Bill also places the onus of proof on the
outworker. We seek amendments that reflect the provisions in state outworker
legislation.[53]
2.43
Oxfam Australia opined that 'the practical application of this provision
may be undermined if the onus of proof to investigate supply chain
relationships and identify responsible entities falls on the outworker'.[54]
To address this issue, Oxfam recommended 'that legislation clearly stipulates
that the principle contractor has responsibility to disclose supply chain
information and identify the relevant entities'.[55]
2.44
Slater and Gordon advocated for changes to the recovery of unpaid amount
provisions so the bill incorporated '[a] key feature of all existing recovery
of remuneration provisions' where 'the onus on ascertaining and proving
liability for payment of remuneration' is shifted:
...away from the outworker and towards persons in the contracting
chain who are much more likely to be in a position to identify the party liable,
and extract the requisite payment from that liable party.[56]
2.45
In regards to claims that entities in the supply could be liable for
payment of unpaid amounts even where that entity did not have a direct
contractual relationship with an outworker, DEEWR stated:
Under the Bill, an entity that has been required to pay an
unpaid amount to an outworker will be provided with a right to recover an
equivalent amount from the responsible person, or offset the amount against any
amount they owe to that person. This right will apply whether the unpaid amount
is paid voluntarily, or as a result of a court order.[57]
2.46
The department anticipated that as a result of the proposed recovery of
unpaid amounts provisions:
...entities further up supply chains may choose to contract
with more reputable suppliers and could also shorten supply chains to limit
exposure to claims of this nature. This would be a desirable outcome for
outworkers as it is likely to result in the reduced risk of businesses
defaulting on their obligation to pay outworkers.[58]
Committee view
2.47
The Committee supports the introduction of the recovery of unpaid
amounts provisions in the bill as a mechanism to assist TCF outworkers to
obtain money they are due from others in the supply chain. Given the complexity
of the supply chains involved in the TCF industry, and TCF outworkers' limited
contact with and / or knowledge of each entity in the supply chain, it is
appropriate to afford outworkers the ability to recover unpaid monies from indirectly
responsible entities.
2.48
The Committee is concerned, however, about the difficulties facing
outworkers in identifying indirectly responsible entities and their subsequent
ability to take "reasonable steps" to request payment from a
responsible entity. To address this problem, the Committee recommends that the
bill is amended to remove the requirement for TCF outworkers to take prior
steps and instead, require only that a TCF outworker believes an entity is a
responsible entity. The Committee notes that such a change may also require the
provision of further protections in the bill for entities where they are found
not to be an indirectly responsible entity, or are an indirectly responsible
entity not liable to pay an unpaid amount, or not liable to pay an unpaid
amount in full.
Recommendation 2
2.49
The Committee recommends that the bill is amended to:
-
remove the requirement of a TCF outworker to take
"reasonable steps" to recover unpaid amounts from a responsible
entity and instead require that a TCF outworker believes an entity is an
indirectly responsible entity; and
-
require an entity to pay an unpaid amount unless the entity
satisfies a court that it is:
-
not an indirectly responsible entity; or
-
not liable to pay the unpaid amount; or
-
not liable to pay the unpaid amount in full.
Right of entry
2.50
Some submitters to the inquiry opposed the proposed new right of entry
provisions that would provide permit holders with additional entry rights to
enter business premises, in particular sweatshops. For example, the TFIA
described the right of entry provisions as 'excessive and unnecessary'.[59]
The NRA opposed 'the granting of rights to union officials to enter the
premises of bone fide independent contractors' and claimed:
...there is no definition of what is meant by “sweatshop”
premises in the act. Nor is there any substantive attempt to differentiate
between “sweatshop” operations and legitimate, fair and productive independent
contract arrangements.
In what is considered a very convoluted process, the bill
does purport to limit the right of entry in respect to “accredited persons”. In
order for a person to be accredited an application will have to be made to a
particular “person or body” and the applicant will have to secure the
endorsement of a union and an employer organisation.
NRA is opposed to the establishment of convoluted and
elaborate processes requiring bone fide independent contractors to secure an
accreditation and union endorsement in order to operate their businesses.[60]
2.51
Conversely, other submitters endorsed the right of entry provisions.[61]
The Australian Immigrant and Refugee Women's Alliance (AIRWA) acknowledged the
controversy around right of entry but argued:
...the ongoing exploitation of vulnerable migrant sweatshop
and homebased outworkers in our own Australian clothing industry justifies
these special provisions.
Without the capacity to enter sweatshops and monitor working
conditions, other legislative provisions lack effectiveness. The current
special rights of entry in the TCF industries give access to the records of
outworkers employed by a contractor, but not to the records of the workers who
might be working in the informal factory or sweatshop at the time of the
inspection of the outworker records. These sweatshop workers are similarly
vulnerable to outworkers and deserve the protection of special laws.
We strongly support the additional special rights of entry
provisions to cover sweatshop workers as well as homebased outworkers.[62]
2.52
FairWear described some of the difficulties encountered by the union
when investigating sweatshop premises and the need for special rights of entry
to address these:
The TCF Union has reported the frustration of identifying
sweatshop situations, but being unable to investigate details without providing
notice under the general right of entry provisions, resulting in workers being
unavailable and the production of records that were clearly recently produced.
In other situations they have had access to records pertaining to outworkers
while visiting a factory that appears to be set up informally, but have not
been able to access the records of those factory workers who appear to be
working in conditions less than the award.
...
Outworkers wages and conditions may be improved, but the
supply of work to award compliant outworkers may be undermined by the increased
flow of work to the sweatshop workers in the same supply chain.
The additional special right of entry provisions are vital to
the efforts to address the exploitation of sweatshop workers and outworkers in
the TCF industry.[63]
2.53
In its submission, the TCFUA elaborated on the problems associated with
identifying and monitoring conditions for workers in sweatshops.[64]
Specifically, the TCFUA described the difficulties of accessing sweatshop
premises under the current legislative framework.
2.54
The TCFUA voiced its strong support for the proposed right of entry
provisions, and stated '[t]he TCF Bill provisions appropriately recognise that
exploitation is not limited to home based work but also exists in sweatshop
factory environments as well'.[65]
2.55
The department recognised the limitation of the current rights of entry
and explained that the proposed extension to rights of entry '...would allow a
permit holder from the relevant union to more easily investigate suspected
breaches of the [Fair Work] Act or a relevant industrial instrument'.[66]
DEEWR continued:
The Department acknowledges that some industry stakeholders
may not be convinced of the need for this extension of right of entry
provisions. However, it should be noted that the expansion will benefit
vulnerable employees by allowing a permit holder to discover and investigate
workplaces in the TCF industry, particularly those operating under sweatshop
conditions, and check relevant documents before these businesses can be closed
and moved to another location to avoid scrutiny. It may also benefit employees
who are fearful about seeking assistance, by limiting the capacity of employers
to refuse entry.
The key change in the extension of the outworker-specific
right of entry provisions in the [Fair Work] Act to all businesses in the TCF
industry will be that a permit holder will not be required to give 24 hours
notice when exercising their right of entry into an employer’s premises. The
requirement that the permit holder have a reasonable suspicion of a breach of a
fair work instrument or the Act continues to apply, although the alleged breach
need not necessarily relate to, or affect, a member of the relevant union. In
addition, an exception will apply for the principal place of business of a
person with appropriate accreditation.
It is also important to note that except in relation to the
notice requirements for entry under the outworker-specific right of entry
provisions in the [Fair Work] Act to investigate suspected breaches of the [Fair
Work] Act or a relevant industrial instrument, the other requirements for entry
will continue to apply.[67]
Mandatory TCF outwork code
2.56
The provisions in the bill that would enable the development of a
mandatory TCF outwork code were raised by some submitters. Submitters such as
the AiG and the NRA were opposed to the introduction of a mandatory code.[68]
The NRA questioned the need for a mandatory code '[g]iven the operation of the
current voluntary code and the failure of the Bill to identify any compelling
need for legislation'[69]
and stated:
Many retailers, particularly our national retail chains, have
over many years actively supported an ethical Australian textile, clothing and
footwear industry by becoming a retail signatory to the National Retailers
Ethical Clothing Code which is administered by Ethical Clothing Australia.
By participating in this Code, retailers play a key role in efforts to ensure
transparency in the industry.
Under the Code retail signatories are required to provide
details twice a year of their Australian textile, clothing and footwear
suppliers and ensure they are complying with the relevant Award provisions and
laws. In providing the details of their suppliers, retail signatories are
committing to take appropriate action if they are provided with evidence from
the Textile Clothing and Footwear Union of Australia that any of their suppliers
are not meeting their legal obligations.[70]
2.57
Conversely, submitters such as FairWear, the TCFUA, AIRWA, Slater and
Gordon, and Oxfam Australia were supportive of the mandatory code provisions.[71]
FairWear's comments were indicative of those who supported development of a
mandatory code:
FairWear strongly supports the Bill’s provision for the
creation of a national mandatory code for TCF industries, modelled on the
existing codes in New South Wales, South Australia and Queensland.
...
The creation of a national mandatory TCF Code of Practice
will provide a uniform scheme nationally, which will make it more accessible to
industry and provide broader protection for outworkers and sweatshop workers.
The codes of practice require record keeping and reporting
throughout the supply chain. This allows regulatory bodies to identify what
volumes of work are going where, and identify where outworkers are involved in
supply chains, and under what pay and conditions. The codes also require all
entities throughout the supply chain to take action against any of their
suppliers who are failing to meet their obligations which ensure that the
workers in those supply chains receive the wages and conditions to which they
are entitled.[72]
2.58
DEEWR explained that the bill itself did not create a mandatory code but
rather contained the capacity for the creation of a mandatory code via
regulations, noting the decision to develop such a code was 'a matter for the
government'.[73]
2.59
The department also described the requirements of TCF industry
participants if a mandatory code was developed, as well as the reasons why such
a code might be implemented:
A TCF outwork code would help to improve compliance with both
the new provisions and the existing minimum conditions for outworkers, by providing
greater transparency in the supply chain and making it easier to identify the
entity responsible for an outworker’s entitlements. It would also assist in
improving compliance more generally by enabling businesses to more easily
identify ethical supply chains for the purposes of contracting, thus reducing
the capacity of, and business incentive for, parties in the chain to undercut
workplace standards.[74]
Recommendation 3
2.60
The Committee recommends that, subject to the foregoing recommendations,
the bill be passed.
Senator
Gavin Marshall
Chair
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