For the purposes of background, the Fair Work Amendment (Equal Pay for Equal Work) Bill 2022 (bill) seeks to amend the Fair Work Act 2009. The bill was initially introduced as a private senator's bill by Senator Malcolm Roberts in the 46th Parliament. It was restored to the Notice Paper in the 47th Parliament on 27 July 2022.
Coalition Senators acknowledge Senator Roberts' longstanding connection with, and strong advocacy for, workers within the black coal mining industry. This includes previously working as an underground coalface miner.
The bill is primarily focused on the black coal industry and would require that certain labour-hire workers receive at least the same rate of pay as other employees performing the same task.
Coalition Senators note that, as outlined in the bill's explanatory memorandum, a new civil penalty would apply in respect of a worker employed under a labour-hire contract and that amendments relating to the pay rate would not have a retrospective application and are limited to any new labour-hire contract entered after the commencement of the bill.
This bill would be applicable to labour-hire employees under the Black Coal Mining Industry Award 2020 and the Aircraft Cabin Crew Award 2020, as well as four other awards that currently do not have provisions for casual employment.
Coalition Senators believe this bill erroneously seeks a one-size-fits-all approach, overlooks nuances of the labour-hire industry, will have unintended consequences, and ignores some fundamentals including the desire by some workers to have the flexibility and other benefits afforded to them by being labour-hire employees.
The Australian coal industry has played a significant role in the modern prosperity of the Australian economy. Like other sectors of the mining industry, it has provided numerous employment opportunities and benefited regional communities across Australia. According to the Minerals Council of Australia (MCA), the coal mining industry employs around 50 000 workers, with another 120 000 indirect jobs supported by the industry.
As a valuable commodity, coal is Australia's second largest export (after iron ore) and accounts for approximately 11.5 per cent of Australia's total exports. While being a strong economic driver and export commodity, coal is an affordable, reliable source of electricity. In 2019, coal supplied over 68 per cent of electricity to the National Electricity Market.
While there are detractors of coal who seek to diminish and disrespect the valuable role played by the coal industry in job creation and wealth empowerment, without doubt, the coal industry has played a pivotal, influential part in the narrative of the Australian success story.
Coalition Senators note that in December 2020, by Senate resolution, the Senate Select Committee on Job Security was established to inquire into and report on 'the impact of insecure or precarious employment on the economy, wages, social cohesion and workplace rights and conditions'. This included the function of the labour-hire industry.
Regarding the role of labour-hire, Coalition Senators respect the diversity of views on the matter; however, Coalition Senators do not share the sentiments espoused by some who have sought to demonise the vital function played by the labour-hire industry.
Like other components that constitute the Australian economy, labour-hire is an incredibly important and dynamic contributor to the Australian workforce. Given the acute labour market and severe skills shortage experienced across Australia, the use of labour-hire has a legitimate and practicable application that benefits the industry and local communities.
According to Laplagne, Glover & Fry, 'the number of labour-hire workers in workplaces with 20 or more employees grew from 33,000 in 1990 to 190,000 in 2002, an increase of 15.7 per cent per year'. Over the past two decades, this has risen to over 500,000 people who work across various industries and workplaces, including the mining sector.
Over the past two decades, the mining industry—as a relevant sector within the scope of this inquiry that employs labour-hire—has responded effectively to the varying demands and shifts in commodity prices for coal with necessary levels of flexibility by supplementing and filling required gaps quickly using labour-hire.
Contrary to representations made in relation to labour-hire and proportion of broader workforce, Coalition Senators note that the current use of labour-hire in the Australian workplace is not considered to be at epidemic levels. According to the submission from the Australian Industry Group (AIG), 'only 1.1% of the workforce is employed by a labour-hire firm. This proportion is lower than it has been over the past 10 years'. Therefore labour-hire employees fill essential needs gaps and meet a market demand within the workforce, which in their absence, would be left unfilled or have to be covered by skilled migration.
It should not be forgotten that the mining industry is the highest paying industry in Australia. According to the MCA, the average wage is $144 000 compared to the rest of the Australian workforce, where the average is $95 000.
Coalition Senators note the concerns of some business and industry advocates associated with labour-hire. Some contend that this bill would increase the complexity and administration of engaging labour-hire employees and create significant practical and payroll complications and increased and unnecessary red tape (regulation).
In its submission, AIG states that a policy such as equal pay for equal work is 'unfair, inappropriate and unworkable'. Additionally, AIG contends the bill does not sufficiently define a 'labour-hire employer' or a 'labour-hire employee', consequently resulting in some businesses inadvertently being caught up by provisions of this bill. As a specific example, consider 'various services to coal mining clients' and the example of electrical contracting firms who occasionally send electricians out to coal mines, and how they might be captured and impacted by this proposed legislation.
Coalition Senators note the objections AIG has towards the proposed new power this bill would grant to the Minister to add additional awards by way of disallowable instrument. In its appearance before the committee, AIG indicated that such a provision 'creates a lot of uncertainty for businesses not just within the labour hire sector but across industries'. This is not conducive to allow business to operate, with confidence, within a robust thriving economy.
Coalition Senators note that the Australian Chamber of Commerce and Industry (ACCI) believes people working in either black coal mining or as airline employees have been the specific focus of this bill because there is a view that people have had their wages reduced for being on labour-hire contracts. On this ACCI said:
There is no conclusive evidence to support the claim that labour-hire employees are paid less than those who are directly employed by the host company for doing the same work in either industry. The Australian Bureau of Statistics (ABS) issues industry-specific labour force data that provide the best available information for employment and wages in mining. It shows that the median weekly earnings of mining employees paid by a labour-hire firm are approximately $300 more (or 13 per cent higher) than the median weekly earnings of direct hire mining employees.
Additionally, ACCI emphasised that '…labour-hire employees in the coal mining industry are paid on average about $120,000 annually, which is about 190% of the award rate (approx. $1,170 per week)'.
On whether a wage differential existed between direct employees and labour-hire employees, the MCA gave evidence during the committee's public hearing that 'the median weekly earnings of mining employees paid by the labour-hire firm are approximately $300 more, or 13 per cent higher, than the median weekly earnings of direct mining employees'.
Coalition Senators share the concerns of the ACCI that should this bill be legislated; it would disenfranchise the capacity of labour-hire employees to negotiate their pay and conditions and note that labour-hire employees currently 'have the same rights and protections as employees in all other types of businesses'.
Coalition Senators note the seismic disruption the COVID-19 pandemic has had on the Australian aviation industry, which was labelled 'an existential crisis' by Qantas. This has also contributed to the reactivation of the sector throughout this year, particularly in response to surge demands as the shadow cast by the pandemic has gradually diminished, resulting once again in increased passenger demand for air travel.
In its testimony during the public hearing the national airline indicated that in relation to its ground handling team—irrespective of whether it consisted of labour-hire employees or direct hire employees—the disruptions experienced during peak times earlier this year would still have resulted in unfortunate disruptions to passengers.
In addition, Qantas said that prior to the COVID pandemic when 'baggage handling was fully outsourced' they reported they 'did not have issues meeting demand and living up to the standards that people expect from Qantas'.
Coalition Senators note that in response to questioning during the public hearing, Qantas confirmed that both directly employed staff and labour-hire employees can access the staff travel program. It is not restricted only to direct Qantas employees. Under this program, staff can get a 25 per cent discount on any advertised airfare, with more significant discounts for stand-by travel.
Recommendation
That the Fair Work Amendment (Equal Pay for Equal Work) Bill 2022 clearly defines 'labour-hire employer' and a 'labour-hire employee'.
Recommendation
Coalition Senators strongly encourages the Australian Government to include genuine, collegiate stakeholder engagement with the labour-hire industry, particularly the mining and aviation industries, relating to its own legislative version of equal pay for equal work, which we understand is currently progressing, and that the Australian Government is not simply blinded by ideological obsession in dismissing the labour-hire industry's legitimate concerns with equal pay for equal work legislation.
Recommendation
That should a version of equal pay for equal work legislation be moved by the Australian Government, that it include a requirement for a review of the legislation's impact on the labour-hire industry, related businesses, and employees 18 months from the time of Royal Assent.
Recommendation
That the Fair Work Amendment (Equal Pay for Equal Work) Bill 2022 not be passed.
Senator Matt O'Sullivan Senator Kerrynne Liddle
Deputy Chair member
Liberal Senator for Western AustraliaLiberal Senator for South Australia