4.1
Agriculture is one of the most significant sectors in the Australian economy. According to the Australian Bureau of Statistics (ABS), in the financial year ending 30 June 2020, the overall value of Australian agricultural commodities produced was valued at approximately $61 billion.
4.2
Evidence heard by the committee suggests that employment in some parts of the agriculture sector has become exceedingly precarious—this has been, in part, due to the prevalence of labour sourcing arrangements, such as labour hire and subcontracting. The bulk of the seasonal agricultural workforce in Australia is drawn from different types of temporary visa holders, and their treatment under such employment arrangements is of particular concern. While the committee acknowledges that there are significant issues for all workers across the entire agricultural sector, this chapter is focussed on workforce arrangements in the horticulture and the meat processing industries.
Horticulture
4.3
Horticulture is the second largest industry in the agricultural sector and involves the cultivation of fruit, vegetables, nuts, flowers, turf and nursery products. According to the Australian Bureau of Statistics, in 2019–2020 the horticulture sector overall exceeded $15 billion in production value and employed over 60 000 people.
4.4
The majority of jobs in horticulture are labour intensive, with the most common being pickers, packers and graders. Every crop has a distinct season where it is at its optimal ripeness or size for harvesting. Evidence from Australian Fresh Produce Alliance (AFPA) outlined that there were between 50 000 and 71 000 short-term roles in fresh produce throughout 2020. Labour is the biggest cost in horticulture, accounting for up to 70 per cent of total production costs.
Meat processing
4.5
The Australian meat industry is recognised worldwide for its high-quality products and is an important contributor to the Australian economy— adding a total of $17.6 billion to Australia's Gross Domestic Product (GDP) in 2018–19. Meat processing is a significant manufacturing and value-adding process within the industry, and includes work such as slaughtering, boning, freezing, preserving or packing of meat, and manufacturing from abattoir by-products.
4.6
Meat processing work is similarly contingent on seasonality—for example, average cattle slaughterings in Victoria and Queensland peak in the dry months and reach a trough in the wet months. Australasian Meat Industry Employees Union Acting Federal Secretary, Mr Matt Journeaux, described the industry as being 'reliant on a commodity that is grown in a paddock that is open to all weather conditions and the difficulties that those present'.
Labour market trends
4.7
Given the seasonal variability of processing and harvesting, some flexibility in employment numbers is expected. According to ABARES, in 2018–19 Australian farms employed on average 326 000 workers. Employment varied throughout the year, with a reported high of 356 000 workers in February compared to a low of 311 000 in June.
4.8
Across both horticulture and meat processing, seasonality creates short-term employment, which has implications on the nature and type of employment that can be offered. Three notable trends in the horticulture and meat processing industries are ongoing labour shortages, the prevalence of labour hire and contracting arrangements, and the use of migrant labour—all of which are discussed below.
Labour shortages
4.9
Historically, agricultural industries have experienced difficulty in attracting and retaining a local workforce. The National Farmers' Federation (NFF) submitted that a number of factors contribute to the lack of availability, quality, and retention of a highly-productive workforce, such as:
The conventional wisdom is that agriculture is “old fashioned”, isolated, physically demanding and unrewarding, with limited career paths, and little social status.
Low levels of industry involvement in education and training, poor promotion of agricultural career pathways, and the limited capacity of the VET system to deliver innovative training solutions reinforce these negative perceptions.
[T]he size of the industry’s workforce is seen to be shrinking, with consolidation and corporatisation of farms and increasing adoption of labour-saving automation and digital technology.
4.10
However, the NFF do not identify wages as a deterrent, as the above factors pose 'much greater implications for the interests of Australians who work in the sector'.
4.11
Australasian Meat Industry Employees Union Acting Federal Secretary Matt Journeaux on the other hand said labour shortages have been created by an overreliance on temporary migrant labour in recent years:
Australians will do the job. I do hear this time and time again. As I explained before, if an entry level labourer is receiving less than someone working for Coles or Woolworths, the meat industry can be quite a confronting industry. If you're a 16-year-old kid and you walk onto a slaughter floor for the first time, it's quite confronting. So, to do that job, there have to be the incentives and the support there from the employer for you to do that role. If the incentives aren't there, you're much better off putting on a shirt and tie and filling shelves in Woolworths and receiving more money for doing it. Again, we can't have 15 or 20 years of an industry in crisis where they're filling the labouring positions with 417s and the skilled roles with 457s, creating their own skills shortage, and then expecting Australians to be lining up at the gates to do those jobs. We need to incentivise young people and get people back into the industry.
4.12
This position was supported by Emeritus Professor Michael Quinlan for the horticulture sector at-large, adding that low pay and poor working conditions have created the labour shortage:
You create a self-fulfilling prophecy, because you bring in workers who are paid very low rates, and it makes the industry extremely unattractive. But we've been running high immigration levels and high levels of temporary visas, which is new to Australia, and it has created a whole new business model in a number of industries which have become highly dependent on these sorts of arrangements. But it's really not sustainable. We need to provide the job opportunities for younger people, because there's a huge level of underemployment in Australia, not just people who are holding insecure work or who can't get into the labour market.
4.13
A 2019 report titled 'Towards a Durable Future: Tackling Labour Challenges in the Australian Horticulture Industry' published by the University of Adelaide investigated the extent of labour shortages in the horticulture industry. It found that 40 per cent of respondents said there had been 'occasions in the past five years when they were unable to get as many pickers, packers and graders as they needed'. Notwithstanding this, the report did not reveal an aggregate labour shortage in the horticulture labour market in Australia.
Labour hire and subcontracting
4.14
The shift towards, and reliance upon, labour hire and contracting arrangements in agricultural industries is a feature of the 21st century, and has been comprehensively reported on in prior research and inquiries. For example, the 2015–2016 Victorian Inquiry into the labour hire industry and insecure work (the Victorian Inquiry) found that, in both meat processing and horticulture, labour hire has been used extensively.
4.15
In 2019, up to 56 per cent of farm labour was carried out by contractors or 'other business operators', in comparison to the national average of 17 per cent—a statistic that has remained consistent over the past decade. Ozgroup, a large berry farming co-operative, provided evidence that 'most of [their] growers would use contracted labour'.
4.16
Some participants suggested that, due to seasonality, the high reliance on labour hire and contract workers is an inescapable feature of the sector. According to the NFF:
The principle reason is that the small/family enterprises which make up the vast majority of farms, do not and cannot offer constant employment week on- week, let alone over 12 months. They have labour needs which are subject to intense fluctuation. Indeed, berry growers may employ 2 people one week and 150 people the next.
4.17
The Chief Executive Officer of OzGroup, Mr James Kellaway, echoed this sentiment saying that the 'engagement of casual labour is an intrinsic part of our business':
We cannot continually offer week-on-week constant employment over the course of a full year. We have labour needs that are subject to intense fluctuation and we find that demand usually outstrips supply at certain times of the year. Despite these challenges, unskilled and semiskilled labour at certain times of the year is essential and the need for it cannot be underestimated.
4.18
Mr Journeaux argued a similar point in relation to the meat processing industry, stating that aspects of job insecurity can be derived from the nature of the industry. But some, he said, were the result of labour hire practices:
However, some of the insecurity is a result of the deliberate choice made by employers in the industry to put downward pressure on wages and inhibit collective workplace organisation. Some of that inhibition of workplace organisation is due to the use of temporary migrant labour, particularly through third-party labour hire companies and, in particular, the use of the 417 or backpacker visa.
4.19
Other participants were more pessimistic on the advent of labour hire and contracting in the sector. For example, the United Workers' Union (UWU) contended that, in horticulture, the prevalence of these types of engagements is having negative effects upon job security and employment conditions:
Grower’s over-reliance on contractors has entrenched casual and insecure employment arrangements even when the work is consistent and predictable. The outsourced employment relationship enables unlawful work practices to develop in the shadows.
4.20
In giving evidence to the committee, the Secretary of Unions NSW, Mr Mark Morey, said that labour hire in horticulture is 'a real problem' and encourages exploitation of workers. Mr Morey also alluded to the fact that labour hire companies are also detrimental to farmers who access their services. He explained:
Many farmers will pay a hefty price to labour hire organisations for workers to pick their crops, and then you get a situation like the orchard where Kate works, where I'm sure the farmer wasn't expecting his workers to be ripped off and where, in fact, labour hire took a huge clip on the way through.
Migrant labour
4.21
Migrants play an important role in Australia's economic growth and development, as they meet local labour market needs, transfer knowledge, foster innovation, and support regional communities. According to statistics from the Migrant Workers' Taskforce report, published in 2019, nationally the amount of temporary visa holders with work rights has grown by 54 per cent in the 10 years from 2008 to 2018.
4.22
A range of existing temporary visa types are used to engage migrant workers, including the:
temporary skilled migration programme;
Working Holiday Maker (WHM) program; and
Pacific mobility schemes, including the Seasonal Worker Program (SWP) and Pacific Labour Scheme (PLS).
Agricultural worker visa
4.23
A new seasonal agricultural worker visa was announced on 16 June 2021 by the Minister for Agriculture, Drought and Emergency Management, the Hon David Littleproud MP. The visa is in response to 'workforce shortages in the agriculture and primary industry sectors' and recent changes to the WHM program under the UK-Australia Free Trade Agreement.
4.24
Inquiry participants gave mixed evidence on the likely ramifications of the visa’s introduction. Some participants expressed concern that the visa will undermine key elements of existing foreign labour schemes including the SWP and the PLS.
4.25
Dr Joanna Howe, a senior lecturer at the University of Adelaide whose work has predominantly covered the effect of migration on labour markets in Australia, pointed to the fact that the SWP is a very effective program due to its mandatory worker induction. In her view, it is essential that the agriculture visa contains similar requirements:
The ability of workers to stay on a farm in the SWP is critical, and it has meant that the unions have been able to organise members and hear problems from their members, and then report these to media, agencies and the relevant department. That’s been absolutely critical for why the Seasonal Worker Program has tended to be a better program than the backpacker program. It’s essential that it’s there for the agriculture visa.
4.26
The General Manager of Industry and Corporate Affairs at Teys Australia, Dr John Langbridge, also gave his support for the existing schemes. He said that the PLS had been 'useful' and that the proposed agriculture visa should be an 'extension of that scheme, rather than a dilution of that scheme'.
4.27
When asked whether the agricultural worker visa should contain some of the same safeguards and conventions that apply to those workers engaged under the PLS, the Chief Executive Officer of the NFF, Mr Tony Mahar, said that the NFF's position was that the measures put in place should be 'reasonable'.
4.28
Departmental officials who appeared before the committee were unable to provide much information on the visa, stating that it was 'still in design'. However, the First Assistant Secretary of the Labour and Connectivity Division within the Office of the Pacific of the Department of Foreign Affairs and Trade, Ms Danielle Heinecke, assured the committee that:
[W]e’re looking at ensuring that there’s a minimum standard attached to protecting workers under this scheme. We’re looking at the lessons of the Pacific schemes to ensure that they are built across into this.
4.29
Lacking such protections, Mr Journeaux said the introduction of the agricultural visa would be 'catastrophic' for the meat processing industry. He further elaborated:
My understanding of the ASEAN visa—I think it’s being called something different now—is that there won’t be a skills requirement. I think there will be some market testing but, again, how that market testing will be conducted will be difficult to monitor. I believe that labourers as well as skilled workers can be brought in under it. There is no minimum salary level, there are no minimum conditions, and those people also have a pathway to permanent residency. A visa where you don’t have those protections, with a pathway to permanent residency, will just open the door for exploitation. It will be, again, catastrophic for our industry.
4.30
The Australian Workers' Union (AWU) argued that the new visa will 'only serve to vindicate growers' reliance on workers who lack adequate pay, conditions or job security'.
Modern Award provisions
The Horticulture Award 2020—piece rates
4.31
Employees in the horticulture industry are predominantly covered by the Horticulture Award 2020 (the Horticulture Award), which sets out the minimum terms and conditions of employment.
4.32
A piece rate is where an employee gets paid by the piece—in horticulture, this means the employee gets paid for the amount picked, packed, pruned or made. The provisions allowing for piece rates are specified in the Horticulture Award, and do not specify a minimum hourly payment. Clause 15.2 of the Horticulture Award states:
The piecework rate fixed by agreement between the employer and the employee must enable the average competent employee to earn at least 15% more per hour than the minimum hourly rate prescribed in this award for the type of employment and the classification level of the employee. The piecework rate agreed is to be paid for all work performed in accordance with the piecework agreement.
4.33
The General Manager of Workplace Relations and Legal Affairs at the NFF, Mr Ben Rogers, described piece rates as a 'productivity based scheme':
The more productive a worker is, the more they earn. The reality is that the good workers, the productive workers—and there are many of them out there; there are many examples of them out there on the Seasonal Worker Program, as well local Aussies—can earn up to $30 or $40 an hour.
4.34
OzGroup told the committee that most of their growers will pay their labourers on piece rates. SWP Manager, Mrs Kylie Hoschke, said that the co‑operative worked 'quite closely' with the Fair Work Ombudsman (FWO), and their 140 growers, to ensure that the piece rates paid are 'fair and equitable'.
4.35
Evidence presented by the AWU suggested that multiple inquiries have found that 'almost all growers who use piece rates to pay below the national minimum wage of $20.33, and substantially below the minimum casual hourly rate specified in the Award of $25.41'.
4.36
Ms Kate Hsu, a fruit picker who gave verbal evidence at a public hearing, told the committee that as a fruit picker she had experienced being paid $50 for 10 hours work.
4.37
According to Unions NSW, the relative lack of regulation around the piece rate scheme 'underpin[s] the ability of people to exploit workers' who are engaged under it:
What’s happened is that piece rates have become a negotiating point, where the employer, the labour hire or the agricultural company employing these workers, isn’t clear on what the employment contract is, isn’t clear on what you will get for the amount that you pick. Then, in a situation like Kate’s, where you’re told you’ll get paid $25 a bucket and then, once you get on the farm and you’re working there, you’re told the bucket’s 800 kilograms, there’s no room for negotiation and you don’t know what contract you’re entering into.
4.38
Dr Joanna Howe agreed that piece rates are often set at amounts which make earning above the national minimum wage impossible for many workers:
Workers themselves are confused about how to apply that piece rate, but it's not just about confusion; it's about the fact that employers set the average competent worker at too high a wage rate. Our research showed that, when farmers set the average competency, it was at a rate that was too high and out of reach, particularly for backpackers who are only working 88 days on a farm but also for other group of workers. We were told story after story about how that piece rate was used to underpay workers and very few workers were able to earn above it.
4.39
Dr Elsa Underhill added that she has come across piece rates of pay as low as $3 per hour:
What we found, repeatedly—from studies starting around 2013 up until 2018—is an extremely high level of exploitation. Very few were paid the minimum wage, whether they were paid by the hour or were paid piece rates. The piece rate workers were particularly low paid. I think the lowest rate we came across was about $3 an hour, but, repeatedly, they were paid on average maybe $3 to $4 less an hour than the hourly rate workers, and the hourly rate workers were not paid the minimum wage, so piece rate workers were paid well below the minimum wage.
Fair Work Commission ruling 2021
4.40
In December 2020, the AWU lodged an application with the Fair Work Commission (FWC) to modify the Horticulture Award to include a guarantee that an 'employee on a piecework rate will earn at least the minimum ordinary time weekly rate or hourly rate in the Award'. On 3 November 2021, the FWC delivered a draft ruling in response to the application, which contained the following key finding:
The Full Bench expressed the view that the existing pieceworker provisions in the Horticulture Award are not fit for purpose; they do not provide a fair and relevant minimum safety net as required by s.134 of the Act. The Full Bench was satisfied that the insertion of a minimum wage floor with consequential time recording provisions in the piecework clause is necessary to ensure that the Horticulture Award achieves the modern awards objective.
4.41
The Australian Council of Trade Unions' (ACTU) president, Ms Michele O'Neil, described the ruling as 'a very important win that the AWU has had for workers in the horticulture sector to increase both the rates of pay and the security of employment for workers in horticulture'.
4.42
Mr James Kellaway said that the ruling must be 'balanced against the needs and the demands of growers'. He expanded:
It needs to also benefit job stability and employment … Our concern, though, is to make sure that the understandable needs of the worker are balanced with the needs and demands, and risks posed by the grower. We will look at the decision in that context.
Meat Industry Award 2020–daily hire
4.43
Meat processing employees are covered by the Meat Industry Award 2020 (the Meat Industry Award). The Meat Industry Award contains a daily hire provision. Daily hire employees work on a day-to-day basis, where the minimum period of notice of termination is one full working day. To compensate for the shorter notice period, individuals employed under the daily hire provision are paid a 10 per cent loading on top of their wage. Daily hire employees also receive statutory entitlements such as long service leave, sick leave and annual leave.
4.44
Historically, daily hire is a product of the seasonal nature of meat processing and the high variability in daily throughput. In these conditions, daily hire allows employers to adjust the number of workers required each day. It remains commonly used throughout the meat processing industry, including by almost all the major processors.
4.45
The daily hire feature has been labelled by some as a facilitator of job insecurity, not by virtue of the provision itself, but by the way it has come to be managed. Additional information from the AMIEU argued:
Nowadays it has become common for employers not to reduce gang sizes. Instead, the full workforce is retained, but they are effectively converted into part-time workers, with daily hire systems allowing the employer to regularly shut down their plant until they have sourced enough cattle for optimum levels of processing. So, instead of a slightly smaller, but relatively secure workforce, you end up with a larger workforce where everyone’s employment has become unpredictable and precarious from one day to the next.
Key workforce concerns
4.46
The industry characteristics discussed above in horticulture and meat processing have significant implications on the wages and conditions of the workforce. The committee heard evidence concerning the following points:
the exploitation of migrants;
the creation of a two-tier workforce; and
the facilitation of wage inadequacy.
Exploitation of migrants
4.47
The issue of migrant exploitation has been well-established. Migrants are considered vulnerable workers by the FWO due to factors such as cultural and language barriers, low awareness of workplace rights, limited options for recourse, and visa conditions. Other problems migrants may face include 'issues of sexual harassment, of discrimination and of profiling'.
4.48
The Migrant Workers Centre (MWC) provided evidence that visa conditions facilitate a structural dependency between holders and employers. Migrants are prevented from, or not given preference to secure work due to 'restrictive visa conditions', and are therefore resigned to insecure work. For example, Condition 8547 of the Working Holiday visa prohibits holders from working for an employer for longer than six months.
4.49
The Assistant Secretary of Unions NSW, Mr Thomas Costa, described such visa requirements as a 'structural disadvantage' and an innate problem with the mechanism by which the immigration system interacts with employment. He elaborated:
For example, working holiday-makers are required to work three months in a regional area if they wish to extend their visa. That creates a structural dependency between the worker and their employer and puts them in a position of disadvantage, and ultimately vulnerability, where they’re prone to exploitation. We can look at things around how much they’re paid on piece rates—there’s a problem with that—and we can look at how their accommodation is, and there’s a problem with that too, but all of these things stem from the fact that the immigration system actually funnels these workers into a relationship of dependency.
4.50
Dr Kate Hepworth told the committee that it was often migrants working with 'some conditions on their ability to work' that are at the highest risk of exploitation.
4.51
Dr Howe highlighted the fact migrants and backpackers are 'extremely vulnerable' to exploitation due to not being able to 'access the rights that we have under Australian law':
Government will often say, ‘All workers are entitled to the rights that they have under the Fair Work Act,’ but, as my own research has shown, a right to unfair dismissal is basically meaningless for a temporary migrant worker. Similarly, other rights to minimum standards of pay or around working hours are very difficult to enforce when this group is so segmented and is desperate to access work in order to achieve a migration outcome.
4.52
Another avenue leaving migrant workers particularly vulnerable to exploitation is their general lack of knowledge of lawful Australian workplace rights and obligations. Evidence from the Migrant Workers' Taskforce found that knowledge of workplace rights was low, and that family and friends in Australia were the main source of information for migrant workers.
4.53
Furthermore, the committee heard that many migrants hold the perception that speaking up on their negative working experiences may jeopardise their employment or ability to renew their visa. Speaking of her own experiences, fruit picker Ms Kate Hsu told the committee:
I was very afraid of getting issues when I needed to renew my visa. I was afraid that reporting my condition and making a complaint to the government would risk my new visa application.
4.54
Even when temporary visa holders do speak up about their unfair working arrangements, they often encounter further barriers. Mr Morey explained:
There's no point ringing up the Fair Work Ombudsman if no-one speaks Taiwanese or Chinese. It's just pointless. They get frustrated as complainants and exit the system very quickly and feel unsupported.
4.55
When asked if the FWO should have more boots on the ground and be working with community groups in industries with high levels of exploitation, Mr Morey said that the FWO had demonstrated that it was not well-placed to respond to migrant issues:
They aren't connected with communities. They aren't connected on the ground with people and as a result things aren't resolved quickly or efficiently. The other thing that we've raised a number of times, particularly with migrants, is that many of them try to make a complaint, or make complaints, and often they are then reported by their employers to immigration around a perceived breach of a visa and may well be sent back home. So any time a complaint is made it's often the case that by the time the complaint is being actioned that worker is no longer in the country.
Two-tier labour market
4.56
A common effect of labour hire is the creation of a two-tier workforce—when one group of workers receives lower wages or fewer benefits than others doing the same job. In meat processing, workers could work side by side, performing the same tasks, and receive '20 per cent to 30 per cent less than what the local worker would be receiving'. In some instances, labour hire companies are 'not even paying the award' rate. Box 4.1 below outlines an example of a common occurrence of this in the meat processing industry.
Box 4.1: Case Study: Same job, same pay in meat processing
Additional information submitted by the Australasian Meat Industry Employees Union (AMIEU) provided evidence on the difference in pay rates for labour hire verses direct employees:
Worker A is employed directly by a meat processing company, and is covered by the enterprise agreement negotiated by that employer. Worker A's gross wage for the week was $1750.62.
Worker B employed by the labour hire company, is not covered by the enterprise agreement. Worker B's gross earnings for the week were $1229.45
Both individuals perform the same work as a 'boner', over the same number of hours, in the same boning room.
Given that it is common for labour hire to be used to supply the majority of unskilled positions in meat processing, it is not often that the discrepancy between labour hire and direct employees' pay can be exposed as evidently as the above.
According to Mr Journeaux, addressing this type of wage inconsistency 'would have a very positive effect on our industry. Same job, same pay would, in essence … wipe labour hire out of our industry'.
4.57
The effects of a two-tier workforce are two-fold. Stifling of career progression and employment opportunities due to 'downward pressure on wages and conditions' can actually affect local labour markets. Logically, if an employer has access to a labour market with lower wage costs, that will have negatively affect the likelihood of that employer engaging those workers who they have to pay greater wages to.
4.58
On the absence of local skilled workers, Mr Journeaux said that the introduction of WHM visa holders (417s) for unskilled roles and Temporary Work visa holders (457s) for skilled roles in the meat processing industry 'created a block':
… typically people are trained from a pool of labourers into those higher skilled positions. So boners, slicers and slaughtermen generally come from an unskilled pool or kids that have come into the industry and show a bit of promise, and they have been trained up to those higher skilled positions. Unfortunately, when the industry filled the labouring pool with 417s and the skilled roles with 457s, it cut off that career progression, and so the industry has left itself in a position where it hasn't got skilled people in it anymore, because the labourers were cut off 10 or 15 years ago.
4.59
Asked if he thought improved wages and conditions, the stopping of undercutting local labour, and ensuring that all workers received the same pay for the same job was a legitimate argument, Dr Langbridge said that 'the reality for these businesses is that the owners need to get a return on investment'. He stressed that, although global meat competitiveness had shifted in the past 30 years, Teys Australia was focused on being able to 'provide employment to Australians and income to Australian farmers for the next 75 years'.
4.60
As Australian workers do not have the same incentive as migrant workers to remain in unfavourable working conditions, Dr Howe said that a 'structural adjustment' has to be made in order to 'future-proof the industry':
Australians aren't going to want to join an industry where they're working side-by-side with temporary migrants who are being exploited and who have put downward pressure on wages and conditions, because those temporary migrants have an incentive to accept that exploitation. The local worker doesn't have that incentive. They can go on Centrelink. They can find another job. So they'll just leave that farm.
Underpayment and wage inadequacy
4.61
As previously discussed in this chapter, workers in horticulture have been affected by underpayment and low wages linked to remuneration by piece rates. Box 4.2 outlines the key findings from a 2018 report by the FWO on the Harvest Trail regarding wide-spread non-compliance in horticulture.
Box 4.2: Harvest Trail Inquiry: Widespread non-compliance levels
In August 2013, the FWO commenced an inquiry into workplace arrangements on the Harvest Trail, in response concerns about non-compliance. As part of the inquiry, the FWO investigated 638 employers, including 444 growers and 194 labour hire contractors.
The report, released in December 2018, found widespread non-compliance amongst investigated employers. In 55.6 per cent of cases, the FWO determined that there had been a failure to comply with Australian workplace laws. Of those:
44 per cent regarded underpayment or non-payment of wages; and
41 per cent regarded failure to meet pay slip and record-keeping obligations.
Concerning piece rates, the FWO found that more than a third of employers were paying piece rates or a combination of piece and hourly rates. Of those:
over 100 of those employers were not engaging pieceworkers correctly by having no written piecework agreement or having an invalid piecework agreement; and
some growers and labour hire contractors applying group rates for pieceworker employees.
Employers found in breach of workplace laws were required to payback a total of $1 022 698 to 2503 employees. The FWO noted that it was 'unable to access and determine the full extent of underpayments in many cases due to issues such as poor record-keeping, cash payments and a transient workforce' and estimated the full extent of underpayments to be greater than that reported.
4.62
Despite there being widespread instances of underpayment in the sector, as evidenced above, when employers do get caught underpaying workers 'there is no punishment'. Mr Journeaux explained:
Those people get caught. They get told to back pay, so they pay those workers the money that they were owed anyway, with a very, very limited number of prosecutions, if any, that come out of that process.
4.63
In response to this issue, Mr Journeaux suggested that greater transparency around wage records may assist in exposing instances of underpayments.
4.64
Furthermore, underpayment and wage inadequacy can have implications for workers more broadly; in particular, it can affect worker arrangements common to labour hire. Labour hire arrangements will often involve the engaging company arranging for accommodation and transport for workers inclusive of their employment. In some cases, workers are charged 'exorbitant rents' for 'substandard accommodation'. Mr Journeaux gave evidence of this in meat processing:
I had four members of mine in front of the ACTU congress three years ago that were renting a premises from a plant manager. They were charged $110 if they wanted a bedroom and if they were prepared to sleep in the lounge room and kitchen they only had to pay $90 a week. They were also paying rent for all of the equipment within the house, which included toasters and lounges and all of those sorts of things, and that amount of money was garnished from their wages weekly.
4.65
Mr Morey argued that this form of 'wage theft' has been 'structured into ways of taking money off [workers] before they even get their pay packet'.
Some workers who don’t have accommodation provided for them and have accommodation in town are then charged to be picked up from town and driven out and back. We’ve heard of rates as high as $25 a day to be picked up, taken out and then taken back. That’s a form of wage theft that has been institutionalised in a transport paradigm or an accommodation paradigm. Basically, in these substandard conditions in which people are working, many of them are not making enough money to even cover the rent that they’re paying their employer for less than appropriate accommodation. Wage theft is not just underpaying people.
4.66
Once a worker has their accommodation and other expenses removed from their pay packet, workers are often 'working for nothing'. When asked what lengths she went to survive on being paid such low wages, Ms Hsu said:
It’s very hard to survive through being paid $50 a day. Thinking I could save money, I did dumpster diving with my friends, who also worked on farms, so we could get free food—leftovers from supermarkets. That’s how we survived.
4.67
Australian Workers’ Union National Organiser, Shane Roulstone, explained that the industry-led Fair Farms initiative had failed to address these issues.
It's deficient in a series of ways. The Australian auditing association has explained clearly to Fair Farms that it doesn't believe their auditing process meets Australian standards and has indicated clearly that it is going to walk away from the program. The Fair Farms program is currently used by Woolworths and Coles, both of which are reviewing the program's suitability to be an auditing process to ensure compliance on farms. Without going into all the details, the Fair Farms auditing process right now considers an 18-hour day to be an acceptable work practice. It doesn't require the payment of minimum hourly rates. It accepts that employees can be paid as little as $3 an hour, provided the piece rate sets it at that. We're trying to work constructively with Fair Farms to bring it to a standard where it will do what it's meant to do and ensure that workers on farms are treated fairly and are paid according to legal obligations. But I'd have to say that we're a fair way off that right now.
Proposals for reform and committee view
4.68
This section details the committee's views and associated recommendations for the horticultural and meat-processing industries.
Regulatory design of temporary migrant visas
4.69
Temporary visa holders make a significant contribution to regional and rural Australian communities, particularly in light of the well documented difficulties these communities have in attracting and retaining local workers. It is incumbent upon the Australian Government to consider the long-term interests, not only of these workers, but of local workers and the Australian economy by addressing the visa system that engages them.
4.70
With regard to the new agricultural visa, the committee points to research by Dr Joanna Howe and her colleagues in which they concluded that 'there is a need for a better targeted, more reliable and sustainable labour migration program'. The committee also notes the evidence from inquiry participants on the stronger protections afforded by the existing SWP and PLS relative to Working Holiday Makers, international students and undocumented workers.
4.71
It is clear to the committee that maintaining the integrity and job security of Australia's agricultural workforce requires that any new visas introduced offer at least the core protections for PLS and SWP workers.
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The committee recommends that the Australian Government works with unions and experts to build upon the minor improvements to worker protections introduced through the Pacific Labour Scheme and Seasonal Worker Program, to introduce superior protections for these workers, and for workers arriving through the Australian Agricultural Visa.
Improve right of entry for trade unions
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The prevalence of migrant exploitation in the horticulture and meat processing industries is alarming. More disturbing however, is the evidence suggesting that, due to the relative lack of transparency of workforce arrangements and the reluctance of migrant workers to engage with the FWO, it is likely that many instances of underpayment and exploitation are not being properly investigated and rectified.
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To address this issue, the Acting Federal Secretary of the AMIEU, Mr Journeaux, suggested that 'unions need to have the right to be able to inspect time and wage records and prosecute employers who aren't doing the right thing'.
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The committee believes that current right of entry provisions have become too restrictive over the last 20 years. The committee is of the view that expanded right of entry provisions that allow for unions to investigate suspected workplace contraventions will deliver positive benefits, such as improved workplace conditions; fewer instances of wage underpayments; and better dissemination of information about employee rights particularly amongst migrant workers.
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The committee recommends that the Australian Government consults with unions to identify how right of entry laws can be improved to deliver better protections for workers, particularly in industries identified as high-risk for exploitation and wage theft by the Fair Work Ombudsman, such as in horticulture, higher education, and meat processing.
Addressing wage concerns
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The committee is convinced by the ongoing research and evidence suggesting that piece-rates are exploitative and not fit for purpose in the horticulture industry. The committee supports the recent FWC draft ruling on 3 November 2021 that mandated a minimum wage be paid to all workers engaged under the Horticulture Award 2020.
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While the FWC ruling is an important step forward, the committee notes that even prior to that decision, piece rates in the sector were supposed to ensure that the average competent worker earn at least 15 per cent more than the minimum rate prescribed in the Award. Given the widespread non‑compliance and lack of enforcement of this provision, the committee believes it is critical the new minimum wage floor is adequately enforced, with the support of relevant unions.
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The committee also remains concerned about the extent of underpayment and wage theft not linked to piece rates—particularly, the evidence indicating that labour-hire workers are commonly offered lower pay and poorer conditions than their counterparts who are directly employed. Irrespective of who their employer is, if people are expected to do the same job, they should be paid the same rates of pay.
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The committee also acknowledges concerns raised by numerous witnesses that the current penalties for wage theft are not adequate disincentives, and regrets the Australian Government’s decision to abandon legislation to make wage theft a criminal offence.
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This topic is discussed in further detail in Chapter 2. That chapter puts forward three key recommendations which the committee anticipates will promote wage equality between labour‑hire workers and directly-employed workers.
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The committee recommends that the Australian Government works closely with, and provides additional funding for, the Fair Work Ombudsman to:
enhance the provision of translating and interpreting services for migrant workers seeking information or lodging a complaint;
expedite the investigation of complaints and enforcement of industry awards in the horticultural and meat processing industries; and
work collaboratively with unions to ensure migrant workers are made aware of their legal entitlements, and have access to a union. Relevant unions should also be provided with a greater proactive auditing role.
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The committee recommends that the Australian Government implements protections which ensure that migrant workers’ personal information is not disclosed by the Fair Work Ombudsman to immigration authorities (including the Department of Home Affairs).
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The committee recommends that the Australian Government imposes significant penalties for employers who demonstrate a pattern of non‑compliance with their statutory employment obligations, including criminalising wage theft.
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The committee recommends that the Australian Government implements an efficient, accessible, and inexpensive mechanism for workers to promptly recover all unpaid wages and superannuation to which they are entitled.