There has been a lot of commentary around the so-called “Same Job, Same Pay” legislation, much of it trying to stir up concern and fear among business owners around the country. But is it actually as bad as some people have been saying?
Under the proposed legislation the Fair Work Commission can order employers to pay labour hire workers the same as their employees for doing a job that would otherwise be covered by their enterprise agreement.
This will require an application from a worker or a union to the FWC – there is no automatic requirement to pay labour hire workers the same rate.
To bust the biggest myth floating around: no version of the legislation so far requires employers to pay their employees the same amount for doing the same job regardless of the employee’s experience, skills or qualifications.
Will this increase the cost of labour hire?
Yes, but in fairly limited circumstances:
- the employer is covered by an enterprise agreement;
- if the employer were to employ the labour hire workers directly, those workers would be covered by the agreement;
- the employer is not a small business (less than 15 employees);
- the labour hire workers are paid less than the employees (often not the case in our experience); and
- a worker or union applies to the FWC for an order and the FWC makes the order (see below).
What’s the process?
Under the proposed changes, labour hire workers or their union representatives can apply to the FWC for a ‘regulated labour hire arrangement order’.
The FWC will make the order if is fair and reasonable in all the circumstances – so it is discretionary, not an automatic right. In making this determination the FWC will consider matters including:
- Whether the enterprise agreement has ever covered employees who have performed the same work as the labour hire workers.
- The employer’s involvement in the work performed by the labour hire workers, and the workers’ use of the employer’s systems, plant and equipment.
- The extent to which the work performed by the labour hire is specialist or expert in nature (though it seems unlikely this sort of labour would be paid less than the employees).
- The period of labour hire, the location of work and the industry.
If the FWC makes the order employers will be required to pay the labour hire the ‘protected rate of pay’, being the equivalent rate the labour hire worker would receive if they were employed to do the same job under the enterprise agreement.
Employers will be obliged to provide their labour hire contractors with all information necessary to determine the ‘protected rate of pay’.
The rate is determined by the ‘full rate of pay’ (including incentive payments, loadings, monetary allowances, penalty rates etc.) that would be payable to the labour hire employee, for their role, if they were directly covered by the employer’s enterprise agreement.
The ‘same job same pay’ legislation is still making its way through parliament.
The catchphrase ‘same job, same pay’ has received a lot of attention because it suggests a radical change. In practice it is likely to have a limited effect on employers because of the limited circumstances in which it will apply.
The proposed changes are accompanied by a host of other more significant industrial relations reform proposals including:
- A return to the examination of the practical relationship between the parties in determining whether an employment or independent contractor relationship exists – not just what the contract says.
- A new definition of ‘casual employee’.
- Making intentional ‘wage theft’ a criminal offence with substantial penalties.
- New workplace rights for gig economy workers.
Batch Mewing will keep you updated in relation to these changes, as they work their way through parliament.