There’s nothing illegal about the US group’s contract with Adecco but the growing trend is giving unions cause for concern

Amazon is recruiting in Australia. The job ads in Sydney and Melbourne show it is looking for skills such as IT and engineering support, sales and account management and “solutions architects”.

But there aren’t any warehouse or distribution jobs listed in Amazon’s Dandenong South fulfilment centre, even though the global internet retail giant launched its Australian operations in December.

According to the National Union of Workers (NUW) national secretary, Tim Kennedy, the reason is simple: labour hire. Amazon has a global contract with Adecco to supply workers, and the union believes most, if not all, of the 200 workers at Dandenong South are hired through the labour-hire firm.

The workers are employed on the road transport and distribution award, which gives a minimum hourly rate of $19.37.

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“The warehouse in Melbourne is an old Bunnings warehouse,” Kennedy says.

“The workers there were members of the NUW that could collectively bargain with Wesfarmers and they earned close to $12 an hour higher [base wage rates] than those workers in the same facility for Amazon now.”

Kennedy blames the Fair Work Act, which allows collective bargaining with the workers’ direct employer, in this case Adecco, but not the ultimate employing entity that controls their work.

“There’s no point bargaining with Adecco, they have no power because they don’t set the rates of pay out there.”

“We can’t bargain with Amazon because, technically, they don’t have any employees [within scope], so the workers are locked into low-quality low-pay work.”

Kennedy says workers at Amazon also face problems such as irregular work, shift cancellations at late notice and short shift lengths.

The NUW has a presence on the site because some workers are existing members, and Kennedy says Adecco did not stop them meeting with workers, but Amazon ignored a request in August to meet the union so there is “no strong engagement” with either.

A spokeswoman for Amazon says “the NUW’s remarks are not accurate”, without specifying which aspect the company disagreed with.

“We have a mixture of permanent and agency staff,” she says, before referring to its workforce not as employees but “associates”. Labour hire is used “to enable us to move quickly, access talent and manage variations in customer demand”.

“We have an open-door policy that encourages associates to bring their comments, questions and concerns directly to their employer.

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“We firmly believe this direct connection is the most effective way to understand and respond to the needs of the workforce.”

Andrew Stewart, a labour law expert and professor at the University of Adelaide, says collective bargaining is still possible at well-established labour-hire firms such as Adecco but it is “much easier” for unions to recruit at a workplace if workers are directly employed.



“If they go to labour hire that necessarily makes that harder … you have the difficulty with a usually casualised and shifting workforce that it’s hard to unionise that kind of business,” Stewart says.

While employers can’t stipulate that their labour-hire firms keep employees on the award, there can be an “informal understanding … that a labour-hire agency is being used precisely because it’s more likely to be employing workers on award conditions, individual contracts or non-union collective agreements”.

A common tactic is to use a labour-hire firm that has already struck a non-union collective agreement with a small group of workers, which Stewart calls “one of the most effective methods of business to avoid collective bargaining”.

The Labor party has promised to tackle so called “sham” agreements – by legislating to make it clear that the employees who vote on an agreement must be representative of those who will ultimately be covered by it.

Labor has also promised a labour-hire licensing scheme, following Victoria’s lead, to crack down on exploitation such as alleged harassment and underpayment, which less reputable labour-hire firms have engaged in.

The Australian Council of Trade Unions is concerned by reports that there are smaller labour-hire operators who have in the past engaged in wage and superannuation theft, unsafe work practices, lack of workers’ compensation and tax avoidance.

But those practices aside, the ACTU president, Ged Kearney, says labour-hire companies “adopt a business model of undercutting pay and conditions to win contracts and displace permanent jobs with insecure casualised jobs”.

“This makes the problems of insecure work and low wage growth worse for everyone but especially those working for labour-hire companies,” she says.

“Labour hire is a tactic that corporations use to organise their workforce and keep them out of the collective bargaining system … workers have to be able to bargain where the power is.”

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In March, the new ACTU secretary, Sally McManus, told Guardian Australia it wanted to reform the Fair Work Act to allow collective bargaining not just in individual workplaces but “across an industry, supply chain, or according to their occupation”.

Stewart says the labour movement is “looking at ways in which you can go back to industry-level arrangements” because “enterprise bargaining is not a good fit for labour-hire arrangements”.

He says only 2% to 3% of the workforce is employed through labour hire, but there is anecdotal evidence it is increasing, and it is part of a broader trend of a decline in enterprise bargaining.

Kearney says the growth of labour hire and other tactics “has driven collective bargaining to a virtual standstill in recent times”.

“Fewer agreements are being registered, many more workers now rely on the award for pay rates and we’ve got the lowest wage growth on record,” she says.



“Amazon’s use of labour hire will hasten the race to the bottom … not only will they employ a large number of people in a way that they won’t be able to secure a loan or plan for their future, that will force Amazon’s competitors to follow suit.”

Kearney says insecure work is one of the ACTU’s priorities, and the rights of labour-hire workers will “feature prominently” in the solutions it offers as part of its Change the Rules campaign, but policies are still under development.

Labor’s shadow workplace relations minister, Brendan O’Connor, defends the use of labour-hire firms, noting that the practice is not “necessarily exploitative” and unions can still negotiate enterprise agreements with them.

“We have a concern with some uses of labour hire: the combination of forcing workers to get an [Australian business number] and the use of labour hire to avoid employment obligations,” he says.

“Genuine efforts to find loopholes or game current laws with a view to cutting employment conditions we’re concerned with and will address.”

O’Connor says Labor is concerned “in principle” with companies hiring workers through labour hire to do the same job as employees.

“If you’re doing like work in the same workplace and are paid less, that is of great concern to us … that, quite frankly, won’t be tolerated.”

Labor’s reform focus on labour-hire licensing will help crack down on dodgy operators such as phoenix companies that shut down and leave workers unpaid.

But the garden variety use of labour hire to make collective bargaining harder is not unlawful.

Barring big changes to bargaining laws to allow direct negotiation with the ultimate employing entity, the solution in the short term will be for unions such as the NUW to organise the workforce of the labour-hire firms.

“Amazon will avoid collectively dealing with unions until the bitter end,” Kennedy says. “They see themselves as a very powerful entity. They’re going to be difficult, but not insurmountable.”