Employment spokesman, Brendan O’Connor, says new regime necessary because of ‘wrongdoing by dodgy ... companies that rip off workers’

This article is more than 4 years old

This article is more than 4 years old

Labor has proposed that labour hire companies should be required to have a licence to operate, in a bid to crack down on worker exploitation.

But the Australian Chamber of Commerce and Industry (ACCI) said it would be unnecessary red tape in an already regulated industry.

If Labor is elected it would legislate so that from 1 July 2017 it would be unlawful for labour hire companies to operate without a licence and for other firms to knowingly or recklessly use an unlicensed company.

Labor’s employment spokesman, Brendan O’Connor, said the licensing regime was necessary because “recent examples of wrongdoing by dodgy labour hire companies that ... rip off workers is tarnishing employers that do the right thing, and is undercutting wages and conditions”.

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O’Connor pointed to the chicken supplier Baiada, which was found to have used labour hire companies that paid workers well below the minimum wage – as little as $11.50 an hour for shifts of up to 19 hours a day.

In another example, D’Vine Ripe Tomato Growers terminated its contract with CNC Labour Hire after Four Corners revealed workers were being underpaid by up to $5 an hour.

The labour hire regime would be overseen by an inspectorate within the fair work ombudsman. It will be paid for by a licence fee.

Licences would be granted only to employers judged to be “fit and proper persons”, taking into account criminal convictions and their cooperation with the regulators.



Breaches of the law would carry a penalty of $216,000 for individuals and $1.1m for corporations.

In May the joint standing committee inquiry into the seasonal worker program, chaired by Liberal MP Louise Markus, urged the government to establish such a regime.

Its report said that “labour hire companies and, in particular, the so-called ‘phoenix’ operators, are particularly harmful to the industry and seasonal workers”.

But Coalition senators on the Senate employment committee temporary visa inquiry opposed the recommendations in its March report.

“While there are undoubtedly a minority of labour hire firms which are doing the wrong thing, what they are doing, in most cases, is already illegal,” Nationals senator Bridget McKenzie said on behalf of the Coalition.

“Coalition senators support the prosecution of these illegal operations.”

ACCI’s chief executive, James Pearson, said: “In those cases where workers are exploited, the existing laws are adequate to penalise offenders.

“Fair work ombudsman inspectors already have the power to seek penalties for breaches and [its] enforcement processes have successfully punished those who exploit workers.

“The proposed licensing regime would add to the regulatory burden experienced by workers, labour hire companies and the businesses that use their services,” he said.

“With any new regulation it is important that the cost does not outweigh the benefit. In this case that test has not been met.

“There are better ways to improve performance, such as industry codes of practice and self-regulation.”

The Coalition and Labor have released policies designed to tackle underpayment of wages.

The Coalition’s policy proposes increased fines and a new offence for franchisors who fail to stop underpayments by franchisees.

But an Adelaide Law School labour law expert, Andrew Stewart, has queried why the policy would not apply to a company that used a subcontractor or a labour hire agency that underpaid workers.

O’Connor said: “The Abbott-Turnbull government has done absolutely nothing to deal with the unscrupulous practices of labour hire companies.”