Australia News

Labour-hire loophole solution underway to avoid underpaid employees

Jomar Teves Sep 5, 2023

2 min read

The Australian government plans to implement a new proposed law to fix the labour-hire loophole. This proposed law will require companies with over 15 workers to pay labour-hire staff the same as regular employees, and it will make deliberate wage underpayment a criminal offence with severe penalties.

At the same time, The Fair Work Commission will have the authority to ensure equal pay for both types of workers and prevent businesses from evading this rule. These labour hire reforms are part of a larger bill to improve conditions for gig and casual workers while punishing wage theft. The Workplace Relations Minister argues that closing this loophole is crucial to protect affected workers.

Labour hire reformation

To reform the current labour hire system, the federal government plans to close a loophole that allows firms to undercut workers by hiring cheaper labour as part of a “life-changing” package of workplace reforms. The law also aims to improve the conditions and pay of gig economy workers and casuals while criminalising wage theft with harsher penalties, including jail time. If passed, the new laws will take effect in November 2024.

The law, set to be introduced to parliament on Monday, will compel companies with more than 15 workers to pay labour-hire staff the same wages as those engaged under enterprise agreements, impacting about 67,000 workers with negligible economic impact.

Additionally, the Fair Work Commission will gain the power to enforce equal wages for directly employed and labour-hire workers while preventing businesses from taking action to avoid this obligation. The commission must consider various factors, including whether the enterprise agreement would apply to the labour-hire worker if the company directly employed them.

Enhance worker’s protection

The law also seeks to strengthen the commission’s authority to protect workers, leading to several outcomes.

First, the commission will set rules for many “employee-like workers” on digital platforms. The compensation rate for gig workers will be raised, and they will be protected against unjust deactivation by digital labour platforms.

Third, the commission will have the power to investigate medium and large enterprises accused of willfully underpaying their employees while having the option not to seek criminal charges if they cooperate.

Finally, the measure will make intentionally underpaying workers a criminal offence, punishable by up to ten years in prison and fines of up to $7.8 million – or three times the amount underpaid if it surpasses the maximum penalty.

In conclusion, in the efforts to reform and enhance worker protections, Australia’s proposed labour-hire reforms play a pivotal role in the nation’s commitment to fair employment practices, worker exploitation, and ensuring that labour-hire staff receive equitable compensation.

Additionally, granting the Fair Work Commission the authority to set standards for digital platform workers and criminalising wage theft underscores the nation’s dedication to workers’ rights. These reforms promise a brighter future for Australian workers, safeguarding their interests and sending a resounding message that fair treatment in the workplace is not negotiable.

Jomar Teves

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After four years in business school and working for multinational clients, Jomar believes he can improve the world through his writings via Public Spectrum, by informing the public on the latest news and updates happening around the government and society. Jomar has eight years experience as a writer and has a degree in Business Administration and Entrepreneurial Marketing.