Rawling, Michael --- "Regulating Precarious Work in Australia: A Preliminary Assessment" [2015] UTSLRS 41; (2015) 40 Alternative Law Journal 252

Last Updated: 16 March 2018

Regulating Precarious Work in Australia: A Preliminary Assessment^[*]

Michael Rawling

Abstract

Today millions of Australian workers are engaged in precarious work. As yet there has not been an adequate federal government response but a recent report commissioned by the Australian Council of Trade Unions (ACTU) indicates that the ACTU sees precarious work as a central issue. This article considers policy options to adequately regulate precarious work recently discussed by the ACTU and an ACTU commissioned report. The article argues that an innovative and coherent set of measures to address the root causes of precarious work and those with the potential to be popular with Australian workers should be pursued.

Introduction

In the past three decades there has been a significant increase in ‘precarious’ or ‘insecure’ work. In 2012 there were up to 4 million Australian casual workers, contractors, workers on short-term employment contracts, outworkers and labour hire workers.^[†] In 2015 precarious work (along with other workplace relations matters) was considered by the Productivity Commissions Inquiry into the Workplace Relations Framework^[‡] and it is thus timely to reconsider this important issue. In recent years precarious work has been transformed from a marginal issue to a central issue for the ACTU. But so far there has not been any adequate Australian government response to precarious work (aside from the innovative road transport and clothing industries schemes). This article examines the current precarious work predicament in Australia, how this predicament came about and what new labour law measures are needed to address precarious work. When examining the measures needed, the article offers a preliminary consideration of proposals for labour law measures to address precarious work contained within the 2011 ACTU options paper The Future of Work in Australia: Dealing with Insecurity and Risk (“ACTU Options Paper”) and the 2012 report titled Lives on Hold: Unlocking the Potential of Australia’s Workforce – The Report of the Independent Inquiry into Insecure Work in Australia commissioned by the ACTU (“Insecure Work Report”). This article focusses on the ACTU Options Paper and the Insecure Work Report because they are key initiatives which highlight regulatory solutions aimed at promoting the interests of precarious workers. Whilst the Insecure Work Report contains some persuasive proposals, the report omits to respond to some important matters raised by the ACTU Options Paper.

The Current Precarious Work Predicament

There are four dimensions to the poor outcomes experienced by precarious workers. Firstly, precarious workers endure a high degree of job uncertainty, experiencing short term work engagements and a high risk of job loss. Secondly, precarious work involves a lack of control over wages, working conditions and pace of work. Thirdly, precarious workers frequently receive insufficient pay to maintain a decent standard of living. Fourthly, precarious work involves a lower level of regulatory protections than continuing employees.^[§] Thus precariousness often results from certain forms of work engagement outside the continuing employment relationship including casual work, contracting arrangements, fixed-term engagements, labour hire arrangements and home-based work.

In 2012 the Insecure Work Report found that casual work rose from 15.8% of employees in 1984 to just under 25% of all employees.^[**] Casual employees are excluded from a number of minimum standards owed to continuing employees including paid annual leave, paid sick leave and notice of termination or redundancy pay. Most awards have a casual loading on the hourly rate that purports to cash out these benefits. But this loading itself can become a trap for low-skilled workers who might be tempted to opt for a slightly higher rate of pay but forfeit the security of paid leave. Casuals have no ongoing job security: with casual employment the employer has no obligation to offer any work beyond a particular shift or day’s work. The short-term engagement of casuals at law is at odds with the duration of casual work in reality; over half of casuals are engaged for more than a year and 15% of casuals have been in their casual job for more than 5 years.^[&#82]

In November 2013 around 9% of the workforce or just under 1 million workers were contractors.^[††] A large number of contractors are ‘dependent’ contractors who either exclusively rely on a single client for work or who have no authority over their work. Many of these contractors only sell their own labour. The ACTU estimates that up to 450,000 of these ‘contractors’ are in sham arrangements whereby an employment relationship is disguised as a contracting arrangement.^[‡‡] Sham contracting has largely arisen to avoid legislated pay and conditions entitlements and to shift liabilities and risks on to the worker. The vast majority of contractors are not covered by minimum employment standards such as minimum pay rates and collective bargaining rights. Instead, most contractors are left to negotiate their own pay and conditions.

In addition, in November 2011, 5% of Australian workers were labour hire workers.^[§§] There are now workplaces where the entire workforce is casual hired through a labour hire firm. Some labour hire workers have been unable to secure bank loans because of their lack of job security.^[***]

Finally, in November 2013 some 4% of employees are engaged on fixed term contracts^[†††] with no job security beyond the term of their current contract. There is also a significant number of vulnerable, home-based workers or ‘outworkers’.^[‡‡‡]

Since the late 1980s a large body of international research has found an association between precarious work and deterioration in wages and working conditions, including adverse occupational health and safety outcomes.^[§§§] Precarious work also exerts downward pressure on the wages and conditions and job quality of continuing employees.^[****] Precarious work is often experienced by sectors of the workforce with the least bargaining power including those with lower skills, women, migrant workers, young workers, Indigenous workers and persons with disabilities.

What Caused the Rise of Precarious Work?

There are multiple, complex, interacting factors causing the rise of precarious work. Here two key interrelated developments which have driven the rise of precarious work are discussed. Firstly, the de-collectivisation of labour relations and, secondly, changes in business practices.

In the mid-20^th century precarious work was considered to pose a threat to permanent jobs so unions used their central position in the compulsory arbitration system to restrict the use of precarious work. The system of conciliation and arbitration began to unravel in the late 20^th century as global business competitiveness and the power of capital increased and the influence of unions waned. This has meant greater control for employers over methods of engaging workers and less capacity for unions to confine precarious work. So there is a close connection between the de-collectivisation of labour relations and the rise of precarious work.

In terms of business practices themselves, restructuring by large organisations has led to an increase in precarious work (and work intensification for remaining employees). A related development has been the growth of elaborate supply chains, a growth in small subcontracting businesses as well as a growth in labour hire firms.^{[††††]} Outsourcing and restructuring has been used to minimise labour costs and shift work risks on to workers. As some employers choose precarious work arrangements other employers follow in a race to the bottom.

The ACTU Options paper recognized that the growth in insecure work has been fostered by supply chains.^{[‡‡‡‡]} Lead firms have used supply chains involving sometimes multiple intermediary parties to insulate themselves from liabilities towards workers. The obligations of the lead firm are passed down the chain and each commercial entity takes its cut of profit. Inevitably the parties near the base of the chain often have low profit margins and experience intense competition, necessitating the engagement of cheaper, precarious labour.^[§§§§]

The causes of precarious work reveal unions and governmental regulators need to be given further opportunities to address the union representation gap. Legislation which is adequately attuned to contemporary business practices also need to be established. In particular, the accountability of lead firms with influence in supply chains needs to be addressed because many direct employers are weaker economic entities that don't have the same capacity as lead firms to provide quality jobs.

The rise of precarious work has been legitimized by conservative ideology that characterizes restraints on markets (such as laws reinforcing standard employment) as illegitimate[.] In Australia, conservative Prime Minister John Howard in his 2004 election campaign used the rhetoric of entrepreneurialism to persuade the electorate to support the winding back of regulation protecting contractors. The notion that employment protection laws restricts the rights of ‘entrepreneurial workers[&#821] may be convincing to those in the electorate who would rather be associated with entrepreneurialism than standard employment[.] This needs to be considered when formulating approaches to regulating precarious work.

Policy Options to Address Precarious Work

The ACTU Options Paper and the Insecure Work Report are to be commended for the focus on protecting and empowering precarious workers. The Insecure Work Report made a number of important, broader policy proposals including investing in workforces. However, this article confines its commentary to that part of chapter 2 of the report because that chapter contains a discussion of labour law proposals for further legislative regulation.

Beyond Employment: Key Minimum standards for all workers?

The Insecure Work Report proposed to expand the current employment model to provide for the rights of precarious workers. The Report recommended that the definitions of employer and employee in the Fair Work Act 2009 (Cth) be extended to capture disguised employment arrangements such as sham contracting. It also recommended the introduction of a statutory presumption under which a “dependent worker” would be an employee for the purposes of the Act[.] (Presumably a “dependent worker” would include a dependent contractor who exclusively relies on a single client or has little authority over her or his work). The advantage of such a statutory presumption is that it would partly replace the current judge-made distinction between employee and independent contractor which is open to manipulation by employers wanting to evade obligations. The disadvantage of this approach is that it might not gain broad-based appeal including from those who see themselves as entrepreneurial workers and not standard employees.

An alternative approach to strengthen and increase the minimum floor of rights for all workers regardless of their legal status outlined in the ACTU options paper might have avoided this kind of concern. The ACTU options pape[r] argued that Australia might take a similar approach to the UK so that some core standards including a minimum wage, paid leave and rights to access dispute resolution processes could be extended all workers. This would maintain the categories of worker currently existing in the labour market but provide some key minimum protections for precarious workers labouring outside permanent employment. This would allow a Labor government to appeal for the electorate’s support for such measures using similar entrepreneurial rhetoric so successfully used by John Howard (but this time to genuinely promote workers’ interests).

In relation to contractors the Insecure Work Report recommended that the sham contracting provisions in the Fair Work Act 2009 (Cth) be strengthened, contractors be provided with the right to bargain collectively and a low cost jurisdiction for challenging unfair contracts be established[. ]Currently many workers designated by the market as contractors would not engage in collective bargaining or legal proceedings to enforce sham contracting provisions. The proposed, new rights would allow unions to organise and represent more contractors and begin to close the union representation gap. Furthermore, the proposal for collective bargaining rights for contractors does not preclude the establishment of minimum standards for contractors. Minimum pay rates for dependent contractors would also provide unions with organising opportunities around ensuring that dependent contractors are paid what they would be entitled to.

There is no sound reason as to why contractors should not be afforded the same rights as employees to collectively bargain[.] The main barrier to establishing collective bargaining rights for contractors is the enduring notion that unions are an unlawful restraint on trade. Given the federal Coalition’s neo-liberal approach to unions it is difficult to see how collective bargaining rights for contractors would be established unless there is a change of government. Even then a concerted union campaign to influence Labor party policy would be needed.

Supply chains and Multiple Level Regulation

The ACTU options paper noted that the capacity of entities at the enterprise level to genuinely bargain is limited “because the locus of economic power and control lies elsewhere”. Examples include “price takers” in highly competitive industries or employers in the public and government-funded sectors. It continued to state that there is a need for multi-employer agreements which could apply to all subcontractors down the supply chain contracting with the business making the enterprise agreement. The options paper also canvassed default application of agreements to indirectly engaged insecure workers[.]

However, although the Insecure Work Report recognised supply chain outsourcing as “a new form of work organisation”^{[ ]} it did not make any recommendations about multi-employer agreements which could regulate a supply chain. This is disappointing. If supply chain arrangements (where the direct employer is frequently not the party with the most influence) are not recognized, this means that regulatory measures might focus on the symptom of economic pressures – being the proliferation of precarious workers – without addressing factors which cause the exploitation of those workers[.] Another policy option overlooked in this area is that textile clothing and footwear (TCF) industry legislation could be adapted and applied to other industries. This industry-specific legislation establishes mandatory contractual tracking mechanisms which follow the outsourcing of TCF work and create liability and legal responsibility for fair working conditions throughout entire TCF supply chains[.] Such a form of supply chain regulation might be adapted to apply to the other industries such as the construction and commercial cleaning industries where lead firms preside over a supply chain to the detriment of precarious workers labouring within the chain.

Casuals

The Insecure Work Report recommended that the Fair Work Act 2009 (Cth) be amended so as to provide minimum standards to protect all employees including casuals. If this does not involve the loss of casual loading, this would likely gain considerable support amongst casual employees.

The Insecure Work Report also recommended changing the definition of casual employment so that informality, uncertainty and irregularity of the engagement determine the character and use of casual workers[.]

An individual right to request conversion from casual employment is now only found in a few modern awards and some enterprise agreements. The evidence suggests that these individual conversion clauses have not been used widely and are rarely used in non-union workplaces[.] In light of this, the Insecure Work Report recommended the development of a gradual deeming mechanism under which casual employees automatically accrue rights and entitlements currently only available to continuing employees[.]These measures would confine casual employment to temporary, short-term or irregular engagements and would support casuals who want to convert to continuing employment[.] However, the ACTU Options Pape[r] stated “Any mechanism which automatically shifts casual employees to permanent roles could be resented by some casual employees who wish to retain the flexibility and loadings associated with casual work”. The Insecure Work Report did not adequately respond to these foreseen difficulties.

Up until recently there has been less resistance in Australia to the casualization of the workforce compared to some European countries.^{[ ]} A concerted campaign raising the political visibility of inferior casual working conditions is needed in order for improvements to the protections of casual to occur.

Secure Employment Orders

The Insecure Work Report recommended that the Fair Work Commission should be able to grant secure employment orders. Such orders could require an employer to offer permanent employment to insecure workers who perform permanent functions[.] The ACTU Options Paper gives some guidance as to how these innovative orders might apply responsively so as to not disenfranchise workers through, for example, loss of casual loading. Unions, who would have the ability to apply for such an order, could access the workplace and identify a group or class of employees that would be subject to an application. The group would be selected so as to cover those workers who wished to convert to ongoing employment and exclude those who wish to keep current arrangements in place. The order themselves might also cater for differing wishes of employees. For example, an order could be a right to elect to convert to casual employment which would be appropriate where some workers wanted to remain as casuals. Or an order could introduce ongoing employment for casuals in stages where casual loading is phased out over time to avoid a sudden large decrease in pay[.] Despite these advantages of secure employment orders, during the term of the previous federal Labor government, the Fair Work Amendment (Tackling Job Insecurity) Bill 2012 (Cth) introduced by the Greens which provided for secure employment orders failed to pass through the Parliament.

Labour Hire

The Insecure Work Report also proposed that a national scheme for the registration, licencing and regulation of labour hire agencies be established. As the report highlights this is not a radical move. Canada, South Korea, Japan and at least nine European countries all having licensing systems or codes of conduct for labour hire agencies. The Report also recommended that the Fair Work Commission be given the power to order the a joint employment relationship exists where “two or more parties are exercising . . . control or taking the benefits from a work arrangement.”^{[ ]} This proposal could work to resolve some of the issues involved in triangular labour hire agencies where the host employer to whom the labour hire agency provides labour is the party with the most economic influence in the relationship.

Enforcement

The Insecure Work Report highlighted that merely extending labour law protections will not alone address the problems associated with precarious work[.] Such protections are only meaningful to the extent they are complied with[.] Thus the Insecure Work Report recommended that government funding to the Fair Work Ombudsman be increased to allow it to improve enforcement and compliance “with a focus on developing new approaches to protecting insecure workers”[.] This increased funding would give the regulator a better chance to further develop their strategic approach to enforcement and keep up with labour market developments such as the fragmentation of the employment relationship, intensification of supply chain pressures and the consequent rise in precarious work[.] However, increased funding to the Fair Work Ombudsman remains unlikely given the focus of current political debate on reigning in the budget surplus by cutting government expenditure.

Conclusion – The Future of Precarious Work

Some would argue that too many restrictions on precarious work would mean higher unemployment rates. But the Insecure Work Report is not arguing for a return to too many restrictions but for a ‘regulated flexibility’ which provides flexibility for employers and security and dignity for workers[. ]

What is needed is an innovative and coherent approach to developing labour standards for all workers which addresses the influence that lead firms have over work arrangements in business structures such as supply chains and labour hire arrangements. The challenge is to make this approach popular and plausible in the current political climate. The ACTU Options Paper and the Insecure Work Report begin this task and demonstrate that the ACTU has changed strategy from only protecting permanent employees to explicitly regulating precarious work[.] It remains to be seen the extent to which all of the unions affiliated with the ACTU pursue this agenda. Also this article has highlighted above some important matters which were raised by the ACTU Options Paper but not properly addressed by the Insecure Work Report.

The Royal Commission into Trade Union Governance and Corruptio[n] and the Productivity Commission inquiry into the Workplace Relations Framewor[k] are currently forcing unions to defend the status quo. Moreover, precarious work has been tolerated by some of the weakest in the community only because their income is supplemented by the welfare safety net. However, in the longer term - especially if current moves to reduce welfare payments succeed - the significant adverse effects that precarious work has on all Australian workers may provide the context for a union and precariat led campaign for better legislative regulation[.] Hopefully the Insecure Work Report is just the beginning.

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^[*] I am grateful to Joellen Riley and the anonymous referees for comments on a draft of this article. Any errors are my own.
^[†] Jill Biddington et al, Lives on Hold – Unlocking the Potential of Australia’s Workforce: The Report of the Independent Inquiry into Insecure Work in Australia – An Inquiry Commissioned by the Australian Council of Trade Unions, 2012.(Insecure Work Report).
^[‡] See Workplace Relations Framework Draft Report, Productivity Commission, August 2015, 99-108.
^[§] Leah Vosko and Nancy Zukewich, ‘Precarious by Choice? Gender and Self-Employment’ in Leah Vosko (ed) Precarious Employment: Understanding Labour Market Insecurity in Canada (McGill-Queens University Press, 2006) 67, 71.
^[**] Biddington et al, above n 1, 14,
28, 30. Casuals who are working systematic and regular hours do have [&#82] in theory at least – unfair dismissal protection.
^[††] Australian Bureau of Statistics Forms of Employment, November 2013 6359.0 published May 2014
^[‡‡] Australian Council of Trade Unions (ACTU), The Future of Work in Australia: Dealing with Insecurity and Risk: An ACTU Options Paper on Measures to Promote Job and Income Security Working Australia Paper 13/2011, Australian Council of Trade Unions, Melbourne, 2011(ACTU Options Paper) 4.
^[§§] Australian Bureau of Statistics Forms of Employment November 2011 6359.0 published April 2012.
^[***] Biddingtion et al, above n 1, 34.
^[†††] Australian Bureau of Statistics Forms of Employment November 2013 6359.0 published May 2014.
^[‡‡‡] Richard Johnstone et al, Beyond Employment: the Legal Regulation of Work Relationships (Federation Press, 2012) 37.
^[§§§] Joan Benach, Carles Muntaner and Vilma Santana, Employment Conditions and Health Inequalities: Final Report to the World Health Organisation, Commission on Social Determinants of Health, Employment Conditions Knowledge Network, 20 September 2007; Michael Quinlan ‘The 'Pre-Invention' of Precarious Employment: The Changing World of Work in Context’ (2012) 23 Economic and Labour Relations Review 3.
^[****] ACTU, above n 7, 3, 11.
^{[††††]} Michael Quinlan ‘Contextual Factors Shaping the Purpose of Labour Law: A Comparative Historical Perspective’ in Christopher Arup et al (eds) Labour Law and Labour Market Regulation (Federation Press, 2006) 21, , 29.
^{[‡‡‡‡]} ACTU above n 7, 14.
^[§§§§] see Johnstone et al, above n 12, 66-67.
Katherine V W Stone and Harry Arthurs ‘The Transformation of Employment
Regimes: A Worldwide Challenge’ in Katherine V W Stone, K.V.W. and Harry Arthurs (eds), Rethinking Workplace Regulation: Beyond the Standard Contract of Employment (Russell Sage Foundation, 2013) pp1-20, pp4-5.
Joellen Riley [&#821]A Fair Deal for the Entrepreneurial Worker? Self-Employment and Independent Contracting Post Work Choices’ (2006) 19 Australian Journal of Labour Law 246.
See Ken Phillips Independence and the Death of Employment, (Voltan, 2005) p3[.]
Biddington et al, above n 1, 30[.]
ACTU, above n 7, 18.
Biddington et al, above n1, 35[. ]
Johnstone et al, above n 12, 198-199[.]
ACTU above n 7, 17, 26[.]
[ ]Biddington et al, above n 1, 19.
See witness statement of Michael Kaine attached to Transport Workers’ Union of Australia submission to the Road Safety Remuneration Tribunal 8 August 2013, p7[.]
R Johnstone et al 2015, 'Protective Legal Regulation for Home-Based Workers in Australian Textile, Clothing and Footwear Supply Chains' (2015) 57 Journal of Industrial Relations 585 at 585[.]
Biddington et al, above n1, 31[.]
ACTU above n 7, 20-21[.]
Biddington et al, above n 1, 33[.]
Ibid[.]
ACTU, above n 7, 24.
[ ]See Dale Tweedie ‘Precarious Work and Australian Labour Norms’ (2013) 24 Economic and Labour Relations Review 297, 300.
Biddington et al, above n 1, 33[.]
ACTU, above n 7, 21-22[.]
[ ]Biddington et al, above n 1, 34.
Ibid, 36[.]
Centre for Employment and Labour Relations Law cited in ibid[.]
Ibid, 39[.]
Centre for Employment and Labour Relations Law cited in ibid, 36[.]
Ibid, 29[. ]
See for example, discussion of insecure work in Opening address by ACTU President Ged Kearney to the ACTU Congress 2015, Docklands Stadium Melbourne, Tuesday, 26 May 2015
[n] last accessed 6 October 2015
[k] last accessed 6 October 2015.
See Quinlan, above n 19, 41-42[.]