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What’s the Deal with the Same Job Same Pay Laws?

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From 1 November 2024, new laws introduced by the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 will affect large businesses around Australia that engage labour hire providers.

This means that your business will be affected if:

  1. You are a business with 15 or more employees;
  2. You and your employees are covered by an enterprise agreement; and
  3. One or more labour hire businesses supply labour (i.e. workers) to supplement your workforce.

Under the new laws, the Fair Work Commission can order that one or more labour hire businesses must pay to their workers, who are placed for more than 3 months in your business, the same amount that you would have paid to those workers as if they were covered by your enterprise agreement.

These laws do not apply to independent contractors that supply goods or services, as opposed to the supply of labour. This fine legal distinction is likely to be tested through litigation and case law.

All of this may of course lead the labour hire provider to increase the fees that they charge onto your business as they face higher wage expenses.

These laws come with anti-avoidance provisions which:

  • allow the Fair Work Commission to expand its same job same pay order to include additional host businesses and additional labour hire providers.
  • prohibit labour hire providers from intentionally turning over their workers to stay under the 3 month placement period.
  • prohibit host employers from engaging different labour hire providers to stay under the 3 month placement period.
  • prohibit host employers from directly engaging a labour hire worker as a contractor.

Example

Company A is a building construction business with 20 employees. Through negotiations with a union, Company A’s 20 employees enjoy generous terms of employment through an enterprise agreement (e.g. $60.00/hour).

Company A engages Company B (a labour hire firm) to supply additional workers to also undertake construction work.

Prior to the same job same pay laws, Company B could pay its employees in accordance with its default industrial instrument, which could be a modern award or Company B’s enterprise agreement (e.g. $30.00/hour).

If an order were made by the Fair Work Commission under the same job same pay laws, Company B would need to pay its workers what Company A had to pay its workers (i.e. $60.00/hour).

The economic impact of these laws remains to be seen.

If you have any questions in relation to this article or employment practices in general, please contact the MST LawyersEmployment Law team on +61 3 8540 0200 or email workplace@mst.com.au.

Link to the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023