Labour Law Reforms Relating to Labour Hiring and Migrant Workers Set to Play Key Role in Federal Election

An Australian Senate inquiry into the exploitation of temporary visa workers (the "Inquiry") has recommended a number of reforms to the Fair Work Act 2009 (Cth) ("FWA"). These recommendations, if implemented, would impose licensing requirements on labour hire companies and additional burdens on employers of temporary visa workers. These recommendations, and a number of other key recommendations, are strongly opposed by the Coalition government, which holds a majority in the lower house but a minority in the Senate.

A number of other reforms, aimed at protecting foreign and other vulnerable workers and increasing penalties for noncompliance by companies, are the subject of the Fair Work Amendment (Protecting Australian Workers) Bill 2016 (the "Bill"), whichis currently before a Senate Committee.

These reforms are likely to be at the forefront of the Labor Party's campaign in this year's federal election. Further, as we discussed in our January 2016 Update, the Coalition government is threatening a double dissolution election if laws resurrecting the Australian Building and Construction Commission are not passed by the Senate.

Senate Inquiry Recommendations. The Inquiry made a number of wide-ranging recommendations in its Labor–Greens-backed majority report. The most important of these include:

  • Requiring labour hire companies, including those based overseas, to be licensed and maintaining a public registry of licensees;
  • Imposing a $4,000 levy per sponsored worker on employers who sponsor the 457 visas of skilled foreign workers;
  • Imposing quotas of a "one-for-one" employment of foreign and Australian tertiary graduates and requiring sponsors of trade visas to demonstrate that apprentices represent at least 25 percent of their workforce;
  • Clarifying that temporary workers have the same rights as Australian workers in their visas;
  • Stronger regulation of franchisors (including allowing franchisors to terminate a franchise agreement without notice where there are reasonable grounds for believing that serious contraventions of the FWA have occurred);
  • Protection of whistleblower temporary workers who report exploitation (by forbidding the Fair Work Ombudsman from identifying them to the Department of Immigration and Border Protection and by ensuring visa breaches do not necessarily void employment contracts); and
  • Independent review by the Fair Work Ombudsman.

The Inquiry also made recommendations for the review of the penalty, accessorial liability and sham contracting provisions under the FWA, some of which are the subject of provisions in the Bill.

Although made under the premise of reviewing the conditions of temporary workers, many recommendations make it more difficult in practice for Australian businesses to employ foreign workers and protect Australian workers from foreign competition.

The Coalition minority in the Senate has voiced strong opposition to many of the key recommendations, stating that a review of the issue (and the Bill) by the government is already in progress.

Fair Work Amendment (Protecting Australian Workers) Bill 2016. The Bill, which is currently before a Senate Committee, also contains provisions concerning foreign and other vulnerable workers. Key provisions of the Bill include a clarification that the FWA applies to all employees regardless of the employee's visa status, reform of provisions relating to sham contracting and increasing penalties for noncompliance by employers.

If the Bill passes, maximum civil penalties will be increased to three times the current maximum (from $54,000 to $162,000 for corporations) in cases of intentional breaches of the Act. In addition, courts will be empowered to make directors of phoenix companies liable for unpaid employee entitlements and to disqualify persons from managing a company under the Corporations Act 2001 (Cth) for breaches of certain civil contraventions of the FWA. New criminal offences will also be inserted mirroring the offences concerning slavery and slavery-like conditions found in the federal Criminal Code.

What This Means for Employers. Similar law reform proposals concerning migrant workers and labour hire arrangements have been the subject of vigorous political debate internationally, most notably in the United States. It is uncertain which, if any, of the proposals for reform will be implemented in Australia, but they will certainly form a key part of the political discussion if a double-dissolution election occurs this year.

We thank associates Michael Whitbread, Clare Langford, Jay Tseng and Joshua Kang for their assistance in the preparation of this Update.