Industrial Law Essay

Question 2

Saira Lusby

93079667

24th September 2013

In recent times, Australian legislation and case law have reflected the evolution of clearer
guidelines regarding the extent to which matters regarding labour hire workers, contractors
and casuals (precarious workers) can (or cannot) be included in an enterprise agreement.
This essay will first seek to examine the nature of precarious employment and then go on to
discuss Australian law, both historically and as it stands today with the final part of this essay
being an assessment as to whether the laws sufficiently address the needs of a precarious
workforce and if not, what more can be done.
The term precarious employment1 may be understood to mean (as defined by Campbell, I)
employment that is deficient in one or more aspects of labour security when compared with
the societal standard for a decent job2 Recent years have seen a growth, in both developed
and underdeveloped countries, of these insecure and irregular work arrangements3 and with
this shift, there is growing concern in the community about an increasing group of
vulnerable workers who are hidden behind the legal device of the commercial contract. It
has been argued that the increase is not limited to Australia, but reflects a worldwide trend in
low paid, low skill work that has come about as a consequence to neo-liberalism4 and the
regeneration of capitalist production norms.
In 2011, an independent inquiry5, sponsored by the Australian Council of Trade Unions was
(ACTU), conducted, reflecting an increasing concern of the Australian government and
unions about a growing vulnerable workforce6, about 40% of the Australian workforce7. As
stated by the Hon Brian Howe in his report from the inquiry;
1

Gunasekara, C. (2011) Independent Contracting in Low Skilled, Low Paid Work in

Australia
2
Campbell, I The Rise in Precarious Employment and Union Responses in Australia at
p114
3
Quinlan, M, 2012 The Pre-Invention of Precarious Employment: the Changing World of
Work in Context
4
Wilson, M. 2013 Precarious Work: The Need for a New Policy Framework at p4
5
The Independent Inquiry Into Insecure work
6
Gunasekara, C. (2011) Independent Contracting in Low Skilled, Low Paid Work in
Australia
7
Wilson, M. 2013 Precarious Work: The Need for a New Policy Framework at p5
2

Over the past few decades, a new divide has opened in the Australian workforce.
No longer between the blue-collar and white collar worker, it is between those in the
core of the workforce and those on the periphery8
With the growing amount of interest and research, it is difficult to dispute that there is a need
for a new class of workers to be in need of protection. For many employers, the option of
evading responsibilities, including (but not limited to) payroll tax, workers compensation
and superannuation is a desirable option and saves a significant amount of money in
entitlements. This in turn increases the exposure of the standard workforce to vulnerability
through insecure forms of work.
It has been suggested9 that this shift will continue with economic conditions (globalisation)
being likely to fuel the continued rise in precarious employment. Advocates of
globalisation believe that indeed a new marketplace has arisen, but that with the new market
place come benefits such as flexibility for workers and economic efficiency.
The challenge presented by precarious work, therefore, is how to provide support to
those workers displaced by economic forces of globalisation, whilst still maintaining
economic efficiency and growth.10
By understanding the nature of precarious labour, the suggested origins and theories, we will
now look to Australian law to better understand the extent to which this group of workers is
and have been included within the legislation and what protections have been offered. As a
starting point, there is value in first understanding the concept of permitted matters.

Wilson, M. 2013 Precarious Work: The Need for a New Policy Framework at p5
Campbell, I The Rise in Precarious Employment and Union Responses in Australia at
p127
10
Rodgers, L 2012 The Regulation of Vulnerable Workers and Precarious Work: A Liberal
Framework p6
9

The question of what matters can and cannot be included in an enterprise agreement has been
a point of consideration for many years. As far back as 1904 awards and agreements could
only be made in settlement of a dispute over industrial matters11, which was interpreted by
the Courts to mean all matters pertaining to the relations of employers and employees, as
described in the joint judgement of the Electrolux case12.
In a series of decisions, including in Re Manufacturing Grocers Employees Federation; Ex
parte Australian Chamber of Manufacturer13, the High Court determined that, for a matter to
be industrial in nature, there must be a direct impact, as opposed to consequential, on the
employer-employee relation. This approach was also adopted by the Federal Court in
Wesfarmers Premier Coal Limited v The Automotive Food Metals Engineering, Printing and
Kindred Industries Union14 as per the following statement; the relevant requirementin
order to be certified, an agreement must be about matters pertaining to the relationship
between an employer... and all persons who are employed in a single business of the
employer.
In terms of what constitutes this matters pertaining principle, the High Court has been asked
to consider many different terms, including those relating to the use of independent
contractors.
In R v The Judges of the Commonwealth Industrial Court; Ex parte Cocks15, the High
Court held that a dispute between a dispute between an employer and employees
about the use of independent contractors to do work outside the factorywas not a
dispute of an industrial matter. A distinction has been drawn between provisions

11

Stewart, A 2013. Stewarts Guide to Employment Law p 156

Electrolux Home Products Pty Ltd v Australian Workers Union and Others [2004] HCA
40 @158
13
(1986) 160CLR341 at 353
14
No. 2 [2004] FCA 1737
15
[1968] 121 CLR 313
12

regulating or prohibiting the use of independent contractors and provisions which

prescribe minimum terms and conditions for the employees of independent
contractors as per the judgement of Gibbs J in R v Moore; Ex parte Federated
Miscellaneous Workers Union of Australia16. .. An award could properly require that
the employee of any contractor engaged by the employer be engaged on the same
terms and conditions to those applicable to the employees of the employer under the
award.17
Over the years, the way in which the matters pertaining principle has been applied by the
courts has been varied to the extent that the High Court has been considered inconsistent on
where or how to draw the line18.
This issue has been somewhat alleviated through s172(1) of the Fair Work Act, 2009 (the
Act) and Item 672 of the Explanatory Memorandum to the Fair Work Bill 2008 (the
Memorandum) whereby prescriptive detail surrounding the inclusion of independent
contractors into enterprise agreements is provided to support in the interpretation and
application of the principle.
What is clear is that there is scope for matters regarding labour hire, workers, contractors and
casuals to be included in enterprise agreements, though there are limitations to what this
inclusion looks like. In Ausurco Contracting Pty Ltd v Construction, Forestry, Mining and
Energy Union19, the judges highlighted It is clearly established from cases before Fair
Work Australiaand its predecessor, that clausesare permitted matters on the basis that
they do not prohibit or restrict or qualify the employers right to use contractors are
permitted matters in an agreement.
16

(1978)140CLR470 @ 473
As discussed in Wesfarmers Premier Coal Limited v The Automotive Food Metals,
Engineering, Printing and Kindred Industries Union (No. 2) [2004] FCA 1737
18
Creighton, B & Stewart, A. 2010 Labour Law @p 307
19
[2010] FWAFB 6180
17

A similar issue was raised and discussed in Australia Postal Corporation v Communications,
Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia20. This case involved the proposed use of a term requiring that Australia Post only
contract out positions once they had advertise vacant positions internally and only if no
permanent employees wanted that position. This term was not considered to be about a
permitted matter, as their Honours stated;
The issue of whether a claim about a contractors is a matter pertaining to the relationship
between an employer and its employees was considered by French Jin [the Wesfarmers
case21]provisions restricting or qualifying an employers right to use independent
contractors are not matters pertaining to the employment relationship.
Where terms relating to conditions or requirements about employing casual
employees or engaging labour hire or contractors are permitted is where the terms
sufficiently relate to employees job security. An example of such a term is one that
provides that contractors must not be engaged on terms and conditions that would
undercut the enterprise agreement, would be within the scope of permitted matters
which are matters pertaining to the employment relationship22.
The same approach was adopted and affirmed in Australian Industry Group v Fair Work
Australia23 where the Full Federal Court rejected the argument that a job security clause in an
enterprise agreement, requiring parity of pay and conditions of contractors with existing
employees was an unlawful term.

20

[2009]FWAFB599
Wesfarmers Premier Coal Ltd v Automotive, Food, Metals, Engineering, Printing and
Kindred Industries Union (No.2) (2004) 138IR362 at [109]
22
Airport Fuel Services Pty Limited v Transport Workers Union Of Australia
[2010]FWAFB4457
23
[2012] FCAFC 108
21

The laws regarding precarious workers in Australia have clearly arisen from the idea of
protecting the job security of standard workers. It is also evident that there exists an intention
to offer protection and also preserve the needs of business and limit prohibitions and
restrictions.
Though a good starting point, it is in this writers opinion that more can be done to protect the
job security of, not just standard workers, but also of precarious workers. Looking at
Australias Industrial Relations system, it is evident that the laws need to change and offer
greater protection, in order to keep pace with the changing world of globalisation. As
Tweedie, D mentions24;
[Precarious] employment... violates...two profoundly anti-market principles which
have been historically embedded in the Australian industrial system. .. wages should be set
with regard to workers needs rather than to market processes or employers capacity to pay
alone...this principle dates from Justice Higgins famous judgement in the Harvester case...
The second principle is wage justice... employees performing the same job should receive the
same wage...
In Australia, changes are underway, and can be evidenced by unions continuing to seek to
integrate contractors into union membership as a means of reducing exploitation and the risk
of unfair competition based on different forms of employment25. There has recently been a
push, as can be seen from recent case law, whereby terms are being pushed for inclusion
regarding precarious workers, into enterprise agreements
Additional protections may be accorded to this vulnerable workforce through greater
commitment to international policy, for example, the ILOs Decent Work program. Wilson,
24

Tweedie, D 2013. Precarious work and Australian labour norms at p301

Campbell, I The Rise in Precarious Employment and Union Responses in Australia at
p123
25

M, highlights the need for ...an idealogical change by governments to take co-responsibility
to provide decent work and the protections for workers that will bring a halt to the growing
inequality in the community26.
A better protection could also be found for labour hire workers, contractors and casuals if in
Australia, the legal definition of work and employees reflects that of the precarious worker.
Rodgers, L provides some valuable insight into the value in bringing precarious work within
the scope of traditional labour law rights. What is required here is the recoginition of a set
of core rights, reflecting the ILO approach27. Alternatively, the current labour law standards
could be expanded to include all work outside standard employment or traditional work.
The strong collective bargaining framework, provided for in the Fair Work Act could become
the vehicle used to determine wages and conditions, regardless of the type of work being
conducted. And it is these terms and conditions that would be included in enterprise
agreements.
Another solution which would offer further protection is based on the test proposed by
Collins, H28 whereby the Courts test for two things; ...a task performance contract, and that
no badges of membership of the firms organisation apply. This is valuable because the
assessment of the relationship is not derived from the intention of the parties, thereby offering
an extended protection to precarious workers where it otherwise may not exist.
In conclusion, it is evident that there exists a growing workforce that is not well protected by
legislation and precedence and that the state of globalisation means there is a social need (at
the very least) to offer protection to these workers. The low skilled and low paid nature of
labour hire workers, contractors and casuals creates a vulnerability that is becoming more
26

Wilson, M. 2013 Precarious Work: The Need for a New Policy Framework at p9
Rodgers, L 2012 The Regulation of Vulnerable Workers and Precarious Work: A Liberal
Framework p6
28
Collins, H. 1990 Independent Contractors and the Challenge of Vertical Disintegration
to Employment Protection Laws p379
8
27

visible with time as is the need for this precarious workforce to be included within the banner
of enterprise agreements.

Bibliography
Airport Fuel Services Limited v Transport Workers Union of Australia [2010] FWAFB 4457
Ausurco Contracting Pty Ltd v Construction, Forestry, Mining and Energy Union [2010]
FWAFB 6180
Australian Industry Group v Fair Work Australia [2012] FCAFC 108
9

Campbell, I The rise in precarious employment and union responses in Australia

http://researchbank.rmit.edu.au/eserv/rmit:10009/n2006022694.pdf
Collins, H. 1990 Independent Contractors and the Challenge of Vertical Disintegration to
Employment Protection Laws Oxford Journal of Legal Studies vol 10, Issue 3. Pp353-380
Creighton, B & Stewart, A. 2010, Labour Law 5th ed., The Federation Press, Sydney
Electrolux Home Products Pty Ltd v Australian Workers Union and Others
[2004]HCA40@158
Explanatory Memorandum to the Fair Work Bill 2008
Fair Work Act 2009
Gunasekara, C. 2011 Independent Contracting in Low Skilled, Low Paid Work in Australia
International Journal of Employment Studies vol 19 No 1: 50
Quinlan, M. 2012, The Pre-Invention of Precarious Employment: The Changing World of
Work in Context The Economic and Labour Relations Review vol 23, no. 4 pp. 3-23
Tweedie, G. 2013 Precarious work and Australian labour norms The Economic and Labour
Relations Review 24: 297
Rodgers, L The Regulation of Vulnerable Workers and Precarious Work: A Liberal
Framework? http://www.c-s-p.org/flyers/978-1-4438-4897-8-sample.pdf:1
R v The Judges of the Commonwealth Industrial Court; Ex parte Cocks [1968] 121 CLR 313
Stewart, A 2013. Stewarts Guide to Employment Law 4th ed., The Federation Press, Sydney
Wesfarmers Premier Coal Limited v The Automotive Food Metals Engineering, Printing and
Kindred Industries Union (No 2) [2004] FCA 1737
Wilson, M. 2013 Precarious Work: The Need for a New Policy Framework The Whitlam
Institute
http://www.whitlam.org/__data/assets/pdf_file/0015/430008/Perspectives_8_Margaret_Wilso
n.pdf

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