Do you use labour hire workers?
Labour hire workers comprise 2.8 per cent of the local workforce and new laws compelling businesses to pay them at the same rate as permanent employees when they’re performing similar roles is having a big impact on workplaces nationwide.
In force since November 2024, the federal government’s Same Job Same Pay legislation applies predominantly in situations where labour hire workers perform the same duties as directly employed staff, ensuring they receive equivalent pay. The rules generally apply to businesses with larger workforces, though there are exceptions for short-term placements and certain specialist roles.
It allows employees, unions and host employers to apply to the Fair Work Commission for what’s known as a ‘regulated labour hire arrangement order’.
Once an order is in place, labour hire workers are entitled to a ‘protected pay rate’ that’s no less than they would receive if they were employed directly by the same organisation under its enterprise agreement.
Their employer must also ensure they receive the same pay rates, including overtime, penalties, and allowances, as if they were directly employed under the host’s enterprise agreement.
Staying on the right side of the law
Thousands of workers across the mining, aviation, meat processing and warehousing industries have enjoyed significant pay uplifts as a result of these changes.
Among their number are 120 NSW mine workers whose wages have risen by up to $35,000 a year, according to the federal Employment and Workplace Relations Minister Murray Watt.
If your business employs labour hire workers or is planning to do so, making sure you comply with the new rules is vital.
Fall foul of Fair Work and you may find yourself facing a stiff fine, coupled with a wage theft claim that could cripple your organisation, or put it out of business altogether.
Employers that are deemed to have intentionally underpaid wages or entitlements may also face criminal charges, with the possibility of prison time.
Copping the cost of compliance errors
There’s little protection available to businesses that find themselves in such a predicament, Steadfast Technical Manager Annette O’Brien warns.
“In the past, in some circumstances, it was possible to take out insurance that could potentially cover fines relating to breaches of the Workplace Health and Safety Act, in terms of wage theft, but this is no longer the case,” she explains.
“That’s changed, so that insurers aren’t permitted to indemnify businesses for fines or lawsuits that might arise from investigations of their remuneration structures. It’s become an uninsurable risk.
“That’s why it’s essential to review your employment arrangements to ensure you’re not, inadvertently or otherwise, operating a two-tier workforce.”
As part of that process, you may need to review employees’ job titles, employment contracts and job descriptions. It’s also important to keep wage and entitlement records up to date, in the event of an audit.
Cover to protect your operations
The right insurance can help your business manage a range of workforce related events, including accidents and incidents on the job. If you’d like help to review your cover, to ensure it’s appropriate for your size and risk profile, contact us today.
