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A proposed amendment to the federal government’s Closing Loopholes Bill will make the sweeping industrial relations legislation somewhat more palatable for employers in resource industries.
The proposed amendments are the result of campaigning by the Australian Resources and Energy Employer Association (AREEA) and subsequent negotiations with the federal government.
Under the proposed amendments, set to be introduced in the lower house, the Fair Work Commission will be unable to make labour hire pay orders for service-providing contractors. AREEA chief executive Steve Knott said he believes the amendments will remedy what Minister for Employment and Workplace Relations Tony Burke referred to as the “unintended consequences” of the Closing Loopholes Bill.
Let’s add some context to the conversation before unpacking what the proposed amendments might really mean.
Closing Loopholes
The Closing Loopholes Bill has been the subject of widespread scrutiny since it was first introduced to the Federal Parliament in September of this year. From wage theft criminalisation to domestic violence worker protections, the bill has been praised and challenged for its ambition.
Among the most controversial elements of the bill is the proposed “same job, same pay” regime, which would potentially undermine the viability of contractual work arrangements in the resources sector.
The bill would require businesses to afford the same pay rates – including base rates, bonuses, incentive-based payments, allowances, and overtime – to contract workers as directly engaged employees protected under enterprise agreements. This requirement, BHP said, will cost the company $1.3 billion a year.
According to the Minerals Council of Australia, the requirements would introduce “guesswork” into contractual pay structures and would result in worse pay across the board.
“This will mean that employees ultimately are worse off and will lose access to bonuses and other terms that are too difficult to replicate under a ‘same job, same pay’ regime.”
Chipping away
Under the bill, unions must apply for a pay order to access the same rate of pay as directly engaged employees. Should the proposed amendments pass, however, the Fair Work Commission will only be allowed to grant such an order if the work arrangement in question concerns the provision of a service to a client rather than a supply of labour.
Instead, the Fair Work Commission will be directed to focus only on “factual matters of supervision, control, provision of equipment, statutory obligations, and whether the work is of a specialist or expert nature”.
In other words, the “same job, same pay” requirements will only apply in circumstances where a company is engaging a third party in a labour hire arrangement – i.e. where outside workers are contracted in lieu of engaging additional staff directly – and not where the third party is simply providing contractual services.
“The industry cannot operate without contract mining and petroleum production services, maintenance service contractors, shutdown service providers, facilities management providers and other specialist service providers – none of which are ‘loopholes’ to circumvent client enterprise agreement rates,” said Mr Knott.
“These contracting arrangements are essential to the resources and energy projects that account for 15 per cent of national economic output, enabled the federal government to deliver its $22 billion budget surplus and, according to the ATO, pay more tax than all other sectors combined.”
The proposed amendments come after the Senate voted to split off certain elements of the bill for separate passage. Though proponents of the split saw it as an opportunity to expedite the passage of protections for more vulnerable Australians, others saw it as more ruthless politicking.
A Senate inquiry into the Closing Loopholes Bill is due to report on 1 February 2024.
Nick Wilson
Nick Wilson is a journalist with HR Leader. With a background in environmental law and communications consultancy, Nick has a passion for language and fact-driven storytelling.
