Australia has entered a new chapter in workplace fairness with the rollout of the enforcement of the “Same Job, Same Pay” laws on November 1, 2024. This legislation which came into effect on 15 December 2023 is designed to address the pay disparity between labour hire workers and permanent employees in comparable positions, confronting a persistent challenge in the Australian workforce. Here, the Albanese Government delivered on its commitment to create more equitable conditions for labour hire workers by enacting the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth).
Key Features of the ‘Same Job, Same Pay’ laws:
Equal Work = Equal Pay
The legislation provides for a host employer or its employees, labour hire workers or a union to make an application to the Fair Work Commission (Commission) for a regulated labour hire arrangement. A regulated labour arrangement order operates to compel labour hire entities to pay their workers the same “full rate of pay” at which the employees would be paid under the host employer’s enterprise agreement (or any other workplace instrument) if they were directly employed by the host employer. The “full rate of pay” is inclusive of incentive-based payments and loadings, monetary allowances and overtime or penalty rates. For the Commission to issue the order, it must be satisfied that:
The labour hire entity supplies its employees and labour hire workers to perform work for another company (the host employer). Notably, in Application by the Mining and Energy Union [2024] FWCB 299, the Full Bench confirmed that the requirement for the performance of work for the host employer is still satisfied if “the work is performed wholly or principally for the benefit of” the host employer or a related entity of the host employer.
An employment instrument (Enterprise Agreement, Union Agreement, etc) applies to the host employer and would apply to the labour hire workers if they were directly employed by the host employer.
Notably, as reported by the Canberra Times on 28 October 2024, “the first pay agreements to be approved by the Fair Work Commission under the changes will include wage rises for more than 2,000 cabin crew on airlines, about 200 meat workers and more than 250 miners”.
Applicability and Exceptions
The legislation applies to businesses with 15 or more employees that are covered by an enterprise agreement and use labour hire workers.
However, the legislation does not apply to small businesses, circumstances where labour hire workers provide a service rather than a labour, cases where an order would not be “fair and reasonable” (here, the Commission considers pay arrangements and the history of industrial arrangements only if parties raise them in submissions), and where the labour hire workers are covered by a training arrangement or are only working for the host company for a short period (typically three months or less).
Implications for Employers
Increased Wage Payments
Unions have demonstrated a significant propensity to capitalise on the new ‘Same Job, Same Pay’ laws with the Mining and Energy Union already making 46 applications to life the wages of an estimated 4,306 workers at 24 coal mine sites in NSW and QLD.
However, as reported by a new ACTU analysis the cost of the ‘Same Job, Same Pay’ changes to the Australian mining sector amounted to only 0.016 percent of annual profits.
Payroll Management and Audits
Employers are encouraged to conduct equal pay audits of their payroll systems to identify and rectify any discrepancies in remuneration among labour hire workers and permanent employees.
Compliance and Transparency
Notably, under the ‘Same Job, Same Pay’ laws, the host employer must provide relevant wage and pay information where they are potentially subject to a labour hire order so that the labour hire entity is able to comply with the order by providing the accurate rate of pay.
A host employer or labour hire entity which attempts to abrogate or avoid their obligations under the new laws will face anti-avoidance measures.
Looking Ahead
1 November 2024 represented a significant shift in labour hire practises across Australia. By addressing wage disparities and promoting equitable treatment, the ‘Same Job, Same Pay’ have the potential to reshape the Australian labour market, fostering a more inclusive and fair work environment.
ABOUT THE AUTHOR
Isabella Tziolis assists as a paralegal in commercial, defamation, employment and general matters and is committed to supporting BlackBay Lawyers mission of delivering exceptional legal services. Her work focuses on assisting in providing comprehensive legal support, conducting extensive research, and offering strategic guidance to clients.
Isabella is currently studying a Bachelor of Laws and a Bachelor of Arts, majoring in Politics and International Relations at the University of New South Wales. Her academic and professional experience has fostered her high attention to detail and strong analytical skills which allows her to efficiently handle high-pressure situations and contribute to effective legal strategies.
