'Same job, same pay': employer implications

'It would be wise for organisations to ensure HR is at the table when it comes to strategic workforce planning': lawyer

'Same job, same pay': employer implications

The ‘same job, same pay’ proposed amendments to the Fair Work Act have drawn a good deal of attention since they were first mooted, says one legal expert.

There has been significant pushback from businesses against the provisions in the bill that’s presently before a Senate Committee, says Cilla Robinson, Partner at Clayton Utz who will be speaking on the subject at HRD’s upcoming Employment Law Masterclass Sydney. “It will be challenging to navigate, but there are ways HR can help their organisations prepare.”

While there will be increased labour costs, she says, embracing the change in the right way could lead to a happier and more cohesive workforce, with greater productivity as a result.

“When looking for a silver lining for businesses I think from a HR perspective, it will hopefully mean that there'll be less angst between labour hire staff and direct employees in terms of the day-to-day operational management. Sometimes these issues of parity can lead to disputes or morale problems within the workforce, so that should be minimised,” says Robinson.

HR’s strategic role in planning for ‘same job, same pay’

“It might also mean those labour hire employees are more engaged and happy to do the same work, rather than comparing themselves to others getting paid more, so from an employee management perspective, it will hopefully mean the employer has more engaged and productive people because they're happier with pay parity and potentially more job security.”

It would be wise for organisations to ensure that HR is at the table when it comes to strategic workforce planning too, she says, to prepare for peaks and troughs in demand that are often addressed by labour hire.

“The proposed changes are geared towards addressing a reality in the Australian labour market where companies can have labour hire staff working side by side with their own employees, doing exactly the same work but often getting paid less than the host workers who are employed under the more beneficial terms of an enterprise agreement.”

By introducing the new laws, employees and unions would be able to apply to the Fair Work Commission for a Regulated Labour Hire Arrangement Order to ensure labour hire employees are paid the same as host employees, says Robinson.

Minimising workplace disputes

In her presentation at the HRD Employment Law Masterclass in Sydney, Robinson will also cover matters that will determine qualification to apply, which will include whether the work is classified as being ‘a supply of labour’ or alternatively, ‘the provision of a service’ - the latter of which may not fall within this type of arrangement.

“It is quite a significant change that ensures large businesses are considering their workforces more thoughtfully, given labour hire staff will not necessarily be cheaper,” says Robinson, noting small businesses are not captured by the changes.

“The lived experience of labour hire employees working side by side other employees literally doing exactly the same job when they know they are getting paid more does create this kind of unfortunate dichotomy within a workforce, which is never great for employee harmony or minimising workplace disputes.”

Robinson anticipates the bill’s intention of addressing “less secure forms of labour, ie. labour hire” may have the effect that more employees have ongoing permanent employment as companies elect to use labour hire providers less often, given the reduction in labour cost savings.

More respectful, harmonious workplaces

“The frequent benefit of a direct employee versus labour hire is that the company has more people who’re actually invested in the organisation. Another by-product of this will mean more respectful, harmonious workplaces because you don't have a dual class arrangement.”

To smooth the transition, it’s important that HR leaders encourage thoughtful discussion around what’s actually needed in terms of hiring throughout the year, rather than engaging labour hire staff on an ad hoc or temporary basis, Robinson notes. “There are circumstances when a company can get an exception to a protected rate of pay despite an order being in force, for example when the employee works for less than three months or if there's a training arrangement,” she adds.

In future, says Robinson, if the bill is seen to be effective in helping vulnerable employees or reducing worker exploitation by evading the application of enterprise agreements, the Government may consider broadening its scope.

“It is possible that the next iteration or next extension of this would be to apply similar types of arrangements in the gig economy or other casual or temporary forms of labour,” she says. “However, it’s also possible too that the provisions may be relaxed, repealed or changed by future liberal governments.” 

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