Labor’s IR bill helps unions and punishes workers

Tony Burke during Question Time at Parliament House. Picture: NCA NewsWire / Martin Ollman

Workplace Relations Minister Tony Burke is still keen to push the line that his Closing Loopholes bill(278 pages of legislation and around 500 pages of explanatory memorandum) is no big deal. It’s just clarifying a few issues, tying up a few loose ends, while “getting wages moving” and delivering a better deal for workers.

Doubtless he was annoyed the Senate had decided to conduct a review of the legislation, with the report to be handed down in February. His preferred option was to have parliament pass the bill this year. The reality is no one is falling for the misleading description of the legislation as merely closing loopholes. Indeed, Andrew Stewart has pointed to the complexity of the bill as well as warning of unintended consequences in relation to the labour hire provisions, potentially dragging in lawyers, accountants and IT workers. He expects major amendments to be made.

The Senate review by the Education and Employment Legislation Committee is now under way and there have been a number of submissions as well as appearances at public hearings. Unsurprisingly, there is a considerable representation of employer bodies and unions in the list of parties taking part in the review.

The submissions from the employer bodies pull no punches. The Business Council of Australia, for example, declares the Closing Loopholes bill represents “the most radical and regressive changes to workplace relations in decades”. The conclusion is that it’s “the wrong step at the wrong time”.

One obvious reaction to the submissions from employer bodies is that “they would say that”. While this response is superficial, it does have some rhetorical appeal. Let’s face it, some large companies have tried to use the current workplace relations system to their advantage and are potentially about to come unstuck.

One example is resources companies continuing to enter into restrictive and costly enterprise agreements with the unions while offsetting the downsides by using labour hire workers or contracting out some operations altogether. The preferred alternative has been to walk away from enterprise bargaining – it has held no advantages for companies since 2016, from which date the better-off-overall test became rigidly interpreted. Another example of an errant company is Qantas.

The preferred way of thinking about the pros and cons of the Closing Loopholes bill is to assess the changes from the point of view of workers. Needless to say, they are not involved in the formal Senate inquiry process but they will be the most affected, in many cases adversely.

The casual provisions, for instance, will deter many employers from offering casual work, particularly involving regular shifts, lest they be caught in the punitive provisions of the legislation.

ACTU boss Sally McManus

There is also a concerted effort to reduce the size of the gig economy to the point that those who currently make additional income on a flexible basis will be denied that option. In the context of the squeeze on cost of living, this will be a very unwelcome development.

For anyone who operates as an independent contractor, including owner-operated truck drivers, there will be great uncertainty about the continuation of their work arrangements.

Around one-quarter of employees are defined as casuals. This proportion has remained essentially unchanged for decades. Casuals are paid a 25 per cent premium on their pay. Some work irregular shifts while others have more regular patterns of work. There is a right for casuals who work regular shifts to seek to convert to permanent status after 12 months. Only around 5 to 10 per cent of eligible casuals do so.

You may ask: What’s the problem? The key is that casuals are much less likely to join trade unions than permanent workers. The only solution as far as Labor is concerned is to make employing casuals much more difficult and in this way drive down the overall proportion of casual workers in the labour force.

The reality is that casual employment suits many people and a reasonable proportion of them prefer regular and predictable shifts – think working mothers. Even so, the Labor government thinks it’s a worthwhile exercise to add complexity and discouragement to casual employment. In the process, it may end up displeasing many people, including those for whom casual employment is a useful stepping stone into the permanent workforce.

As for the gig economy, again the Labor government’s aversion stems from the unions’ dislike of this form of employment. The reality is that most participants in the gig economy are able to top up their earnings from their main job in a flexible way. The technology connects sellers with buyers and ensures workers are paid according to agreed terms.

Former Business Council of Australia boss Jennifer Westacott

Closing Loopholes creates yet another form of employment – employee-like – with gig economy participants becoming entitled to minimum hourly wages and some other benefits devised by the Fair Work Commission. This is notwithstanding the fact that the platforms are not themselves employers.

Labor’s assurances given prior to the election, that platforms such as Airtasker and Mable would be exempt from the new laws, have proven hollow, even though workers on these platforms earn well in excess of award wages. Mable is a particularly useful mechanism connecting service providers and purchasers in the disability sector.

The important point again is that gig workers are unlikely to join unions. The unions’ presumption that absent the gig economy, the work will be undertaken by firms employing workers who can potentially be unionised is simply unrealistic. The much more likely outcome is that most of the work will simply disappear and the benefits that flow to both gig workers and users of platform-based services will be lost.

At a broader level, the bill seeks to make life very difficult for independent contractors, even though this form of employment suits many situations. There is likely to be considerable confusion about who is a contractor and who is an employee. To bring in post-contract assessments of the “true nature of the relationship” under section 15AA will be expensive and time-consuming.

Senator Michaelia Cash discussing the government's closing loopholes bill

While a small number of labour hire workers may benefit from the same job, same pay provisions, over time, there are likely to be significant adjustments made at the firm level that involve the paring back of the pay and conditions of permanent workers. Future expansion and investment are also likely to be deterred in those areas of the economy in which the same job, same pay provisions have most impact.

The bottom line is that the Closing Loopholes bill is designed to favour registered trade unions that currently account for less than 10 per cent of the private sector workforce. On balance, it will cause significant harm to a great many workers who are currently satisfied with their status as casuals, gig workers, independent contractors – even labour hire workers.

The sheer complexity of the new legislation will add to the cost of employing workers. Apart from the unions, the only other parties to really benefit will be lawyers and industrial relations advisers. We can just hope critical amendments and excisions can be made in the Senate to minimise the damage.