Labor strikes secret deal to get workplace changes over the line

Tony Burke clinches a breakthrough deal with employers representing some of the biggest resource and energy companies, splitting business opposition to Labor’s workplace changes.

Tony Burke’s breakthrough deal increases the government’s prospects of getting the contentious IR changes through the Senate. Picture: NCA NewsWire / Martin Ollman

Workplace Relations Minister Tony Burke has struck a breakthrough deal with employers representing some of the nation’s biggest resource and energy companies, splitting business opposition to Labor’s industrial relations bill and increasing the government’s prospects of getting the contentious changes through the Senate.

After weeks-long negotiations, the agreement to exempt service contractors from the new workplace laws was signed off on Tuesday by Mr Burke and the Australian Resources and Energy Employer Association, whose members include Fortescue, Woodside, ExxonMobil and Chevron.

The deal is the third significant advance achieved by Mr Burke following agreements with the Australian Hotels Association and gig platforms, and is a setback for employer groups representing BHP and Qantas which want to kill off the bill.

AREEA chief executive Steve Knott, who has been a vocal critic of Labor’s workplace policy ­agenda, told The Australian he wanted to commend Mr Burke “for responding to our members’ concerns that the government’s labour-hire proposals could ­potentially impact the broader ­resources and energy sector”.

Mr Burke told The Australian that AREEA had sought amendments to make it explicitly clear that service contractors should not be captured by the new laws.

“These amendments will put it beyond doubt,” he said. “We will end up with better legislation as a result of the constructive engagement and industrial expertise that AREEA has brought to the table.”

In comments aimed at business groups still campaigning against the changes, Mr Burke said: “The only reason left for opposing the government’s actions on the ­labour-hire loophole is because employers want to continue ­underpaying people.”

Mr Knott said the “significant” amendments would ensure that contracting businesses delivering services to mining, energy and all other sectors of the economy would be exempted from the new labour-hire provisions.

Under the changes, the Fair Work Commission will be prevented from making labour hire pay orders where businesses are providing a service to a client ­rather than supplying labour.

“This is the guarantee AREEA has fought long and hard for on behalf of the Australian resources and energy industry,” Mr Knott said. “With the government committed to passing its Closing Loopholes Bill into law, protecting the resources and energy sector supply chain has been the ­overwhelming priority for AREEA and its broad national membership.”

The Australian revealed in June that Mr Burke has been open to a new test to prevent specialist mining and energy contractors being inadvertently caught up in the laws following consultations with AREEA and its ­members. But when the bill was released, Mr Knott was unhappy with its wording, resulting in further ­negotiations with the government that led to the new agreement on Tuesday.

The agreement stands in ­contrast to the open hostilities ­between Mr Burke and Mr Knott last year over the government’s Secure Jobs Better Pay laws.

Declaring there was “white-hot anger” among mining, oil, and gas companies about the changes, Mr Knott threatened to run a campaign similar to the $20m ­offensive against the mining tax “but on steroids”.

Mr Burke hit back at the time, saying: “If Mr Knott wants to spend $20m of his members’ money on a campaign to stop wages moving, that’s on him.

“If they think that a $20m ­advertising campaign is going to stop this government from trying to get wages moving, they have no understanding of the pressures that are happening around every kitchen table in the country right now.”

The Minerals Council of Australia, which has committed up to $24m to campaign against the bill’s passage, is expected to continue to oppose the bill.

Under the new changes, ­tighter criteria will direct the commission 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.

Contracting businesses will no longer have to prove they are ‘wholly or principally’ providing a service, rather, on balance, that the arrangement points towards service provision instead of labour hire.

Sources said the changes will result in a tight assessment of the facts of the employment relationship between the contractor and its employees.

It will mean the past, current and future workforce practices of the client/host, will not be part of the test as to whether a company is providing a service or supplying labour.

Employer sources said the concessions demonstrate the government was very serious about narrowing the application of the new labour hire pay orders to arrangements that were for the supply of labour, and not for the provision of service.

“It will strongly discourage unions from making applications outside of traditional labour hire as the prospects of success would be extremely low,” one source said.

“The bar has been set that the FWC must be satisfied that the order would not cover work that is for a service.”

Mr Knott said the “improvements to the bill come after months of constructive talks” with Mr Burke and department officials, with AREEA and key contracting members providing the government with practical ­examples on the differences ­between service contracting and labour hire in the resources ­sector.

“AREEA’s century-long ­expertise in industrial relations was pivotal in consultations with government as we brought forward a compelling case to carve out specialist service contractors from the proposed labour hire legislative reforms,” Mr Knott said.

“These negotiations have been complex, extensive and not without challenges. That said, AREEA and Minister Burke have engaged in such consultations in good faith.”

He said the forthcoming amendments should remedy what Mr Burke had described as “unintended consequences” of the bill for service contractors.

“Legal review has confirmed the negotiated amendments would significantly strengthen the service contractor exemption and ensure only businesses providing labour hire to clients could be captured by future orders,” Mr Knott said.