‘Same job but more pay’ to hit employers

The peak recruitment industry body warns Labor’s workplace reforms will force hospitals, schools and aged care providers to pay labour hire workers even higher wages than direct employees.

Employment Minister Tony Burke. Picture: NCA NewsWire / Jenny Evans

The peak body for the recruitment and staffing industry has warned the Albanese government’s workplace reforms will force hospitals, schools and aged care providers to pay labour hire workers even higher wages than direct employees in a “perverse”, unintended consequence of proposed same job, same pay laws.

The same outcome could also apply to the childcare and horticulture sectors, forcing employers to either pay even higher wages to surge workers – who are already paid more than direct workers – or struggle to find extra workers to fill gaps.

The Recruitment, Consulting & Staffing Association claims the proposed reforms will have the reverse effect of what Employment Minister Tony Burke’s is claiming to solve in levelling the pay playing field for direct and ­labour hire workers.

The body, which is a member of the employer-led campaign against the government’s proposed new laws, claims an examination of enterprise agreements across the sectors it represents has exposed a loophole that would allow, for example, a nurse employed in a Queensland hospital to get higher pay if they moved to a recruitment agency.

The RCSA claims to have exposed a loophole that would allow, for example, a nurse employed at a Queensland hospital to get higher pay if they moved to a recruitment agency. Picture: istock

While the proposed legislation has not been released, the government has indicated that it would seek to ensure that labour hire firms matched the wage conditions of enterprise agreements in place for firms they were recruiting to.

The RCSA argues that while labour hire workers must be paid in line with the site EA, they are not covered by the EA which would mean labour hire firms would still be subject to employment law and award minimums as award employers.

This would mean that any award trade-offs in an EA that were negotiated under the “better off overall test” would not apply for labour hire workers not covered by the EA, leaving labour hire firms in breach of employment laws or forced to pay labour hire workers the higher award components. This would be then passed on as higher wages and costs to employers, it claims.

Mr Burke disputed the claims, saying the proposed legislation would not interfere with the way labour hire operated.

“It has always been the case – including when I used labour hire as an employer – that labour hire workers are more often than not paid more than direct employees,” he told The Australian. “This is because of the insecure and irregular nature of their hours.

“Nothing in our legislation will interfere with this standard way that labour hire has always operated. The only thing that will change is that a loophole that undercuts rates of pay will be closed.”

But RCSA chief executive Charles Cameron said the new laws would create a “giant compliance bomb” for Australian business.

“It is still not clear what problem they are trying to solve,” he said.

“University of Melbourne HILDA data confirms that, across Australia, labour hire workers are – on average – paid more than their direct hire counterparts so there is actually no loophole.

“There will be a huge complexity and unintended consequence from this legislation, and I’m concerned that the government hasn’t fully considered all the scenarios where it will impact.

“I know they certainly haven’t spent extensive time talking through detail with businesses that will be responsible for implementing it in practice.

“When you create law to address an isolated issue – then apply it broadly – all you do is create problems where they didn’t previously exist.

“One example would be that in many scenarios, the application of this law will mean businesses will, in fact, be required by law to pay more to a labour hire worker doing the same job alongside a directly hired worker.

“Our members tell us that across a number of EBA environments – including in health, aged care, education, childcare and horticulture – because labour hire businesses will have to adhere to both EA and award entitlements, which means their clients will be required to pay higher wages to labour hire workers who do the same job alongside another direct hire worker.

“Ironic that a government ­intent on closing loopholes is ­proposing to create a brand new one where workers will be paid more money for the same job if they are employed by a labour hire firm rather than directly by a hospital.”