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Friday Workplace Briefing
The Rise of the Fair Work Commission Under Labor – New Power Over Gig Workers and Independent Contractors!
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About the Hosts
Managing Principal - Victoria
Senior Associate - Workplace Relations
Andrew Douglas: Okay, main topic. The federal government, again, the Labour government has come up with an idea around the gig economy and independent contractors. I just want to talk a little bit about the history of where we’re coming from. There’s three states that have got gig economy legislation that’s sitting there trying to protect the underlying entitlements, as the states say, for gig workers.
The difficulty with the gig economy is that platforms change and the methods of hiding people from employment status move so flexibly and are so almost invisible. And so you do need some mechanism if you decide to protect these group. And I think ethically, all of us agree that gig workers do deserve some sort of protection.
Those on the horizontal plane and gig workers, those who are doing food delivery and stuff, are the most marginal workers we have in our economy. The ones on the vertical level, those who Nina and I decide we’re putting to get a job, and we do it as a loose collaboration. We’re gig workers, we’re not contractors. We don’t need to be protected, ’cause we have a set of skills. We’re seeking expensive work. We don’t need that sort of protection.
And of course, independent contractors have historically needed a significant amount of protection, and in key industries, get forms of that protection through various bodies like VCAT. So the transport work drivers, And the TW particularly have been saying for a long time, look, you know 25 years ago, you gave us trucks, you put a burden of us paying and maintaining those trucks and had a workable wage. We lost all our redundancy entitlements, we lost all these other benefits that we would’ve received. And now we’re in the stage with escalating fuel prices where we’re locked into our own contracts. We were going broke.
And so Labor’s response has been threefold. The first one, as they’ve said with gig workers, look, we need some mechanism which broadly identifies a gig worker rather than a task-based gig worker. And that protects the basic terms of him, the minimum standards around that.
Nina Hoang: And that will come through minimum standard orders.
Andrew Douglas: Yeah, and minimum standard orders, although Nina and I have had a bit of an argument about this, is a bit like the old awards. Because what will happen is Nina will act for the, she’ll love this, I’ll make her a TW organiser, and say, look for Uber food delivery. We want to make an agreement. We want an order. And I suspect, because there’s no detail in this, what’ll happen is Nina will get that order and then seek to add this response to every other food delivery. Don’t know actually what’s going to happen.
Nina Hoang: No, yeah.
Andrew Douglas: But the detail’s just not there. But I understand why it’s happening, and it’s a good thing, but I’m going to raise this point now, ’cause I think it’s, I’m a relatively old guy. I can remember the early awards. They were about four or five pages, six pages. I was here when Keating made the changes in 1991 and 1993 that led to the Workplace Relations Act. And I was there when I saw enterprise agreements being made which were two pages, three pages. If you look at major awards now in the construction or driving industry, there’s 70, 80, 90 pages. You look at enterprise agreement for someone like Qantas, they’re 180 pages. My difficulty with this is, it’s all very well unless the industry bodies who run these arguments, rather than employer and employee, get in and bureaucratize it and make it so it can’t be understood by the average business. And that’s what awards are today. Most people actually cannot administer an award because they’re-
Nina Hoang: Yes, it’s very complicated.
Andrew Douglas: So my fear about these orders are we may end up going down that path, which means both the employee and the employer may simply not be able to understand terms of conditions.
Nina Hoang: But that’s not what’s happening at the moment. So what they’ve actually said is, we’ll do minimum standard orders as to like pay, like a very set amounts of things. And I’m saying-
Andrew Douglas: Hours of work.
Nina Hoang: Yeah, like it could evolve from it, but like the intention is to address the exploitation.
Andrew Douglas: That was the intention at the beginning, just so you know, with every other-
Nina Hoang: Yeah, but, you know, this is still opened up for submissions.
Andrew Douglas: So I think it’s a really good thing.
Nina Hoang: So it’s a good starting point.
Andrew Douglas: Submission’s closed on the 12th of May, so that opened on the 13th of April. So it’s not a lot of time for submissions.
Nina Hoang: And it could still change.
Andrew Douglas: It could still change. But look, I think it’s a really good thing, the gig economy, I want it to be treated as something different from an employee contractor that breaks down that old bifurcation of things which just doesn’t work anymore. So it’s good to do that. It’s good there are some protections. My fear is that will go down the path of everything else that the Fair Work Commission gets its hand on and industrial bodies caught to end up with documents this thick.
Nina Hoang: I feel like it’s going to be a bit different honestly, because the nature of gig economy is, it’s not as united as like employees are. So I think, I hear your fears, but I think that even bodies like the unions who have to advocate on the behalf will have to approach it differently, because there are so many gig economy workers, and to be like, we’ll just cover everyone, I don’t think they’re going to be able to do it that way. Well, depend on the detail.
Andrew Douglas: Look, they’re already doing it, so I reckon they will, and I reckon they’ll find a way of making money out of the representation which keeps them alive.
Nina Hoang: Oh, we can definitely guarantee that.
Andrew Douglas: Okay, the next thing is with independent contractors. And this is, look, Labour Party, Federal Labour Party has a very strong representation from TW, particularly from New South Wales, right, which is a very powerful representative of TW. There is no doubt that independent contractors get a rough end of the deal in the jobs that used to be done by employees, okay? ‘Cause they often end up with a liability of a significant piece of plant. The maintenance and responsibility. And there is no doubt that the present methods of protecting those people are limited, and they are complex, difficult, and slow in responding.
Nina Hoang: And they’re usually locked into the contracts that they’ve made.
Andrew Douglas: So what the suggestion about the Fair Work Commission is threefold, again, with the Fair Work Commission gaining powers in relation to forms of agreement making. And that would be by application, again, by union.
Nina Hoang: By mutual application, I thought it was.
Andrew Douglas: Well, that’s not where it’s going to end up. We both know that. That’s going to end up by application, and then you’re going to be drawn into it. That’s the way the legislation always ends up.
Nina Hoang: And they have the dispute resolution as well.
Andrew Douglas: The second part of putting a dispute process in, but the difference here is, here, you are genuinely dealing with an independent contract. And therefore the decision-making powers of the commission would be elevated to what are called arbitral or judicial powers. Real concern-
Nina Hoang: Getting the line there.
Andrew Douglas: Yeah, look, you know, without criticising the Fair Work Commission’s DNA, there’s a reason we have a Fair Work Commission in the way it does, and it doesn’t have judicial powers is ’cause it deals in a conciliatory process for resolving problems. To elevate that to a legal level would really undermine the capability of a whole group of people who just actually aren’t lawyers or weren’t practising lawyers in this area in the commission to be making decisions. And I think we’d just be in endless disputes and endless appeals, because we’re dealing with people who don’t actually have the skills to be actually doing that decision making. And that’s why the commission doesn’t have arbitral or judicial powers, ’cause they’re mostly not lawyers. So that’s just a quick point on the side. But the next one, again, Nina and I agree but disagree on, is many of these contracts that independent contractors go into, take it or leave it contracts, and they are by nature unfair contracts.
Nina Hoang: Particularly in the building industry, where they’re kind of like, you know, if you don’t take it, we’ll find somewhere else. There is no equal negotiation at all.
Andrew Douglas: And so there’s this idea of creating an unfair contracts jurisdiction also within the Fair Work Commission. Now we used to have that in New South Wales with 104, 109 sections of the Industrial Relations Act, which were a litigator, a plaintiff litigator’s heaven. That’s the risk. But once again, we’ve got to understand, if we want to deal with the independent contractor issue, we’ve got to deal with the unfairness. And the unfairness sits within the contract. And sits within the contract more than ever now as a result of the high court decisions around what an independent contractor and what is an employee, where people who are hosts or the principal in it have revisited their contracts to make sure they’re very clear it is an independent contractor. But they haven’t stopped shaving off the benefit down to the people who are the independent contractor. So I think there is an inevitability about there being an unfair contract-
Nina Hoang: Yeah, I think-
Andrew Douglas: Jurisdiction somewhere. Whether it sits in the Fair Work, ’cause once again, it goes to contractual analysis is another issue. And we’ve seen since James has taken the other cases, how much the Fair Work Commission has struggled to apply the law of the high court. And I think with Matt, before he went on parental leave, and you and I, we’ve talked about four or five cases where it’s been very clumsy. And it’s been very doctrinaire the way that it’s been applied, almost as if the president said, look, this is the way it works and you just got to do it. That didn’t happen, by the way, I’m just saying that. So we’ve got to be really careful to give a power to a jurisdiction which doesn’t have a skill.
Nina Hoang: Yeah, I agree. I think it’s got to be balanced. But the current unfairness in the market is so high. And the current methods that are available for them to address it, it’s just, it’s not workable. It’s expensive.
Andrew Douglas: So I do, I agree. It has to be-
Nina Hoang: Something needs to be done.
Andrew Douglas: And it needs to be a quick thing, because these people are hand to mouth. So when they-
Nina Hoang: Yeah, and they go under.
Andrew Douglas: That’s right. So when they’ve got a problem, they need to resolve it in a couple of weeks, not a couple of years. So I think there’s a lot of good that’s coming out in this proposal. Whether it becomes law or not, who knows. But it’s a great discussion. And it’s a great reminder at the moment that the world is moving away from the employment model to a model which has gig workers, independent contractors, and some core employees. And there needs to be a set of law around all for both the employer and the employee to know what are their rights and entitlements, and the remedies that come out of that need to be quick. So that’s our, we’ll come back to it, does it start to evolve, and we’ll probably know more in about three or four months later.
Nina Hoang: I reckon it’s going to shift after all the submissions, but we’ll see.
Andrew Douglas: We’ll see. Okay, well, let’s go onto the case study.
Nina Hoang: Yeah, the one that you thought was funny, and I think it’s more-
Andrew Douglas: No, I don’t think it’s funny.
Nina Hoang: Kids Safe Home Incorporated (KSH) was an emergency shelter for kids suffering violence. Amy was the WHS manager for KSH. The board had directed Amy to set up a system to manage recruitment of employees to ensure the children were safe. This involved more than the usual working with children and police checks. The board explained they wanted to ensure there was thorough background checks undertaken, including past employers.
Amy had been given the job in 2021. She set up the police checks and working with children processes, but got caught up with other work and didn’t finalise with HR the other controls to ensure the children were safe. The chair of the board checked in with the CEO in April 22022. The CEO, Marj John, spoke with Amy and the HR manager immediately.
The HR manager explained that Amy would prepare the final process then work with her to settle it. The HR manager Gavin was still waiting for it. Amy explained that she was doing some research as to what was the best methods and would come back to the CEO and Gavin.
In November 2022, Gavin employed Mark as a child welfare officer. He had come from a school in charge of the boarding house. Unbeknownst to Gavin, Mark had been asked to leave the school following Mark striking a child in anger in a drunken rage. At the time, Mark had just broken up with his wife and was mentally stressed. As a result, the school agreed to treat it as a resignation.
Amy had in draft form the signing of consent to past employers to seek details of their performance conduct and reasons for leaving. It had not been enacted. Instead, it was a reference check to a person identified by the candidate who turned out to be a close friend of Mark.
Andrew Douglas: All right, we’re on to the questions then. Now, this raises a couple of issues, and I wanted to separate the issues right at the beginning. One is, you know, what were the obligations of the relevant internal service providers? OHS, or WHS.
Nina Hoang: HR, CEO.
Andrew Douglas: HR, CEO… and ultimately the governance issue around the board. And the second issue is around this idea of signing off on deeds or saying, just saying, look, we’d just treat it as a resignation. We’ll deal with that one last. But I want you to keep that in your mind, because remember, that’s a very critical representation you make to a future employer. So the first one is, can Mark be stood down pending an investigation?
Nina Hoang: Yeah.
Andrew Douglas: Yeah. Well, there’s an imminent threat. So the two reasons are imminent threat or risk to the persons involved, or the the risk of evidence being distorted or damaged by-
Nina Hoang: And the serious nature of it. Like I can’t see any reason why you would allow him to continue working.
Andrew Douglas: That’s just a question.
Nina Hoang: Yeah, but it’s such an obvious answer.
Andrew Douglas: I would like to put it obviously. Can Mark’s employment be terminated if the investigation revealed Mark was intoxicated, pushed the child away, and the child tripped on carpet, fell over hitting his head. In other words, the incident itself was bad, but it wasn’t as terrible as we first thought.
Nina Hoang: I think he didn’t, it wasn’t a fatality.
Andrew Douglas: You know, it was a fatality. But when he pushed the kid back, the kid tripped on carpet, fell over and-
Nina Hoang: Ah, right, I see, yeah.
Andrew Douglas: But he was intoxicated.
Nina Hoang: Yeah, the breach of duty of care.
Andrew Douglas: Well, let’s just make it really simple. You don’t have to get to the last part. If he’s intoxicated, it’s a breach. It’s serious misconduct. And serious misconduct under regulation 107 for the fair work. So that’s one part. The second part is you shouldn’t be touching any child in your care in this manner. So yes. Can Amy be charged under safety legislation? And if so, what it would be? Now, she was the WHS manager. Over to you, Nina.
Nina Hoang: So she would definitely be charged under primary breaches, but also reckless endangerment.
Andrew Douglas: So she’d be a section 25 breach, because she didn’t exercise reasonable care.
Nina Hoang: Care towards other, wait, no, it would be 26, right, towards other people, ’cause for the child.
Andrew Douglas: Yes, it would.
Nina Hoang: Not towards other, but yeah, definitely reckless endangerment, because she was aware of the risk and has ignored it, and been reckless to it.
Andrew Douglas: So she runs the risk of jail over this.
Nina Hoang: I think she’s definitely going to jail.
Andrew Douglas: And you’re a hanging judge. Okay, next one.
Nina Hoang: I wouldn’t be a hanging judge.
Andrew Douglas: Can Gavin be charged under safety legislation? If so, what would be the charge? Now, Gavin was the HR manager.
Nina Hoang: Yeah, so I think for this one, it would also be a primary breach, one under section 26. I don’t think it’s enough to be-
Andrew Douglas: I think it’s 25, just, 26 is management control.
Nina Hoang: Yeah, but 25 is towards other employees. The child is the one you owe the duty to.
Andrew Douglas: Oh, is it? Can you, we’ll have, we’ll come back. But yeah, whatever it is, it’s the individual breach. And I don’t think it’d be reckless endangerment. But Gavin did hold the responsibility of people management. In other words, of managing the internal systems process for people. And was a person who was aware of the risk and did nothing to follow it up. And there’s no evidence Gavin followed it up from Amy at all. So, and Gavin was the person who recruited with that knowledge of the risk. So I think he’s in trouble. I don’t think it’s reckless endangerment.
Nina Hoang: I think maybe they delay the changes then walk away from it kind of thing.
Andrew Douglas: Yeah.
Nina Hoang: Yeah.
Andrew Douglas: I think the CEO is in real strife, ’cause the CEO understood the board, directed this, understood the urgency in it, did follow it up once at the direction of the board, not on their own, and then made no further following up.
Nina Hoang: Yeah, so they really would’ve needed systems in place to check that it was happening.
Andrew Douglas: Yeah, so we had a bit of a discussion before about how serious this is. If I had the window, we’re up 17 floors, and the window fell out, and it was Nina’s job to actually make sure the window was replaced and to manage the safety of it and Nina didn’t for six months, Nina would be in a lot of strife.
Nina Hoang: But so would you.
Andrew Douglas: Oh, so would I? That’s exactly right, so would I. And the fact is that sometimes psychological hazards and psychological risks, or these implicit threats and risks, are not as observable, and therefore they don’t seem as high. But not knowing whether a person is safe to manage a vulnerable child is by itself inherently one of the highest risks. It’s like a window being knocked out 17 floors up. And therefore you not only need to ensure it hasn’t been happening, you need to have a system to ensure it isn’t happening.
Nina Hoang: Yeah, and I think the key thing here, which came out from our discussion, was it’s not based on the consequence. So for example, if the child, nothing happened to the child, the fact that you allowed the situation to occur and the risk to occur is enough, that is a breach in itself. And that’s what the court will focus on. It’s not based on the consequence. That just mitigates all-
Andrew Douglas: That’s right, it’s the gravity. So if someone dies, that goes to the gravity here of what the ultimate sentencing will be, but it doesn’t change the liability.
Nina Hoang: Yeah, ’cause it’s based on how far you’ve moved from the reasonable standards.
Andrew Douglas: Yeah, so the next question is, is the board, particularly the chair, liable? And I think there is some risks around 144-
Nina Hoang: Yeah, probably only 144.
Andrew Douglas: For the chair. I don’t think they’d attack the rest of the board unless there’s evidence in the board of somebody who’s raising the risk issue and it’s clear to them, then all the board could be liable. But it’s usually a chair. Now, this is the one that is contentious, and we’ve only got 30 seconds. I’ll be really quick about it. When you say somebody we’re recharacterizing as a resignation, you understand that when you make that representation, whether it’s in a deed or whether it’s through a letter or whatever it is, it’s a representation that you know the person who you’re doing, the fired employee is going to utilise, and someone else is going to rely upon it. So it is a representation. And if it causes detriment, then there’s actions and competition law if you’re courting competition law. But whatever you’ve done, it’s a representation you know is going to be relied upon. So both Nina and I, when there are serious wrongdoings, we are very careful and won’t allow that recharacterization. We say, no, look, whatever you don’t do, what you can say is, look, we will not make comment on base determination.
Nina Hoang: That’s how you should respond if someone asks you about it.
Andrew Douglas: But if someone’s done something very bad and there’s a risk of it occurring again, it’s not just we’re not getting on or performance has been a bit rough. It’s something which is really serious misconduct, which could happen again in the future. Please, never, ever enter into a deed of recharacterization, because you are, and there are cases on this, effectively making, giving a person a false reference.
Nina Hoang: And you could be sued for it.
Andrew Douglas: Yeah, so if the common law claim was brought by the family of the deceased child, and that happened to the organisation, they would join the school for the misrepresentation that occurred. Now, the school would come back and say, well, you never made any proper inquiries. Had you asked us, it’d be difficult. But there’s were the level of risk lies, so you don’t want to do that. I’ve got to tell you, that’s it for this week.
Nina Hoang: Yeah, thank you for joining us.
Andrew Douglas: Thank you for joining us. Thumbs up.
Nina Hoang: Yeah, give us a thumbs up.
Andrew Douglas: No, that’s hands up.
Nina Hoang: I was waving to them. But yeah, thumbs up.
Andrew Douglas: Thumbs up. See you later, bye bye.
Nina Hoang: Bye.
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