Same Job, Same Pay?

With all the recent changes commencing in the employment law space, another important date is coming up which will have a significant impact on many businesses and employees. From 1 November 2024, a regulated labour hire arrangement order can come into force, but applications can already be made, and many applications (and a few orders) have already been made.

So what is it? A regulated labour hire arrangement order sets a protected pay rate for labour hire employees who are working for a host business. The Fair Work Commission can make an order that requires labour hire employees working for a host business to be paid at least the same rate of pay as employees of the host business who are doing the same kind of work.

However, the Commission can only make these orders if someone applies for an order. This type of order is called a regulated labour hire arrangement order. The employees covered by the order are called regulated employees. The host business is called the regulated host. The rate of pay is called the protected rate of pay. An enterprise agreement or other covered employment instrument that applies to the regulated host, and would apply to labour hire employees if the regulated host were to employ them directly, is called the host employment instrument.

The following parties can apply for a regulated labour hire arrangement order:

• a regulated employee
• an employee of the regulated host
• an employee organisation (union) that can represent a regulated employee or an employee of the regulated host
• the regulated host.

Labour hire employers of the regulated employees cannot apply for an order.

Although parties can apply for an order any time, it cannot come into force until 1 November 2024.

When someone applies for a regulated labour hire arrangement order, the Fair Work Commission must make the order where:

• an employer supplies, or will supply, either directly or indirectly, one or more employees to a regulated host to perform work for the regulated host
• the regulated host is not a small business employer, and
• the host employment instrument would apply to those regulated employees if the regulated host were to employ them directly to perform work of that kind.

The Fair Work Commission must not make a regulated labour hire arrangement order if:

• the performance of the work is, or will be, wholly or mainly (principally) providing a service, instead of supplying labour, or
• it is not fair and reasonable in all the circumstances to do so.

When deciding whether the relevant work is for the provision of a service or the supply of labour, the Fair Work Commission must take into account:

• how involved the employer is in managing the performance of the work
• how much the employer or a person acting for them directs, supervises or controls the regulated employees when they perform the work
• how much the regulated employees use the employer’s systems, plants or structures to perform the work
• the extent to which either the employer or another person is subject to industry or professional standards or responsibilities in relation to the regulated employees, and
• how specialised or expert the work is.

The protected rate of pay is generally the full rate of pay that would be payable to a regulated employee if the host employment instrument applied to them. If an employer needs more information to calculate the protected rate of pay, they can write to the regulated host to ask them to provide the information they need. The regulated host must provide the information that the employer asks for.

The protected rate of pay requirements do not apply:

• to trainees, or
• if an exemption period applies.

The protected rate of pay requirements generally do not apply to short-term arrangements (engagements of 3 months or less). This is called an exemption period.

However, the Fair Work Commission can, on application, decide that:

• a longer or shorter exemption period applies
• a recurring extended exemption period applies, or
• no exemption period applies.

The Fair Work Commission can do this:

• while an application for an order is still before the Commission, or
• after an order has been made.

The following parties can apply for a different exemption period:

• the regulated host
• an employer covered by the order
• a regulated employee covered by the order who performs, or will perform, work for the regulated host, or
• an organisation (such as a union or employer association) that can represent any of those people or businesses.

The Fair Work Commission can vary a regulated labour hire arrangement order in certain circumstances. If a regulated host enters into an arrangement with a new employer(s) to supply employees to perform the same kind of work for them, the host must apply to change the existing order to include any new employers and their employees.

Where a regulated labour hire arrangement order is in force and the host employment instrument is replaced by a new instrument, the order will have effect as if the new instrument were the host employment instrument. This is subject to certain conditions.

As this is a new area of law, the Fair Work Commission are developing guidelines to help parties understand how regulated labour hire arrangement orders work.