THE SENATE BILLS. Fair Work Amendment (Protecting Australian Workers) Bill Second Reading SPEECH

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1 THE SENATE BILLS Fair Work Amendment (Protecting Australian Workers) Bill 2016 Second Reading SPEECH Tuesday, 15 March 2016 BY AUTHORITY OF THE SENATE

2 Tuesday, 15 March 2016 THE SENATE 1936 SPEECH Date Tuesday, 15 March 2016 Page 1936 Questioner Speaker Cameron, Sen Doug Source Senate Proof No Responder Question No. Senator CAMERON (New South Wales) (17:11): I move: That this bill be now read a second time. I seek leave to table an explanatory memorandum relating to the bill and have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows FAIR WORK AMENDMENT (PROTECTING AUSTRALIAN WORKERS) BILL 2016 The Fair Work Amendment (Protecting Australian Workers) Bill 2016 is a legislative expression of Labor's commitment to protecting the rights of vulnerable workers and punishing those who systematically abuse those rights. It provides protections the coalition will never provide. It deals with the serious and systematic contraventions of workplace laws and the abuse and denial of workers' rights that the coalition chooses to ignore. Over the past couple of years, we have witnessed some of the most egregious cases of worker exploitation seen in Australia in decades. Exploitation that has been met, not with condemnation, but with silence and inaction by the Abbott and Turnbull governments. In 2015 alone, we saw companies that are household names in Australian business involved in wholesale trampling of workers' rights. We have seen subcontractors engaged by Myer employing cleaners on sham contracts under which workers were paid below award wages, denied penalty rates and superannuation and working without occupational health and safety protections. We have seen 7-Eleven stores operating a business model based on methodical, systematic exploitation of vulnerable foreign workers that included gross underpayment of wages, doctoring of pay records designed to conceal unlawful conduct and workers subjected to threats of deportation and physical intimidation that has no place in a civilised society like ours. We have seen revelations that Pizza Hut delivery drivers have been paid as little as six dollars an hour under rampant sham contracting arrangements that defy not only the law but any sense of decency. We have seen supply chain arrangements adopted by Baiada Group in its poultry processing plants that rely on gross exploitation of temporary overseas workers; workers being forced to work dangerously long hours for far less than the minimum wage and to add insult to injury, being housed in overcrowded, substandard accommodation. These are the visible examples of the illegality and exploitation of workers that is beginning to flourish under the Turnbull government. They are the tip of a very large iceberg.

3 Tuesday, 15 March 2016 THE SENATE 1937 In alone, the Fair Work Ombudsman recovered $23 million in wages owed to over 11,000 workers. At the same time, the Turnbull government has cut the Fair Work Ombudsman's budget. Labor on the other hand has made repeated calls for the Fair Work Ombudsman to have its funding and powers increased. Employers who deliberately and systematically deny workers their rights not only deny working people the right to a fair day's pay for a fair day's work, they undercut employers who want to do the right thing, they undermine the integrity of the workplace relations system, they distort the labour market and they undermine the principles of fair competition that underpin a successful economy. This bill is an important step towards cracking down on the underpayment and exploitation of workers that has become rife under the Abbott and Turnbull governments. It provides for increased penalties to be imposed on employers who deliberately and systematically deny workers the wages they are due. It provides increased protection for workers against sham contracting. It gives the courts the power to make orders to ensure company directors are personally liable for the unpaid wages of employees of companies under their control that have been involved in phoenixing activity. It gives the courts the power to disqualify company directors involved in companies that are found to have deliberately engaged in serious contraventions of workplace relations laws. It introduces new criminal offences for conduct that involves the use of coercion or threat within the meaning of slavery and slavery-like conditions of the Criminal Code where employers commit serious contraventions of the Fair Work Act 2009 in relation to temporary overseas workers. These offences will relate to exceptional cases which warrant the public condemnation of criminality. They do not capture inadvertent conduct, or even intentional underpayments. This is reserved for the most serious behaviour which involves criminal coercion or threats. Individuals who contravene these provisions may face fines in excess of $40,000, imprisonment for two years or both. The main provisions of this bill will: Make it clear that the Fair Work Act 2009 applies to all employees irrespective of their immigration status; Require the Fair Work Ombudsman to publish a Fair Work Information Statement containing information for employees about their rights under the Fair Work Act 2009, the relationship between workplace laws and the Migration Act 1958 and the right of overseas workers to seek redress for contraventions of workplace laws; Provide additional protection for workers against adverse action taken against them because they question whether a workplace right exists or whether they are an employee or independent contractor; Introduce a "reasonable person" test in determining whether an employer has engaged in sham contracting; Give the courts the power to make orders requiring directors of phoenix companies to pay unpaid wages and other employee entitlements when a company of which they are a director is phoenixed; Increase the maximum penalties available for certain breaches of the Fair Work Act 2009 in circumstances where the size of the company, the sophistication of its management systems and its existing statutory responsibilities in respect of its conduct should mitigate against serious contraventions occurring; Give the courts the power to disqualify company directors from managing a company in cases where there are proven serious and systematic contravention of workplace laws; and Introduce new criminal offences carrying pecuniary penalties and imprisonment for up to two years in cases involving contraventions that include coercion or threat within the meaning of Division 270 slavery and slavery

4 Tuesday, 15 March 2016 THE SENATE 1938 like conditions of the Criminal Code. One of these offences is directly related to coercion or threat directed at temporary overseas workers. The principle behind these measures is that Labor puts people first. This bill builds on Labor's strong record of protecting wages and conditions and cracking down on worker exploitation. Only Labor understands that fairness at work helps to drive a more productive, competitive and prosperous economy. Labor will not countenance Australia entering a race to the bottom on wages and conditions. Currently, an employer who fails to properly pay workers is liable for a civil penalty of up to $10,800 per breach (60 penalty units) for a natural person or $54,000 for a corporation (300 penalty units). These penalties are clearly an inadequate deterrent given the brazen and systematic underpayment of workers we have seen in the last 12 months. Increased penalties will be available to the courts in respect of businesses that are not small businesses, and where the business has been involved in deliberate and systematic breaches of the Fair Work Act Currently, the Fair Work Ombudsman does not commence proceedings against employers where contraventions of workplace laws are clearly inadvertent. This bill doesn't change that position but what it does do is ensure the courts have a range of penalties available to them that can be imposed on employers who engage in the most egregious contraventions of workplace laws. The Fair Work Ombudsman defines sham contracting as: "... where an employer tries to disguise an employment relationship as an independent contracting relationship to avoid having to provide employees with their proper entitlements ". Labor recognises that independent contracting is legitimate and for some people, quite desirable. People are perfectly entitled to work for themselves, but no-one should be required to trade off their wages, sick leave, annual leave, and occupational health and safety protections just to keep their job. Sham contracting shifts the cost and risk of employment from the employer to the worker, discourages innovation and the development of human capital, creates health and safety risks and facilitates tax avoidance. It is a pernicious practice that must be stopped. Under the Fair Work Act 2009, it is unlawful for an employer to pretend that a worker is an independent contractor when the worker is really an employee but only if the employer didn't know the worker was really an employee. In its final report into the workplace relations system released in December 2015, the Productivity Commission found that, "it seems to be too easy under the current test for an employer to escape prosecution for sham contracting" and proposed instead a test of reasonableness in order to make a determination of whether a worker is an employee or independent contractor. The Fair Work Review Panel established by Labor in 2012 also suggested a "reasonable person" test be a key determinant of the distinction. This bill introduces that test. Presently an employer who engages in sham contracting is liable for a civil penalty of up to $10,800 per breach for an individual and $54,000 for a body corporate. The existence of sham contracting in high profile Australian companies suggests that the current penalties are inadequate to deter employers from engaging in sham contracting.

5 Tuesday, 15 March 2016 THE SENATE 1939 Just like failing to pay the legal wage, sham contracting makes it harder for employers who are doing the right thing to compete. This bill increases the penalties for employers who rip off their staff. As the conduct is actually anti-competitive conduct, the penalties are in line with those that apply to other anti-competitive conduct. The bill also includes measures that empower the courts to disqualify company directors of companies found to have engaged in sham contracting. This bill introduces new sanctions to prevent exploitative employers escaping liability for wrongdoing through "phoenixing". Measures in this bill make company directors personally liable for debts in relation to wages and other entitlements owing to workers. The recent Productivity Commission report on the workplace relations laws noted that, "there should be greater scope to pursue compensation from company directors of phoenix businesses that have engaged in exploitation." Phoenixing involves the deliberate transfer of assets from an indebted company to a new company to avoid paying creditors, tax or employee entitlements. Existing debts are left with the old company, which ends up entering administration or liquidation, leaving no assets to pay creditors including small businesses and workers. Meanwhile, a new company, often operated by the same directors continues the business under a new structure. By engaging in this illegal practice, the directors avoid paying debts, including outstanding wages and other entitlements owed to workers. In 2012, the Labor government amended superannuation laws to allow the Australian Taxation Office to hold directors personally liable for unpaid superannuation guarantee payments where "phoenixing" had been used in an attempt to avoid superannuation obligations to workers. Establishing similar arrangements for unpaid employment entitlements builds on this positive reform. As at June 2015 there were 732,750 people in Australia on temporary visas with work rights: 51.1 per cent (374,570) on student visas, 25.7 per cent (188,000) on 457 visas and 19.6 per cent (143,920) on working holiday maker visas. Data from the Fair Work Ombudsman indicates that the rate of complaints about workplace issues made by temporary overseas workers is more than three times the rate for domestic employees. The Productivity Commission has found that temporary overseas workers are more vulnerable to exploitation than are other employees. This is especially true for overseas workers who may be working illegally in Australia. Exploitation of temporary overseas workers undermines wages and conditions for everyone. If an unscrupulous employer thinks they can get away with underpaying a foreign worker, then they are far less likely to employ an Australian worker who is more likely to know they're underpaid, and who is more likely to complain because they don't rely on the goodwill of the employer to stay in Australia. Currently, it is a criminal offence to employ someone, or to refer someone to work, if they are not legally entitled to work in Australia. It is an offence is punishable by two years' imprisonment. It is also an aggravated offence, punishable by five years' imprisonment if that worker is also exploited. This bill creates a new criminal offence for those who deliberately exploit temporary overseas workers and fail to meet their obligations to the worker under the Fair Work Act 2009, even if they are employing the worker in accordance with the terms of their visa. This offence will be punishable by up to 2 years imprisonment or a fine of up to $43,200 (240 penalty units) for a natural person, or a fine of up to $216,000 (1,200 penalty units) for a corporation.

6 Tuesday, 15 March 2016 THE SENATE 1940 The pervasive nature of the exploitation of temporary overseas workers indicates that specific penalties should be imposed to send a clear message that this behaviour is completely unacceptable in Australia. As the law currently stands, it is not possible for foreign workers working unlawfully in Australia to take action under the Fair Work Act 2009 to recover unpaid wages. This situation creates a perverse incentive for rogue employers to favour illegal workers over legal workers because it means they can avoid paying the wages that they owe. The interim Productivity Commission report on the workplace relations laws found, "it may actually be cheaper to target workers who do not have an appropriate visa". This bill will ensure any person who is underpaid will have recourse to action to recover what they are owed. The Fair Work Act 2009 will apply to everyone who is employed in this country, irrespective of their immigration status. This bill extends fairness and rights at work to everyone who works in this country. It seeks to bring an end to the racketeering that is threatening to corrupt labour markets in important sectors of the economy. It seeks to bring an end to the kind of rip-offs, intimidation and beatings inflicted on staff of 7-Eleven stores. It will help bring to an end to the days when employers like the Baiada Group have been able to use the corporate veil to not only conceal their illegal conduct, but to escape sanction when it is uncovered. It will help bring an end to the disgusting exploitation of young workers at Pizza Hut franchises. This bill contains important protections that the Turnbull government has no intention of ever enacting. I commend the bill to the Senate. Senator CAMERON: I seek leave to continue my remarks later. Leave granted; debate adjourned.