As part of the Fair Work Legislation Amendment (Closing Loopholes) Act, Regulated Labour Hire Arrangement Orders were added to the Fair Work Act 2009 and commenced operation on 15 December 2023. The changes were aimed at not allowing an employer to use labour hire to undercut wages in their own enterprise agreement and therefore protecting bargaining outcomes.
This means the Fair Work Commission can make an order that requires labour hire employees (someone who enters a work contract with a labour hire agency) working for a host business to be paid at minimum the same rate of pay as employees of the host business who are doing similar work. If you are engaging a labour hire provider and they are coming into your business, and you have an enterprise agreement covering the work they are doing – it is not that you have to pay the labour hire people the same. It is that there could be an application for an order which is a “regulated labour hire arrangement order” for the workers to be paid the same as what is in your enterprise agreement.
Employers need to be aware that whilst the legislation commenced on 15 December 2023, the new Regulated Labour Hire Arrangement Orders can be made from 1 November 2024. The Orders will require the employer providing the labour to pay the applicable rate of pay under the host employers enterprise agreement, there are however some exceptions to this. The Commission will be required to apply a test when making such orders and must issue the order unless it is not ‘fair and reasonable’ to do so in all the circumstances. There is quite an extensive list of factors contained in the legislation.
The Commission can only make an order if the person who requested the order meets the below criteria:
Labour hire employers (of the regulated employees) cannot apply for an order and the regulated host must not be a small business.
The protected rate of pay
When an order is in place the employer must pay the regulated employee at least the protected rate of pay for the employee. The protected rate of pay is generally the full rate of pay that would be payable to a regulated employee if the host employers enterprise agreement applied to them. It is important to note that the Order will not apply all the conditions of the enterprise agreement, only the protected rate of pay. Trainees or if an exemption period applies these employees are exempt from receiving the protected rate of pay. The protected rate of pay requirements generally do not apply to short-term arrangements (3 months of less).
How can the South Australian Business Chamber assist you?
Our team of Workplace Advisors are on standby to provide you with advice on the new Regulated Labour Hire Arrangement Orders.
Our Senior Consultants can assist with any disputes or if your business is subject to a Labour Hire Arrangement Order or you engage with a labour hire provider.
Contact our Business Advice Hotline on (08) 8300 0000 (select option 1) and we will make sure you are ensuring your compliance.
