Chris Ketter (Queensland, Australian Labor Party) Share this | Hansard source

I rise to make a contribution in respect of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. As previous Labor senators in this debate have indicated, whilst we are glad that the government has taken some tentative steps to address the issue, in the face of the egregious examples of abuse by certain franchise companies these steps are woefully inadequate. We have seen very many examples of this, and I will talk a bit about that as well.

This bill has been a long time coming. It does do a few things worthy of note. Among other things, it introduces a new civil remedy offence of 'unreasonably requiring an employee to spend or pay an amount of their money in relation to the performance of work'. The Senate committee inquiry in relation to the bill revealed stakeholder concerns that this new offence will not cover unreasonable demands made by employers to prospective employees as a condition of employment. This is of serious concern. This is a serious deficiency in the bill.

Additionally, as highlighted in the submission by Morris Blackburn—a firm that has a lot of experience representing workers, often on a pro bono basis—these proposed changes to the liabilities of franchisors do not go far enough. If we're talking about improving accountability and making sure workers are paid what they are owed, then these changes need to be stronger. The liability imposed by the proposed section 558B attaches only to a franchisor who is a responsible franchisor entity. The bill defines this as a franchisor that has 'a significant degree of influence or control over the franchisee entity's affairs'. In short, I believe this change will merely encourage franchisors to operate at arm's length from franchisees to ensure that liability does not apply under section 558B. This change would have the effect of merely allowing franchisors to distance themselves from the alleged underpayment but would do nothing to stop the underpayment from occurring.

Secondly, there are additional protections for franchisors if they take what's referred to as 'reasonable steps to prevent a contravention'. The prevention test describes it as 'the franchisor need only take pre-emptive action in advance of a contravention and will not be in breach of the provision if they fail to address the contravention once it has occurred or is occurring'. This is an obvious flaw as, after becoming aware of the contravention, a franchisor can in essence do nothing and escape liability if it otherwise meets the prevention test in section 558B. It's concerning that meeting this prevention test could be as simple as a franchisor advising a franchisee of their obligation through a simple 'tick and flick' checklist.

Given these weaknesses in the bill, it is my view that more scrutiny is warranted. And this is where we look at the egregious examples of abuse that came out in the 7-Eleven underpayment scandal. This profit-splitting arrangement, in which a franchisor took 57 per cent of profits made by franchisees and imposed a significant number of business expenses on the franchisees, actually incentivised franchisees' noncompliance with the act as a way of recovering profits they had surrendered to the franchisor.

I was listening to Senator Williams's contribution in relation to this matter yesterday. Senator Williams advocated a review of the franchising arrangements. My personal view is that that is something which could be accommodated. There are some questions to be asked in relation to the franchising model and protecting franchisees and, in turn, protecting the rights of workers employed by the franchisees. The courts are needed here to examine if the business model of the franchisor has substantially contributed to franchisees breaking workplace law. Sadly, even when we have worker exploitation occurring on an industrial scale, this government has remained absent. We only need to look at 7-Eleven's dastardly attempts to minimise what's owed to employees, who have clearly been overworked and underpaid, yet this government has done nothing but produce weak legislation that will only have a slight impact in stopping this situation from occurring again.

Victims of this scandal are still being short-changed. Prakash Kumar, who was underpaid hundreds of thousands of dollars at a number of 7-Elevens, was offered a payout under the new scheme that is $100,000 less than the amount he originally claimed for. Another former 7-Eleven worker Raj Desia was made an offer by the panel of $60,986 which was $16,000 less than the amount he was owed. As recently as 25 July, a 7-Eleven owner in Brisbane was personally fined $28,000 and his company fined $140,000 by the Federal Circuit Court after he was found to have underpaid eight staff and falsified records to cover their tracks. This is an absolutely disgraceful situation. Australians expect that our industrial relations system is going to protect vulnerable workers. When we have people coming into the country who are particularly vulnerable on visas, who are studying and who rely on their jobs in order to remain in the country, they particularly need to be protected. In the face of these egregious examples, we have a government which is not taking reasonable steps to address the issues. If the government was to get serious about assessing whether the franchisor has taken reasonable steps to ensure that exploitation doesn't occur, the bill should also require consideration of the vulnerability of workers to exploitation, such as young workers or workers on visas.

Submissions to the Senate Education and Employment Legislation Committee's inquiry into the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 identified the behaviour allegedly engaged in by a Domino's franchise where sponsorship for a working visa and a job was offered on the condition of payment of $150,000, as an example. While it would appear that particular pre-employment requirement for an up-front payment linked to the provision of a visa may be prohibited by other legislation, other unreasonable pre-employment requirements are not. Stakeholders from business and unions made submissions to the Senate committee inquiry, raising concerns about the lack of oversight in the bill for the proposed new Fair Work Ombudsman compulsory questioning powers. Whilst Labor supports giving the FWO the powers necessary to prevent, uncover and prosecute the exploitation and underpayment of vulnerable workers, we are also concerned that these powers are exercised appropriately. We really need to address this particular issue. Unfortunately, this legislation doesn't go far enough, and there are a number of amendments that Labor has in mind here. These will certainly improve the effectiveness of the bill.

I have been participating in the Education and Employment References Committee's inquiry into corporate avoidance of the Fair Work Act. I have heard numerous witnesses indicating to me that wage theft is now on the rise and is at historic levels in this country. It is quite clear to me that the Fair Work legislation is not working fairly for ordinary workers, particularly not for vulnerable workers. We need to have a thorough look at this issue. Unfortunately, the legislation we have before us at the moment is not going anywhere near addressing some of these issues. Senator Watt has touched on some of these issues. Other issues that should be looked at that require urgent attention are things like stopping sham contracting. I fully support any attempt to address that but, unfortunately, this bill doesn't go anywhere near that. Another issue is providing proper licensing for labour hire companies. Even the Franchise Council has indicated that the issues that came out, for example, in the 7-Eleven scandal, apply across the whole of the workforce, and the labour hire industry is also needing a bit of a shake-up. I note that the Queensland government has taken steps to introduce licensing arrangements here for labour hire companies, and we did start to look at this in relation to the backpacker tax at a federal level. There is also shutting down the practice of companies phoenixing to avoid wage liabilities; properly reforming the Fair Work Act to strengthen protections for workers; criminalising employer conduct that involves the use of coercion or threats during the commission of serious contraventions of the Fair Work Act in relation to temporary overseas workers; and making it easier for workers to recover unpaid wages from employers and directors of responsible companies.

Having said that, I won't use all the time available to me, in the interests of trying to get on with the job of getting this bill done in a proper way. But, as I say, a number of these exploitation issues go across the economy. We support this bill with amendments. Quite frankly, the bill is better than nothing, and on that basis I commend it to the chamber.