Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

by leave—I move opposition amendments (1) to (20), (22), (23) and (36) to (38) together:

(1) Schedule 1, items 14 and 15, page 8 (lines 4 to 14), omit the items, substitute:

14 Section 12

Insert:

franchisee entity of a franchise: see subsection 558A(1).

14A Section 12 (definition of indirectly responsible entity )

Repeal the definition, substitute:

indirectly responsible entity:

(a) in relation to TCF work performed by a TCF outworker—see subsections 789CA(3), (4) and (5); and

(b) in Division 4A of Part 4-1—see subsection 558A(3).

14B Section 12

Insert:

responsible franchisor entity for a franchisee entity: see subsection 558A(2).

supply framework: see subsection 558A(3).

14C Section 12 (before paragraph (a) of the definition of worker )

Insert:

(aa) in Division 4A of Part 4-1—see subsection 558A(3); and

15 Section 537 (after the paragraph relating to Division 4)

Insert:

Division 4A imposes obligations on responsible franchisor entities, holding companies and indirectly responsible entities in relation to certain contraventions of civil remedy provisions by other entities.

(2) Schedule 1, item 16, page 8 (table item 29A), after "558B(2)", insert "558B(2B)".

(3) Schedule 1, item 17, page 9 (lines 1 to 3), omit the heading to Division 4A, substitute:

Division 4A—Responsibility of responsible franchisor entities, holding companies and indirectly responsible entities for certain contraventions

(4) Schedule 1, item 17, page 9 (line 4), omit the heading to section 558A, substitute:

558A Meaning of franchisee entity,responsible franchisor entityandindirectly responsible entity

(5) Schedule 1, item 17, page 9 (line 15), omit "significant".

(6) Schedule 1, item 17, page 9 (after line 16), at the end of section 558A, add:

(3) A person is an indirectly responsible entity for another person (the worker) if:

(a) there is an arrangement, or a chain or series of 2 or more arrangements, for the production or supply of goods or services by the worker (the supplyframework); and

(b) the person is party to an arrangement in the supply framework; and

(c) any of the following applies:

  (i) the person has influence or control over the worker's affairs or the affairs of the worker's employer;

  (ii) under the supply framework, the worker performs work for the purpose of the business of his or her employer and goods or services are provided to the person;

  (iii) the worker otherwise forms part of the conduct of the undertaking of the person; and

(d) the person is not:

  (i) the worker's employer; or

  (ii) a responsible franchisor entity for the worker's employer; and

(e) if the person is a body corporate—the worker's employer is not a subsidiary (within the meaning of the Corporations Act 2001) of the person.

(7) Schedule 1, item 17, page 9 (lines 17 and 18), omit the heading to section 558B, substitute:

558B Responsibility of responsible franchisor entities, holding companies and indirectly responsible entities for certain contraventions

(8) Schedule 1, item 17, page 9 (line 27), omit "entity; and", substitute "entity.".

(9) Schedule 1, item 17, page 9 (line 28) to page 10 (line 7), omit paragraph 558B(1)(d).

(10) Schedule 1, item 17, page 10 (after line 8), after subsection 558B(1), insert:

(1A) Subsection (1) does not apply if the responsible franchisor entity proves that it and its officers (within the meaning of the Corporations Act 2001):

(a) did not know and could not reasonably be expected to have known that the contravention by the franchisee entity would occur; and

(b) did not know and could not reasonably be expected to have known, at the time of the contravention by the franchisee entity, that a contravention by the franchisee entity of the same or a similar character was likely to occur.

(11) Schedule 1, item 17, page 10 (line 14), omit "subsection (7); and", substitute "subsection (7).".

(12) Schedule 1, item 17, page 10 (lines 15 to 25), omit paragraph 558B(2)(c).

(13) Schedule 1, item 17, page 10 (after line 26), after subsection 558B(2), insert:

(2A) Subsection (2) does not apply if the body corporate proves that it and its officers (within the meaning of the Corporations Act 2001):

(a) did not know and could not reasonably be expected to have known that the contravention by the subsidiary would occur; and

(b) did not know and could not reasonably be expected to have known, at the time of the contravention by the subsidiary, that a contravention by the subsidiary of the same or a similar character was likely to occur.

Indirectly responsible entities

(2B) A person contravenes this subsection if:

(a) the person is an indirectly responsible entity for a worker; and

(b) the worker's employer contravenes a civil remedy provision referred to in subsection (7) in relation to the worker; and

(c) the contravention by the worker's employer is connected to the worker's work under the supply framework.

Note: This subsection is a civil remedy provision (see this Part).

(2C) Subsection (2B) does not apply if the indirectly responsible entity proves that it and its officers (within the meaning of the Corporations Act 2001):

(a) did not know and could not reasonably be expected to have known that the contravention by the worker's employer would occur; and

(b) did not know and could not reasonably be expected to have known, at the time of the contravention by the worker's employer, that a contravention by the worker's employer of the same or a similar character was likely to occur.

(14) Schedule 1, item 17, page 10 (lines 27 to 32), omit subsection 558B(3), substitute:

Reasonable steps to prevent a contravention of the same or a similar character

(3) A person does not contravene subsection (1), (2) or (2B) if the person proves that, as at the time of the contravention referred to in paragraph (1)(a), (2)(b) or (2B)(b), the person had taken reasonable steps to prevent a contravention by the franchisee entity, the subsidiary or the worker's employer of the same or a similar character.

(15) Schedule 1, item 17, page 10 (line 35), omit "franchisee entity or subsidiary", substitute "franchisee entity, a subsidiary or an employer of a worker".

(16) Schedule 1, item 17, page 11 (lines 3 and 4), omit paragraph 558B(4) (a), substitute:

(a) the size and resources of the franchise, body corporate or parties to arrangements in the supply framework (as the case may be);

(17) Schedule 1, item 17, page 11 (line 7), omit "or (2)(b)", substitute ", (2)(b) or (2B)(b)".

(18) Schedule 1, item 17, page 11 (line 22), at the end of subparagraph 558B(4)(e)(ii), add "or".

(19) Schedule 1, item 17, page 11 (after line 22), after subparagraph 558B(4)(e)(ii), insert:

  (iii) the supply framework;

(20) Schedule 1, item 17, page 11 (lines 29 to 35), omit subsection 558B(6), substitute:

Civil proceedings in relation to contravention by franchisee entity, subsidiary or worker ' s employer not required

(6) To avoid doubt, a reference in paragraph (1)(a), (2)(b) or (2B)(b) to a contravention by a franchisee entity, a subsidiary or an employer of a worker includes any contravention whether or not an order has been sought or made against the franchisee entity, subsidiary or employer under Division 2 for the contravention.

(22) Schedule 1, item 17, page 12 (lines 33 and 34), omit the heading to section 558C, substitute:

558C Right of responsible franchisor entity, holding company or indirectly responsible entity to recover

(23) Schedule 1, item 17, page 13 (lines 3 and 4), omit "of subsection 558B(1) or (2) in relation to a franchisee entity or subsidiary", substitute "of subsection 558B(1), (2) or (2B) in relation to a franchisee entity, a subsidiary or an employer of a worker".

(36) Schedule 1, item 57, page 31 (lines 14 and 15), omit the heading to clause 19 of Schedule 1, substitute:

19 Application of amendments—responsibility of responsible franchisor entities, holding companies and indirectly responsible entities

(37) Schedule 1, item 57, page 31 (lines 17 and 18), omit "or subsidiaries", substitute ", subsidiaries or employers of workers".

(38) Schedule 1, item 57, page 31 (lines 20 to 25), omit subclause 19(2) of Schedule 1, substitute:

(2) To avoid doubt, in determining for the purposes of subsections 558B(1A), (2A) or (2C) of the amended Act whether a person could not reasonably be expected to have had knowledge as referred to in that subsection, a court may have regard to conduct that occurred, or circumstances existing, before the end of the period referred to in subclause (1).

These amendments do three things. Firstly, they limit the definition of 'responsible franchisor' so that a franchisor has to have 'a degree of influence or control, not a significant degree'. Secondly, they extend the new civil liability provisions where labour hire companies are used and across the supply chain. They reverse the onus of proof to make it harder for franchisors and big companies to escape liability. So if what we are about in this bill is protecting vulnerable workers then these three areas are important. It's about a degree of influence or control, not a significant degree. It's about extending the new civil liability provisions where labour hire companies are used across the supply chain and reversing the onus of proof to make it harder for franchisors and big companies to escape liability. Labor are pleased the government has adopted our policy of accessorial liability, which will be applied to franchisors so that they can't escape responsibility for the exploitation of workers by their franchisees.

The recent example of wage fraud and worker exploitation is not, however, limited to franchising. Sadly, Australians have seen that exploitation extends to the practices of labour hire arrangements, and along supply chains. Big companies can't be allowed to avoid their responsibilities for the way in which their business practices allow, and in many circumstances require, worker exploitation to occur. As the Franchise Council of Australia argued to the legislation committee inquiry:

No evidence provided makes the case for singling out franchising when Fair Work compliance concerns are an economy-wide issue.

So even the Franchise Council, which has moved heaven and earth to try to stop this, has conceded the point that worker exploitation is an economy-wide issue. One of the great areas of exploitation is through labour hire arrangements. I think anyone who has seen the Four Corners reports about the labour hire exploitation that takes place against vulnerable visa workers in rural and regional Australia would certainly understand that this is a huge issue. If the Franchise Council can see that, then surely it's incumbent upon this chamber to recognise that this is an economy-wide issue and not simply an issue in franchising.

The Franchise Council also submitted:

Any new legislation should reflect the economy-wide nature of the employee underpayment concern. An economy-wide approach may be assisted by contemplating if the definition of 'parent' company was extended beyond parent and subsidiary to a situation where one party exercised reasonable allocation of responsibilities and significant control over another party, such as in a closely controlled supply chain or a franchise, licence or product distribution arrangement.

Similarly, the Asia-Pacific Centre for Franchising Excellence stated:

Franchising should not be singled out. The proposed amendments appear to have evolved as a reaction to recent media involving the underpayment of employees by franchisees in some high-profile franchise brands. However, it is disingenuous and patently unfair to target franchise organisations …

So not only is the Franchise Council of Australia concerned, but the Asia-Pacific Centre for Franchising Excellence—I don't know if that is an oxymoron—is raising this issue as well. They are saying it is disingenuous and patently unfair to simply target franchise organisations.

Labor's amendments mean that franchisors will not be singled out, and, because it is an economy-wide approach to prevent wage exploitation, we should deal with it on an economy-wide basis. Labor's amendments are aimed fairly and squarely at making the big economic decision-makers accountable for the contracts they enter into. These amendments address the gap in the government's response to worker exploitation by extending liability to 'indirectly responsible entities', so that where companies and businesses outsource their workforce to labour hire firms, or enter into contracts for the supply of goods and services to their businesses, they cannot escape liability for their role in the exploitation of workers by those labour hire or supply chain firms. It falls square on the principles we've just been debating: if you have control over an entity, then you must accept that you have some liability if that entity breaks the law. That's what's been happening. As a former union official, I can recount many examples of labour hire companies coming in and actually working under what was an enterprise agreement or a certified agreement at the time, and the employer turning a blind eye to that certified agreement and the contract labour company paying less. This is unacceptable. This is something that we should deal with, given the concerns of both the Asia-Pacific Centre for Franchising Excellence and the Franchise Council of Australia.

Extending potential civil liability across the supply chain is about stopping big business and companies from negotiating contracts which can only be fulfilled by underpayment of wages. It's about making the economic decision-makers take an active role and ensuring that the people who do the work to supply the goods and services are not exploited. Just because you bring someone in on a contract labour basis, it should not absolve you of your obligation to ensure that workers on your worksite, your factory, your warehouse or your farm are employed legitimately and appropriately in line with the laws of Australia. Yet we see so much of this: farmers employ a contract labour company and that contract labour company then goes on to rip workers off, and when it's exposed the farmer says, 'Oh, I didn't know anything about this. It wasn't my responsibility.' But the work is being done on behalf of that farmer. The work is being done in the warehouse that is owned by the owner. The work is being done in the factory that is owned by that factory owner—the same as the work that is done by a franchisor on behalf of a franchisee is work being done for that franchisee. These are issues of similar concern. These are issues that go to the same principles that we've just been debating. That's why we believe the responsibility should be extended to the employer or the labour hire company to ensure that that labour hire company does the right thing, and there are so many examples at the moment where they don't. It's about stopping big business and companies from negotiating contracts which, as I have said, can only be fulfilled by the underpayment of wages. The economic decision-makers must be engaged.

Currently the bill only imposes civil liability on franchisors where they have a significant degree of influence or control over the franchisee entity's affairs. We believe that this definition is too narrow. It serves to incentivise franchisors to change their models in order to be able to argue that they do not have a significant degree of influence or control. By removing 'significant', these amendments remove that incentive. These amendments also strengthen the government's bill by requiring the franchisor, holding company or indirectly responsible entity to prove that they did not know, or could not reasonably have known, that the exploitation would occur, and that they took all reasonable steps to prevent it. Reversing the onus of proof in this way sends a very strong message that worker exploitation will not be tolerated. With these amendments, the bill would have real teeth to protect workers and would ensure that employers and big companies take responsibility for their obligations under the Fair Work Act and for the impact of the economic decisions that they make.

We've seen examples of companies processing chickens and contract labour coming in under the award wage. Those companies say, 'Well, we didn't know about it.' But these companies are actually working on the premises. These companies are supposed to be working under the law of Australia. These contract companies are, in our view, the responsibility of the employers that engage them on their premises. This is the same principle that we've just dealt with and is an important principle in the context of protecting vulnerable workers. If we are fair dinkum about protecting vulnerable workers then we will go to the issues that have been exposed in the newspapers, on Four Corners, on 7.30 and by people coming and talking to me about the exploitation that's taking place. Many senators in this place would have had workers come in and tell them about the exploitation they've experienced simply because they are employees of labour hire companies.

Now, some of those labour hire companies, such as the one shown on Four Corners, have been run by criminal gangs exploiting vulnerable workers who are here on temporary visas—putting them up in overcrowded housing, with some of them being forced to provide sexual favours to get a job and get an income. This should be unacceptable in modern-day Australia—it is unacceptable at any time in Australian history, but it certainly is unacceptable now. And if an employer has labour hire companies engaged in this type of misbehaviour or illegal activity, then those companies should not simply be allowed to say, 'We didn't see it; we didn't know about it; we've got no responsibility, because it's the responsibility of the labour hire company.'

If we really want to protect vulnerable workers then these amendments will be accepted. By accepting these amendments we will make our industrial relations system better for workers who are employed by labour hire companies. It would be consistent with the submissions from the franchising operations in Australia and consistent with other submissions that we've had. It will make sure that exploitation as a matter of course in this country stops and that the employer has an obligation—whether franchisors, franchisees or labour hire companies—to protect workers.