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MEDIA RELEASE: AREEA welcomes IR Bill amendments to exempt service contractors

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Australian Resources & Energy Employer Association (AREEA) welcomes amendments to the  Government’s “Closing Loopholes” Bill introduced to Parliament today, confirming service contractors will be exempt from labour hire proposals.

Last week, AREEA signed off on amendments negotiated with Workplace Relations Minister Tony Burke that would prevent the Fair Work Commission from making a “Regulated Labour Hire Arrangement Order” (RLHA Order) where the performance of work is for a service rather than labour hire.

Under the amendments, representing substantial concessions from the Government:

  • New subsection 1A means the consideration of whether performance of work is for provision of a service rather than supply of labour is now a jurisdictional threshold issue for the FWC.
  • As a result, the “contractor test” sits outside the broader considerations of whether it is “fair and reasonable” to make an order, and instead is a standalone objective issue.
  • Subsection 1A removes the overwhelming burden of proof that previously sat with service contractors. It is now incumbent on the FWC to be satisfied that an arrangement is not for a service before it can proceed with an order.
  • The term “wholly or principally for provision of a service” has been amended to simply “for provision of a service”, meaning the FWC will form a view on balance of probabilities rather than requiring to be convinced work is for a service.
  • To inform its view the FWC must have regard to a simple five-point multifactor test that focuses only on the facts of the relationship between the employer and its employees, and how the work is performed.
  • The highly problematic sixth factor that sat in the previous test, which would have allowed the FWC to consider the workforce practices of the client/host utilising the service, has been removed entirely.


The effect of these changes is noted in the Explanatory Memorandum to the amendments:

This amendment would provide that … the FWC must not make a regulated labour hire arrangement order unless it is satisfied that the work performed by employees of an employer is not or will not be for the provision of a service, rather than the supply of labour.

AREEA chief executive Steve Knott AM said the amendments reflected a carve-out for service contractors in all cases where the service being provided was not traditional labour hire.

“AREEA’s multifactor test provides more certainty than a definition of labour hire, and gives service contractors five clear criteria to rely upon to demonstrate their service is not labour hire,” Mr Knott said.

“It was important the negotiated carve-out directed the FWC to consider the reality of the arrangement having regard only to the criteria in the multifactor test and not other arguments unions may run including on the workforce arrangements within the client’s business, or other practices in the industry.

“Under these changes, if an application is made against them, service contractors will not have to litigate out of an order. Rather, they will simply have to file a submission to the FWC to assist it in informing its view, as per other functions of the IR system.”

Notwithstanding AREEA’s success in negotiating a clear service contractor exemption, amendments tabled today revealed other concerning developments in relation to the labour hire provisions.

This includes an apparent expansion of the FWC’s jurisdiction to consider joint venture and “common enterprises”, as well as to effectively make “multi-employer” orders capturing a number of employers supplying labour to a host business via one application.

“The service contractor exemption will apply equally to these new processes, but AREEA’s firm position is applications should be considered carefully by the FWC on a case-by-case or employer-by-employer basis,” Mr Knott said.

“Service contractors should not be roped into proceedings that may involve traditional labour hire companies or attempts to cover all employers operating at one site under a common order.

“AREEA’s approach to consult with members and represent their views directly with the Government will continue, including over these new concerns.”

**CLICK HERE for flowcharts on the FWC’s process for making a Regulated Labour Hire Arrangement Order – before and after the amendments introduced in the Lower House.

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