New Labour Hire Laws in Australia – RLHA Orders and "Same Job, Same Pay" Changes from November 2024

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New Labour Hire Laws in Australia – RLHA Orders and "Same Job, Same Pay" Changes from November 2024

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The Australian employment landscape is set to undergo a major transformation with the introduction of Regulated Labour Hire Arrangement (RLHA) orders on November 1, 2024. These new orders, introduced as part of a broader effort to close the so-called "labour hire loophole," aim to ensure that labour hire workers receive the same pay as employees directly employed by a host business for the same role. This change is expected to address growing concerns over wage discrepancies and the misuse of labour hire arrangements to underpay workers.

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At Mahony’s, we are here to help businesses and workers navigate these upcoming changes. In this article, we break down the key points about RLHA orders, their purpose, and what both employers and employees need to know to ensure compliance.

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1. Purpose and Rationale for RLHA Orders

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The primary goal of RLHA orders is to ensure fairness in pay for labour hire employees. Traditionally, labour hire arrangements have been used by some businesses to circumvent enterprise agreement pay rates, allowing them to pay labour hire workers less than their directly employed counterparts. These new orders will require labour hire employees to be paid at least the same amount as if they were directly employed by the host business, ensuring equal pay for equal work.

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The principle of "same job, same pay" underpins these changes and is designed to close loopholes in the labour hire system that have, in the past, allowed for wage suppression and inequality.

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2. The Application Process for RLHA Orders

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Applications for RLHA orders can be made to the Fair Work Commission (FWC) by various parties, including:

• Labour hire employees
• Unions representing employees
• Host businesses that engage labour hire workers

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The Fair Work Commission will be responsible for reviewing and making decisions on these applications. Once an RLHA order is in place, it ensures that the labour hire employee is paid no less than the protected pay rate (explained below) that they would have received under the host business's enterprise agreement or other workplace instrument.

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3. What is the Protected Pay Rate?

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One of the critical aspects of RLHA orders is the introduction of a protected pay rate. Under these new regulations, labour hire employees must be paid no less than the protected pay rate that applies to workers directly employed by the host business. This rate encompasses all forms of compensation, including:

• Base salary
• Incentive-based payments and bonuses
• Loadings and allowances
• Overtime and penalty rates
• Any other additional payments the host’s directly employed staff would receive

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By ensuring that labour hire employees receive the full range of benefits provided to regular employees, RLHA orders aim to close the pay gap that often exists in labour hire arrangements.

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4. Obligations for Employers Under RLHA Orders

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RLHA orders place obligations on both host businesses and labour hire employers to ensure compliance with the new rules. Specifically:

• Host businesses are required to provide information to the labour hire employer to ensure that employees are paid correctly. This includes details of the relevant enterprise agreement and pay rates.
• Hosts must notify labour hire employers if their workplace agreement changes or is replaced, ensuring pay rates remain aligned.
• Anti-avoidance provisions prohibit hosts and labour hire employers from engaging in behaviour intended to sidestep RLHA orders or manipulate the arrangement to underpay workers.

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By placing responsibility on both the host and the labour hire employer, these changes aim to ensure that workers are paid fairly, regardless of their employment arrangement.

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5. Exclusions and Limitations to RLHA Orders

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While RLHA orders are comprehensive, there are some notable exclusions and limitations:

• Small businesses: The Fair Work Commission cannot make an RLHA order if the host business is classified as a small business employer. This typically refers to employers with fewer than 15 employees.
• Training arrangements and short-term engagements: RLHA orders generally do not apply to workers on training agreements or those employed for a short-term period (typically three months or less).
• Fair and reasonable exemptions: The Fair Work Commission may choose not to make an RLHA order if it determines that doing so would not be fair or reasonable under the circumstances.

These exclusions ensure that the RLHA system remains balanced and does not place undue strain on smaller businesses or short-term arrangements.

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6. The First RLHA Order: A Landmark Decision

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The first RLHA order was recently made by the Fair Work Commission after an application by the Mining and Energy Union on behalf of labour hire workers at a black coal mine. This order set a precedent, ensuring that labour hire employees working at the mine would receive the same pay and benefits as their directly employed counterparts.

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This landmark decision highlights the significant changes that RLHA orders represent in how labour hire is regulated in Australia. As more RLHA orders are applied for and granted, labour hire workers across various industries can expect fairer pay and working conditions.

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Conclusion

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The introduction of Regulated Labour Hire Arrangement (RLHA) orders marks a significant shift in employment law in Australia. By implementing the "same job, same pay" principle, these changes aim to eliminate wage disparities and ensure that labour hire workers are compensated fairly for the work they perform.

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For employers, understanding and complying with these new rules is essential to avoid legal issues and penalties. For labour hire employees, this represents a positive step towards achieving wage equality.

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Got a question? Ask Mahony’s. If you need help understanding how RLHA orders impact your business or your employment, contact our expert employment law lawyers today. We’re here to guide you through these changes and ensure that your rights and obligations are protected.

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Frequently Asked Questions

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1. What is the purpose of RLHA orders in Australia?
RLHA orders are designed to ensure that labour hire employees are paid the same as directly employed workers in the same roles. They aim to close the labour hire loophole that has allowed businesses to pay labour hire workers less than their regular employees for performing the same job.

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2. How do I apply for an RLHA order?
Applications for RLHA orders can be made by labour hire employees, unions, or host businesses to the Fair Work Commission. The commission reviews the application and determines whether the order should be granted.

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3. What does the protected pay rate include?
The protected pay rate under an RLHA order includes all forms of compensation that a directly employed worker would receive. This includes base pay, bonuses, loadings, overtime, penalty rates, and other additional payments outlined in the host’s enterprise agreement or workplace instrument.

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4. Are small businesses affected by RLHA orders?
No, small businesses (those with fewer than 15 employees) are excluded from RLHA orders. The Fair Work Commission cannot make an RLHA order if the host business is classified as a small business employer.