Labour Hire and Contractor Engagement in 2018

Transcription

1 Labour Hire and Contractor Engagement in 2018 Container Transport Alliance Australia Breakfast Seminar 22 February 2018 Sean Sullivan Hall & Wilcox Document ID 1

2 In the beginning, Long history of labour for hire in Australia 1990 s innovation and proliferation Outsourcing, Employee companies, Service companies, Long term hire Let us take the hassle out of workforce management 2000 s and 2010 s Mining boom Shortage of skilled labour. Explosion in operators, cashing in on the good times. Expansion beyond manual labour to include professionals & tradesmen Courts and Parliament struggle to keep pace, traditional reluctance to intervene in contracts has evaporated 2

3 Labour Hire Licensing Act 2017 (Qld) 3

4 Labour Hire Licensing Act 2017 (Qld) Initiative of Labour State governments Similar legislation proposed Passed in Queensland and South Australia, currently before Victorian Parliament Main purposes: Protect workers from exploitation Restore integrity to the Labour Hire Industry 4

5 Labour Hire Licensing Act 2017 (Qld) Definitions Provider - Carries on the business of supplying a worker to do work for another person. Includes supply through subcontractors (touches each link of the chain) Includes work under the control of third parties Excludes subcontractors in the Building industry Excludes entities to be prescribed by Regulation Worker Person supplied by Provider to do work, with the provider to pay the worker for that work. Expressly includes apprentices/trainees under group training programmes Excludes persons to be prescribed by Regulation 5

6 Labour Hire Licensing Act 2017 (Qld) Fit & Proper Person 12 month Licence Character test for the Applicant, Nominated Officer and each Executive Officer Honesty, integrity and professionalism Criteria yet to be prescribed by Regulation but requested information includes: Records demonstrating financial viability, any history of insolvency 5 year history of WorkCover and Workplace Health & Safety compliance Excluded for 2 years if Licence cancelled (other than because of sale) 6 monthly reports Extensive details of operations, including immigration and number of non-english speaking workers 6

7 Labour Hire Licensing Act 2017 (Qld) The Offences Unlicensed labour hire Person $130,439 (1,034 penalty units) or 3 years, Corporation $378,450 (3,000 penalty units) Not enter into Labour Hire arrangement with unlicensed provider - Person $130,439 (1,034 penalty units) or 3 years, Corporation $378,450 (3,000 penalty units)- UNLESS Reasonable Excuse that the provider was on the Register of Licence Holders Not enter into arrangements to circumvent the scheme - Person $130,439 (1,034 penalty units) or 3 years, Corporation $378,450 (3,000 penalty units) 7

8 Labour Hire Licensing Act 2017 (Qld) The Offences (continued) Not advertise whilst unlicensed - $25,230 (200 penalty units) Positive duty on Host to report unlicensed provider as soon as practicable UNLESS there is a reasonable excuse - $25,230 (200 penalty units) Each person who counsels, procures or aids in offence are equally liable to be prosecuted 8

9 Labour Hire Licensing Act 2017 (Qld) Deadlines Act commences operation 16 April 2018 Regulations yet to be published. Consultation completed in February 2018 and apparatus to be put in place Grace period Provider may supply workers without a licence up to 15 June 2018, and beyond that date if the provider has a pending licence application lodged before 15 June

10 Labour Hire Licensing Act 2017 (Qld) To Do Potentially wide net of Providers Wait & see but may need to consider licences for Employee holding companies and/or Service companies Review all existing labour hire contractors and make enquiries as to their intentions to obtain licences After 15 June 2018, positive obligation to carry out due diligence on providers to ensure that they are licensed. This includes due diligence down the chain of supply if subcontractors are involved Positive obligation to diarise to check ongoing suppliers have renewed the annual licence Corporate governance obligation to report potential breaches 10

11 Employee/Contractor Test and the Consequences 11

12 Employee/Contractor Test Stevens v Brodribb Sawmills The Duck Test The Vibe Look at the substance, not the form Multifactorial Not exhaustive list Key Factors: Payment of money and tax Control/Supervision Branding Training and tools Independence to contract elsewhere 12

13 Employee/Contractor Test Easier said than done Vabu Courier drivers Not employees for Superannuation because provide own equipment, paid per job, use Pty Ltd service companies BUT considered employees in personal injuries claim because unidentified driver wore Company uniform On Call Interpreters Not employees for PAYG tax because fixed fee per job, free to knock back work and work for rivals BUT deemed employees for Superannuation Guarantee Quest Hotels 2 cleaners forced to sign with labour hire company to continue their old work. Section 357 Sham contract misrepresentation to employees of their employment status Uber Not an employee in Unfair Dismissal application because paid per job, independent, provided own equipment, and was not branded BUT UK Courts find that drivers are employees 13

14 Employee/Contractor Test Implications Tax State & Federal Superannuation Guarantee Levy Immigration On-hire Labour Agreements for 457 & 186 Temporary Visas penalties 14

15 Employee/Contractor Test Fair Work Act Section Even if not employer, a Host can be held to account for involvement in a scheme to contravene employee entitlements Fines and civil liability for damages to repair breaches Involvement is very broad includes direct or indirect act or omission knowingly concerned in the breach Wilful ignorance not a defence Reputational damage 7 Eleven Fair Work Ombudsman Costs of investigation and potential corporate undertakings 15

16 Employee/Contractor Test Fair Work Act Unfair Dismissal Stellar Call Centre reasoning of the 1990 s Not unfair dismissal to remove worker and not offer new work Kool v Adecco reasoning of 2016 Ongoing obligation to offer alternative work at a different workplace unless they follow the fair go all round process Potential liability of the Host for failure to provide good reasons and procedural fairness before notifying the labour hire company to remove the worker, but unlikely At least expect some pushback from labour hire companies who are risk aware 16

17 Employee/Contractor Test To Do Be able to justify Outsourcing and Service Company arrangements Labour Hire Avoid branding, require labour hire to exert some control/supervision through rep worksite visits Ongoing Due Diligence to ensure labour hire company complying with legislation and employee entitlements 17

18 Insurance and Safety 18

19 Insurance and Safety WorkCover Common Law Loss of Indemnity Pre-1996, the Host was indemnified for injuries to hired workers under the workers compensation policy of the Labour Hire company WorkCover Queensland Act 1996: Did not carry over deemed indemnity provision Bonser v Melnacis WorkCover not liable for contribution in Tort if the worker does not make a common law claim against the Labour Hire company But WorkCover can claim contribution against the Host regardless whether the worker makes a PIPA claim 19

20 Insurance and Safety WorkCover Common Law - Exposure WorkCover legislation limits calculation of damages, but these limits only apply to the employer Labour Hire company Personal Injuries Proceedings Act introduced similar limits on damages against Hosts in 2002 But Civil Liability Act 2003 excludes operation of PIPA where there is a workers compensation entitlement Hosts exposed to pre-2002 damages Recent judgment awarded 35%+ premium above WorkCover damages Christie split -75/25 Hosts also liable for plaintiff s costs, whereas WorkCover has statutory exclusion in most cases 20

21 Insurance and Safety WorkCover Common Law Contractual Indemnity Debate since 1996 whether WorkCover obliged to honour contractual indemnities Byrne v People Resourcing (Qld) 2014 Final conclusion of Yes due to definition of damages in WorkCover legislation WorkCover policy fixed by legislation. Unlike Public Liability insurance policy, WorkCover cannot exclude this contractual liability 21

22 Insurance and Safety WorkCover Common Law Contractual Indemnity WorkCover bound by whatever the Labour Hire company agrees with the Host But the Labour Hire company will wear the premium increase for claims. And possible fall out when renewing licence Critical to have full indemnities for Employee Holding companies and Service companies Different types of contractual indemnities: Full Indemnity Mirror Tort Liability 22

23 Insurance and Safety WorkCover Common Law Contractual Indemnity Paskins v Hail Creek Coal & WorkPac Labour Hire v Labour Hire accident Host s system of work was reasonable and accident caused solely by carelessness of labour hire worker However, Host still found vicariously liable for negligent worker as de facto employer in charge of worksite, provide equipment, and provide training and directions Host saved by full indemnity from Labour Hire company as co-defendant. 23

24 Insurance and Safety Workplace Health & Safety Work Health & Safety Act 2011 Strict liability for all workers on worksite Non-delegable duty More than one entity may have the same duty and entity may have multiple duties New Industrial Manslaughter offence negligent cause of death of worker 20 years prison for persons (including executives) and $12,615,000 (100,000 penalty units) for companies 24

25 Insurance and Safety To Do Review all labour hire contracts to check for indemnities Check for Deeds of Indemnity for Employee Holding companies and Service Companies Review responsibilities of Labour Hire companies: Pre-placement medical clearances and warranties as to fitness Basic training and qualifications Reps to be onsite or visit regularly to liaise with labour hire workers Labour Hire companies to report incidents promptly and cooperate in investigations 25

26 Conclusions 26

27 Conclusions The hassles have returned Constant Due Diligence & Corporate Governance: Check licensing Check of compliance with employee entitlements Clear demarcation of labour hire workers and contractors from employees Check for contractual indemnities 27

28 Sean Sullivan Special Counsel Sean.Sullivan@hallandwilcox.com. au 28