In the Loop - Same Job, Same Pay measures

The “same job, same pay” amendments proposed in the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 passed Parliament on 7 December 2023.

Who will be affected by the change?

This change may have significant ramifications for employers in labour hire agreements and where there is an enterprise agreement, or different benefits under those arrangements.

What “loophole” is the change intended to close?

The Government’s stated intent behind the “same job, same pay” measures is to prevent employers undercutting bargained wages in enterprise agreements by engaging labour hire workers (who are paid less than they would be under the host employer’s enterprise agreement). The “loophole” is illustrated by the workforce arrangement depicted below:

The use of labour hire workers in this manner has been the source of discord between stakeholders in the mining, energy and aviation industries in particular, with concerns being flagged that the practice both exploits labour hire workers (who may receive less than the wages paid to host employees) and may drive down the wages of host employees (by reducing bargaining leverage, as host employees are effectively competing with “cheaper” labour hire workers).

What “same job, same pay” measures actually look like?

The change will allow the Fair Work Commission (FWC) to make a “regulated labour hire arrangement order” (labour hire order/s) requiring employers that supply their employees as labour hire to perform work for a “host employer”, pay their employees the same rate of pay as employees of the “host employer” who perform comparable work.

A range of supplementary changes will be introduced to facilitate the making of labour hire orders, including:

The FWC will only be able to make a labour hire order where it is ‘fair and reasonable’ to do so and can take into consideration a number of factors such as the current and historical coverage and application of the host employment instrument and the nature of the work being performed.

What situations will be exempt?

Certain arrangements and situations will be exempt from labour hire orders, including:

When will the change take effect?

The FWC will be able to make labour hire orders from 1 November 2024.

It is important to note that even if the labour hire agreement was entered into before this date, the new regulations still apply.

Further Anticipated Guidance?

The FWC has advised that it will publish guidelines on the operation of the new provisions by 1 November 2024. Notably, the guidelines will provide practical suggestions on how the ‘fair and reasonable’ test may be applied.

What should employers do?

Both labour hire employers and host employers should remain aware of the imminent changes taking effect and assess whether this may present any risks to their existing workforce arrangements. Relevantly, this may necessitate re-evaluating any existing processes and/or systems to facilitate any appropriate sharing of wage and pay information as well as potential pay structures given the risk of labour hire orders being sought.