HARDY, Dr Tess, Private capacity [by video link]

McCRYSTAL, Professor Shae, Private capacity

STEWART, Professor Andrew, Private capacity [by video link]

[14:36]

CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. Would you like to comment on the capacity in which you appear before the committee today?

Prof. McCrystal : I am a professor of labour law at the University of Sydney.

Prof. Stewart : I am from the University of Adelaide.

Dr Hardy : I am at the law school at the University of Melbourne.

CHAIR: I now invite one of you to make a short opening statement. At the conclusion of your remarks, I will invite members of the committee to ask questions.

Prof. McCrystal : We thank the committee for the opportunity to speak to and answer questions about our submission on this bill. It was prepared with the assistance of two other colleagues—Professor Joellen Riley Munton, from UTS, and Ms Adriana Orifici, from Monash University. It is also supported by 18 other prominent Australian labour law academics. The submission draws on both our academic expertise and the practical or all professional experience many of us have. It addresses many, though not all, aspects of the bill and has a summary of key points at the beginning.

In the interests of time, I won't take you through all those points but I simply highlight the first of them, on page 2. You'll see that we support a number of proposals in the bill, especially those concerning compliance and enforcement, although there are elements we believe could be approved through appropriate amendments. But there also many key amendments that we oppose, especially in relation to part-time employment and agreement-making. We agree that there is need for greater certainty and fairness in the treatment of casual employment, but we do not believe the bill has the right solutions. And there are other important measures we believe could or should have been addressed but have not been. Overall, we are concerned that, in its present form, this package of reforms will not just fail to address pressing issues such as wage stagnation and insecurity at work but will exacerbate them.

That's all I want to say by way of introduction. If it's convenient, I'm happy to take questions concerning our submissions on schedules 3 and 4 of the bill, on agreement-making. Associate Professor Hardy can deal with matters relating to schedule 5, on compliance and enforcement. Professor Stewart can handle any other questions, including on casual and part-time employment, flexible work directions or the powers of the commission. Thank you.

CHAIR: Excellent. I appreciate the brevity of your opening statement. Senator Pratt.

Senator PRATT: Thank you to all of the academics for your excellent submission. Professor McCrystal, your submission says that the agreement approval process cannot be seen only as procedural in nature and that changes to that process are not just about removing red tape. Could you please give us the background on what purpose these processes serve and the risks that appear if they are removed.

Prof. McCrystal : What's importance to understand about part 2-4 of the Fair Work Act is that it is not a system of collective bargaining; it is a system of agreement-making. Bargaining, which we understand from the ACCC's work in recent times, is important for getting better wages outcomes and for getting more productive deals. But this act does not require bargaining. It's estimated that around 40 per cent of agreements are not the product of bargaining. Now, that's an estimate; the numbers are shaky, but we're looking at a substantial number. Unrepresented workers make those agreements with their employers. The question is: who protects the interests of those unrepresented workers? When this act was enacted, it was enacted on the basis of the non-union agreement-making stream process that existed under the old Workplace Relations Act. The union stream was abolished, and it was enacted under that stream. The processes of agreement-making were there to protect the interests of unrepresented workers. The entire system of agreement-making is controlled by employers, from beginning to end. They initiate bargaining, they run bargaining, they put the agreement to the vote and they put it up to the Fair Work Commission. Unions are not required in that process. They're an optional extra. They happen sometimes—in about 60 per cent of cases, we think—but not all the time. That means the responsibility for the protection of unrepresented workers has shifted to the Fair Work Commission. The agreement approval processes allow the Fair Work Commission to make sure—and it's not a huge obligation—that at minimum unrepresented workers have had the opportunity to give informed consent. That is what the statutory process does. It's not a great model, and we've seen all kinds of undesirable outcomes. But this bill will make that worse.

The consequences are that we will have no mandated or clear process of agreement-making that employers must follow. To work out what the minimum requirements are for employers in an agreement-making process, we will need to read Fair Work Commission decisions, because it will no longer be mandated by the act. The Fair Work Commission is no longer focusing on the interests of unrepresented workers but asking what employers have done in that process. There will be an increased need, as I've said, to read Fair Work Commission decisions. I suspect we'll see an explosion in small-cohort agreement-making, because we'll lose the capacity to scrutinise those processes. Removing the ability of unions to give evidence in that process means that we will keep it in the dark. We only know about substandard agreement-making because the union movement has consistently been scrutinising agreement-making processes. Look at the One Key dispute. We know about that substandard agreement, which applied to a thousand workers but was voted up by three—two casuals and one noncasual—because of the capacity of unions to shed light on those processes and to represent the interests of unrepresented workers and union members in that process. Information before the Fair Work Commission will only come from employers, in the case of unrepresented workers. So I think they're the risks.

Not all disputes are like the CUB dispute down in Melbourne, where CUB terminated its agreement with a labour hire company that had negotiated with the union and then negotiated an agreement with a labour hire company that pulled out of its drawer an agreement it had negotiated with three workers, with 50 cents above the minimum wage for tradespeople. Not all agreements have the kind of publicity that Victoria beer gets, right? Beer attracts publicity. Lots of agreements will slide under the radar, and I think that will be the consequence.

Senator PRATT: Thank you for that very excellent answer. In that context, when it's combined with a definition of 'casual employment' in the new provisions, it seems inevitable that it will become standard practice for an employee whom an employer wishes to treat as a casual to be engaged under very well-crafted contracts that will make clear there's no commitment that work will be offered, no expected pattern of hours—even if that's completely at odds with the intended or likely reality of the work. How good are these so-called conversion clauses, up against the reality of how this is likely to operate, in the experience of academics here?

Prof. McCrystal : If it's okay with you, I'm going to hand over to Andrew—Professor Stewart.

Prof. Stewart : We certainly agree there's a need for a definition of 'casual employment'. We explain that in the submission. The problem we see is that the definition raises a number of very difficult issues, and it potentially exacerbates existing problems. I might say at this point that, besides the issues we go through in our submission, there is one other aspect of the definition which has been drawn to our attention just very recently. We'd like, with the indulgence of the committee, to be able to put in a short supplementary submission to address that. Just very briefly: it's our concern that the definition unwittingly picks up almost every kind of fixed-term employment contract so that, potentially, someone who's on a three-year or five-year fixed-term contract who would never have been thought of as a casual will be treated as a casual because of some significant overreach in that definition.

Senator PRATT: Can you highlight in what ways? Is it about just the hours that they work and the way they change, or their actual experience of conditions in terms of things like holiday pay and sick leave?

Prof. Stewart : It's simply because the definition of 'casual employment' in the bill says that you're a casual if you haven't been given indefinite employment. Somebody who's on quite a lengthy fixed-term contract doesn't have indefinite employment; therefore, on the explicit wording of the bill, they'd have to be treated as a casual, which would mean they'd lose any annual leave entitlements. So that is a very significant number of workers. I think it's fairly clear. Our analysis of the bill suggests this is certainly not the intent, but it illustrates the problems with the definition. As I say, if the committee—

Senator PRATT: As to the reverse problem: on one hand, there's the Trojan Horse—'Suddenly we're going to have to pay for people we've paid a casual loading to; we're going to have to repay those entitlements.' We've almost got the inverse here: there's someone who thinks they should have those entitlements but, because their hours have fluctuated, that means that they no longer have those entitlements?

Prof. Stewart : That's correct. If the committee is happy to give us the opportunity, we would like to put in a submission which fully explains the concerns on that point and what we see are the adverse consequences.

Senator PRATT: In that context, it would be good for us to be able to put that to the department in detail. I have to say that, along with your excellent academic submissions, there's one from the ANU that says:

… further erosion of protections for casual workers, as outlined by the proposed Act, threatens to exacerbate the present vulnerabilities of these workers to exposure and transmission of COVID-19 and of other infectious diseases.

And they say that because there is clear evidence, from their point of view, that inadequate protections as to paid sick leave means that there is a much greater passing-on of the flu and other infectious diseases. Would you concur that, clearly, when they're casual, if people are sick they can't actually take sick leave, can they?

Prof. Stewart : We do think that's part of the problem. It's one of the consequences of having one in every four Australian employees being treated as a casual when in fact their jobs are not at all casual—they're ongoing jobs. The statistics are overwhelming about the prevalence of very long-term casual employment arrangements. For employment which is genuinely casual, where work is needed on a fluctuating basis, there is no reason why you shouldn't have flexibility—why businesses shouldn't have the flexibility to take on workers as they need. The concern that we have is that the bill will institutionalise and possibly even extend the practice of taking somebody who's doing ongoing work—work that's needed on an ongoing basis, where there's no fluctuation—and treating them as a casual and depriving them of those leave entitlements.

Having said that, we also think that the bill will not create sufficient certainty for employers, because, to the extent that the bill encourages employers to give workers documentation that says one thing and then employ them on a completely different basis, we think there would still be scope—and we explain this in the submission—for a court to say, 'Well, the real agreement isn't the one on paper; it's the actual work that you're doing.' So, even to the extent that this is meant to give some comfort to businesses, it will not do so completely.

It will also—and this goes to another aspect of the legislation—mean a huge amount of additional red tape for businesses—a massive increase. Under the bill's proposal, within six months of this change taking effect, every employer will have to go through a formal assessment process of every casual to work out whether or not they have to be given some new paperwork. So, again, we definitely agree this is a matter that should be addressed. We don't believe this is the way to do it.

CHAIR: Senator Sheldon you can have one question, and then I'm going to Senator Small.

Senator SHELDON: Given the number of women who work in part-time jobs, what impact do you see that these so-called simplified additional hours provisions will have? In your submission, you reference the so-called simplified additional hours agreement, and you say:

… the proposal creates a risk that it will create an incentive for employers to reduce guaranteed hours for permanent part-time staff, and so exacerbate rather than address the problem of chronic underemployment in the Australian labour market.

Can you elaborate on those two points?

Prof. Stewart : Thanks, Senator. The proposal in the bill is certainly intended to create some flexibility for employers that would undoubtedly benefit a number of employees, although in some cases part-time employees might gain hours that simply happen at the expense of, almost certainly, a group of casuals. But the bigger risk we see by far is that employers are encouraged to take on employees, potentially even employees who would have been full-time, on 16-hour-a-week contracts which then can be supplemented by overtime as the employer sees fit with no obligation to provide overtime pay. What we say in the submission is that the question of flexibility for part-time employment is a matter that's better handled through awards on a sector-by-sector basis. We give the example that in the hospitality industry, in major awards in that sector, since 2017 it's been possible to take on workers, giving them a guarantee of certain hours with the flexibility for more hours to be offered, provided they're not offered at times when the employee has said they can't be available. That's a really good example of sector-by-sector flexibility with safeguards built in to protect employees. We suggest this is a matter that should be dealt with by the commission on that sectoral basis rather than trying to impose a one-size-fits-all mechanism which potentially could be abused.

CHAIR: Senator Small.

Senator SMALL: Thanks for your time. I have two key lines of questions as they relate to the discussion today, one around definitions and the other around agreement making. Firstly, starting with agreement making, would you accept that agreement making was, in fact, a key premise of the Fair Work Act as introduced by the previous Labor government?

Prof. McCrystal : Yes.

Senator SMALL: Thank you. Would you agree that every employee covered by an agreement and every bargaining representative of an employee appointed under the NERR processes will have a right to make submissions to the Fair Work Commission?

Prof. McCrystal : Yes.

Senator SMALL: So, therefore, it is false to say that only employers would have a right to make submissions to the Fair Work Commission?

Senator PRATT: If they're casual, they can—

CHAIR: Labor senators, you were listened to in silence. I ask that the same courtesy and respect be returned to coalition senators. Senator Small has the call.

Prof. McCrystal : The point I was making was: in circumstances where you're dealing with unrepresented workers, where you have had an agreement-making process that has potentially only taken 21 days from start to finish and those workers have not been represented in that process, under the amendment that excludes—except in exception circumstances—trade unions from presenting evidence to the commission the only voice in that room will be the employer.

Senator SMALL: Can I pick up on that. Would you accept that the amendments proposed by this reform actually strengthen and clarify employee participation rights as they relate to casual employees? I'm setting aside your presumption that all Australians would like a union at the bargaining table. My question is very specific, around the enhancement and the clarity that this reform provides to employees employed casually to participate in or appoint bargaining representatives.

Prof. McCrystal : No, I don't agree on that. I don't think the act does anything—

Senator SMALL: Can you point to the specifics of the reform that fail that?

Prof. McCrystal : There is no reform with respect to the right of casuals to appoint bargaining representatives. I really don't understand the question. I also reject your statement that I'm saying that every Australian worker wants a union at the table. I'm saying that, under this bill, unrepresented workers are not going to have their interests in any way represented at the approval stage of the bill. There will be no opportunity for an alternative perspective to be given to the Fair Work Commission in approving that agreement.

Senator SMALL: So any employee who provides a submission, which, as you just agreed, they are absolutely entitled to do either themselves or through their bargaining representative to the Fair Work Commission—you're effectively contending that that is not open to them?

Prof. McCrystal : It is open to them to make an individual submission, but I am contending that many employees are not in a position to—

Senator SMALL: I will move on, if I can. I'm conscious of time.

Prof. McCrystal : I'd like to finish the answer, thank you.

Senator SMALL: I'm just conscious of time.

Senator O'NEILL: I know it's getting too pointed for you. Just let her finish answering the question.

CHAIR: Senator Small has the call. Senator Small, please put your next question.

Senator O'NEILL: Point of order, Chair: Professor McCrystal has not finished her answer. She needs to finish her answer.

Senator SMALL: I will note this is not a prewritten statement. I'm trying to—

Senator O'NEILL: Clearly, you don't want to hear the answer, but the answer was very instructive.

CHAIR: Senator Small has the call. Can we please let Senator Small put his question, and then the witness can answer the question.

Senator O'NEILL: He has put the question. She didn't get to answer it; that's the point.

CHAIR: I'm mindful of the time.

Senator O'NEILL: I'm mindful of it, too, but I'd love the professor to finish her answer.

CHAIR: I point out that the government's time for questioning is being taken up by interjections and points of order from Labor senators. Senator Small has the call.

Senator SMALL: Moving on to the question of definitions—

Senator O'NEILL: Point of order, Chair: you have been quite strict throughout the day in managing the time and also making sure that people who were giving an answer were allowed to continue to answer that question. That should apply to this witness as it has to others. I call on you, Chair, to allow Professor McCrystal to finish answering the question.

Senator SMALL: I'm happy to take the answer on notice.

Senator O'NEILL: I'm sure we could finish it here now.

CHAIR: Senator Small has the call.

Senator SMALL: I will move to questions around definitions of employment. Would you accept that the longstanding award definition of employment applies as to how the employee is engaged at the commencement of their employment?

Prof. Stewart : Yes, the longstanding definition in many awards and agreements is that you're a casual if you were engaged and paid as a casual, and that has been understood by many people who work in the system, and also by the Fair Work Commission, to have a primary focus at the point of engagement. But recent court decisions, and indeed earlier court decisions, have shown that it's possible to argue that if the relationship becomes something other than what it was envisioned to be at the outset of the arrangement, it can be recognised now as something other than a casual relationship.

Under the bill, the bill attempts to prevent any reference to subsequent events; any reference to the reality of the arrangement. We don't think it fully succeeds in that, so we think there will still be scope for argument, but it's certainly intended to have a focus on the contractual form rather than the actual nature of the job.

Senator SMALL: We'll pick up on that. So I guess that you would accept that where someone is engaged as a casual they should be able to remain as a casual, should they so choose?

Prof. Stewart : What we would say is that if their job isn't a casual one, they should have the same entitlements that non-casual workers have.

Senator SMALL: Just to pick up on that point, you would seek to make the determination for them, rather than that individual, who has a very clear right to convert subject to meeting the requirements outlined in the reform bill, you would seek that determination to be taken away from the individual who wants to stay as a casual?

Prof. Stewart : One of the basic premises of having labour standards is that our society decides that there are certain rights that people should have which they should not be free to contract out of. Why do we interfere with their freedom of contract? Because we recognise that they often—not always, but often—lack the bargaining power to make an informed decision.

Senator SMALL: If I can just interrupt, just to be very clear, so the individual, you're saying, should not have the right, under these proposed reforms, to either convert their employment to full-time permanent employment, or remain as a casual, because of this idea of contracting out? Is that your assertion?

Prof. Stewart : No. What I'm arguing about, or what I guess I'm contesting, is what we do about someone who is presented with a piece of paper at the start of their employment that tells them they're a casual, when really they're not. If you have somebody whose job was—

Senator SMALL: At the 12-month mark someone is given a piece of paper that says 'You are entitled to permanent employment', you're saying that shouldn't happen?

Senator O'NEILL: That's not what he is saying, and you shouldn't be putting words in his mouth.

Prof. Stewart : To answer your question, for somebody who has been in casual employment, and they're a genuine casual because their work is fluctuating, yes, it seems perfectly reasonable to give them an opportunity at some point, if that has been continuing, to convert to permanent employment. The idea of choice in the context of a genuine casual relationship is not something we're seeking to contest.

CHAIR: Thank you for your appearances here today. The committee will now suspend.

Senator WATT: No questions have gone to Professor Hardy. I have one very brief question for her.

CHAIR: If there's one very brief question and a very brief answer.

Senator WATT: Thank you. Is it true that the proposed criminal sanctions for wage theft have both a higher bar for successful prosecution and lower maximum prison sentences than exists in the current Queensland law for that offence, and can you just briefly explain any differences?

Dr Hardy : Yes, that is true, in the sense that Queensland provides for 10 years imprisonment, as does Victorian legislation, and the federal proposed provisions provide for four years imprisonment. There's an obvious difference, a lighter sentence being available to under the federal proposal.

In terms of successful prosecutions, the provisions of the federal bill are narrower in scope and vision. It will make it much more difficult, in my view, to bring successful prosecutions, because there are multiple limbs; it applies only to employers; it applies with respect to fewer employee entitlements; it's harder to pursue individuals. So there's a range of issues which I think will make it hard for the prosecution to prove those elements beyond reasonable doubt.

CHAIR: That does conclude your evidence. Thank you very much for coming along today.

Proceedings suspended from 15:04 to 15:15