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Monday, 11 August 2003
Page: 13058


Senator MURRAY (8:22 PM) —I wish to move Democrats amendment (3) on sheet 2955. I had some biblical thoughts as Senator Collins was speaking—I thought, `O ye of little faith'. Perhaps hard experience has taught you otherwise. This is one of the reasons that I want to move these amendments separately. We are taking the fairly brave stand of supporting the intent of the government to have as far as possible just one unfair dismissals jurisdiction for all Australian employees— which I suggest will happen one of these days if not today—but we also need to move forward in terms of the definition of an employee.

One of the dangers of practitioners in workplace relations law, industrial relations law or, indeed, even political parties is that they become stuck in what has been rather than what is. There is a need to constantly move forward in understanding changed employee relationships and to look behind the veils—sometimes in terms of entities, sometimes in the way people work and sometimes in the way they are hired and managed—to see whether the employee relationship is a genuine one. It has struck us for some time— and it probably has struck other senators in other parties—that the definition of employee is extremely poorly developed in federal law. Senators in the chamber will remind me, but I am pretty certain that in the act there is no definition of an employee.

In this there is a strange contradiction. My experience and knowledge is that the government has always supported the notion that genuine employees should have access to unfair dismissals law, except of course with their peculiar small business exemption idea. Once again, I would say that it is also the view of the Labor Party that any genuine employee should have access to the provisions of the law. I dare to suggest, without having asked them, that that would also be true of the opinion of the Greens and the Independents. You have to say to yourself, `In what respect is the law deficient?' The law is deficient in the sense that there is a lack of certainty at the edges as to what constitutes an employee. The states have tried to make some inroads on this but in my view are still constrained by past cases and past relationships.

I have tried in this definition to look behind that and to go for principles about the relationship of employee and employer. Of course I have needed some expert help, and in that sense I have turned to Professor Andrew Stewart, who is a real authority in this area. I looked at some work he has done and plagiarised it for the purpose of this amendment. If you are out there, Professor Stewart, thank you very much. Your good work is here and I think it advances the law quite considerably. There are some key elements I would pick up on. For instance, part of the amendment says:

(2) In determining whether a worker is genuinely carrying on a business, regard must be had to those of the following factors which are relevant in the circumstances of the case:

(a) the substance and practical reality of the relationship between the parties, and not merely the formally agreed terms;

A legal construct which is designed to evade the employee relationship you can get around by looking at the actual substance of it. If a person is carrying tools, driving a truck or hired by a labour agency, it does not necessarily make them a contract worker. In many of those cases they will be an employee.

There is another area which I would pick on briefly as I go through this amendment: tax law. This chamber gave all-party support, and I think Independent support too, to the alienation of services income legislation. Under that legislation, the tax office can make a personal services determination in relation to the worker, pursuant to subdivision 87-B of the Income Tax Assessment Act 1997, in connection with work of the client performed by them. That act says that for purposes of tax you can be determined—not deemed, but determined—to be an employee by the tax office, because of the alienation of personal services income. Yet a person who is determined as an employee and who must pay tax as an employee under that legislation might not be determined as an employee under the federal workplace relations act or under some of the state IR acts. That is just crazy. If there is anything which defines you as an employee, it has to be the tax you pay and the way you can make your individual income tax claims under the tax act. I am willing to suggest that this amendment may not be complete and cover every one of the bases, but I think Professor Stewart's pro-forma that I have used advances matters quite considerably in terms of reaching out and trying to get on the statute a far better definition of a genuine employee.

Before I sit down, I will point out one small change which I think is easy to make to this. On page 2 there is a heading which says `170CBB Definition of employee'. That heading actually repeats a heading that had come earlier. It should have read `Declaratory orders by the Full Bench'. With that motivation, and unless there are any further questions, I move:

(3) Schedule 1, page 4 (after line 21), after item 3, insert:

3A After section 170CB

Insert:

170CBA Definition of employee

(1) For the purposes of this Division, a person (the worker) who contracts to supply his or her labour to another person is to be presumed to do so as an employee, unless it can be shown that the other person is a client or customer of a business genuinely carried on by the worker.

(2) In determining whether a worker is genuinely carrying on a business, regard must be had to those of the following factors which are relevant in the circumstances of the case:

(a) the substance and practical reality of the relationship between the parties, and not merely the formally agreed terms; and

(b) the objects of this Division; and

(c) the extent of the control exercised over the worker by the other party; and

(d) the extent to which the worker is integrated into, or represented to the public as part of, the other party's business or organisation; and

(e) the degree to which the worker is or is not economically dependent on the other party; and

(f) whether the worker actually engages others to assist in providing the relevant labour; and

(g) whether the Australian Tax Office has previously made a personal services determination in relation to the worker pursuant to Subdivision 87-B of the Income Tax Assessment Act 1997, in connection with work of the kind performed for the other party; and

(h) whether the worker would be treated as an employee under the provisions of any State law governing unfair dismissal which, but for this Act, would otherwise apply to the worker.

(3) A contract is not to be regarded as one other than for the supply of labour merely because:

(a) the contract permits the work in question to be delegated or subcontracted to others; or

(b) the contract is also for the supply of the use of an asset or for the production of goods for sale.

(4) An employment agency which contracts to supply the labour of a person (the worker) to another party (the client) is to be deemed to be that person's employer, except where this results in a direct contract between the worker and the client in relation to that labour.

(5) Where:

(a) an arrangement is made to supply the labour of a person (the worker) to another party (the ultimate employer) through a contract or chain of contracts involving another entity (the intermediary); and

(b) it cannot be shown that the intermediary is genuinely carrying on a business in relation to that labour that is independent of the ultimate employer, on the basis of the factors set out in subsection (2);

the worker is to be deemed to be the employee of the ultimate employer.

(6) For the purposes of this section, employment agency means an entity whose business involves or includes the supply of workers to other unrelated businesses or organisations, whether through a contract or a chain of contracts.

170CBB Definition of employee

(1) The Full Bench may, on application by an organisation, a peak body or the Minister, make an order declaring:

(a) a class of persons who perform work in an industry under a contract for services to be employees; and

(b) a person to be an employer of the employees.

(2) The Full Bench may make an order only if it considers the class of persons would be more appropriately regarded as employees.

(3) In considering whether to make an order, the Full Bench many consider:

(a) the relative bargaining power of the class of persons; or

(b) the economic dependency of the class of persons on the contract or

(c) the particular circumstances and needs of low paid employees; or

(d) whether the contract is designed to, or does, avoid the provisions of an industrial instrument; or

(e) whether the contract is designed to, or does, exclude the operation of the minimum wage; or

(f) the particular circumstances and needs of employees, including women, persons from a non-English speaking background, young workers and outworkers; or

(g) the consequences of not making an order for the class of persons; or

(h) the requirements listed in section 170CBA.

(4) This section applies to constitutional corporations.

(5) In this section:

contract includes:

(a) an arrangement or understanding; and

(b) a collateral contract relating to a contract.

constitutional corporation means a trading, foreign or financial corporation within the meaning of paragraph 51(xx) of the Constitution.

industrial instrument includes an award or agreement under this Act or a State Act.