Same Job Same Pay (SJSP) Orders Take Effect

Whilst the new SJSP laws actually commenced on 15 December 2023 orders made under the new laws were unable to take effect until 1 November 2024. Momentum is starting to build for these types of applications.

SJSP laws allow FWC, on application, to make orders to compel a labour hire entity to pay labour hire workers no less than the rate that the employees would be paid if they were directly employed by the host employer and doing the same work. The relationship between a labour hire entity and a host employer in supplying labour hire employees isn’t intended to be restricted by reference to the formal arrangements by which this typically occurs. A direct agreement labour hire entity and a host employer is not a necessary precondition for making an application.

The laws do not apply:

1. to small business host employers;

2. where the labour hire workers are providing a service rather than their labour (*this is likely to be the most contested area in any dispute);

3. where the labour hire workers are covered by a training arrangement or are only working for the host company for a short period (generally three months or less), or

4. generally, where FWC considers it is not fair and reasonable in all circumstances to do so.

Civil penalties can be ordered against labour hire entities if they pay less than the protected rate of pay, or against a party for breaches of the anti-avoidance provisions.

Our Take

We understand that most people would think that this law is really just about preventing the ‘big end of town’ using outsourcing arrangements to ‘undercut’ labour costs. A fair enough assessment.

However, some businesses would counter-argue, to remain competitive, they have to look at ways to play on an ‘even playing field’ when paying for labour because historically their lower level labour roles have enjoyed the benefits of strong enterprise bargaining increases across all levels when conditions were ‘good’. This has unfortunately resulted in some businesses having to pay ‘more than their competitors’ and consequently more than ‘the market’ for such roles. In other words – labour has ‘outpriced’ itself. Also, a fair enough assessment.

There needs to be some sort of ‘middle ground’ but unfortunately, like most legislative change, a blunt force instrument rarely gets to deal with the ‘nuance’. The early decisions are demonstrating that FWC is attempting to deal with the ‘nuances’ and we will just have to wait and see for more guidance. Key factors are likely to be: the pay arrangements that apply to the employees of the host employer and the history of industrial arrangements applying to both the host employer and the labour hire employer.

Action for Host Employers

• continue to watch decisions in this area

• budget for labour hire arrangements to become more expensive – getting a ‘win’ from outsourcing just became a lot harder

• factor the application of the SJSP laws into any enterprise agreement negotiations

• respond quickly to labour hire agency request for information about pay rates – an SJSP application may be on the horizon and you need to act quickly

Edge Legal

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