Although having its genesis in the first tranche of the Closing Loopholes amendments, Regulated Labour Hire Arrangement Orders (RLHAO) have become colloquially know as ‘Same Job, Same Pay’ orders.  As we approach the first decision relating to an application for a Same Job, Same Pay order, early signs emphasise the need for employers to be actively considering their workforce composition, and the impact such an order would have on their business.

By way of quick recap, on application the Fair Work Commission must make a RLHAO if it’s satisfied:

• A labour hire employer supplies (or will supply) one or more of its employees to the host (it doesn’t matter whether this supply occurs directly or indirectly).
• An Enterprise Agreement, workplace determination or other covered employment instrument applies to the host, and would apply to the labour hire employee if they were employed by the host.
• The host is not a small business.

With that said, the legislation provides that there are circumstances in which the Commission must not make the RLHAO.  These include:

• If the work performed by the worker is part of the provision of a service (rather than the supply of labour).
• If it’s not fair and reasonable in all of the circumstances, having regard to:
  • The pay arrangements that apply to employees of the host, including: whether the instrument applies only to a particular class or group of employees; whether the instrument has ever applied to an employee of the classification and grade that would apply to the labour hire employee; or, the rate of pay that would be payable to the labour hire employees if the order were made.
  • The history of industrial arrangements applying to the host and labour hire employer.
  • The relationship between the host and the labour hire employer.
  • Whether the arrangement is for the benefit of a joint venture or common enterprise.
  • The terms and nature of the arrangement under which the work is performed (e.g. duration, location of work, the industry, and number of employees).
  • Any other matter the Commission considers relevant.

While there’s obviously going to be space for consideration and argument as to when it’s not fair and reasonable in all the circumstances to make an RLHAO, it’s safe to say that the mere fact a long established, arms-length arrangement has been in place where employees of the labour hire employer work insider the host’s operations at on pay which is less than the host’s employees, is not going to fall within that category…  Consistent with that, early data points suggest those circumstances are more likely to be the exception to the rule.

To date, two applications for RLHAOs appear to have been made to the Commission.  Both applications are within the mining industry and involve employers of some size.  Both applications were filed during March and as at the end of May:

• One application has been discontinued following the host offering permanent to the labour hire workers.
• The other application will be determined “on the papers” (without a hearing) after the respondent parties informed the Commission that they don’t oppose the application and did not wish to file any evidence or make any submissions with respect to the application.

While a decision in the second application is pending, it’s reasonable to assume a RLHAO will be made given the absence of any evidence or submissions in opposition.

It would be unnecessarily fatalistic to assume that every company that utilises labour hire workers will be the subject of an application, or that every application will be successful.  At the same time, most employers should be able to assess the likelihood of an application being made in their circumstances.  Irrespective, and with the knowledge that a RLHAO would have an undoubtable impact on operational considerations, now’s the time for all employers to begin assessing and weighing these matters as part of the future decision making.  If you’d like to discuss that, please give us a call.