"Same job, same pay" orders one year on: FWC guidelines and recent decisions

Almost a year ago, in December 2023, the power of the Fair Work Commission (FWC) to make "regulated labour hire arrangement orders" (also referred to as "same job, same pay" and "jump up" orders) was introduced into the Fair Work Act 2009 (Cth) (FW Act) via the first tranche of the "Closing Loopholes" reforms.

The stated intent of these orders is to "close the labour hire loophole", specifically by lifting the pay rates of labour hire workers where they are performing work for a "host" that has higher rates of pay under its relevant industrial arrangements (e.g. under a "host's" applicable enterprise agreement).

These FW Act changes also detail:

• who can seek these orders
• when the FWC can (and can't) make them
• when they can commence operation
• obligations of labour hire employers and their "hosts" when they are under these orders
• exceptions to when they operate, and
• robust "anti-avoidance" provisions.

For a refresher on the ins and outs of these labour hire reforms, view our previous article.

Twelve months on, there have been several important developments in this new jurisdiction of the FWC. These include:

• new guidelines on the operation of same job, same pay orders; and
• several decisions of the FWC regarding the making of these orders, as well as a key upcoming contested hearing in the FWC in January 2025.

The developments present a number of considerations for employers in dealing with these types of orders.

New guidelines from the FWC

The FWC recently published guidelines regarding the operation of the new "regulated labour hire arrangement orders" under the FW Act. The guidance coincides with the orders being able to commence legal operation from 1 November 2024.

The guidelines are designed to assist in promoting compliance with these types of orders, setting out:

• who can apply for and be covered by the orders (such as relevant union/s)
• the circumstances where the FWC must make these orders, and where it cannot, for example if the "service exclusion" (provision of a service rather than the supply of labour) or the "fair and reasonable exclusion" applies
• the obligations of labour hire employers and their "hosts" when they are covered by these orders (e.g. ensuring that relevant employee/s of the labour hire employer receive at least the applicable "protected rate of pay" while performing work for the "host")
• exceptions that may apply when these orders are in place, where the relevant labour hire employee/s are not required to be paid the otherwise applicable "protected rate of pay" (e.g. "short-term" arrangements, with the default period for these engagements being up to three months)
• the ability of the FWC to make "alternative protected rate of pay" orders (e.g. in circumstances where paying the otherwise applicable "protected rate of pay" would be "insufficient" or "excessive"), as well as being able to deal with disputes about these types of orders (and make "arbitrated protected rate of pay" orders)
• the robust "anti-avoidance" framework in place, to prevent labour hire employers or "hosts" seeking to circumvent these orders (e.g. by setting up corporate structures or "rolling" labour hire arrangements to prevent the making or application of these orders).

The FWC guidelines can be accessed here.

Recent FWC decisions and an upcoming contested hearing

Since the new laws commenced, several applications have been made in the FWC by relevant union/s, most predominantly the Mining and Energy Union (MEU), seeking these orders for the benefit of labour hire workers. So far, these applications have related to the mining, aviation, and meat industries.

It is fair to say that the bulk of these applications to date have not been strenuously opposed by affected labour hire employers and their "hosts". In the main, "regulated labour hire arrangement orders" have been agreed by consent (or uncontested) between the relevant union/s, "host/s" and labour hire employer/s, with an acceptance that the relevant arrangements in these applications have been for the supply of labour, and not for the provision of a service.

This means that we are yet to see detailed authorities from the FWC (and potentially courts) on the interpretation and application of these new laws, including how both the "fair and reasonable exclusion" and "service exclusion" to these orders being made will be judicially considered.

However, there is an upcoming contested hearing in the FWC, scheduled for January 2025, where BHP and various third-party providers for its coal mining operations in Queensland are challenging applications for these orders by the MEU and AMWU. It’s expected that the FWC will be required in this matter to determine how both the "service exclusion" and the "fair and reasonable exclusion" to making these orders will apply.

What's next?

We await to hear the outcome of the upcoming FWC contested hearing on these orders, as the FWC's decision in this matter should provide employers and "hosts" with greater clarity on when these orders can (and can’t) be successfully resisted.

While the focus of FWC applications for these types of orders has so far been predominantly in the mining and aviation industries, now that a number of these orders have been successfully obtained in the FWC, all employers and "hosts" who utilise labour hire as a workforce strategy should be assessing their potential labour cost impacts, in the event that they become bound by these orders.

Should there be a change of government following the upcoming federal election in 2025, it remains to be seen whether the Coalition will seek to repeal these laws.

For more information on "same job, same pay" orders and labour hire arrangements, contact a member of our experienced employment and workplace team.