Late last year, Federal Parliament passed legislation that would give the Fair Work Commission (FWC) power to order that a labour hire agency employer ensure that employees working as part of the arrangement are paid no less than the rate they would be paid under the host employer’s enterprise agreement if they were directly employed. This obligation will not apply before 1 November 2024.

The FWC would be prohibited from making an order unless it is satisfied that the performance of the work for the host is not or will not be for the provision of a service, rather than the supply of labour.

The FWC would also be prohibited from making an order if satisfied that it was not fair and reasonable in all the circumstances to do so, having regard to submissions from affected businesses and employees. In determining whether making an order would not be fair and reasonable, the FWC would be required to consider a range of factors, including:

• existing pay arrangements;
• whether the performance of the work is for the provision of services rather than the supply of labour; and
• the history of industrial arrangements applying to the host and the employer.

Once an order is made, host employers would be required to provide certain information to employers supplying employees under the arrangement, on request, to assist them in meeting their payment obligations.

Where an employee supplied under the arrangement is engaged for a short-term period or under a training arrangement, the provisions will not apply. Where the host business is a small business employer, an exemption will not apply.

Other new powers given to the FWC under this new legislation include setting minimum standards for independent contractors who are performing digital platform work or engaged in the road transport industry. These will apply on and from 1 July 2024.

The definition of employee will change with effect 1 July 2024 to facilitate a return to the ‘multi-factorial’ test previously applied by courts and tribunals in characterising a relationship as one of employment or of principal and contractor.