Report recommends plan to protect agency workers in the horticulture, meat and cleaning industries, where exploitation is most rife

The Victorian government will introduce a licensing scheme for labour hire companies in response to a report that found “outright exploitation” of agency workers particularly in the horticulture, meat and cleaning industries.

Victorian industrial relations minister, Natalie Hutchins, announced the scheme on Thursday after tabling Anthony Forsyth’s independent report into labour hire and insecure work in parliament.

Forsyth concluded that “rogue” labour hire operators frequently breached laws through underpayment of award wages, tax avoidance, non-payment of superannuation, poor occupational health and safety practices and maltreatment of workers and backpackers on visas.

The inquiry heard of health and safety issues in the horticulture industry, including seasonal workers expected to work long hours with untreated boils on their legs because of poor diet and some who experienced sexual harassment and uncompensated injuries in the workplace.

Hutchins said the findings of the report are “damning of practises that have been left unregulated for too long and are tarnishing our nation’s reputation as the land of a fair go”.

Forsyth recommended a labour hire licensing scheme be introduced in the horticulture, meat and cleaning industries, where exploitation is most rife, with the capacity to be expanded to other industries.

Victoria should also advocate that the scheme become national, the report said.

The scheme would require companies to demonstrate their compliance with minimum conditions like pay laws by providing employment records.

The business and its key personnel would have to pass a “fit and proper person test” to ensure they had not been involved in breaches of workplace laws or insolvencies.

A register of labour hire agencies would allow companies looking to hire workers through them to check the provider was approved. Penalties would apply for operating an unlicensed labour hire company.

The report recommended the Victorian government advocate that the Fair Work Ombudsman direct more resources to policing underpayment and unlawful deductions, and that the federal government implement its election policy to boost the ombudsman’s investigatory powers and increase penalties for underpayment.

Although many labour hire agencies did not engage in “outright exploitation”, the report found workers were still more susceptible to “differential treatment in respect of issues like health and safety, dismissal and rostering” compared with other employees.

“It is an unavoidable consequence of the engagement of labour hire workers as casual employees, or as independent contractors, that they do not receive the benefit of many/any minimum employment conditions under the National Employment Standards,” the report said.

The report suggested pay and conditions could be improved by allowing employees of labour hire companies to be covered by the enterprise agreements of the companies in which they are placed to work.

Forsyth also found that other non-permanent work arrangements, especially casual work and fixed term contracts, often left workers experiencing financial insecurity and stress.

“Many workers in this kind of position would prefer more ongoing or permanent forms of work,” he said.

The report said the Victorian government should use procurement to improve workplace conditions at a range of companies tendering for government work including IT, cleaning, security, transport, hospitality and other similar services.

Tenderers should be required to show: they “predominantly engage workers in secure employment” rather than as casuals or on fixed term contracts; where they hire independent contractor relationships that these are genuine rather than sham arrangements; that their cost structure guarantees workers will be paid legal entitlements.

The head of the Australian Industry Group Victorian branch, Tim Piper, said the report “raises some valid issues but not all of the recommendations have merit”.

“It is essential that in dealing with a very small minority of disreputable labour hire operators, an undue regulatory burden is not imposed on the vast majority of labour hire companies and their clients,” he said.

Piper rejected the recommendation that labour hire workers should receive the same pay and conditions as those in the firms in which they are placed, and called for such clauses to be outlawed.

He said that companies employing a high proportion of casual employees should not be “locked out of government work” by the proposed procurement policy.

Victorian Trades Hall Council secretary Luke Hilakari said: “What we see going on on our farms is shocking, but it’s only the tip of the iceberg as this report shows.”

He said the labour hire licensing regime would improve the lives of workers and welcomed the Victorian government commitment to introduce it.

The government will now consider “most effective and efficient structure” for the scheme and prepare a full response to the other recommendations.

Victoria to introduce labour hire licensing scheme to stem exploitation by Paul Karp.  Available from <https://www.theguardian.com/australia-news/2016/oct/27/victoria-to-introduce-labour-hire-licensing-scheme-to-stem-exploitation>. [Thursday 27 October 2016 07.42 BST]  Photograph: Lukas Coch/AAP