The Harper Competition Review has recommended making awards and industrial agreements subject to sections 45E and 45EA of the Competition and Consumer Act (CCA).
Section 45E of the CCA prohibits a person (an employer) from making a contract, arrangement or understanding with an organisation of employees that contains a provision restricting the freedom of the employer to supply goods or services to, or acquire goods or services from, another person. Section 45EA prohibits a person from giving effect to such a contract, arrangement or understanding.
The Review found a conflict between the objective of sections 45E and 45EA and the regulation of awards and industrial agreements under the Fair Work Act.
While the ACTU proposed exempting workplace approved under the Fair Work Act from the provisions, employer representatives proposed that sections 45E and 45EA be amended to include awards and industrial agreements.
The Review has recommended that sections 45E and 45EA of the Competition and Consumer Act be amended in line with employer proposals except to the extent they relate to the remuneration, conditions of employment, hours of work or working conditions of employees.
Professionals Australia CEO Chris Walton says that jump up clauses are an important mechanism for securing equivalent pay and conditions for contractors and ensuring their engagement does not undermine the pay, conditions and security of employment of the permanent workforce.
“Outlawing jump up clauses means a business could bring in workers through a labour hire firm to do the same job as an existing worker on lower wages and conditions than had been agreed in an enterprise bargain and would undermine wages and job security. They ensure fairness and a level playing field.”
Under the Fair Work Act, clauses which qualify or restrict the employer engaging contractors are not permitted. However terms that require the employer to consult before engaging contractors and that require the employer to afford contractors the same terms and conditions as employees are permitted. In August 2012, a Full Bench of the Federal Court hearing an appeal by the Australian Industry Group in the ADJ Contracting case backed the right of unions to negotiate workplace agreements that afford contractors the same terms and conditions as employees, blocking a third attempt by employers to have the clauses declared unlawful.
Jump up clauses are a critical mechanism for providing equivalent rights and protections for independent contractors and for protecting the integrity and security of employment of the permanent workforce. Jump up clauses in conjunction with strong sham contracting penalties in the Fair Work Act are fundamental to protecting workers from unscrupulous employers who try to avoid their employment obligations. On this basis, Professionals Australia holds the strong view that jump up clauses should continue to be retained as permitted matters and that workplace agreements should be exempted from the provisions of sections 45E and 45EA.