10.6092/issn.1561-8048/11222
This article examines the concept of the ‘employer’ in Australian labour law, showing how the use of this term (and the related concept of ‘employee’) can operate to limit the rights of workers in relation to unfair dismissal, collective bargaining and employment entitlements under the Fair Work Act 2009. It also considers several areas in which rights and obligations are ascribed more broadly, under both the Fair Work Act and workplace health and safety laws. The article then explores various regulatory approaches through which attempts have been made to extend responsibility beyond the unitary conception of the employer, in the context of three specific business models: labour hire, franchising and supply chains. The new forms of regulation adopted in Australia in recent years include labour hire licensing schemes, statutory provisions imposing liability for breaches of minimum employment standards upon franchisors, and regulatory schemes to enhance accountability across sector-specific supply chains. The article concludes with a brief discussion of reforms to bargaining structures which are critical, if business reliance on the unitary concept of the employer is to be meaningfully contested in the Australian setting.
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Anthony Forsyth
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The Identity of the ‘Employer’ in Australian Labour Law: Moving Beyond  the Unitary Conception of the Employer
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Anthony Forsyth
2020/07/20
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The Identity of the ‘Employer’ in Australian Labour Law: Moving Beyond  the Unitary Conception of the Employer
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The Identity of the ‘Employer’ in Australian Labour Law: Moving                        Italian Labour Law e-Journal
Beyond the Unitary Conception of the Employer                                                 Issue 1, Vol. 13 (2020)
Anthony Forsyth                                                                                     ISSN 1561-8048
anthony.forsyth@rmit.edu.au                                          https://doi.org/10.6092/issn.1561-8048/11222




     The Identity of the ‘Employer’ in Australian Labour
                    Law: Moving Beyond
          the Unitary Conception of the Employer
                                            Anthony Forsyth


 1. Introduction. 2. Defining the ‘Employer’ in Australian Labour Law. 2.1. Unfair
 Dismissal. 2.2. Collective bargaining and industrial action. 2.3. Minimum employment
 standards. 2.4. General protections and workplace bullying. 2.5. Work health and safety. 3.
 Regulatory Responses to Overcome Limitations of the Unitary Concept of Employer. 3.1.
 Labour hire. 3.2. Franchise business structures. 3.3. Supply chains. 4. Conclusion.



                                                       Abstract

     This article examines the concept of the ‘employer’ in Australian labour law, showing how the
     use of this term (and the related concept of ‘employee’) can operate to limit the rights of
     workers in relation to unfair dismissal, collective bargaining and employment entitlements
     under the Fair Work Act 2009. It also considers several areas in which rights and obligations
     are ascribed more broadly, under both the Fair Work Act and workplace health and safety laws.
     The article then explores various regulatory approaches through which attempts have been
     made to extend responsibility beyond the unitary conception of the employer, in the context
     of three specific business models: labour hire, franchising and supply chains. The new forms
     of regulation adopted in Australia in recent years include labour hire licensing schemes,
     statutory provisions imposing liability for breaches of minimum employment standards upon
     franchisors, and regulatory schemes to enhance accountability across sector-specific supply
     chains. The article concludes with a brief discussion of reforms to bargaining structures which
     are critical, if business reliance on the unitary concept of the employer is to be meaningfully
     contested in the Australian setting.
     Keywords: Unitary employer; Labour hire; Franchising; Supply chains; Collective bargaining




 1. Introduction.
    Australian labour law takes as its starting point the relationship between the employee
 and ‘the unitary employer’1, a notion explained (in the UK context) as the ‘contractual

 
   Professor of Labour Law, RMIT University, Melbourne, Australia. This essay has been submitted to a
 double-blind peer review process.
 1 Rawling M., Howe J., The Regulation of Supply Chains: An Australian Contribution to Cross-National Legal Learning,

 in Stone K., Arthurs A. (eds), Rethinking Workplace Regulation, Russel Sage Foundation, New York, 2013, 233,
 234.
Anthony Forsyth                                                                          Italian Labour Law e-Journal
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employer’ or the entity responsible for ensuring compliance with minimum wages and
other labour standards2. As Hardy has stated: ‘A general premise of the [Fair Work Act
2009] is that a binary and direct employment relationship is in existence. [However], this
statutory foundation is potentially compromised by the fact that it is not now uncommon
for multiple organisations to be involved in shaping key working conditions’3. In Australia,
as in many comparable countries, various new business models have emerged over the last
30 years or so4 through which businesses have been able to ‘side-step’ the application of
employment regulation premised on the accountability of the unitary employer5.
    This article examines (in Section 2) the definition of ‘employer’ in Australian labour law,
showing how the use of this term (and the related concept of ‘employee’) can operate to
limit the rights of workers in relation to unfair dismissal, collective bargaining and
employment entitlements under the Fair Work Act. Section 2 also considers several areas in
which rights and obligations are ascribed more broadly, under both the Fair Work Act and
workplace health and safety laws. The article then moves on (in Section 3) to explore
various regulatory approaches through which attempts have been made to extend
responsibility past the common law employer, in the context of three specific business
models: labour hire, franchising and supply chains. The new forms of regulation adopted in
Australia in recent years include labour hire licensing schemes, statutory provisions
imposing liability for breaches of minimum employment standards upon franchisors, and
regulatory schemes to enhance accountability across sector-specific supply chains. The
article concludes (in Section 4) with a brief discussion of reforms to bargaining structures
(put forward by the union movement) which could more effectively overcome the
constraints imposed by the traditional conception of the employer.


2. Defining the ‘Employer’ in Australian Labour Law.

   The concept of ‘employer’ is defined in Australia’s principal statute regulating
employment and labour relations, the Fair Work Act. This legislation uses the term ‘national
system employer’ to define the types of entities that are subject to various of its provisions,
reflecting the statute’s constitutional coverage6. So, for example, ‘constitutional
corporations’, ‘the Commonwealth’ (i.e. federal government) and any ‘Commonwealth

2 Wynne-Evans C., A Solution to Fissuring? Revisiting the Concept of the Joint Employer, in Industrial Law Journal
(advanced access version), 2020, 1, 3. See also Prassl J., The Concept of the Employer, Oxford University Press,
Oxford, 2015, 1, 13, 16-23.
3 Hardy T., Who Should Be Held Liable for Workplace Contraventions and on What Basis?, in Australian Journal of

Labour Law, 2016, 78, 86.
4 Johnstone R., McCrystal S., Nossar I., Quinlan M., Rawling M., Riley J., Beyond Employment: The Legal

Regulation of Work Relationships, The Federation Press, Alexandria, 2012.
5 See generally Hardy T., Reconsidering the Notion of the “Employer in the Era of the Fissured Workplace: Traversing the

Legislative Landscape in Australia, in Nakakubo H., Araki T. (eds), The Notion of the Employer in the Era of the
Fissured Workplace: Should Labour Law Responsibilities Exceed the Boundary of the Legal Entity?, Kluwer Law
International, Alphen aan den Rijn, 2017, 53.
6 Legislative power to regulate workplace relations is shared, under the Australian Constitution, between the

federal and state parliaments. However, federal legislative capacity has been extended over the last 30 years
through reliance on the constitutional power to regulate corporations. See Stewart A., Forsyth A., Irving M.,
Johnstone R., McCrystal S., Creighton and Stewart’s Labour Law, The Federation Press, Alexandria, 2016, 101-
106.

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authority’ (i.e. federal public sector authorities) are designated as national system
employers7. ‘Employer’ for these purposes has its ordinary or common law meaning8,
which is premised on the traditional employment relationship between employer and
employee (as distinct from a principal-independent contractor relationship)9. The following
three examples illustrate how the Fair Work Act notion of the employer, and the related
concept of ‘employee’, operate to limit access to employment rights. This is followed by
discussion of other examples in which a broader range of business entities may be
subjected to employment obligations.


2.1. Unfair dismissal.

   Under Part 3-2 of the Fair Work Act, only employees can bring a claim to the Fair Work
Commission (FWC) for unfair dismissal against an employer10. This means that an
independent contractor has no right to challenge the termination of their contract, an issue
which has arisen in relation to workers putatively categorised as contractors in the gig
economy11. Several platform workers have sought to challenge their dismissals in recent
years, arguing that they were misclassified and were at law employees with the right to
pursue an unfair dismissal claim. In only one case to date has this argument succeeded: a
Foodora delivery rider who was able to show that the company exercised extensive control
through a ‘batching’ method that allocated work to riders utilising performance metrics12.
In other cases, Uber and Uber Eats drivers have been ruled ineligible to pursue unfair
dismissal claims, because the ‘wages-work bargain’ inherent in the employment relationship
was considered to be absent in the arrangements they entered into with these platforms 13.
These decisions have overlooked the various forms of control which platforms exercise
over gig workers (including an algorithmic form of performance management), and the
practical inability of the workers to develop their own independent businesses14.
   In addition, an employee can only bring an unfair dismissal claim against their direct
employer. In the context of agency work (known in Australia as ‘labour hire’), this means

7 Fair Work Act, section 14(1).
8-Fair   Work Act, section 12; see also the definition of ‘employer’ (and ‘employee’) provided at the
commencement of each Part of the legislation, and the definition of ‘national system employee’ in section 13
(‘an individual so far as he or she is employed, or usually employed’ by a national system employer).
9 Stewart et al, n. (6), 204-213.
10 Fair Work Act, section 382(a).
11 Stewart A., McCrystal S., Labour Regulation and the Great Divide: Does the Gig Economy Require a New Category of

Worker?, in Australian Journal of Labour Law, 2019, 32,1.
12 Klooger v Foodora Australia Pty Ltd [2018] FWC 6836; the employee also established that his dismissal by the

platform, allegedly for infringing its intellectual property rules, was really motivated by his public involvement
in campaigning for improved conditions for food delivery riders. He therefore won his unfair dismissal claim
and was awarded compensation, although by then Foodora had left the Australian market: Chau D., ‘Foodora
to cease operations in Australia later this month, but lawsuits still ongoing’, ABC News, 2 August 2018.
13 Kaseris v Rasier Pacific V.O.F. [2017] FWC 6610; Pallage v Rasier Pacific Pty Ltd [2018] FWC 2579; Suliman v

Rasier Pacific Pty Ltd [2019] FWC 4807; Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd T/A Uber Eats
[2020] FWCFB 1698.
14 See Forsyth A., The Uber Eats Decision: Australia’s FWC Full Bench misses the chance to see through the gig economy’s

sophistry, 2020, https://labourlawdownunder.com.au/?p=846, accessed 12 June 2020; Forsyth A., Playing
Catch-Up but Falling Short: Regulating Work in the Gig Economy in Australia, in King’s Law Journal, 31, 2020,
(forthcoming).

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the employee has no rights vis-à-vis the host business at which he or she is placed by an
agency15. This orthodox analysis enables host businesses to determine that they will no
longer accept the services of an agency’s employee (for example, because of concerns
about the employee’s performance or misconduct), without facing any unfair dismissal
liability16. The employee in such a situation may also be unable to bring a claim against their
employer (the agency), as the requirement of a termination ‘on the employer’s initiative’ 17
may not be satisfied (either because the agency keeps the employee ‘on the books’ but
without providing them with further work18, or the agency is able to point to the actions of
the host as the activating cause of the termination rather than any action of its own 19).
However, a series of more recent decisions limit the ability of an agency to rely on the
contractual entitlement of a host to have a labour hire employee removed from its site, as a
basis for the agency to avoid an unfair dismissal claim20.


2.2. Collective bargaining and industrial action.

   The system of collective agreement-making and ‘protected’ industrial action that may be
taken in bargaining for a new enterprise agreement, under Parts 2-4 and 3-3 of the Fair
Work Act, is based on the related concepts of employer and ‘enterprise’. The most common
form of agreement is one made by an employer and its employees for all or part of the
employer’s enterprise (a ‘single-enterprise agreement’)21. An ‘enterprise’ is ‘a business,
activity, project or undertaking’22. Agreements may also be made between two or more
employers and their employees, where the employers are ‘single-interest employers’23.
These are employers engaged in a common enterprise or joint venture24, related companies
in a corporate group,25 or employers specified in a ‘single interest employer authorisation’
(for example, franchisees in a franchise business structure) 26. Finally, agreements can be
made between two or more employers (who are not single-interest employers) and their
employees (a ‘multi-enterprise agreement’)27. A specific stream of multi-enterprise
bargaining is provided to assist low-paid employees to obtain a collective agreement28.



15 Arcadia v Accenture Australia (2008) 170 IR 288 (finding that no employment relationship exists as between
labour hire employee and host); FP Group Pty Ltd v Tooheys Pty Ltd [2013] FWCFB 9605 (rejecting the notion
that agency and host are joint employers).
16 Cresp v Nissan Casting Plant (Australia) Pty Ltd [2016] FWC 3845.
17 Fair Work Act, section 386(1)(a).
18 Bradford v Toll Personnel [2013] FWC 1062.
19 Pettifer v MODEC [2016] FWC 3194; Pettifer v MODEC [2016] FWCFB 5243.
20 Kool v Adecco Industrial Pty Ltd [2016] FWC 925; Tasmanian Ports Corporation Pty Ltd v Gee [2017] FWCFB

1714; Kumar v Australia Personnel Global Pty Ltd [2017] FWC 5661; Spinifex Australia Pty Ltd v Tait [2018]
FWCFB 6267; Star v WorkPac Pty Ltd [2018] FWC 4991.
21 Fair Work Act, section 172(2)(a).
22 Fair Work Act, section 12.
23 Fair Work Act, section 172(2)(a).
24 Fair Work Act, section 172(5)(a).
25 Fair Work Act, section 172(5)(b).
26 Fair Work Act, sections 172(5)(c) and 249(1)-(2); Re McDonalds Australia Pty Ltd [2013] FWC 2477.
27 Fair Work Act, section 172(3)(a).
28 Fair Work Act, Part 2-4, Division 9 and Part 2-5, Division 2.



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   The overwhelming focus of collective bargaining on the notion of the ‘enterprise’ has
the effect of limiting agreement-making to the direct employer of a group of employees.
So, for example, it is not possible for employees or their union to bargain with a host
business in the labour hire context29, nor across all of the employers in a particular industry
or sector30 (unless those employers agree to make a multi-enterprise agreement or are the
subject of a low-paid bargaining authorisation, as indicated above). Protected industrial
action in the form of strikes or work bans may only be taken in support of a single-
enterprise agreement, and not to progress demands for a multi-enterprise agreement31 or
for common claims at more than one employer32. The low-paid bargaining stream has not,
in practice, been successful in enabling unions to increase the coverage of agreements
across multiple employers in service industries like child care, cleaning and hospitality,
because the statutory tests for accessing it are far too stringent33.


2.3. Minimum employment standards.

   Under the Fair Work Act, minimum wages and employment conditions are set down in
instruments with legal force known as ‘awards’, which apply on an industry or occupational
basis34. A smaller number of minimum conditions, including various leave entitlements,
notice of termination and redundancy pay, form the ‘National Employment Standards’
(NES) applicable to all national system employees35. Employers are liable if they contravene
any provision of the NES in respect of an employee36, and are similarly liable for any
breach of an award37 or an enterprise agreement38. An employee may seek remedies from a
court including compensation for the amount of any underpayment arising from such a
breach, and the imposition of civil penalties against their employer39.
   As well as a claim against the direct employer, section 550(1) of the Fair Work Act opens
up the prospect of liability for contravention of the NES, an award or agreement on the
part of any other ‘person who is involved in a contravention’. This includes a person who
has aided, abetted or induced the breach, been in any way knowingly concerned in or party

29 Industrial Relations Victoria, Victorian Inquiry into the Labour Hire Industry and Insecure Work: Final Report,
Victorian Government, 31 August 2016, 102.
30 Creighton B., A Retreat from Individualism? The Fair Work Act 2009 and the Re-Collectivisation of Australian

Labour Law, in Industrial Law Jounal, 4’, 2011, 116, 125-127.
31 Fair Work Act, sections 409(1) and 413(1)-(2). See further McCrystal S., Why Is It So Hard to Take Lawful

Strike Action in Australia?, in Journal of Industrial Relations, 2019, 61, 1,129.
32 Fair Work Act, sections 412 and 421 (the prohibition of ‘pattern bargaining’).
33 Macdonald F., Charlesworth S., Brigden C., Access to Collective Bargaining for Low-Paid Workers, in McCrystal

S., Creighton B., Forsyth A. (eds), Collective Bargaining under the Fair Work Act, The Federation Press,
Alexandria, 2018, 206, 213-218. See also United Voice v Australian Workers’ Union of Employees (Qld) (2011) 207
IR 251; Australian Nursing Federation v IPN Medical Centres Pty Ltd [2013] FWC 511; United Voice [2014] FWC
6441.
34 Fair Work Act, Part 2-3.
35 Fair Work Act, Part 2-2.
36 Fair Work Act, section 44(1).
37 Fair Work Act, sections 45.
38 Fair Work Act, section 50.
39 Fair Work Act, sections 539(2) (Items 1, 2 and 4), 540(1) and 545; employees may initiate a claim for

recovery of underpayments by themselves, or with the assistance of their union or the federal enforcement
agency (Fair Work Ombudsman).

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to it, or conspired with others to effect it40. Under this ‘accessorial liability’ provision, other
parties such as company directors, senior managers, human resources managers, payroll
staff and even external accountants have been found to be primarily liable, or jointly liable
with employers, for underpayments41. A significant increase in the incidence of
underpayments in the last five years, commencing with systemic and widespread non-
compliance with awards by 7-Eleven stores42, raised the question whether accessorial
liability could be extended to franchisors within a franchise network or lead companies in
supply chains. By the time the 7-Eleven scandal emerged in 2015-2016, instances of seeking
to apply section 550 to establish liability on the part of a separate corporation (in addition
to the direct employer) had been rare43. This led to pressure for legislative amendments,
enacted in 201744, which are discussed in Section 3 below.


2.4. General protections and workplace bullying.

    Two other types of claims under the Fair Work Act adopt a broader approach to the
categories of worker and business entity that they apply to. First, ‘general protections’
claims under Part 3-1 may be initiated by an employee against their employer, or by an
independent contractor against their principal.45 These claims relate to situations where the
employer or principal has allegedly taken some form of ‘adverse action’ (for example,
dismissal or demotion)46 against an employee or contractor, because of their exercise of
various types of ‘workplace rights’47 or engagement in different kinds of ‘industrial
activity’48, or for a discriminatory reason49. In practice, most general protections claims are
brought by employees rather than contractors50. Independent contractors more frequently
bring claims under another provision in Part 3-1, section 357, which prohibits ‘sham
contracting’ (i.e. an employer misrepresenting an employment relationship as one of
principal and contractor)51.



40 Fair Work Act, section 550(2). As to the level of knowledge required to establish involvement in a breach
under this provision, see Hardy, n. (3), 87.
41 See for example Fair Work Ombudsman v Priority Matters Pty Ltd & Anor [2019] FCCA 56; Fair Work

Ombudsman v NSH North Pty Ltd [2017] FCA 1301; Ezy Accounting 123 Pty Ltd v Fair Work Ombudsman [2018]
FCAFC 134.
42 Berg L., Farbenblum B., Remedies for Migrant Worker Exploitation in Australia: Lessons from the 7-Eleven Wage

Repayment Program,’ in Melbourne University Law Review, 2018, 41, 3, 1035.
43 Hardy, n. (3), 87-90, discussing successful examples such as Fair Work Ombudsman v South Jin Pty Ltd [2015]

FCA 1456.
44 Fair Work Amendment (Protecting Vulnerable Workers) Act 2017.
45 Fair Work Act, section 342(1) (Items 1, 3).
46 Ibid.
47 Fair Work Act, sections 340-341.
48 Fair Work Act, sections 346-347.
49 Fair Work Act, section 351.
50 For discussion of the potential application of the protections afforded to contractors, see Stewart et al, (3),

669.
51 See for example Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 90 ALJR 107;

‘Ambassador’s bodyguard employed on sham contract, union alleges’, Workplace Express, 1 June 2017; ‘$1
billion class action could redefine sub-contracting arrangements’, Workplace Express, 22 November 2018; Patty
A., “It’s not fair. It’s not right”: Rider takes Deliveroo to court, in Sydney Morning Herald, 28 August 2019.

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   Secondly, Part 6-4B enables a worker to apply to the FWC for an order that bullying at
work by an individual or group of individuals stop52. For these purposes, the term ‘worker’
takes its meaning from the Work Health and Safety Act 2011 (see below), and includes an
employee, contractor, apprentice, trainee, work experience student or volunteer.53 The
businesses within which a workplace bullying claim can arise are centred on the concept of
a ‘person conducting a business or undertaking’ (PCBU), also derived from the Work
Health and Safety Act, but limited by section 789FD(3) of the Fair Work Act to specific types
of PCBU54. Anti-bullying orders, although rarely made by the FWC55, can potentially be
directed towards a worker’s employer, principal, co-worker(s) and even persons who visit
the workplace56.


2.5. Work health and safety.

   Uniform work health and safety (WHS) laws have been adopted at the federal level and
in all Australian states and territories apart from Victoria and Western Australia. 57 These
statutes, modelled on the federal Work Health and Safety Act, significantly broaden potential
accountability for the safety of workers and the public beyond the narrow concept of the
employer. The uniform WHS laws ‘channel the relevant regulatory focus towards the
business activity in question rather than the formal legal structure’58. This is achieved by
imposing the primary duty of care on the ‘PCBU’ (see above), a very wide concept which
includes an employer, an occupier of premises, various types of lead businesses (for
example, franchisors, principal contractors), franchisees, subcontractors, digital platforms,
labour hire agencies and host businesses59. The framing of WHS regulation around the
notion of the PCBU operates in tandem with the wider definition of ‘worker’ (see above),
ensuring that safety protections afforded by the primary duty of care ‘clearly cover workers
carrying out work in most multilateral work arrangements’60.




52 O’Rourke A., Antioch S., Workplace Bullying Laws in Australia: Placebo or Panacea?, in Common Law World
Review, 2016, 45, 1, 3.
53 Fair Work Act, section 789FC(2), although a person volunteering in a wholly-volunteer organisation that

has no employees is excluded from bringing a bullying claim: Re McDonald [2016] FWC 300; compare Re Legge
[2019] FWC 5874 and Bibawi v Stepping Stone Clubhouse Inc [2019] FWCFB 1314.
54 These include constitutional corporations, the Commonwealth or Commonwealth authorities.
55 The FWC adopts an intensive case management approach to bullying claims, aimed at restoring safe and

productive workplace relationships, leading to a very high settlement rate: FWC, Annual Report: Access to Justice
2018-19, 2019, 50-51.
56 Stewart et al, n. (6), 704.
57 The Work Health and Safety Bill 2019 is currently before the Western Australian Parliament.
58 Hardy, n. (3), 93.
59 Johnstone R., Regulating Work Health and Safety in Multilateral Business Arrangements, in Australian Journal of

Labour Law 2019, 32, 1, 41, 45.
60 Ibid., n.(59); see also 46-49.



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3. Regulatory Responses to Overcome Limitations of the Unitary Concept of
Employer.

    The discussion in Section 2 has shown that, with few exceptions, the locus of Australian
workplace regulation is framed around the traditional employment relationship. This gives
rise to many limitations in the ability of employees or unions to exercise individual and
collective rights against entities other than the direct employer. Hardy has examined the
normative justifications for extending liability to third parties for non-observance of
minimum employment standards. These include that the lead firm may have caused the
direct employer to engage in breaches; that it may possess the power in the supply chain to
prevent contraventions from occurring; and that it may have benefitted (directly or
indirectly) from the breaches61. Rationales of this kind are evident in the various regulatory
interventions adopted at federal and state level over the last ten years or so to address the
limitations arising from the unitary concept of employer in Australian labour law, which are
examined now.


3.1. Labour hire.

   Two different sets of issues arise for workers from the use of third-party labour
providers in different sectors of the labour hire market. The first group of providers are in
what might be termed the mainstream or reputable part of the labour hire industry. These
businesses are larger, well-established labour hire agencies, which generally comply with
awards and have systems in place to ensure host businesses follow workplace health and
safety requirements62. The problems for employees of these agencies include determining
where liability for unfair dismissal lies as between the agency and the host (as discussed in
Section 2 above)63; and differential treatment compared with employees of the host (for
example, those employees are often entitled to higher rates of pay under an enterprise
agreement entered into by the host, which does not apply to labour hire workers on site) 64.
Another issue is that many labour hire staff are engaged as casuals65, ending up in long-term
insecure employment (for example, this is a common experience for labour hire workers
placed in manufacturing plants or distribution warehouses)66. However, two recent judicial
decisions have challenged the ability of employers to retain labour hire workers as casuals
indefinitely, by granting them leave entitlements associated with permanent employment
where the ‘casual’ arrangements are in fact regular and ongoing67.


61 Hardy, n. (3), 101-102.
62 Industrial Relations Victoria, n. (29), 53-54, 81.
63 See also ibid, 111-116.
64 Ibid, 98-103.
65 A ‘casual’ employee is one engaged on an uncertain and irregular basis, as compared with full-time or part-

time employment: Stewart et al, n. (6), 245. On the high incidence of casual employment in labour hire, see
Industrial Relations Victoria, n. (29), 61-62, 89-90.
66 Industrial Relations Victoria, n. (29), 77, 79-80, 89-90, 106; Hatch P., In Amazon’s “Hellscape”, Workers Face

Insecurity and Crushing Targets, in Sydney Morning Herald, 7 September 2018; Schneiders B., Strikes to Hit Chemist
Warehouse as Workers Seek Huge Pay Boost, in Sydney Morning Herald, 1 March 2019.
67 WorkPac Pty Ltd v Skene [2018] FCAFC 131; WorkPac Pty Ltd v Rossato [2020] FCAFC 84.



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    In 2016, the Victorian Inquiry into Labour Hire and Insecure Work recommended the
adoption of an industry Code of Practice, to improve the three-way relationship between
agency, host and employee. The Code (which has not been implemented) could include
best practice arrangements in relation to matters like the rostering of labour hire staff and
fair processes in decisions leading to dismissal68. Another regulatory solution adopted by
unions is the inclusion of ‘site rates’ clauses in enterprise agreements made with host
businesses. These clauses require agreement rates of pay to be extended to any labour hire
employees on site69. An extension of this approach was adopted in the Australian Labor
Party’s 2018 proposal to enact the principle of ‘same job, same pay’ for labour hire workers
(i.e. ensure that they receive the same pay and conditions as direct employees)70. This
proposal could perhaps have taken a similar approach to that found in the Agency Workers
Regulations 2010 (UK)71. Nevertheless, the policy was not fully developed, nor ultimately
implemented, as Labor lost the May 2019 federal election.
    The second group of labour intermediaries are those termed by the Victorian Inquiry as
‘rogue’ labour contractors72, whose role in industries such as horticulture, meat processing
and contract cleaning has become more visible in the last five years73. These labour
providers engage in blatantly exploitative conduct, including significant levels of
underpayment of award wages, provision of sub-standard accommodation, non-observance
of workplace health and safety rules and dangerous transportation of workers to work
sites74. Usually, the contractors are not labour hire agencies or any form of legitimate
business. They operate in the shadows, taking advantage of the vulnerability of migrant
workers in particular, and are difficult to monitor or trace for purposes of enforcing
workplace and other laws75. The regulatory response to this problem has been the adoption
of labour hire licensing laws in three states: Queensland, South Australia and Victoria76.
    Under these statutes, only legitimate businesses with a demonstrated capacity to comply
with workplace, safety, taxation, migration and related laws can obtain a licence to provide
labour hire services. The labour hire legislation in each state also imposes on host
businesses the obligation to utilise only licensed labour hire providers. Substantial penalties
apply both to providers operating without a licence, and to hosts using unlicensed



68 Industrial Relations Victoria, n. (29), 260.
69 Ibid., 103-107.
70 Australian Labor Party, Same Job, Same Pay: Labor’s Plan to Tackle Unfair Labour Hire, July 2018.
71 For an assessment, see Forde C. and Slater G., The Effects of Agency Workers Regulations on Agency and Employer

Practice, ACAS Research Paper 01-14, 2014.
72 Industrial Relations Victoria, n. (29), 53-54, 81.
73 See for example Howe J., Reilly A., Wright C., van den Broek D., Clibborn S., A Critical Examination of the

Relationship between Labour Hire Intermediaries and Growers in the Australian Horticulture Industry, in Australian Journal
of Labour Law, 2019, 32, 1, 83. See also (on non-compliance in the construction industry) Hannan E., 80 pc of
labour hire firms breaking law, ABCC audit shows’, in The Australian, 19 June 2020.
74 Industrial Relations Victoria, n. (29), Chapter 4; Finance and Administration Committee, Parliament of

Queensland, Inquiry into the Practices of the Labour Hire Industry, Report No 25 of the 55th Parliament, June 2016,
19–23; Economic and Finance Committee, Parliament of South Australia, Final Report: Inquiry into the Labour
Hire Industry, Report No 93, October 2016, 24–35.
75 See for example Industrial Relations Victoria, n. (29), 185, 193-196.
76 Labour Hire Licensing Act 2017 (Qld); Labour Hire Licensing Act 2017 (SA); Labour Hire Licensing Act 2018

(Vic). See also Labour Hire Licensing Act 2020 (ACT), establishing a licensing scheme in the Australian Capital
Territory.

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providers77. In this way, labour hire licensing laws aim to eradicate disreputable operators
from entering the market. They do not challenge the foundational conception of the labour
hire contractor (or agency) as the legal employer of workers supplied to host businesses.
However, they distribute some of the responsibility for compliance with minimum
employment standards to hosts, thereby countering the tendency of many users of labour
hire services to ‘turn a blind eye’ to exploitation from which they benefit. This regulatory
approach has been shown to be effective in raising standards of business behaviour and
reducing exploitation of vulnerable workers, over more than 15 years of experience in the
United Kingdom78.


3.2. Franchise business structures.

    It was noted in Section 2 above that the 7-Eleven underpayment scandal led to the
passage of amendments to the Fair Work Act in 2017, to increase the level of protection
afforded to employees in franchise businesses. Exploitation in the franchise sector has
extended further than 7-Eleven, with revelations of underpayments and other employment
law breaches also in Domino’s Pizza franchises79, Caltex petrol outlets80, the Subway fast-
food chain81 and various brands operated by Retail Food Group (including Donut King,
Brumby’s and Gloria Jean’s)82. In Australian franchise networks, the franchisee (for
example, the 7-Eleven store operator) is the legal employer of the employees, and therefore
liable for any underpayments or other award breaches that may occur83. The nature of
franchise networks is such that, frequently, franchisees are under considerable pressure
from franchisors to reduce labour costs84. Franchisors often exercise a high level of control
over franchisees in relation to matters such as product presentation, branding and use of
particular suppliers85. In these ways, franchisors transfer much of the risk of business
operations (including in relation to employment law compliance) onto franchisees, while
still deriving a considerable proportion of the profits86.

77 Forsyth A., Regulating Australia’s ‘Gangmasters’ through Labour Hire Licensing, in Federal Law Review, 2019, 47,
3,469.
78 See for example Gangmasters Licensing Authority, The Preventative Impact of Licensing on Labour Exploitation,

June 2015; Metcalf D., United Kingdom Labour Market Enforcement Strategy 2018–19, Director of Labour Market
Enforcement, Report, May 2018, 68, 95. Compare, however, Ariyawansa S., A Red-Tape Band-Aid or a Solution?
Lessons from the United Kingdom’s Gangmasters (Licensing) Act 2004 for Temporary Migrant Workers in the Australian
Horticulture Industry, in Australian Journal of Labour Law, 2017, 30, 2, 158.
79 Ferguson A., Christodoulou M., Domino’s Pizza workers kept in the dark about underpayment for almost two years, in

Sydney Morning Herald, 14 February 2017.
80 Ferguson A., FWO report on Caltex is a shocker, in Australian Financial Review, 5 March 2018.
81 Ryan P., Subway forced to cough up workers’ unpaid wages in crackdown on fast-food sector, in ABC News, 1 October

2019.
82 Ferguson A., Danckert S., “It’s like 7-Eleven”: claims underpayment is rife at RFG, in Sydney Morning Herald, 18

December 2017.
83 Hardy T., Shifting Risk and Shirking Responsibility? The Challenge of Upholding Employment Standards Regulation

within Franchise Networks, in Australian Journal of Labour Law, 2019, 32, 1, 62, 63, 65.
84 Ibid., 66.
85 Johnstone et al, n. (4), 70-71; Kellner A., Peetz D., Townsend K., Wilkinson A., “We are Very Focused on the

Muffins”: Regulation of and Compliance with Industrial Relations in Franchises, in Journal of Industrial Relations, 2016, 58,
1, 25.
86 Johnstone et al, (4), 70; Hardy, (83), 64-65.



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   Prior to the 2017 amendments, the Fair Work Act proved insufficient to counter the
particular problems arising from non-compliance within franchises. The accessorial liability
provision (section 550, discussed earlier) had only been used successfully to make a
franchisor liable for underpayments in one case87. In the high-profile 7-Eleven case, the
courts generally took the view that the franchisor (7-Eleven’s Australian head office) ‘was
not at fault’88. On the contrary, the Fair Work Ombudsman found (in its inquiry into the 7-
Eleven scandal) that the franchisor could have prevented the underpayments by the
franchisees in light of its control over the settings in which they operated89. This
contributed to public pressure for legislative reforms that would hold franchisors
accountable, which came in the form of the Fair Work Amendment (Protecting Vulnerable
Workers) Act 2017.
   The 2017 legislation introduced amendments to the Fair Work Act, under which
franchisors and holding companies may be held liable for workplace law breaches by
franchisees and subsidiaries, where they have actual or imputed knowledge of the
contraventions and do not take reasonable steps to prevent them90. In the franchise
context, liability applies where the business conducted by the franchisee is substantially or
materially associated with intellectual property relating to the franchise, and the franchisor
has a significant degree of influence or control over the franchisee’s affairs 91. These
provisions represent the most deliberate statutory attempt, to date, to challenge the
limitations of the traditional unitary concept of the employer in holding Australian
businesses accountable for non-compliance with minimum standards. There have not yet
been any decided cases to indicate how effective the amendments are in achieving that goal
in practice.92 Concern has been raised, however, that franchisors may be able to manipulate
relevant factors in the statutory defence to avoid liability93.




87 Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290, discussed in Hardy, (83), 74-75.
88 Hardy, n. (83), 72-73, discussing decisions such as Fair Work Ombudsman v Hiyi Pty Ltd [2016] FCCA 1634;
Fair Work Ombudsman v JS Top Pty Ltd [2017] FCCA 1689. Note, though, that 7-Eleven head office took
responsibility for recompensing all underpaid workers through its wage repayment scheme: see Berg and
Farbenblum, n. (42).
89 Fair Work Ombudsman, A Report of the Fair Work Ombudsman’s Inquiry into 7-Eleven: Identifying and Addressing

the Drivers of Non-Compliance in the 7-Eleven Network, Commonwealth of Australia, April 2016, discussed in
Hardy, (83), 74.
90 Fair Work Act, Part 4-1, Division 4A; see in particular section 558B.
91 Fair Work Act, section 558A. For detailed examination of the 2017 franchisor liability provisions, see

Hardy, n. (83), 75-82.
92 In the only decision related to the 2017 provisions so far, the Federal Court of Australia refused the Fair

Work Ombudsman’s application to require a franchisor to produce documents in an investigation into its
alleged liability under section 558B for underpayments by one of its franchisees: Fair Work Ombudsman v
United Petroleum Pty Ltd [2020] FCA 590.
93 Hardy, n. (83), 78-80, discussing section 558B(3)-(4): the defence is taking reasonable steps to prevent

breaches from occurring, having regard to factors such as the size and resources of the franchise, the
franchisor’s ability to influence or control franchisees, any action taken by the franchisor to ensure the
franchisees had reasonable knowledge of workplace laws, and arrangements put in place by the franchisor to
ensure compliance by franchisees and deal with complaints about underpayments or other breaches.

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3.3. Supply chains.

   Complex supply chains have been the focus of various innovative regulatory strategies
in Australia94. Johnstone et al have observed that (like franchising and labour hire,
discussed earlier):
             The supply chain is another business structure that by its nature obscures the real economic
         relationship between business controllers and the workers who actually carry out the work. …
         These integrated supply chain systems … enable firms at or near the apex of the chain to avoid the
         legal proximity with workers that may attract various obligations and liabilities, but at the same
         time enable them to maintain effective commercial control over the work performed95.

Countering this business model has come in several different forms. First, exploitation of
home-based ‘outworkers’ in the textile, clothing and footwear (TCF) industry over a long
period of time led to implementation of a complementary legislative framework in four
Australian states. These laws include provisions deeming outworkers (generally considered
to be independent contractors) as employees, and providing them with the right to recover
unpaid entitlements against a range of parties across the clothing supply chain (although
not clothing retailers or consumers)96. A similar scheme was implemented federally through
amendments made by the Fair Work Amendment (Textile, Clothing and Footwear Industry) Act
2012. Part 6-4A of the Fair Work Act allows outworkers to recover unpaid wages, leave and
superannuation from an entity above them in the supply chain, for whom work has been
indirectly performed97. The federal and state regulatory approaches seek to bring clothing
retailers into responsibility for fair treatment of TCF outworkers, through codes of practice
imposing obligations relating to the commercial relationships retailers enter into with
manufacturers and suppliers98 (for example, requiring manufacturers to disclose details of
production locations to retailers99).
   Secondly, a short-lived experiment with supply chain regulation in the road transport
industry was implemented through the Road Safety Remuneration Act 2012. This legislation
established the Road Safety Remuneration Tribunal (RSRT), a specialist body with powers
to set minimum rates and other conditions for employees and self-employed owner
drivers100. Obligations could also be imposed on other participants in the transport supply
chain. This can be seen in the RSRT’s Contractor Driver Minimum Payments Road Safety
Remuneration Order 2016. It required consignors and consignees of goods, operators of
premises for loading and unloading goods, and other contractual intermediaries to take
reasonable steps to ensure that hirers of drivers were not impeded from complying with the

94 Rawling, Howe, n. (1), 235.
95 Johnstone et al, n. (4), 66.
96 The relevant state laws in New South Wales, Victoria, South Australia and Queensland are examined in

Rawling, Howe, n. (1), 236-239.
97 Stewart et al, n. (6), 254-255. See also Textile, Clothing and Footwear and Associated Industries Award 2010,

Schedule F.
98 Rawling and Howe, n. (1), 238-239; Stewart et al, (6), 255.
99 Nossar I., Johnstone R., Macklin A., Rawling M., Protective Legal Regulation for Home-based Workers in

Australian Textile, Clothing and Footwear Supply Chains, in Journal of Industrial Relations, 2015, 57,4, 585, 592-593.
100 Rawling M., Kaine S., Regulating Supply Chains to Provide a Safe Rate for Road Transport Workers, in Australian

Journal of Labour Law, 2012, 25, 237.

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minimum rates specified in the order101. One of the objectives here was to counter the
negative supply chain effects of inadequate minimum pay rates for drivers, including the
necessity to take on additional work and engage in unsafe practices to complete deliveries
within unreasonable time-frames102. However, the order operated for only two weeks prior
to the RSRT’s abolition by the Coalition Government in the lead-up to the 2016 federal
election.103 It is therefore not possible to assess the effectiveness of this regulatory
intervention in supply chains. The backlash against it104, though, highlights the power of
business forces to resist regulation that transcends the traditional conception of the
employer.
    Thirdly, the Fair Work Ombudsman has sought to make wider supply chain actors
responsible for labour standards compliance through litigation relying on section 550 of the
Fair Work Act (discussed above). This formed part of a deliberate ‘strategic enforcement’
approach on the part of the regulator, combining enforcement action in the courts with
other tools such as enforceable undertakings and compliance deeds ‘to look beyond labour
law’s traditional focus on the liability of the contractual employer of labour’105. One of the
most significant examples related to the underpayment of supermarket trolley collectors,
typically employed by subcontractors at the base of a supply chain with the peak occupied
by the major supermarkets: Coles and Woolworths106. In one case, the Fair Work
Ombudsman instigated proceedings for award breaches against the direct employing
entities, and against Coles based on its alleged involvement in the contraventions under
section 550107. The Coles litigation was resolved through an enforceable undertaking in
which the company accepted its ‘ethical and moral responsibility’ to ensure compliance by
all parties involved in running its enterprise108. In another case, a contracting entity above
the direct employer of trolley collectors was found to be liable as an accessory to
underpayments engaged in by that employer109.
    In summary, these measures to lift compliance with minimum labour standards in
complex supply chains have met with mixed success. The approach adopted in the TCF
sector has arguably been the most effective, utilising a combination of federal and state
legislation, the industry award and both mandatory and voluntary codes to ‘enable hidden
workforces to be made visible and enable monitoring and enforcement of legal liability and
responsibility for fair working conditions’110. It is also important to note that supply chain
regulation in the TCF and road transport industries came about following many years of

101 Stewart et al, n. (6), 428.
102 See for example the RSRT’s ruling in Re Third Annual Work Program [2015] RSRTFB 15.
103 Road Safety Remuneration Repeal Act 2016. See Stewart et al, (6), 180, 428; Rawling M., Johnstone R. Nossar

I., Compromising Road Transport Supply Chain Regulation: The Abolition of the Road Safety Remuneration Tribunal, in
Sydney Law Review, 2017, 39,3, 303.
104 Thornthwaite L., Controversial History of Road Safety Tribunal Shows Minimum Pay was Doomed from the Start, in

The Conversation, 15 April 2016.
105 Hardy T., Howe J., Chain Reaction: A Strategic Approach to Addressing Employment Noncompliance in Complex

Supply Chains, in Journal of Industrial Relations, 2015, 57, 4, 563, 563-565.
106 Johnstone R., Stewart A., Swimming Against the Tide? Australian Labor Regulation and the Fissured Workplac,’ in

Comparative Labor Law and Policy Journal, 2015, 37, 55, 76-77.
107 Hardy, n. (3), 88, noting that significant penalties were imposed on the direct employers responsible for

underpaying the trolley collectors: Fair Work Ombudsman v Al Hilifi [2016] FCA 193.
108 Hardy and Howe, n. (105), 571.
109 Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456, discussed in Hardy, (3), 89.
110 Nossar et al, n. (99), 600.



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campaigning by trade unions in those sectors.111 The role of unions in agitating for
regulatory reform to overcome the limitations of the unitary concept of the employer in
Australian labour law is considered in the concluding section which now follows.


4. Conclusion.

   This article has illustrated the limitations of Australian labour law’s capacity to protect
workers outside the framework of the traditional employment relationship. Regulatory
interventions to address these constraints have mostly been focused on finding a way to
hold lead firms accountable for compliance with minimum labour standards, for example
through labour hire licensing, franchisor liability provisions and supply chain schemes.
Important as these experiments have been, more is needed to effectively challenge the
ability of employers to distance themselves from responsibility through multilateral
business models. The main TCF union has argued that collective bargaining at the sectoral
or supply chain level is required to engage all relevant parties in the clothing production
process112. The Australian Council of Trade Unions contends that workers should be able
to determine their preferred level of bargaining, whether that be across industries, supply
chains, franchises or wherever the locus of employer power is113. The United Workers
Union has shown, through its Fair Food Campaign over the last few years, that gains can
be obtained for workers through a ‘whole of supply chain’ approach to collective
organisation and solidarity114. Legislative change to enable collective bargaining beyond the
narrow focus of the employing enterprise is essential, if business reliance on the unitary
concept of the employer is to be meaningfully contested in the Australian setting.




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Anthony Forsyth                                                           Italian Labour Law e-Journal
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Copyright © 2020 Anthony Forsyth. This article is released under a Creative Commons
Attribution 4.0 International License




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