Victorian/Tasmanian Branch

TRANSPORTWORKERSUNIONOFAUSTRALIA

VICTORIAN/TASMANIAN BRANCH

ABN47634608538

President:AllanTaylor

VicePresident:JamesHughesBranchSecretary:WayneMader

BranchAssistantSecretary:JohnBergerTrustees:ChrisFennell,KevinWhelan

7December2015

KathFawcettInquirySecretariat

VictorianInquiryintothe

LabourHireIndustryandInsecureWorkMelbourne

Byemail:

DearKath,

52-56RouseStreet,PortMelbourne

P.O.Box203,PortMelbourne,Vic.3207Tel:1300727614Fax:(03]96461792

Email:bsite:

VictorianInquiryintotheLabourHireIndustryandInsecureWork-TWUSubmission

TheTransportWorkersUnionwelcomestheVictorianGovernment'sInquiry intoLabourHireIndustryandInsecureWork.

TheUnion'sSubmissionsforconsiderationbythe Inquiryareenclosed.

ForfurtherinformationIcan becontactedattheofficeormobileon0402039189.

Yourssincerely,

BranchSecretary

Enc.

TRANSPORTWORKERSUNIONOFAUSTRALIA(TWU)

SUBMISSIONTOTHEVICTORIANINQUIRYINTOTHELABOURHIREINDUSTRYANDINSECUREWORK

7December2015

PREAMBLE

THETWUSUPPORTSTIPTRUCKOWNERDRIVERSFORBETTERPAYANDCONDITIONSANDGREATERWORKSECURITYWITHPLANTHIRERS(ANDBUILDERS)INTHEEXCAVAT/ONINDUSTRY

INTRODUCTION

TheTransportWorkersUnionofAustralia(TWU)isaregisteredindustrialorganizationundertheFairWork(RegisteredOrganisations)Act2009(Cth).

TheTWUhasover20,000membersinVictoriaandTasmania.Membersaredrawnfromadiversityofsectorsinthetransportindustry,includingairports,armouredcars,bulkmilkcarters, busindustry,buildingandconstruction,excavation,furnitureremoval,logcarters,mixedindustries,oilandgas,ownerdrivers,roadtransport,retailmilk,taxidrivers,towtrucksandwaste.Unionmemberscompromiseofemployees,labourhireemployeesandownerdrivers.

TheTWUisanindustrialorganizationrepresentingmembersforoveracentury.Ithasbeenastaunchsupporterandrepresentativeofworkersinthetransportindustryandhasfoughtforworkers'rightsunderdifferentworkmodels:thetraditionalemployer­employeemodel,labourhireandownerdrivermodelsprovidedthatsucharrangementsaregenuine andlegitimateandarenotarrangementsdressedupassomethingelsetoavoidthepaymentsofstandardminimumindustrialorlegalentitlements.

AsignificantnumberofTWUmembers(around30%)operateassmallbusinesses intheformofOwnerDrivers.Around80-85%ofthesebusinessesarecorporations;theremainderoperateassoletradersorpartnerships.

ByvirtueofitslongrepresentationalhistorytheTWUhasestablishedauniqueunderstandofthecommercialandoperationalrealitieswithinwhichthesesmallbusinessesoperateandhastakenonthecorrespondinguniqueresponsibilityofassistingOwnerDriverstobecomeand/orremainviablesmallbusinessentities.

OnbehalfoftheOwnerDriversthatareacorecomponentofitsconstituency,the TWUmakessubmissionsregardingtheVictorianInquiryintotheLabourHireIndustryandInsecure Work.

OWNERDRIVERSANDFORESTRYCONTRACTORSACT

TheTWUiscommittedtoprotectingtheimportantbenefitswhichflowfrom appropriatelymaintainedsmallbusinessstructuresinthetransportindustry.TheTWUhas,withthewidespreadsupportofindustry,soughtthatOwnerDrivervulnerabilitiesbeaddressedthroughlegislationinVictoria.

TheUnionhasbeenastrongadvocateforTWUMemberswhoareownerdrivers.ItfoughtforandwonthesupportoftheVictorianGovernmentin2005whentheOwnerDriversandForestryContractorsAct2005wasintroducedforthefirsttimetoregulatetherelationshipbetweenahirerandcontractorinthetransportindustry.

THEUNIQUESTATUSOFOWNERDRIVERSSMALLBUSINESSES

ItisimportantforthisInquirytoacknowledgeattheoutsetthatIndependentcontractingarrangementsinfactarebestviewedasacontinuumofdifferingarrangementsrangingfromgenuinelyindependentbusinessarrangementswhichdeterminetheirownprioritiesandhavesomemarketpowerthroughtoarrangementsliketheOwnerDrivermodel,whichalthoughprovidingtangibleproductivityandefficiencybenefitshasmanyofthehallmarksofexploitabledependency.

Accordingly,someofthesesmallbusinesseshaveattracted,andoughtcontinuetoattract,adegreeofregulatoryprotection.OwnerDriversareadiscretecategoryofsmallbusiness,vulnerabletoexploitationbecauseofthedependantnatureofthecontractualrelationshipspursuanttowhichtheyperformwork.

TheveryrealefficienciesattachingtotheOwnerDriver-principalcontractormodelflownotfromtheindependenceoftherelationshipbutfrompreciselytheopposite.EaseofentryviafinancingarrangementsleadingtohighlevelsofdebtencourageOwnerDriverstoestablishand/ormaintainhighlydependent relationshipswithprincipalsforwhomtheyworknecessarilyhardinordertoservicedebt andmakealivingforthemselvesandtheirfamilies.

ThedegreeofpracticalindependencethatmostOwnerDriversexerciseinthedaytodayoperationoftheirbusinessesisminimal.Forexample,theoverwhelmingmajorityofOwnerDriversalmostwithoutexception:

•Performworkforasingletransportoperator;

•Performworkatthebehestofthatoperatorinaccordancewithveryspecificpriorities(includingspecificdelivery/pick-up priorities)setbythedirectorsandmanagementofthatoperator;

•Areusuallyrequiredtoholdthemselvesavailabletoperformworkforasinglecontractorthusrenderingthemunavailableforanyoneelse;

•Takedirectionfromthatoperatoronadaytodaybasisasiftheywereemployeesoftheoperator;

•Arerequiredtopaintorotherwisemarkthevehiclestheyprovidewiththeoperator'scoloursand/orinsignia;

•Havelittleornopowertosetprice,rathertheytakethepricetheyaregiven;and

•Operatewithverytightmargins

Theseareindicatorsnotoftheindependencebutofdependencyandreliance.

Thisdependencebringswithitvulnerability.ThenecessityforOwnerDriverstoreceiveasteadystreamofworktomeettheirfinancialcommitmentontheirtruckand,inadditions,earnadecentlivingforthemselvesandtheirfamiliesplacestheprincipalcontractorinaverypowerfulposition.

TIPTRUCKOWNERDRIVERS

ThefocusoftheUnioninthisSubmissionisTipTruckOwnerDrivers.ThereappearstobeagapinFederalandStatelegislationinregulatingtherelationshipbetweenTipTruckOwnerDriversandPlantHirersusedbyBuildersintheexcavation industry.

InadditiontogeneralOwnerDriverissuesraisedabove,TipTruckOwnerDriversalso:

•Arepricetakers;

•Haveexperienceddecliningratesoverthelastdecade,andincreasingbusinessoverheadcosts;

•Experiencesignificantperiodsofunpaidwaitingtimes;

•Oftenexperience flator'all-in'ratesthatdonotcompensateforlabour,letalonedeliveringanyprofitonsignificantcapitalinvestmentorrewardfortherisk;

•Experienceasignificantinformationimbalancecomparedwiththosewhoengagethem;

•Areabletobeterminatedwithnoorminimalnotice,butareunabletoeffectivelychallengeterminationoftheircontractsonthebasisofharshnessorunfairness.

TheUnionprovidesthefollowingoverviewoftheissuesandconcernsithasforitsmembertiptruckownerdriversandcallsuponthisInquirytoaddressthesemattersbymakingrecommendationstotheStateGovernment(whicharelistedonthelast pageofthisSubmission).Theoverviewwhichfollowsisin accordancewiththe3.3and56Questionsforparticipantstoaddressinsubmissionsatpage1024ofTheVictorianInquiryintotheLabourHireIndustryandInsecureWorkBackgroundPaperOctober2015

(A)TowhatextentislabourhireusedinVictoria?Inwhichindustriesandregionsisitmostprevalent?

Owner-driverswhooperateTipTrucksintheexcavationindustrydosoonasimilarbasistoaworkerwhoisemployedinatraditionallabourhirearrangement.The"HostEmployer"inthiscaseistheBuilderwhoneedsearthworkscompletedonaconstructionsite.TheBuilderwillcontractthisworkouttoaPlantHirecompanyknownasthe"TheSupplier".ThePlantHirerwhowillthensourceandengageaTipTruckOwnerDriver(TheWorker)whowillprovidethelabourtocompletethejob.

TheonlyfeaturethatdifferentiatesthisarrangementtoanyotherformoflabourhireisthattheTipTruckOwnerDriverprovidesatruckaswellastheirlabour.EarthmovingworkisconductedoverwhelminglyonaLabourHiremodel.Therecouldbeanywhereuptoathousandtippers ontheroadinVictoriaandofthesetheUnionestimateslessthan100wouldbedirectlyemployedasemployeesbyoneofthePlanthirersandasimilarnumberwouldbedirectlyengagedbyaBuilder.

(B)Whatdolabourhire suppliersinVictorialooklike(e.g.size,sectorstheyoperatein,localorpartofnational/multinationalbusiness)?

Intheexcavationindustrytherearefivemainplanthirecompanies:EasternPlantHire(EPH),Lantrak,FleetPlantHire,SouthernPlantHireandKingstonPlantHire.Thesefivecompaniesmakeupapproximately80%oftheindustry.Therearealsomany smalleroperatorsintheindustry.Thelowbarrierstoentrymeanthesesmallercompanieswillcomeandgofromtheindustry.

(C)Howarelabourhireworkersgenerallyengaged?Towhatextentaretheyengagedasemployees?Orasindependentcontractors?

TipTruckOwnerDriversregisterwithoneormoreofthePlantHirercompanies.Theywillthenreceiveoffersofworkonanad-hocbasisusuallyviatextmessage.Themessagewilltypicallysaythereisajobavailableatvariouslocationsthatwillpayanamounteitherbythemeterorbythetonneorlesscommonlybythehour.

These offersofworkdonotbindtheplanthirecompanytoactuallyprovidetheworkandcanbecancelledatanytime upuntilworkactuallycommences.Inwetweatherajobmightgoonholdforanumberofhoursandthenbecancelledafteritsscheduledstarttime,in thesecasesthedriverwillnotbepaideventhoughtheyhavespenthourswaitingatthejobsite.Onceworkcommencesthereisalsonothingstoppinganotherplanthirecompanyapproachingthebuilderandundercuttherate.Thisresultsinthe jobbeingofferedtoowner­driversatalowerrate.

OfthemainfiveplayersonlyEPHdirectlyengagedrivers.Theyhavesomewherebetween30-60driversdirectlyengageddriversoperatingcompanyownedfleet.However,theoverwhelmingmajorityoftheworkersEPHengageareownerdrivers.

(D).Whatworkingconditionsdolabourhireworkerstypicallyhave?Whatdifferencesarethere,ifany,betweentheconditionsofdirectemployeesofahostorganisationandlabourhireworkers?

TheratesofpayforaTipTruckOwnerDriverisdeterminedbythemarketratefortrucksonanygivenday.

Iftrucksarehardtogetownerdriverswillearnagoodrate.However,ifthereislittleworkonofferdriverscanworkforbelowthecostofrunning atruckfortheday.Otherconditions(suchasextrapayforworkingatnightorminimumpaymentwhereajobiscancelled)arepatchyanddependlargelyonthedemandfortrucks.

(E.Inwhatwaysdo hoststypicallyuselabourhireworkers?Aretheyusedtosupplementortoreplaceongoingworkforcesordirectemployees?

TheuseofPlant Hirershasalmostcompletelyremoved theneedforBuilderstoengagetheirowntipperdrivers.

(F).Doestheuseof labourhireimpacttheavailabilityofapprenticeshipsandtraineeships?

No

(G).Towhatextentdohostsinquireintothelabourpracticesoflabourhiresuppliers?Shouldthisoccur?

Notatall.Inmanyinstancestheeconomicpressureexertedbythelowratesintheindustryforcedriversintounsafebehaviorontheroad,inparticularfailingtotakemandateddriverfatiguebreaks.

NoneoftheHostEmployersthattheTWUisawareofhaveanysystemsinplacetoensurethesedriversarecomplyingwiththelaw.

Thelowratesalsonecessitatesmallfleetoperators(whoalsoworkviaplanthirecompanies)payingtheirdriverssubstantiallybelowminimumwages.NoeffortismadebytheHostEmployertoenquireintothiswhentheyshouldreasonablybeawaretheratesaretoolowtoallowthepaymentofovertime,penaltiesandotherallowances.

(H).Isthereevidenceoflabourhirebeingusedtoevadeworkplacelawsandother legalobligations?

HostEmployersareabletoengagelabourviaaplanthirecompany.ThesePlantHirersarenotrequiredtopayworkcoverinsuranceorsuperannuationtotiptruckownerdriversengagedbythem.

ThebenefitsofthesecostreductionstothePlantHirerarethenlargelypassedontotheHostEmployersvialowercartagerates.

(I)DoestheuseoflabourhirearrangementsleadtopositiveoutcomesforVictorianworkers,businessesandthebroadercommunity?Whatproblemsdoesitcreate?

ThereisanimportantroleforPlantHirerstoplayintheearthmovingindustry.Theybringexpertiseinregardstothedisposalofthewasteanddirtfromconstructionsites.ManyPlantHirersruntipswherethedirtcanbeutilizedinthe developmentoflandforotheruses.Theyare alsoabletoefficientlyallocateusefultypesofdirtforotherconstructionpurposes.

PlantHirersarealsoable todeploylargenumbersoftrucks toBuilderswhocouldnotrealisticallyengageTipTruckOwnerDriverdirectlyduetotheeconomicandadministrativeburdenthatwouldcreate.

FurthermorebytakingontheobligationtopaytheTipTruckOwnerDriversthelargerPlantHirecompanieseffectivelyinsuretheOwner-Driversfromtherisksassociatedwithnon-paymentorlatepaymentofinvoices.

Howeverdespitethepositiveroleplayedby thePlantHirestheultra­competitivenatureoftheindustryservestodrivetheratesdowntoapointthatpreventsowner-driversfromrunningasafebusiness thatrewardstheownerdriversfortheirefforts.

(J).Whatregulatoryoptionsareavailable toaddresstheissuesraisedbythe TermsofReference,withinthelimitsofVictoria'slegislativepowers?

TheOwnerDriversandForestryContractorsAct2005(Vic)allowsforthecreationofcodesforpracticeforOwnerDrivers.Acodeofpracticefortheexcavationindustryshouldtobedevelopedtoensure:

1.TipTruckOwnerDriversareonlyengagedonanhourlybasisandnotemployedonloadratesthatmayencouragedriverstospeed,overloadandbreachfatigue laws

2.Mandateminimumpaymentunlessajobis cancelledwithin 24hourstoallowdriverstosourcealternativework

3.Thedevelopmentofappropriatecostmodeltoensuredriversareabletoearnenoughtomaintainasafetruckandobtainareasonablereturnoninvestment.

(K).WhatwouldbetheimpactofastatutorylicensingschemeforlabourhireoperatorsinVictoria, includingrequirementsforlicenseestocomplywithminimumstandardsforthefairtreatmentofworkers?

Notapplicable

(L).WhatevidenceorexperiencedoyouhaveofregulatorymodelsinotherjurisdictionsforaddressingtheissuesraisedintheTermsofReference?

ContractdeterminationinNSWallowstheNSWIndustrialRelationsCommissiontomake"Awards"forOwnerDrivers thatset downminimum termsandconditionsforOwner-Drivers.

_0680.pdfRECOMMENDATIONS

TheUnioninvitestheInquirytomakerecommendationstotheVictorianGovernmentto:

1.StrengthentheOwnerDriversandForestryContractorsAct2005(Vic) byprovidingspecificprovisionsandregulationstoprovidegreaterrightsandprotections toTipTruckOwnerDrivershiredbyPlantHirers.TheActshouldintroducepenaltiesforbreachestoencouragegreatercompliance.

2.DevelopatemplateforengagementbetweenaPlantHirerandTipTruckOwnerDrivertoconfirmsrightsandprotectionstoTipTruckOwnerDriversovertheirengagementandworksecurity

3.Developanappropriatecostmodelforuseintheindustrytodetermineappropriateminimumrates,penaltiesandallowancestoTipTruckOwnerDrivers

4.Develop a Codeof Practice as described inParagraphJ above inthe

Submissions.

WAYNEMADERBRANCHSECRETARY

TRANSPORTWORKERSUNIONOFAUSTRALIA