Regulating Australia’s ‘Gangmasters’ through Labour Hire Licensing

Publication Date01 September 2019
DOI10.1177/0067205X19856504
AuthorAnthony Forsyth
SubjectArticles
Article
Regulating Australia’s
‘Gangmasters’ through Labour
Hire Licensing
Anthony Forsyth*
Abstract
This article examines the recent introduction of state-based regulation to address the increasingly
prominent problem of exploitation of vulnerable workers by labour hire providers around Aus-
tralia. Mounting evidence of underpayments and other breaches of workplace laws has emerged
from a range of state and federal inquiries into the labour hire sector in recent years. The article
draws parallels between these abuses and the exploitative activities of ‘gangmasters’ in industrial-
era Britain. It then closely analyses and compares the labour hire licensing schemes introduced in
Victoria, Queensland and South Australia, which aim to combat noncompliance by introducing
barriers to entry and eliminate ‘rogue’ operators from the labour hire market. The article assesses
the effectiveness of similar licensing and registration schemes in several overseas jurisdictions,
especially the gangmasters licensing scheme operating in the United Kingdom since 2004. The
article concludes that the licensing schemes introduced under the three state laws are a timely and,
most likely, effective new approach to tackling the problem of noncompliance with workplace and
other laws. Alternative responses to exploitation at the federal level are also considered, including
the 2017 Vulnerable Workers legislation introduced largely in response to systemic under-
payments in the 7-Eleven franchise network. Finally, the article observes that federal reform of the
labour hire sector may emerge in the near future, given the Labor Opposition’s policy commitment
to introduce a national labour hire licensing scheme. In the meantime, the state labour hire
licensing schemes examined in this article represent an important step forward in regulation to
combat worker exploitation by contemporary Australian ‘gangmasters’.
I Introduction
This article examines the recent introduction of state-based regulation to address the increasingly
prominent problem of exploitation of vulnerable workers by labour hire providers around Aus-
tralia. Over the last 4 years, these issues have been the subject of extensive media reporting
1
as well
as inquiries by committees of the federal Parliament, inquiries initiated by Labor governments in
* Professor, Graduate School of Business and Law, RMIT University. The author may be contacted at anthony.forsyth@
rmit.edu.au. The author thanks the FLR’s anonymous referees for their helpful feedback on a draft of this article.
Federal Law Review
2019, Vol. 47(3) 469–493
ªThe Author(s) 2019
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DOI: 10.1177/0067205X19856504
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Queensland, Victoria and South Australia (‘SA’) and inv estigations by the federal workplace
enforcement agency, the Fair Work Ombudsman (‘FWO’). These various evidentiary sources have
provided a consistent picture of noncompliance with workplace, safety, taxation, superannuation,
migration and other laws, with a common ingredient being the provision of workers by a third party
provider to a host business. In labour hire arrangements of this kind, the host recipient of labour
services (eg, a farm requiring seasonal workers to pick fresh produce) is distanced from legal
responsibility for the workers’ employment conditions.
2
Instead, the third party provider carries
responsibility for ensuring that the workers are paid minimum award rates of pay and receive other
award and statutory employment entitlements.
However, the nature of the tripartite labour hire relationship means that it is quite open to
workers ‘falling through the cracks’ of legal responsibility
3
— whether because the labour hire
provider ignores its legal obligations as employer, or because in certain areas like health and safety
regulation, the responsibilities are shared between the provider and the host business.
4
Another
major issue that has been identified, particularly by the state-level inquiries into the labour hire
sector, is that there are minimal barriers to entry to that sector which might preclude unscrupulous
providers from being able to operate. In response, the Queensland, Victorian and SA governments
have introduced labour hire licensing legislation which aims to ensure that only legitimate busi-
nesses with a demonstrated capacity to comply with workplace and related laws can provide labour
hire services. These statutes also affix host businesses with the obligation to utilise only licensed
labour hire providers. The dual obligations — of providers to operate with a licence; and of hosts to
use licensed providers — are backed up by substantial civil (and in some instances, criminal)
penalties. Enforcement bodies with significant investigatory powers are established under each of
the state laws.
The mistreatment of labour hire workers in Australia has some parallels with the exploitative
practices of ‘gangmasters’ in industrial-era Britain.
5
This English term was traditionally used to
describe a manager who took charge of a gang of workers, mainly in the agricultural and horti-
cultural industries, under ‘a syste m of subcontracting’ entered into between gangmasters and
farmers.
6
The Agricultural Gangs Act of 1867, 30 & 31 Vict, c 130 (‘Agricultural Gangs Act’)
defined a ‘gangmaster’ as someone ‘who hires Children, Young Persons, or Women with a view to
their being employed in Agricultural Labour on Lands not in his own Occupation’.
7
According to
Strauss: ‘Gang labour became dominan t in the [English] agricultural sector thro ugh the mid-
nineteenth century ...’.
8
However, the gangmaster system came to be associated with certain
coercive features, such as long working hours, very low pay, adverse health effects of working
in cold conditions, exploitative child labour and sexual mistreatment of girls and women.
9
Fol-
lowing an investigation and report by the Children’s Employment Commission (1865–67), the
Agricultural Gangs Act was passed:
to eliminate unsuitable gang-masters by setting up a licensing system. It also forbade the employment
of all children under the age of eight, prohibited men and women working in the same gang, and made
it illegal for even a licensed gang-master to take charge of a female gang unless he was accompanied by
a woman license holder.
10
The 1867 legislation also introduced a requirement that gangmasters prove their ‘good
character’.
11
The gang labour system was largely in decline by the end of the 19
th
century.
12
Gangmasters re-
emerged, though, in the late-20
th
and early-21
st
centuries,
13
raising concerns about illegal activity
470 Federal Law Review 47(3)

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