Fair Work Ombudsman’s Harvest Inquiry Report finds widespread non-compliance in horticulture

The release of the hotly anticipated Harvest Inquiry Report by the Fair Work Ombudsman provides a timely reminder to employers in the agriculture industry to review their practices in relation to employees.

Annie Smeaton, Partner and Samantha Ramsay, Lawyer discuss the findings of the recently released Report and what it means for employers in the agribusiness sector.

The Harvest Inquiry Report

The Report is the outcome of an inquiry that commenced in August 2013 by the Ombudsman to review workplace arrangements along the Harvest Trail. The Ombudsman said that it ‘uncovered widespread and concerning non-compliance with workplace laws in the horticulture industry’. As a result of the Inquiry, the Ombudsman recovered over $1 million for more than 2,500 employees. However, the Ombudsman estimates that there were far more underpayments that it was unable to pursue due to poor record keeping, cash payments and the transient workforce.

The Report resulted in five key findings about the Harvest Trail:

• widespread non-compliance among the employers investigated
• widespread misuse of piece rates
• significant reliance on overseas workers by growers
• a negative impact on workers where labour hire arrangements were used
• a role to be played for consumers in addressing exploitation.

Widespread non-compliance amongst investigated employers

In more than half of the investigations conducted, the Ombudsman found that there had been a failure by employers to comply with Australian workplace laws. The non-payment of wages (44%) and the failure to meet record keeping obligations (41%) were the most common breaches identified.

Other types of breaches included failures to pay casual loading, penalty rates, leave and leave loading and other technical breaches.

Widespread misuse of piece rates

Both the Horticulture and Wine Industry Awards allow piecework arrangements. The Ombudsman recognised that the availability of labour and the quick harvesting of crops is critically important for produce farmers. However, the Ombudsman identified that, while a third of employers were paying piecework rates, over 100 employers were not engaging pieceworkers correctly as they had no written piecework agreements or invalid piecework agreements.

The Ombudsman also observed a practice of paying employees group rates, which often leads to individual workers being disadvantaged.

The Ombudsman’s position is that, for a piecework rate to be valid, an employer must be able to demonstrate that the piecework rate will allow an average competent employee to earn at least 15% more per hour than the minimum hourly rate for the Horticulture Award and 20% more for the Wine Industry Award.

Significant reliance by growers on overseas workers

Of the 626 employers surveyed by the Ombudsman, 67% were employing overseas workers. The majority of these (182) were in Queensland. The most common visa type was the 417 working holiday visa. While the Ombudsman recognised that there were many positives to the working holiday visa system, it was concerned that there was not a widespread recognition that 417 visa holders had the same rights and protections as any other employee.

The incentive of obtaining a second visa following 88 days of eligible work appeared to result in workers accepting substandard conditions, substandard pay and a reluctance to seek assistance.

Negative impact where labour hire is used

Labour hire is often an essential staffing mechanism for growers who need produce picked, packed and dispatched in a tight ‘harvest window’. The Inquiry was only able to establish the staffing arrangements for 366 of the cases it considered and found that:

• 49% of growers directly employed all their labour
• 39% used a combination of direct employment and labour hire contractors
• 12% sourced all labour via labour hire

Growers indicated to the Inquiry that they were having significant issues in sourcing labour due to a decline in ‘professional picker gangs’. This meant a heavier reliance on labour hire.

The Inquiry identified that multiple levels of subcontracting significantly increased the probability of non-compliance with workplace laws. For example, labour hire operators would approach growers at a time where they needed to ‘get the crop off’ and provide a low quote for labour that seemed ‘too good to be true’.

The Inquiry also found that labour hire and other ancillary service providers had entered into arrangements that disadvantaged workers including:

• charging job finding/placement bonds
• restricting accommodation options, including practices that meant that visa holders went without work but continued accruing accommodation debts
• offering overcrowded and poor standard accommodation at above market rates
• requiring workers to use specific transport providers to get to and from site.

A role for consumers in addressing exploitation

The Ombudsman commissioned research into consumer behaviour and awareness as a part of the Inquiry, which revealed that there was a lack of consumer awareness about the treatment of workers on the Harvest Trail. The Ombudsman particularly noted the finding that consumers indicated a willingness to pay more for ‘domestic fair trade’ produce.

Next steps arising out of the Inquiry

The Ombudsman is set to establish a Harvest Trail Working Group within its department to continue the work of the Inquiry, which will:

• consult with relevant stakeholders (including the Migrant Workers’ Taskforce)
• achieve enduring compliance through partnerships with key intermediaries and community organisations to educate growers and employees on their workplace rights and obligations
• work with key government and non-government partners to develop a coordinated and sustainable communications campaign to inform consumers of the ‘true cost’ of fruit and vegetables
• work closely with government departments and agencies to enhance the regulatory framework
• build a culture of compliance through the Harvest Trail by:
  • including the Harvest Trail in the Ombudsman’s priority areas for proactive compliance and enforcement (with results to be well publicised)
  • leverage the record keeping provisions introduced by the The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017
  • ensure clarity around labour hire regulation
  • explore opportunities for compliance partnerships with leading businesses in the sector
  • leverage the relevant recommendations of the Migrant Worker Taskforce.

Finally, the Report noted that the Inquiry had commenced before the passage of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017. The Act, among other things, requires employers who fail to meet record-keeping obligations, without reasonable excuse, to disprove wage claims and also face significant penalties. The Ombudsman reported that passage of this Act will enable it to address the most serious and deliberate cases of non-compliance through targeted interventions and strategic litigation.

If you would like to discuss the implications of the Harvest Inquiry Report for your business, please contact our workplace relations and safety partner, Annie Smeaton on [email protected] or (07) 3231 2946.