As a result of the findings of the Inquiry, the FWO recommends that Councils review and amend their security services tender documents to:
- enable full visibility and monitoring of the labour supply chain
- reflect best practice as contained in FWO’s Guides on contracting labour and supply chains1
- include a specific reference that requires principal contractors and subcontractors to comply with the Fair Work Act [FW Act]
- require principal contractors seek written permission to subcontract work
- require both principal contractors and subcontractors to regularly report on their compliance with the FW Act (FWO recommends annually)
- ensure that the “schedule of fees” contained in contracting agreements be indexed against the applicable award rates effective every 1 July
- require principal contractors and subcontractors to undertake training on the provisions and obligations of the Security Industry Award
- disclose the input items associated with the total cost of an employee2
- ensure that the amounts paid in their contracts are sufficient to allow both principal contractors and subcontractors to cover employee entitlements
- require all principal contractors and subcontractors to sign up to FWO’s My account service and provide evidence of their knowledge of the wages required to be paid under the relevant industrial instrument including any applicable penalties for weekends, public holidays or overtime
- require the principal contractors to provide evidence that any subcontractors are aware of the distinction between contracts of employment and contracts for service.
That principal contractors and subcontractors:
- sign up to FWO’s My account online service
- review and revise all practices to ensure their employees are provided with all of their entitlements under the FW Act and the relevant industrial instrument
- seek independent advice from a professional such as a lawyer, accountant and/or employer organisation prior to entering into an agreement with Councils
- ensure when quoting future tenders, the submission recognises all operating costs including wages and entitlements
- incorporate monitoring measures of subcontractor compliance
- recognise the distinction between an employee and an independent contractor3
- reflect best practice compliance4
- ensure the offering of Individual Flexibility Arrangements [IFAs] to employees meets all the requirements of the FW Act5.
That principal contractors, where any subcontracting occurs:
- implement regular (six monthly) compliance auditing on subcontractors to ensure their ongoing compliance
- amend their subcontracting agreements to include specific reference to the subcontractors’ ongoing obligation to be compliant with the FW Act and the relevant industrial instrument.
That employer and employee organisations:
- ensure they provide their members with education about all required legislation for their businesses including providing information on current wage rates
- provide their members with updates in relation to wage increases as soon as they occur
- promote best practice compliance
- encourage or require their members to subscribe to the FWO My account online service
- encourage or require their members to subscribe to the FWO online newsletters and updates
- ensure their workplace relations advisers are fully educated in relation to the Fair Work legislation so they can provide their members with the most accurate advice
- educate their members about the use of IFAs
- encourage their members to locate information on the FWO website when they are uncertain about entitlements.
Within 12 months of the publication of this report, the FWO will request the Councils:
- audit their security industry supply chains and provide the FWO with a report on their audit methodology and findings
- provide FWO with an additional report detailing improvements made to their corporate governance framework and procedures for the lawful contracting of security service providers throughout the supply chain.
The FWO will assess these reports to ensure compliance with Commonwealth workplace laws, and:
- conduct follow up audits and/or investigations where non-compliance is identified
- within two years of the publication of this report, survey security employees performing duties for the Councils subject to this Inquiry, to assess whether the subsector has changed its governance arrangements to ensure compliance with the FW Act.
- Contracting labour and supply chains page
- The ‘total cost of an employee’ is discussed later in this report and includes direct costs such as ordinary hourly wages, overtime and public holiday rates, casual loadings, allowances (such as first aid) and leave payments (personal or annual). There are also indirect costs in running the business such as cars, parking, insurance, health insurance contributions, communication devices, licenses, training, accommodation and superannuation.
- Sham contracting occurs where a worker should be an employee, but is instead engaged as an independent contractor. Further information about these sorts of arrangements can be located on the FWO website: Independent contractors page
- Contracting labour and supply chains page
- Legislation page