(Fair Work Ombudsman v Tao Hu & Ors)
This matter is of concern for the threat it poses to the use of piecework rates to compensate workers under the Horticultural Award 2010.
In 2017 the Fair Work Ombudsman commenced proceedings for the underpayment of over 400 farm workers against HRS Country Pty Ltd, a labour hire company who provided pickers under contract to a Queensland mushroom farm.
The farm business, Marland Mushrooms Qld Pty Ltd, were also prosecuted as accessories to the alleged underpayment, in which pickers were ostensibly short-changed $649,000 in piecework rates (payment awarded on the basis of the weight, volume or quantity of output – common in the horticulture industry).
In 2017 the National Farmers’ Federation successfully applied to intervene in the case through the Australian Farmers’ Fighting Fund, in order to ensure the proper interpretation of piecework rates in the Horticultural Award 2010.
The NFF labelled the Fair Work Ombudsman’s case “fundamentally defective” citing concerns that it could lead to a number of negative consequences for employers, workers and third parties.
It is currently a requirement that piecework rates be set in such a way that the average, competent worker will earn at least 15% more than they were paid at the minimum hourly wage for the same amount of work.
On 12 July 2018, the Federal Court of Australia handed down its first instance decision in this matter.
While Justice Rangiah found that the piecework rates in question did not enable the average competent worker to earn 15% above the award rate, he said the Ombudsman’s arguments relied on evidence that was purely circumstantial. Importantly, Justice Rangiah acknowledged that an employee is not reverted to the award rate of pay in the instance that they do not work to the rate established in a piecework agreement.
The Court’s decision reflected a pragmatic approach to piecework rates that could be followed by employers and employees in the horticulture industry.
An Appeal was launched shortly after the Federal Court’s July decision, and on 22 January 2019 the NFF was granted leave to intervene through the AFFF.
The appeal effectively deals with 3 issues:
- The consequences of entering into a piecework agreement which is inconsistent with the requirements of the Horticulture Award;
- Whether entering into such an agreement constitutes an ‘ongoing’ breach or is ‘once-off’; and
- Whether, in this case, Marland Mushrooms was complicit in the labour higher contractor’s breach.
A decision is pending.