(Fair Work Ombudsman v Tao Hu & Ors)
This matter was of concern for the threat it posed to the use of piecework rates to compensate workers under the Horticultural Award 2010. A positive outcome was achieved in early 2020, when the High Court refused to grant special leave for the Fair Work Ombudsman to launch a further appeal.
In 2017 the Fair Work Ombudsman (FWO) 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 FWO’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 to the High Court of Australia was launched by the FWO 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 dealt 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.
On 14 February 2020, the High Court heard the FWO’s application for special leave to appeal the decision of the Federal Court. The bench, consisting of Chief Justice Kiefel and Justice Edelman, rejected the FWO’s application.
The court was critical of what was described as ‘rather circular reasoning’ in the FWO’s basic position, that workers who are paid at the incorrect rate should not therefore be considered piece-workers. Ultimately the Court did not consider there was was sufficient reason to doubt the correctness of the Federal Court’s decision.
The decision of the High Court effectively brought this matter to a close, with a very positive outcome for the agriculture sector which preserved the use of piece rates in horticulture.