Modern-Day Worker Exploitation

History Repeats … Regulatory Responses to Industrial-Era ‘Gangmasters’ and Modern-Day Worker Exploitation

by Anthony Forsyth,
Professor in the Graduate School of Business and Law at RMIT University in Melbourne, and a Consultant with national legal firm Corrs Chambers Westgarth. 
Contact: anthony.forsyth@rmit.edu.au
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Considerable attention has been focused on the problem of worker exploitation in Australia over the last few years, triggered mainly by the 7-Eleven underpayments scandal.

Since then, widespread exploitation of vulnerable workers has been identified in other franchise businesses (Caltex, Domino’s Pizza) and in the labour hire sector.

Labour hire contracting is used to source seasonal workers for the horticulture industry, and in meat processing plants. The workers are predominantly from overseas, either international students or backpackers on working holiday visas.

The nature of labour hire is that it distances the business which benefits from a worker’s labour – for example, the farmer or grower – from legal responsibility for ensuring that employment obligations are complied with.

Those obligations are owed to the worker by the labour contractor, and it is through the gaps in the three-way labour hire relationship that compliance with awards, health and safety regulations, taxation and superannuation legislation frequently falls.

These modern-day forms of exploitation, and the regulatory responses to them which are now emerging, have historical parallels in the measures introduced to combat the abuses of ‘gangmasters’ in industrial-era Britain.

So just what is a ‘gangmaster’? This term was traditionally used to describe a manager who took charge of a gang of workers (originally men, then increasingly women and children because they were cheaper) – mainly in the agricultural and horticultural industries.

The Agricultural Gangs Act of 1867 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’. Here, we see the idea of a contracting arrangement for the provision of workers to perform labour for someone else – much like contemporary labour hire.

Gang labour became dominant in the English agricultural sector by the mid-19th century, replacing the labour of many ‘yearly-hire’ farm servants. However, the gangmaster system also came to be associated with certain coercive features – very low pay, tied (and substandard) housing arrangements, lack of freedom to end the employment and work elsewhere, adverse health effects of working in very cold conditions, and exploitative child labour.

These practices inevitably led to a series of commissions of inquiry in the 1860s, and legislative reform. The 1867 Act introduced a form of licensing and a requirement that gangmasters prove their ‘good character’. This regulation was largely motivated by moral concerns to protect women and children from abusive male gangmasters.

The term largely fell into disuse in England in the 20th century (with the 1867 Act abolished by the 1960s) – until the Morecambe Bay tragedy in 2004. 23 Chinese workers, all working in the UK illegally as part of a cockle-picking gang, were caught by the changing tide and drowned. They were inexperienced and had no safety gear. Their gangmaster was convicted on multiple counts of manslaughter, and sentenced to 14 years’ imprisonment.

The public outcry from this incident led to the establishment within one year of the Gangmasters Licensing Authority (GLA), and penalties of up to 10 years’ imprisonment for acting as a gangmaster in specified industries without the required licence.

The GLA (now known as the Gangmasters and Labour Abuse Authority) has proven to be successful in improving compliance with minimum labour standards in the supply chains of major supermarkets and other industries in the UK. It is also providing a model for reform in Australia, where evidence of exploitation by ‘rogue’ labour contractors is now overwhelming.

For example, the recent Victorian Labour Hire Inquiry heard that backpackers and international students working in fruit and wine production on farms around Mildura were being paid $12-$14 per hour (the casual award rate at the time was around $21 per hour).

Rest breaks and basic safety standards were not being complied with – people were working long hours in hot conditions without water, and provided with dangerous transportation to farms.

There was also evidence of accommodation linked to the provision of work, where the workers had no other option, and the accommodation was appalling. For example, the Inquiry heard about ‘doss houses in Sale’ run by a labour contractor to local farms where there were: ‘15-20 people to a house, stacked in like rabbits in a burrow, all paying $100 a week rent’.

The Victorian Inquiry recommended the introduction of a GLA-style licensing scheme, which would require labour hire agencies and contractors in the horticulture, meat processing and cleaning industries to obtain a licence.

The issuing and renewal of licences would be conditional on meeting strict standards to ensure compliance with minimum award rates of pay and other employment conditions, as well as safety, migration and tax laws.  Host users of labour hire services would be required only to use licensed providers.

The Victorian Government has committed to implementing the Inquiry’s recommendations, but will introduce a scheme of general application to all labour providers in the state (rather than being focused on specific sectors).

This will ensure consistency with the labour hire licensing scheme which has now been introduced in Queensland (under the Labour Hire Licensing Act 2017), and that proposed under legislation now before the South Australian Parliament.

Federal Labor has a policy to implement a national labour hire licensing system if elected to office.

This would be a far more effective response to the exploitative practices of our contemporary Australian gangmasters than the patchwork of state-based licensing schemes currently emerging – although these are a necessary interim measure.

Professor Forsyth was Chair of the independent Inquiry into the Labour Hire Industry and Insecure Work, carried out for the Victorian Government in 2015-16. His final report and the state Government’s response can be found at: https://economicdevelopment.vic.gov.au/inquiry-into-the-labour-hire-industry

Professor Forsyth is co-author of Creighton and Stewart’s Labour Law, 6th edition (2016) and carries out research on workplace dispute resolution, collective bargaining, the regulation of trade unions and labour hire/agency work. 

Citation: Anthony Forsyth. History Repeats … Regulatory Responses to Industrial-Era ‘Gangmasters’ and Modern-Day Worker Exploitation. Australian Policy and History. November 2017.

 

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