Publication Falling through the Cracks? Labour hire, Contracting and Outsourcing Risks across the ASX100
One of the most significant changes in Australian workplaces over the last few decades has been the resurgence and multiplication of various indirect forms of employment. This has occurred not just through the establishment of new casualised or 'gig' industries, but also due to changes to the ways in which existing companies structure their operations.
Increasingly, the boundaries of a company’s workforce stretch beyond its direct employees, to include labour hire agencies, subcontractors, service contractors, independent contractors, and even gig economy workers. Many companies now outsource a large proportion of their activities to other businesses (which in turn, often outsource again). Scholar David Weil coined the term 'fissured workplace' to describe this trend.
During the COVID-19 pandemic, the impacts of this shift have become apparent.
Australia has relied upon workers in sectors such as health care, cleaning, transport, logistics, education, construction, energy and resources to continue working in demanding and often risky conditions. Many of these workers are employed in precarious conditions - including as contractors, subcontractors, labour hire and/or casual workers.
Ongoing outbreaks of the virus have illustrated just how this level of precarity raises health and safety risks for us all. The pressure to continue working - applied by employers but also dictated by economic circumstances - is extreme for many. In 'indirect' working arrangements, lines of responsibility are often unclear, critical information is easily miscommunicated, and training can be lacking.
Employers may choose to turn to indirect employment arrangements for a number of reasons, including reducing labour costs, accessing specialised workers, adapting to labour market volatility, shifting liabilities away from the organisation, and even, to undermine or circumvent union presence. However, in doing so, they may increase their exposure to a range of workforce, business and operational risks. These include:
- Poorer Occupational Health and Safety (OHS) outcomes
- Increased possibility of involvement in modern slavery, labour exploitation and wage theft
- Lower levels of worker engagement and loyalty
- Loss of human and intellectual capital
- Reduced workforce development, due to less access to training, skills acquisition.
In 2020, ACCR discussed some of the key workforce and operational risks associated with indirect employment through our report, Labour Hire and Contracting Across the ASX100. We reviewed how ASX100 companies in the mining, construction, commercial cleaning and large-scale solar installation sectors were publicly reporting on their workforces. These sectors were chosen because they demonstrated high rates of labour hire, significant non-compliance by labour hire providers with employment and other legislation, and/or the risks were of relatively high severity.
This report updates and extends that analysis, to include companies in the following sectors: airlines and airports, casinos, construction, mining, oil and gas exploration, property management, retail, utilities, supermarkets, and warehousing. Additional sectors were identified through a review of traditional media, company reporting, information from safety regulators, and government inquiries for the period 1 April 2020 - 30 June 2021, to identify areas where the use of indirect employment was linked to specific allegations, controversies and/or increased business risk.
In producing these reports, our aim is to encourage companies to ensure that their reporting more adequately reflects their entire workforces, giving investors a full picture of the risks to be managed. It is clear from our findings that investor engagement on risks associated with indirect employment is currently being hampered by poor company reporting on workforce issues. Although indirect workers make up a substantial proportion of the workforce in certain sectors, most companies continue to only report on their 'direct' workforce. Generally speaking, company reporting across the ASX is insufficient to allow investors to engage with companies about their employment models and overall workforce strategy.
ACCR analysed the workforce reporting of 37 ASX100 companies, with a focus on disclosures regarding the labour hire and contract (or 'indirect') workforce. ACCR used the Global Reporting Initiative (GRI)’s definition of the ‘indirect workforce’, that is, “workers who are not employees and whose work is controlled by the organization”. This analysis found:
1. Less than half of companies publicly report on the total number and/or FTE equivalent of their indirect workforce
Only 15/37 (41%) of companies provided disaggregated data for employees and non-employees. A further 2/37 (5%) of companies provided aggregated employee and indirect workforce data. It is important that companies provide disaggregated data on their employees and indirect workforce, so that investors can form an understanding of their workforce strategy and properly engage on its risks and benefits.
2. Very few companies provide any definitions for their ‘indirect workforce’.
Only 13/37 (35%) of companies provided any definitions of their indirect workforce. 10/37 (27%) companies provided either aggregated or disaggregated numbers for their indirect workforce, but failed to provide definitions for the categories of worker included in these numbers. As such, it was not clear if their workforce data captures all of their indirect workforce, and if not, which part of the workforce was captured in the data.
3. While all companies report some health and safety data, less than half provide disaggregated data for their indirect workforce.
32/37 (86%) of companies provided numeric data on fatalities in their Australian and/or global operations. Of these, only 15/37 (41%) companies provided disaggregated data on the number of fatalities amongst the indirect workforce. Significantly, for a further 5/37 (14%) it was unclear whether the reporting on fatalities included the indirect workforce. 25/37 (68%) of companies provided some OHS data for the indirect workforce, however only 14/37 (38%) provided disaggregated data for their indirect workforce.
As indirect workers are often over-represented in safety incidents, and may be at a higher risk of workplace health and safety incidents, it is crucial for companies to provide disaggregated health and safety for each section of its workforce.
4. Companies often use different reporting metrics to report on their direct and indirect workforces
14/37 (38%) of companies report disaggregated OHS data for their direct workforce (employees, including fixed term) and indirect (contractor, labour hire) workforce. Of these, eight companies reported using (at least some) different metrics for their direct and indirect workforces, with most reporting against more indicators for their direct workers than their indirect workers.
Comparing the metrics reported on for a company's direct and indirect workforce can illuminate key differences between how the company monitors the health and safety of different sections of its workforce. If a segment of the company's workforce is excluded from its public reporting, this should be noted and an explanation given as to why.
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D. Weil, The Fissured Workplace: Why Work Became so Bad for so Many and What Can Be Done to Improve It, Harvard University Press. Cambridge, 2014, p. 148. ↩︎
ACCR, ‘Broken chains of responsibility: Victorian COVID-19 clusters reveal subcontracting risks’, 3 July 2020, viewed 1 August 2021, https://bit.ly/2VoVTny. ↩︎
R. Hall, Labour Hire in Australia: Motivation, Dynamics and Prospects, University of Sydney, Sydney, 2002. ↩︎
ACCR, Labour Hire and Contracting Across the ASX100, 2020, viewed 1 August 2021, p. 12 - 16, https://bit.ly/3ihiTxU. ↩︎