Horticulture – Backpackers, Farmers and Labour Hire Companies

Labour Hire Companies

A recent Four Corners program highlighted instances where backpackers and other foreign workers were being underpaid and exploited in the horticulture industry.

It also highlighted the risks for farmers using labour hire companies when those companies fail to comply with their legal obligations.

Workers on farm

The labour force on a farm will often consist of a core group of skilled workers who are employed directly by the farmer all year round and a supplementary temporary labour hire workforce during peak demand or season.

Employing foreign workers

Australian laws require:

  •  foreign workers to comply with their visa restrictions, including the length of their stay and ability to work; and
  • employers to engage workers who have the lawful right to work in Australia and to provide those workers with minimum employment conditions (similar to those provided to Australian workers).

Checking foreign workers right to work

A person who engages a worker (directly or indirectly, for example, through a labour-hire company) has a legal obligation to check that person has the lawful right to work in Australia.

Checks are usually undertaken via VEVO (Visa Entitlement Verification Online) which is found on the Department of Immigration’s website.

If there is no written agreement between the labour-hire company and the farmer – both the company and the farmer are responsible for checking.

A well-drafted labour hire agreement will make it clear that the labour-hire company must only supply legal workers and carry out the usual checks – giving some protection to the farmer.

Paying foreign workers

Some farmers using labour-hire companies may have a false sense of security if they think the labour-hire company is solely responsible for any underpayment or breach of an Award.

Clearly, the labour-hire company will be liable for underpaying its workers. However, the reality is that farmers can be dragged into the mess if they are found to have been involved in a breach of an award, agreement or the Fair Work Act.

A person is involved in a contravention if they:

  • aid, abet, counsel or procure the contravention;
  • induce the contravention, whether by threats or promises or otherwise;
  • are in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
  • conspire with others to effect the contravention.

To illustrate the key risks, assume:

  • the farmer is in the horticulture industry;
  • the Horticulture Award applies to the farmer and the workers;
  • the worker is a backpacker;
  • the minimum hourly rate for a casual worker is $21 per hour;
  • the labour-hire company offers to supply a worker at an hourly rate of $14.

In this example, the farmer knows (or should reasonably know) the rate payable to the labour-hire company is $7 less than the minimum hourly rate under the Award.

The farmer needs to ask themselves, how can the labour-hire company supply a worker at a rate which the farmer knows is less than the minimum hourly rate of an applicable award unless they are underpaying their workers?

Proceeding to utilize the labour-hire company in this situation is a risk for the farmer.

Competitive cost cutting – not at the expense of compliance

In a fight to remain competitive, cost-cutting is occurring across many businesses. However, in light of the potential legal costs, fines and reputational damage, costs to comply with legal obligations should not be cut.

If you would like advice on employing foreign workers or labour hire agreements, please contact Matt Bell, Director – Business and Workplace law 07 4616 9860

This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.

Contact Information

Direct Line: 1300 068 736