Labour hire is hurting mining towns

Published: 28 Nov 2018

Mining companies' preference for employing workers through labour hire companies is hurting the regional communities that depend on jobs flowing from the mining sector. 

A submission by the CFMEU to a parliamentary inquiry into the mining sector says federal and state governments should act to limit the corrosive affects of labour hire and casualisation.  

Labour hire is hurting communities through: 

  • Casualisation: most labour hire employees are casuals meaning they can be stood down or let go for any reason, leading to financial stress, mental health issues and unsafe work practices including a reluctance to raise safety issues; and  
  • Lower wages: the CFMEU estimates labour hire workers are paid on average 30% less than permanent employees, even taking into account the casual loading, meaning substantially less wages are flowing into communities. 

The decreasing proportion of permanent employees in the coal mining industry workforce represents a worrying shift in income away from the pay packets of workers in local communities, straight into the profits of some of the world’s richest companies, most of which are headquartered overseas and have the majority of their shareholders overseas.

-CFMEU submission 

Coal Services data shows that in NSW, one-third of underground mineworkers and almost half of open cut mine workers are employed by contractors. There are very few new permanent job opportunities. 

A recent survey by the ACTU found that 82% of the job advertisements for the mining industry on Seek were placed by labour hire contractors.

While the vast majority of labour hire employees are casuals, they usually work an identical pattern to permanent employees with a fixed roster of 42 or more hours per week at the same mine site for years on end. They are referred to as ‘permanent casuals’ – a classic contradiction in terms.

An executive from Whitehaven Coal has explained the company’s preference for a high proportion of casual labour hire employees as a measure to cut costs and provide flexibility (but only for the company): 

Labour hire employees provide the Company with operational flexibility on a day to day basis. For example, the Company has the ability to send labour hire workers home in the event of an equipment breakdown or bad weather. Labour hire workers are also effective commercially because they are more cost effective than permanent employees…

The underpinning need for flexible and commercial work arrangements, and the need to reduce costs at the Mine, is stronger than ever.

-Letter from Nigel Wood, Whitehaven Coal, 2015.

The CFMEU has had some success in the courts, challenging the legal validity of labour hire agreements. However, the Union argues stronger legislation is needed to reverse the insidious spread of casual labour hire in coal mining. This includes: 

  • Changing the Fair Work Act to define casual employment in a manner consistent with common law and common sense – that is, irregular, intermittent and without a firm advance commitment to work. Employers should not be able to avoid minimum standards like annual leave and personal leave just because they want to. 
  • Strong casual conversion provisions, so that casuals on regular and fixed roster arrangements have a right to permanency after six months and automatic conversion to permanency after 12 months if the employee did not meet the Fair Work Act definition of a casual. 
  • Enforcing equal pay for equal work, so that labour hire workers could not be paid less than the permanents they are working beside. 

In addition, the CFMEU’s submission argues that state governments should consider attaching criteria to the terms of mining leases to restrict the proportion of contract labour used in mines. Generally, labour hire usage of 10% of the total workforce should be enough to reflect genuine peaks in work or labour shortages. 

The ‘permanent casual’ work model in mining is a rort. Mining workers and communities deserve better and they need their elected representatives to stand up for them.