Labour Hire Loopholes: Same Job, Different Pay, Fewer Rights
By Direct Democracy
The Two Workers Standing Next to Each Other
Imagine two people on the same factory floor, doing the same job, supervised by the same manager, for the same company. One is a direct employee earning $32 an hour with paid sick leave, superannuation contributions, and redundancy protections. The other is a labour hire worker, placed by a staffing agency, earning $26 an hour with no guaranteed hours, limited entitlements, and no real job security.
This isn't a hypothetical. It's a daily reality for hundreds of thousands of Australians - in meatworks, warehouses, construction sites, aged care facilities, and farms across the country.
Labour hire is the practice where a business (the host employer) engages workers not directly, but through a third-party staffing agency. The agency technically employs the worker, the host employer directs their work, and both parties benefit from the arrangement - except, in many cases, the worker.
How Big Is This Problem?
Labour hire is not a niche corner of the economy. According to the Australian Bureau of Statistics and labour market research:
- An estimated 1.3 to 1.7 million Australians work in some form of labour hire or on-hire arrangement at any given time
- The labour hire industry turns over more than $20 billion annually
- Labour hire workers earn on average 15–25% less than directly employed counterparts in equivalent roles
- They are significantly less likely to receive paid leave, training, or redundancy pay
- Industries with the heaviest labour hire use include logistics, food processing, construction, and agriculture
The Fair Work Ombudsman has repeatedly found labour hire workers among the most vulnerable to wage theft, with some investigations uncovering systematic underpayments running into the millions of dollars - often affecting migrant workers and people in regional areas with few other options.
Why Does the Loophole Exist?
For decades, enterprise bargaining agreements (EBAs) negotiated between unions and direct employers set wage floors for specific workplaces. But those agreements often only covered directly employed staff. Labour hire workers - technically employed by a separate entity - weren't covered, even if they were doing identical work.
This created a powerful incentive for companies to convert their workforces. Why pay direct employees $35 an hour under a hard-won EBA when you can ring a labour hire firm and get someone for $27?
The people who benefit from this arrangement are clear:
| Beneficiary | How they benefit |
|---|---|
| Host employers | Lower wage costs, no entitlement liability, flexible headcount |
| Labour hire agencies | Fee income, often 15–30% on top of worker wages |
| Shareholders | Higher margins, lower fixed labour costs |
The people who lose are equally clear: workers, their families, and ultimately the communities that depend on steady local spending.
What Has Government Actually Done?
The Morrison Government largely left the labour hire framework untouched despite multiple inquiries and union pressure. The 2020 Senate inquiry into unlawful underpayment of workers' entitlements documented the problem extensively - and was followed by minimal legislative action.
The Albanese Labor Government passed the Closing Loopholes Act in 2024, which introduced a Same Job, Same Pay framework. On paper, this sounds like exactly the fix needed. In practice, the changes are narrower than they appear:
- Same Job, Same Pay provisions only apply where a majority support determination is made by the Fair Work Commission - meaning workers must actively apply and prove the case
- The framework does not automatically apply to all labour hire arrangements
- Enforcement relies heavily on unions having the resources and presence to pursue applications
- Industries with low union density - agriculture, hospitality, small manufacturing - remain largely unprotected
- Critics including the ACTU have noted the regime is opt-in by process, not opt-in by right
Labor deserves credit for moving on this issue at all - the Coalition never did. But the watered-down design of the framework reflects the political reality: big employers lobbied hard, and the final legislation reflects compromises that significantly limit its reach.
Why Does This Policy Persist Despite Being Unpopular?
Polling consistently shows Australians support the principle of equal pay for equal work. It's not a controversial idea to most people. So why has it taken so long to fix, and why is the fix so incomplete?
The answer lies in where political power actually sits. The Business Council of Australia, the Australian Industry Group, and major employers in logistics and agriculture are among the most well-resourced lobbyists in the country. They have direct access to ministers, fund political donations across both major parties, and can threaten economic consequences - job cuts, reduced investment - when reform is proposed.
Workers in labour hire, by contrast, are often transient, often not union members, often from migrant backgrounds, and often unaware of their legal rights. They are among the least politically powerful groups in Australia, despite being among the most economically vulnerable.
This is the classic dynamic that allows bad policy to persist: the costs are diffuse and borne by people with little political voice, while the benefits are concentrated among entities with enormous political influence.
What Would Voters Actually Choose?
This is where direct democracy becomes relevant. If Australians were asked directly - "Should workers doing the same job in the same workplace receive the same pay and conditions, regardless of who technically employs them?" - the answer would be overwhelming. Survey data and common sense both point to strong majority support.
But that's not how our system works. Voters elect representatives who then negotiate with lobbyists, weigh up donor relationships, consult industry bodies, and produce legislation that often bears little resemblance to what the public actually wants. The Same Job, Same Pay reforms are a case study in this gap: the rhetoric said one thing, the legislation delivered something much smaller.
Direct Democracy exists to close that gap. When members vote on policy, it's not filtered through marginal seat calculations or corporate access. It reflects what people actually think is fair - and on issues like labour hire, that matters.
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