High Court Decisions Threaten the Moral Foundation of Labour Law
By Giri Sivaraman and Jim Stanford
Australia was once known for its far-reaching efforts to protect workers against exploitation. Through measures like the national minimum wage, the Awards system, and an extensive system of conciliation and arbitration, we became known as the land of the ‘fair go.’
The core motivation for all of these policies was a recognition that employers and workers do not come to the bargaining table as equals. Instead, there’s an inherent power imbalance in the employment relationship, that must be moderated by policy and law.
While employers depend on their staff in aggregate to operate their business, they seldom significantly depend on any individual worker: like it or not, most of us can be replaced. Individual workers, on the other hand, need their job to support themselves and their family. The cost to them of a breakdown in the employment relationship is immediate and devastating. That gives employers a natural advantage in negotiating the terms and conditions of work.
Through most of Australia’s history, it was an explicit goal of labour law to balance these lopsided scales. Minimum standards and extensive regulations were established to prevent employers from using their superior economic position to exploit workers who were desperate to survive. The goal was to establish a rational and fair rule of law to govern employment relations, rather than a no-holds-barred law of the jungle (in which employers would almost always win).
Unfortunately, that moral tradition has been whittled away in recent decades by several worrying trends — including the replacement of permanent jobs with casual roles, contractors, and gigs; abuse routinely experienced by migrant workers; and outright contravention of the law, like wage theft (which is now a standard business practice in many industries).
But in two recent decisions, the High Court of Australia has taken a sledgehammer to what remains of the founding principle that government must protect workers against the superior economic might of employers. The implications for fairness and balance in future employment relations are both enormous and troubling.
The first blow was struck late last year with the Court’s decision in the WorkPac v Rossato case. That case involved an employee (Mr Rossato) working for a labour hire firm on a mine site for several years. His rolling contracts labelled him a ‘casual employee,’ but he worked a regular full-time roster, set 12 months in advance. In practical terms, his job was stable and permanent.
So when Rossato wanted to care for his ill spouse, he asked for annual leave — as is guaranteed to other workers under the National Employment Standards. Lower courts found that the circumstances of his work justified those normal entitlements, but the High Court overruled them. If Mr Rossato’s contract said he was a ‘casual,’ then he was a casual. Full stop. He was denied annual leave and other normal entitlements (like personal leave and severance).
Just months earlier, the Commonwealth government had legislated amendments to the Fair Work Act which confirmed the right of employers to hire casual labour in any position. So in that regard, the High Court’s Rossato decision was redundant. Nevertheless, labour experts were alarmed at the Court’s narrow view of the sanctity of a contract — even one signed between a powerful corporation and a lone, insecure worker. Traditional concerns regarding the fairness of contracts between unequal parties were discarded. And we worried what other labour standards might be in jeopardy, under this view that “a contract is a contract.”
It wasn’t long before those fears were confirmed. In a second set of decisions earlier this month, the High Court has confirmed that just about any of Australia’s traditional labour protections can be ignored by employers — so long as they get affected workers to sign a contract that allows them to do so.
One of those cases (ZG Operations v Jamsek) involved two truck drivers who worked full-time for 40 years for a lighting company. However, they were denied normal benefits like superannuation and annual leave — because their contract defined them as ‘contractors’ not employees. In previous disputes like this, courts in Australia (like other countries) would examine the concrete conditions of work to see if it practically constituted ‘employment,’ regardless of what it was called.
Now, however, the High Court is saying that if the contract says the worker is a contractor, then the worker is a contractor. Once again, “a contract is a contract.” Employment only exists if the contract calls it employment. The Court brushed off traditional concerns about “the exercise of superior bargaining power by the company.” Employment is not a “social or psychological concept like friendship,” it’s a legal agreement, pure and simple.
“Friendship” or not, Australian employers are certainly feeling the High Court’s love: they are celebrating their explicit new power to rewrite just about anything in current employment law, so long as their contracts are clever and explicit enough. And when individual workers are presented with a simple choice — sign this, or you’re fired — many will inevitably give up long-fought rights (like a minimum wage, superannuation, and paid holidays).
The High Court’s decisions legally entrench the systemic power differentials that are inherent in employment relationships. The idea that a solo worker can somehow bargain as an equal with a large corporation, free to strike a deal that benefits them both, constitutes a libertarian fantasy. In an economy marked by growing inequality, insecurity, and outright desperation, this naïve view wilfully ignores the harsh realities of wage labour.
Government must respond to these rulings, and quickly, before other standard worker protections fall like dominos. They can do this by tightening the definition of employment in labour law, and imposing concrete tests that prevent employers from using this enormous new loophole to evade basic standards of fairness. Whether they are willing to act, depends more on politics than on the law. But if governments do not act, other principles of traditional fair play in employment relations will crumble under the weight of these harsh judgments.
Giri Sivaraman is a Principal with Maurice Blackburn Lawyers. Jim Stanford is Economist and Director of the Centre for Future Work.
