Public Law and Policy

Research UnitSubmission to the Inquiry into Labour Hire and Insecure Work

DR JOANNA HOWE

The Public Law and Policy Research Unit, University of AdelaideThe Public Law & Policy Research Unit at the University of Adelaide contributes an independent scholarly voice on issues of public law and policy vital to Australia's future. It provides expert analysis on government law and policy initiatives and judicial decisions and contributes to public debate through formulating its own law reform proposals.

About the AuthorDr Joanna Howe is a Senior Lecturer in Law at the University of Adelaide and a consultant with Harmers Workplace Lawyers. She holds a Doctorate of Philosophy in Law from the University of Oxford where she studied as a Rhodes Scholar. Joanna has also worked as a consultant for the International Labour Organisation, the McKell Institute and for the Equal Opportunity for Women in the Workplace Agency. Joanna is the first-named chief investigator on a category 1 grant investigating the challenge of labour supply and precarious work in the Australian horticulture industry ($175,000) and also a chief-investigator on an Australian Research Council Discovery Grant, ‘Work Experience: Labour Law at the Boundary of Work and Education’ (DP150104516, 2015-2018, $238,000). In 2015 Joanna held a grant from the Oñati International Institute for the Sociology of Law in Spain to convene a workshop on temporary labour migration bringing together international experts in 2015. She is the author of three books - 'The Australian Standard of Employment Rights' (2009, Hardie Grant), ‘Rethinking Job Security’ (2016-forthcoming, Ashgate Publishing) and 'Temporary Labour Migration in the Global Era: The Regulatory Challenges' (with R Owens, 2016-forthcoming, Hart). She is the recipient of the University of Adelaide's Women's Research Excellence Award 2015.

The University of Adelaide 2‘Predatory Princes’, ‘Migration Merchants’ or ‘Agents of Development’?

An Examination of the Legal Regulation of Labour Hire Migration Intermediaries

Dr Joanna Howe*

I Introduction

Migration intermediaries have a ubiquitous presence in global labour migration.1 This paper examines the challenges in regulating the relationship between intermediaries and temporary migrant workers. Typically this relationship begins in one country and continues in another, as a prospective migrant leaves their country of origin and journeys to their country of destination. Given the complexity of the migratory process, migrants often rely on different intermediaries to assist with various aspects along the way. Intermediaries can take the form of recruitment agents, labour hire companies, migration agents, financial lenders, amongst others. Their services can be extensive, for both skilled and low skilled migration,2 ranging from job placement, visa, travel and accommodation assistance to loaning money. Particularly because migrant workers and employers do not share a common language or have experience with the same education and training systems, they often rely on intermediaries to play a match-making role.3 According to van den Broek et al, migration intermediaries are ‘agents that intervene at various critical junctures to connect the migrant to the destination country labour market’.4

Although this paper will consider the regulatory challenges arising from the use of migration intermediaries, it is important to acknowledge the myriad important and legitimate functions of migration intermediaries. A business case exists for migration intermediaries. For prospective migrant workers, migration intermediaries can provide invaluable assistance in connecting them to a prospective employer in a destination country. With demand-drive labour migration schemes increasingly de jour in destination countries,5 many prospective migrant workers need pre-arranged employment as a condition of the visa.6 Australia’s subclass 457 visa programme exemplifies such an approach. Migration intermediaries with their ‘location-specific capital’ can also provide expert knowledge of local migration and employment laws, travel and accommodation assistance to enable

* This submission is a copy of a paper that was prepared for the workshop ‘The Evolving Project of Labour Law’ hosted by the Centre for Employment and Labour Relations Law at the University of Melbourne, 4-5 February 2016.

1 For an early consideration of their role, see Philip Martin, Merchants of labour: agents of the evolving migration infrastructure, Discussion Paper, Decent Work Program, DP/158/2005. Geneva: International Institute for Labour Studies (2005).

2 Van den Broek et al point out that whilst the literature tends to focus on the use of migration intermediaries for low skilled and unskilled work, they also have a significant role in facilitating skilled labour migration: Diane van den Broek, William Harvey and Dimitria Groutsis ‘Commercial migration intermediaries and the segmentation of skilled migrant employment’ (2015) Work, employment and society 1-12.

3 David Autor (ed), Studies of Labor Market Intermediation (Chicago, University of Chicago Press, 2009).

4 Van den Broek, Harvey and Groutsis, above n 2, 2.

5 Martin Ruhs, ‘Immigration and Labour Market Protectionism: Protecting Local Workers’ Preferential Access to the Local Labour Market’ in Cathryn Costello and Mark Freedland (eds), Migrants at Work: Immigration and Vulnerability in Labour Law (Oxford, Oxford University Press, 1st ed, 2014).

6 Demand-driven’ migration laws are those in which the impetus for migration comes from employers who make a request to immigration authorities to sponsor temporary migrant workers; see further: Anna Platonova and Giuliana Urso (eds), Labour Shortages and Migration Policy (International Organisation for Migration, 2012) 12-15.

The University of Adelaide 3the prospective migrant to more readily make the transition to the destination country and to settle in more easily after arrival.7 Depicted by Aguinas as ‘agents of development’,8 migration intermediaries often enable the migratory process to take place by loaning money to prospective migrant workers.9

It is not just migrant workers who benefit from migration intermediaries. From an employer perspective, intermediaries serve an important function in matching employers with prospective temporary migrant workers. For employers, this outsources the challenges associated with recruitment across national borders and can even alleviate the ongoing regulatory burden of complying with employment laws and migration laws as the intermediary can assume responsibility for wage payments, superannuation and taxation.

On one level, migration intermediaries are simply ‘forms of infrastructure’10 within the migratory process, a broad brush term to depict the ‘institutions, networks and people that move migrants from one point to another.’11 However, on another level, their activities and role are normatively vexed: ‘merchants’ who sell migration, profiting from the commercialisation of the migratory process,12 or ‘predatory princes’ who provide high interest loans luring unsuspecting individuals to embark on the labour migratory journey only to become entrapped into debt and for a job, wages and conditions that are far removed from what was originally promised. The Deegan Review13 into the 457 visa programme recognised that ‘reliance upon migration and recruitment agents both in Australia and offshore’ was a source of vulnerability for migrant workers.14 In their edited collection examining the role of intermediaries in global labour migration, Strauss and Fudge view intermediaries as key to the construction and exploitation of temporary migrant workers’ vulnerability to forms of unfree and forced labour and labour trafficking.15 At their most sinister, migration intermediaries have been found culpable of human trafficking of irregular migrants and refugees.16 Employers too, face risks

7 Julie DaVanzo, ‘Repeat migration, information costs and location-specific capital’ (1981) 4(1) Population and environment 45-73.

8 Dovelyn Aguinas, ‘Guiding the Invisible Hand: Making Intermediaries Work for Development’ (Research Paper No. 2009/22, UNDP Human Development, 2009) 2.

9 See further, Philip Martin, ‘Reducing Worker-Paid Migration Costs’ in Joanna Howe and Rosemary Owens (ed)Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 17 - forthcoming.

10 Van den Broek, Harvey and Groutsis, above n 2, 2.

11 Johan Lindquist, Biao Xiang and Brenda S Yeoh, ‘Opening the black box of migration: brokers, the organization of transnational mobility and the changing political economy in Asia,’ (2012) 85(1) Pacific Affairs 7, 8-9.

12 See: Jennifer Gordon, ‘Global Labor Recruitment in a Supply Chain Context’ (ILO Fair Recruitment Initiative Series No 1, ILO, Geneva, 2015).

13 Commissioner Barbara Deegan of the Australian Industrial Relations Commission was appointed to review the integrity of the 457 visa programme in 2008. For more on the Deegan Review, see: Joanna Howe 'The Migration Amendment (Worker Protection) Act 2008: Long Overdue Reform, But Have Migrant Workers Been Sold Short?' (2010) 24(2) Australian Journal of Labour Law 13.

14 Visa Subclass 457 Integrity Review, Final Report (Commonwealth of Australia, October 2008) ('Deegan Report') 63.

15 Kendra Strauss and Judy Fudge, Temporary Work, Agencies and Unfree Labour: Insecurity in the New World of Work (Routledge, London, 2013), Chapter 1.

16 See, for example, Bina Fernandez, ‘Traffickers, Brokers, Employment Agentss and Social Networks: The Regulation of Intermediaries in the Migration of Ethiopian Domestic Workers to the Middle East’ (2013) 47(4) International Migration Review, 814-843; Johan Leman and S Stef Janssens, ‘The Various “Safe”-House Profiles in East-European Human Smuggling and Trafficking’ (2007) 33(8) Journal of Ethnic and Migration Studies 1377-1388; John Salt and Jeremy Stein, ‘Migration as a Business: The Case of Trafficking’ (1997) 35(4) International

The University of Adelaide 4from relying on an unscrupulous migration intermediary. This may leave an employer open to litigation on account of unpaid wages and entitlements as an employer may provide a lump payment of wages to the intermediary who takes a big cut at the workers’ expense resulting in the workers receiving less than the legal minimum.17

This paper acknowledges that migration intermediaries are common features of contemporary migratory processes which have arisen because of the complexity of labour migration in the global era. These arrangements can be beneficial for all parties involved and do not necessarily result in exploitation of temporary migrant workers with a purpose of sidestepping legal structures. This paper focuses not on these legitimate arrangements but instead on unscrupulous migration intermediaries who offer a labour hire service to employers enabling the latter to rely on the former as a means of labour control and reducing costs. In these situations both employers and migration intermediaries profit from exploiting temporary migrant workers, although as I will explain, often an employer’s actual knowledge of the extent of the exploitative conduct is somewhat limited. The first section of this paper provides an examination of the role of migration intermediaries as labour hire firms. The second section focuses on the presence of migration intermediaries in the Australian horticulture sector. The third section explores various regulatory possibilities to improve the oversight, accountability and functioning of migration intermediaries in Australia. I conclude by arguing that whilst migration intermediaries can serve an important function in the labour migratory process, it is vital that there is a coordinated and comprehensive regulation of their role.

II Migration Intermediaries and Labour Hire

Labour hire arrangements typically involve a ‘triangular relationship’. 18 This refers to the fact that the workers involved are not employed by the business to whom they provide labour. Instead, the business pays a fee to a third party who is the employer of the workers and is responsible for all personnel arrangements. As this section will explain, the absence of a direct employment relation through the use of migration intermediaries who perform a labour hire service to employers assists in the creation of a hyper-flexible workforce and produces additional vulnerability for workers, especially in situations where a complex labour hire arrangement has been intentionally set up to avoid an employer’s legal obligations. Numerous examples have emerged of labour hire companies

Migration 467-494; Anna Triandafyllidou and Thanos Maroukis, Migrant Smuggling Irregular Migration from Asia and Africa to Europe (London, Palgrave Macmillan, 2012).

17 See, for example: Enforceable Undertaking between the Commonwealth of Australia (as represented by the Office of the Fair Work Ombudsman) and Coles Supermarkets Australia Pty Ltd, 6 October 2014.

18 See, Richard Johnstone, Shae McCrystal, Igor Nossar, Michael Quinlan, Michael Rawling and Joellen Riley,Beyond Employment: The Legal Regulation of Work Relationships (Federation Press, Annandale, 2012) 60.

The University of Adelaide 5

seeking to sell temporary migrant labour to employers resulting in the underpayment of wages,19

crammed housing,20 and the misclassification of workers to avoid minimum wages and conditions.21

Temporary migrant workers typically find it difficult to access legal remedies so the case law in this area is somewhat scarce. 22 There are, however, some instances which have come to light in recent

years of migration intermediaries in the form of labour hire firms, setting up complex employment practices to avoid paying correct wages to temporary migrant workers.23 The reason this is an effective technique in concealing wage underpayments is because migrant workers employed in a complex labour hire structure tend to be less able to distinguish the identity of their employer and the wage they are entitled to. So, for example, in the case of Crystal Carwash24 the court referred to the problem of ‘asymmetrical bargaining power’ which arises in these arrangements which enabled the labour hire firm to avoid the minimum hourly wage rate in the award and overtime payments in the award. 25 This case involved underpayments of a substantial number of carwash workers, most of whom were low skilled, from non-English speaking backgrounds and were temporary visa holders on visas for a non-work purpose.26 Crystal Carwash established a number of labour hire companies that purported to employ the workers, and initially maintained that these companies were the “true” employer of the workers. Crystal Carwash later acknowledged, for the purpose of the proceedings, that it was the employer of the workers, and admitted to underpayments totalling $177,077.59. In imposing considerable penalties on the business and its senior personnel, Justice Buchanan noted that the labour hire arrangements “concealed the true position and made the enforcement of award obligations more difficult”.27

19 Fair Work Ombudsman, ‘Labour hire operators face Court for allegedly underpaying foreign worker $8000’ (Media release, 20 April 2012) < http://www.fairwork.gov.au/about-us/news-and-media-releases/2012-media-releases/april-2012/20120420-butler-blackberry-prosecution>.

20 For example, see the ABC Four Corners investigation into the use of labour hire companies in the horticulture industry, ABC Four Corners, ‘Slaving Away’, 4 May 2015, for a transcript of the story, see <http://www.abc.net.au/4corners/stories/2015/05/04/4227055.htm>.

21 For example, a Victorian labour hire company was banned from sponsoring workers under the 457 visa programme because it was employing workers on a casual basis rather than paying them their proper entitlements: Minister for Immigration and Citizenship, Chris Bowen, ‘Victoria company first to be banned under 457 visa programme’ (Media release, 17 February 2012). See also: Mary Crock, Sean Howe and Ron McCallum, ‘Conflicting priorities? Enforcing fairness for temporary migrant workers in Australia’ in Cathryn Costello and Mark Freedland (eds), Migrants at Work: Immigration and Vulnerability in Labour Law (Oxford, Oxford University Press, 1st ed, 2014) 422-466.22 See, Catherine Barnard and Amy Ludlow ‘Enforcement of Employment Rights by EU-8 Migrant Workers in Employment Tribunals’ (2015) Industrial Law Journal

23 The use of labour hire firms can also be used to frustrate a migrant worker’s unfair dismissal claim, for example, see Smallwood v Ergo Asia Pty Ltd [2014] FWC 964.

24 Fair Work Ombudsman v Crystal Carwash Café Pty Ltd (No 2) [2014] FCA 827.

25 Fair Work Ombudsman v Crystal Carwash Café Pty Ltd (No 2) [2014] FCA 827 at [27].

26 See further, Fair Work Ombudsman, ‘Car wash operator fined over “deliberate and calculated” underpayment of young staff’ (Media Release, 7 August 2014) <https://www.fairwork.gov.au/about-us/news-and-media-releases/2014-media-releases/august-2014/20140807-crystal-carwash-penalty>: This article confirms most of the workers were international students or WHMs: See also ‘Crystal Car Wash manager fined for underpaying staff’, The Sydney Morning Herald (online), 18 December 2012 <http://www.smh.com.au/nsw/crystal-car-wash-manager-fined-for-underpaying-staff-20121218-2bkqz.html>

27 Fair Work Ombudsman v Crystal Carwash Café Pty Ltd (No 2) [2014] FCA 827 at [6].

The University of Adelaide 6Another similar case reveals how migration intermediaries can use a labour hire arrangement to mislead low skilled temporary migrant workers as to their correct wages and entitlements. The case of Fair Work Ombudsman v Glad Group [2012] FMCA 731 involved the underpayments of 31 employees who were employed to perform cleaning services by Glad Group. The employees included international students, working holiday visa workers and recent immigrants, many who spoke little English.28 Glad Group used an arrangement by which the workers completed four-hour shifts, but were paid for the fourth hour by LJ & LJ King Pty Ltd pursuant to a sub-contract arrangement. Glad

Group admitted in the proceedings that it was the employer of the workers for the entire duration of the shift and that it had deliberately contravened the award by failing to pay basic periodic pay, annual leave, personal leave, toilet allowances, overtime rates and keep employee records. Although the FWO argued that the subcontracting arrangement was an ‘informal and artificial arrangement’ and may have been attempt by Glad Group to reduce its obligations, the Court noted that the FWO was unable to produce evidence of the motivations behind the arrangement and took into account the fact that once the underpayments were brought to Glad Group’s attention, it took full responsibility for the employees’ entitlements. This outcome indicates the substantial evidential challenge in successfully bringing a case against a migration intermediary involved in setting up a labour hire to evade legal obligations.29

There is an increased precarity for temporary migrant workers on a visa for a non-work purpose because of their propensity to perform low skilled work and their susceptibility to being recruited and organised in this work via migration intermediaries who are labour hire firms. In both the aforementioned cases the temporary migrant workers involved were mostly international students and working holiday makers. As Howe and Reilly have noted, ‘the presence of such a large and vulnerable migrant workforce [such as international students and working holiday makers], that is unregulated outside domestic labour law risks creating an underclass of workers who are invisible to the law’.30 Tham, Campbell and Boese point out that temporary migrant workers who are employed in certain industries face a ‘structural reality of non-compliance’.31 They argue that the structural design of temporary labour migration programmes invites and facilitates non-compliance by employers and that in certain industries, where there is greater likelihood of non-compliance, these structural features render it inevitable that it will be commonplace for employers to employ temporary migrant workers in breach of immigration laws and policies. In their view, the phenomenon of temporary labour migration produces non-compliance with labour law that is not aberrational but the norm. Drawing upon this perspective, it is possible to argue that the presence of a vast majority of migration intermediaries in these certain industries where there is ‘a structural reality of non-compliance’ and involving temporary migrants on a visa for a non-work purpose produces labour hire arrangements through which employers can circumvent their legal obligations to workers

28 The FWO media release confirms that ‘the employees included international students, working holiday visa workers and recent immigrants and many of them spoke little English. Six were aged under 21 at the time’: Fair Work Ombudsman, ‘Company fined for underpaying foreign workers’ (Media Release, 21 August 2012) <https://www.fairwork.gov.au/about-us/news-and-media-releases/2012-media-releases/august-2012/20120821-glad-group-penalty>.

29 See also: Fair Work Ombudsman v Jay Group Services Pty Ltd & Ors [2015] FCCA 2869; FWO v Ramsay Food Processing [2011] FCA 1176. See also Coles trolley collecting cases: FWO v Al Hilfi [2012] FCA 116; FWO v Al Hilfi [2015] FCA 313 and Enforceable Undertaking between the Commonwealth of Australia (as represented by the Office of the Fair Work Ombudsman) and Coles Supermarkets Australia Pty Ltd, 6 October 2014.

30 Joanna Howe and Alexander Reilly 'Meeting Australia's Labour Needs - The Case for a Low Skill Work Visa' (2015) 43(2) Federal Law Review 259, 285..

31 See: Joo-Cheong Tham, Iain Campbell and Martina Boese, ‘Why is Labour Protection for Temporary Migrant Workers so Fraught? A Perspective from Australia’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 8 - forthcoming.

The University of Adelaide 7and exert greater control. Or as Strauss and Fudge argue, ‘the triangular nature of intermediated employment creates difficulties when identifying and attributing employment-related legal rights and duties, and it can have very different consequences for temporary agency workers depending on the regulatory regime under which they labour’.32 They go onto say that where the identification of the employer is unclear, as it certainly was intentionally arranged to be in Crystal Carwash, ‘wages, working conditions and occupational welfare benefits are easily compromised’.33

However, it is not just low skilled temporary migrant workers who are vulnerable to exploitation by unscrupulous migration intermediaries, skilled migrant workers can also experience problems. Recognising that ‘intermediary activities [can] shape labour market outcomes for skilled migrant workers’, van den Broek, Harvey and Groutis refer to a ‘paradigmatic shift’ towards private-sector provision of migration services which ‘operate at both origin and destination countries, and intervene at important junctures of the migration process including during negotiations over employment and living conditions’.34 Temporary skilled migrants can also be exploited by unscrupulous migration intermediaries. For example employer sponsored skilled migration schemes make worker mobility difficult so that if a recruiter has misled a worker offshore, once onshore a migrant worker’s opportunity to hold the recruiter accountable for promises made offshore are somewhat limited because the worker is reliant on the employer’s continuing sponsorship to remain in the country.35 In the case of Australia’s 457 visa programme, a visa holder has 90 days to secure a new sponsorship arrangement before they are required to return to their country of origin,36 so withdrawal of support from the employer-sponsor may mean cancellation of the visa, rendering a migrant worker’s position even more fragile and volatile.37 Where a temporary migrant worker has aspirations for permanent residency and a country has a two-step process (like Australia) then this can make it even less likely that a worker will report unscrupulous recruitment practices by an employer via a migration intermediary. The Deegan Report identified that the promise of permanent residency can be an incentive for migrant workers to accept poorer wages and conditions.38

The case of Fair Work Ombudsman v Kentwood Industries (No 2) [2010] FCA 1156 illustrates the possibility for skilled migrant workers to be misled by an offshore migration intermediary offering a labour hire service to an Australian employer. This case involved substantial underpayments to Chinese tradesmen on 457 visas who were employed by Kentwood, and had been recruited by a Chinese recruitment company, Beijing Sunshine. Each worker agreed to pay Beijing Sunshine 15,000 Chinese yuan for employment and visas, equivalent to four months’ pay under their employment contract with Kentwood. Before leaving China, each worker signed an employment contract with Kentwood, with conditions below applicable industrial standards as well as the minimum requirements of the 457 visa scheme. Once in Australia, the workers were not paid for several months, worked up to 11 hours a day, 6-7 days a week and received $20 per 6 hours of overtime.

32 Kendra Strauss and Judy Fudge, Temporary Work, Agencies and Unfree Labour: Insecurity in the New World of Work (Routledge, London, 2013) p 7-8.

33 Kendra Strauss and Judy Fudge, Temporary Work, Agencies and Unfree Labour: Insecurity in the New World of Work (Routledge, London, 2013), Chapter 8.

34 Van den Broek, Harvey and Groutsis, above n 2, 4.

35 For literature on the regulatory challenges associated with global labour recruitment, see: Jennifer Gordon, ‘Joint liability approaches to regulating recruitment’ (Research Paper No. 2518519, Fordham Law Legal Studies, 2014).

36 Visa condition 8107.

37 This issue was explored in Ms Maricar Virata v NSW Motel Management Services Pty Ltd T/A Comfort Inn Country Plaza Halls Gap [2015] FWC 7932 and Applicant v Microsoft Australia Pty Ltd [2012] FWA 3353.

38 Visa Subclass 457 Integrity Review, Final Report (Canberra, Commonwealth of Australia, 2008) 51.

The University of Adelaide 8Kentwood argued at trial that the real dispute was that the workers did not want to pay for the services provided by Beijing Sunshine including visa application fees, translation fees, airfares, accommodation, and food and living expenses in Australia. Kentwood asserted that it remitted the workers’ salary to Beijing Sunshine at the request of the workers and that Beijing Sunshine then reimbursed the fees and services charges paid on behalf of the workers and remitted their salary to their respective Chinese bank accounts. The Federal Court rejected Kentwood’s argument as no evidence had been provided that Beijing Sunshine was making lawful deductions for legitimate intermediary services rendered to the workers and ordered for the workers to receive backpay plus

interest, and imposed substantial penalties on Kentwood and Mr Zhang who was a majority shareholder and director of both Kentwood and Beijing Sunshine.39

The aforementioned cases each involve migration intermediaries establishing a labour hire arrangement to obfuscate the legal obligations of the employer in terms of wages and conditions. The use of a migration intermediary in these situations to organise a labour hire arrangements produces a situation where the precarious nature of labour hire work is combined with the precarious position of temporary migrant work.40 Fudge has noted, both agency work and temporary migrant work deviate from the normative model of employment and produce a precarious employment whose norms encompass insecure and unstable work.41 Weil has evocatively referred to this phenomenon as the ‘fissured workplace’,42 pointing to the propensity of employers to reduce labour costs through practices such as subcontracting, franchising and the use of the supply chain, each of which involve or result in the worker being denied employment status. In these situations, Weil argues ‘labor costs are often the first place employers look to reduce expenses to remain competitive, even at the cost of compliance. Typically, the further away the laborer is from the ultimate beneficiary of that labor, the greater the chance for violation or exploitation. Violations tend to be greatest where margins are slimmest’.43 The use of elaborate labour supply chains involving migration intermediaries also poses substantial challenges in terms of enforcement,44 as does the practice of ‘phoenixing’ which involves

39 For another case involving a migration intermediary who made unlawful deductions for rent, agency fees and airfares, and for tuition fees, see Armstrong v Healthcare Recruiting Australia Pty Ltd & Anor (No 2) [2008] FMCA 1050. See also the enforceable undertaking signed by Chia Tung who unlawfully deducted fees for visa processing, flights, insurance, food and transport from the wages of temporary migrant workers and were involved in substantial underpayment of wages: Enforceable undertaking between the Commonwealth of Australia (represented by the Fair Work Ombudsman) and Chia Tung Development Corp Limited, 20 April 2015.

40 On the precarity of temporary migrant work, see, eg: Mark Miller, ‘Special Issue: Temporary Workers: Programs, Mechanisms, Conditions, Consequences: Introduction’ (1986) 20(4) International Migration Review 740, 747; Joanna Howe, ‘The Migration Amendment (Worker Protection) Act 2008: Long Overdue Reform, But Have Migrant Workers Been Sold Short?’ (2010) 24(2) Australian Journal of Labour Law 13; Alexander Reilly, ‘The Ethics of Seasonal Labour Migration’ (2011) 20 Griffith Law Review 127. On the problems for workers encountered in labour hire arrangements, see: Victorian Inquiry into the Labour Hire Industry and Insecure Work, Background Paper, October 2015 and more generally: Richard Johnstone, Shae McCrystal, Igor Nossar, Michael Quinlan, Michael Rawling and Joellen Riley, Beyond Employment: The Legal Regulation of Work Relationships (Federation Press, Annandale 2012); Laurie Berg, Migrant Rights at Work: Law’s Precariousness at the Intersection of Immigration and Labour (Taylor & Francis Ltd, United Kingdom, 2015).

41 Judy Fudge, ‘Precarious Migrant Status and Precarious Employment: The Paradox of International Rights for Migrant Workers’ (2012) 34 Comparative Labor Law and Policy Journal 98.

42 David Weil, The Fissured Workplace: Why Work Became So Bad For So Many People And What Can Be Done To Improve It (Harvard University Press, 2014).

43 David Weil, ‘Afterword: Learning Lessons from a Fissured World: Reflections on International Essays regarding the Fissured Workplace’ (2015) 37 Comparative Labor Law and Policy Journal 209, 211.

44 James Brudney, ‘Decent Labour Standards in Corporate Supply Chains: The Immokalee Workers Model’ and Jennifer Gordon, ‘Roles for Workers and Unions in Regulating Labour Recruitment in Mexico’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart,

The University of Adelaide 9a labour hire company choosing to systematically and deliberately liquidate its assets in order to avoid legal ramifications for its conduct and also to continue its operation under the auspices of a different labour hire company.45 In important ways, the ability of migration intermediaries to create labour hire arrangements is thus enabling employers to reduce wage costs and exert greater labour control through circumventing the traditional employment relationship – a technique which has been applied with considerable controversy in Australian horticulture – a subject to which I now turn.

III Australian Horticulture and the Problem of Unscrupulous Migration Intermediaries

The Australian horticulture industry lends itself to the presence of migration intermediaries. Whilst growers have expertise in producing fresh fruit and vegetables, they do not usually possess the human resources experience or knowledge on how to recruit and organise a workforce. Most horticulture work cannot be mechanised, and employers in the industry therefore require a reliable supply of productive labour. However, there is a great deal of uncertainty over the current and future workforce needs in the industry as a substantial portion of horticulture work is seasonal, low skilled and requires labour at short notice. Estimates suggest that there are 130,000 employees in the Australian horticulture industry,46 comprised of transient local workers like grey nomads (itinerant retirees), working holiday makers and undocumented workers, with the latter two groups forming the bulk of the harvest workforce.47 There is also increasing pressure on growers to supply quality fresh produce at competitive prices according to a tightly pre-programmed schedule with the major supermarkets. To meet these production schedules and to meet peaks and troughs in labour demand, it is becoming common practice for growers to rely on labour contractors to facilitate labour supply in an efficient and timely manner,48 and for contractors to move teams of workers to different sites on the harvest trail according to the needs of growers.49 For these reasons, reliance upon migration intermediaries to match employers and workers makes perfect sense, with a recent study by Underhill and Rimmer finding that 27% of those surveyed received their remuneration for horticulture work from a contractor.50

Despite the legitimate role for migration intermediaries in the Australian horticulture industry,51 there

2016) Chapters 15 and 16 - forthcoming. See also Chris Wright and Sarah Kaine, ‘Supply chains, production networks and the employment relationship’ (2015) 57(4) Journal of Industrial Relations 483-501.

45 See further, Victorian Inquiry into the Labour Hire Industry and Insecure Work, Background Paper, October 2015, 17

46 Fair Work Ombudsman, Horticulture Industry Shared Compliance Program 2010, Final Report, November 2010 (Australian Government); Safe Work Australia, Work-related injuries and fatalities on Australian farms, March 2013.

47 International students and workers under the Seasonal Workers Program also work in horticulture but are not numerically significant.

48 For evidence of this practice abroad, in the case of UK and South African horticulture, see: Stephanie Barrientos, ‘“Labour Chains” Analysing the Role of Labour Contractors in Global Production Networks’ (Working Paper 153, Brooks World Poverty Institute, July 2011) 8. See also, Ben Rogaly, ‘Intensification of Workplace Regimes in British Horticulture: The Role of Migrant Workers’ (2008) 14 Population, Space and Place 497.

49 For examples of this in the Chilean horticulture industry, see Salame and Morales, 2000 and Barrientos and Kritzinger 2004

50 Elsa Underhill and Malcolm Rimmer, ‘Itinerant foreign harvest workers in Australia: the impact of precarious employment on occupational safety and health’ (2015) 13(2) Policy and Practice in Health Safety 25, 27.

51 Although this paper focuses on the Australian horticulture industry, this problem is no means unique to Australia. On exploitation of migrant workers in agriculture elsewhere, see, eg: Jennifer Gordon, ‘Roles for Workers and Unions in Regulating Labour Recruitment in Mexico’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 15 - forthcoming. Charles

The University of Adelaide 10seems to be mounting evidence of improper behaviour by migration intermediaries and a growing chorus of demands to address this.52 As the Productivity Commission recently observed, ‘[l]abour hire companies figure prominently in cases of migrant exploitation, particularly in industries such as horticulture and food processing’.53 Pandora’s box was opened in 2015 when a prominent television investigation by the ABC’s Four Corners program uncovered the abundant use of unscrupulous migration intermediaries in horticulture, leading to underpayment of wages, substandard housing, unlawful deductions for transport and other costs and even in some instances, sexual harassment.54

At an anecdotal level other subsequent media reports found similar problems with the use of unscrupulous migration intermediaries in horticulture,55 which is supported by submissions from the not-for-profit sector.56 An empirical analysis of the presence of migration intermediaries on the

harvest trail made similar findings, concluding that Australian horticulture remains an industry where non-compliance with labour laws is rife.57

A recent case involving a Taiwanese national whose application for a second Working Holiday visa was rejected due to lack of documentation of her work in a regional area, also found evidence of rampant use of unscrupulous labour hire arrangements within the horticulture industry.58 In this case the applicant claimed she had worked on the Covino farm in Gippsland for more than 88 days, however she was unable to provide evidence to substantiate this. She gave oral evidence that she was referred to the farm through an agency and did not know the name of the company that employed her, and that she received cash payments. The Tribunal accepted that the applicant’s evidence was

Wolfson, Petra Herzfeld Olsson and Christopher Thörnqvist ‘Forced Labour and Migrant Berry Pickers in Sweden’ (2012) 28(2) International Journal of Comparative Labour Law and Industrial Relations 147.

52 ‘SA announces parliamentary inquiry SA labour hire inquiry into labour hire industry following Four Corners report’ ABC News (online), 6 May 2015 <http://www.abc.net.au/news/2015-05-06/parliamentary-inquiry-into-labour-hire-industry/6449714>; The Hon Daniel Andrews MP, ‘Labour Hire Inquiry’ (Media Release, 5 May 2015) <http://www.premier.vic.gov.au/labour-hire-inquiry/>; The Honourable Curtis Pitt , ‘Parliamentary inquiry to investigate rogue labour hire operators’ (Media Release, 3 December 2015) <http://statements.qld.gov.au/Statement/2015/12/3/parliamentary-inquiry-to-investigate-rogue-labour-hire-operators>; Senator the Hon Michaela Cash, ‘Ministerial Working Group to help protect vulnerable foreign workers’ (Media Release, 15 October 2015) <https://ministers.employment.gov.au/cash/ministerial-working-group-help-protect-vulnerable-foreign-workers>

53 Australian Government, Workplace Relations Framework, Productivity Commission Inquiry Report Volume 2, No. 76 (2015) 935.

54 ‘Slaving Away: The Dirty Secrets behind Australia’s Fresh Food’, Four Corners, Australian Broadcasting Commission, 4 May 2015.

55 Mark DeBono, ‘Crackdown Continues on Exploitation of Migrant Workers on Victorian Farms’, ABC News Just In, 22 May 2015; Tobi Loftus, ‘Queensland labour company allegedly left fruit pickers from Vanuatu without pay’, The Sydney Morning Herald, 14 January 2015; Kallee Buchanan, ‘Horticulture businesses audited amid backpacker exploitation claims in Bundaberg in Southern Queensland,’ ABC News Just In, 23 June 2014; Bridget Brennan and Lucy McNally, ‘Fruit picking industry operator investigated over claims of bullying, sexual harassment in Mildura’, ABC News Just In, 6 January 2015.

56 Dr Mark Zimsak, Uniting Church in Australia Synod of Victoria and Tasmania, Submission by the Justice and International Mission Unit, Synod of Victoria and Tasmania, Uniting Church in Australia to the Senate Education and Employment Committee to the Inquiry into the impact of Australia’s temporary work visa programs on the Australian labour market and on the temporary work visa holders, May 2015.

57 Diane van den Broek, Dimitria Groutsis, Malcolm Rimmer and Elsa Underhill, 'Enterprising Middle Men on the Harvest Trail: Ethics, Society and Migrant Work' in The Political Economy of Work and Labor Markets: Workplace Regimes in Comparative Perspective, Society for the Advancement of Socio-Economics Conference, Chicago, United States, 12th July 2014. See also, Elsa Underhill and Malcolm Rimmer, ‘Layered vulnerability: Temporary migrants in Australian horticulture’ (2015) Journal of Industrial Relations 1.

58 1417296 [2015] MRTA 409.

The University of Adelaide 11credible and entirely consistent with investigations by the media into Covino Farm’s labour hire practices in 2015. The horticulture industry itself has admitted it has a problem, hosting an ‘Overseas Workers in Agriculture Forum’ in August 2015 and producing an industry code of conduct governing grower-labour hire arrangements. This forum determined the importance of the horticulture industry in working closely ‘with regulatory authorities on identifying opportunities to lift standards in the industry and prevent the existence of contract labour hire firms that do not do the right thing’.59 The Fair Work Ombudsman has had substantial involvement in the horticulture industry, partnering with the industry to gauge compliance in 2009 and finding over a third of farmers in breach of the award,60 launching a three year education campaign in 2013 informing employers and employees working of their rights and obligations at work,61 initiating a review of working holiday makers to begin in 2016,62 and acknowledging its extensive efforts in pursuit of issues relating to temporary

migrant workers in horticulture.63 In 2015 the federal government announced Taskforce Cadena, a joint taskforce involving several government departments and agencies, with an objective of uncovering and prosecuting exploitative labour hire companies and a ministerial working group to help protect vulnerable migrant workers.64 According to the head of the Taskforce, Commander Nockels, the objective of its investigations is to expose ‘unscrupulous middlemen hiring the overseas workers’ and its gaze is fixed on the presence of seasonal and low-skilled temporary migrant workers in food processing and agriculture.65

Growers’ use of migration intermediaries as labour hire providers is problematic in a number of ways. Firstly and perhaps most importantly, this practice tends to be accompanied by significant wage underpayments and as a means of exerting greater labour control over workers. By providing accommodation, credit and transport to workers, intermediaries have various additional means of labour control at their disposal which both enhance the precarity of migrant workers and their dependence on the intermediary. Secondly, the use of a third party to source labour and to be responsible for wages and conditions allows growers to simultaneously claim immunity from the legal consequences which ensue from non-compliance with the Fair Work Act 2009 (Cth), 66 whilst

59 PMA Australia-New Zealand, ‘”Overseas workers in agriculture” forum’ (on file with author).

60 Tess Hardy, ‘Enrolling Non-State Actors to Improve Compliance with Minimum Employment Standards’ (2011) 22 The Economic and Labour Relations Review 117.

61 Fair Work Ombudsman, ‘Harvest trail campaign’ <https://www.fairwork.gov.au/how-we-will-help/helping-the-community/campaigns/national-campaigns/harvest-trail-campaign>; Fair Work Ombudsman, Annual Report 2014-2015, 22.

62 Fair Work Ombudsman ‘Fair Work Ombudsman to review entitlements of overseas visa holders on working holidays’ (Media release, 4 August 2015).

63 See: Fair Work Ombudsman, ‘Statement in Response to 4-Corners Report’ (Media Release, 7 May 2015) <http://www.fairwork.gov.au/about-us/news-and-media-releases/2015-media-releases/may-2015/20150507-fwo-statement-in-response-to-4-corners>.

64 Minister for Employment, Michaelia Cash, ‘Ministerial working group to help protect vulnerable foreign workers,’ Media Release, 15 October 2015; Joint Standing Committee on Migration, Seasonal Worker Program, Committee Hansard, 13 November 2015, 55, oral evidence of Mr Nockels, Department of Immigration and Border Protection.

65 Emma Field, ‘Taskforce Cadena targets agriculture and food processing industries’, The Weekly Times, 1 September 2015.

66 Although there are accessorial liability provisions in the Fair Work Act 2009 in section 550(1) which allow employers who are an accessory to a breach of the law to be held to account, this can be quite difficult to prove. For example in Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 at 135 the Court held that before any accessorial liability will arise, it is necessary to establish the subjective element of knowledge of each of the essential elements of the contravention. The Court there noted that knowledge may be constructive in the sense that it may be possible to show willful blindness in relation to the elements of the

The University of Adelaide 12taking advantage of the many behavioural and cost benefits of using a precarious labour source for picking, packing and grading jobs.67 Although, as Tham, Campbell and Boese point out, it is incumbent upon the employer to identify their obligations to employees and to ensure these are met, the use of labour hire migration intermediaries provides a convenient smokescreen by which employers can avoid this responsibility.68 Thirdly, this situation tends to allow intermediaries to control access to horticulture jobs which can have the effect of preventing local workers from accessing these types of jobs because of reliance on ethnic recruitment networks.69 Fourthly, the practice of some growers to rely on unscrupulous migration intermediaries penalises the many responsible growers who find it difficult to compete with rogue growers. It gives those that rely on unscrupulous migration intermediaries an unfair competitive advantage in being able to exert greater labour control and reduce wage costs. In Kentwood, the court recognised that non-compliance with Australian law through the use of migration intermediaries in labour hire situations ‘can also give the

non-compliant employer an unfair comparative advantage against competing Australian businesses and workers operating lawfully’.70

The use of migration intermediaries in horticulture also reveals the symbiotic relationship between intermediaries and growers in reducing wage costs and exerting greater labour control in return for mutually enlarged profits. A recent study found that migrant workers in horticulture were frequently exploited by labour hire contractors, hostel operators and other intermediaries seeking to ‘sell’ migrant labour to employers. This study found that the increasing ‘commercialisation of migration’ has opened up possibilities for entrepreneurship but that this has ethical implications as entrepreneurs do not necessarily have social ethics or the same impetus to act ethically as employers. The study concluded that the presence of migration intermediaries has resulted in a race to the bottom for horticulture wages in Australia. Whilst this study largely relied on working holiday makers on the 417 visa, it does illustrate what can happen in a system which allows employer demand to determine the composition of a country’s migrant worker intake.71 If employers’ demand for labour is the main

contravention, but absent such a finding it is necessary to establish actual knowledge on the part of the person to whom it is sought to sheet home accessorial liability in respect of a contravention.

67 See, for example: Chris Wright and Andreea Constantin, ‘An analysis of employers’ use of temporary skilled visas in Australia’, Submission to the Senate Education and Employment References Committee Inquiry into the impact of Australia’s temporary work visa programs on the Australian labour market and on the temporary work visa holders, 1 May 2015; Siew-Ean. Khoo, Peter McDonald, Carmen Voigt-Graf and Graeme Hugo, ‘A global labor market: Factors motivating the sponsorship and temporary migration of skilled workers to Australia’ (2007) 41(2) International Migration Review 480.68 See: Joo-Cheong Tham, Iain Campbell and Martina Boese, ‘Why is Labour Protection for Temporary Migrant

Workers so Fraught? A Perspective from Australia’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 8 – forthcoming. See also: Fair Work Ombudsman v Hongyun Chinese Restaurant Pty Ltd (In Liquidation) & Ors [2013] FCCA 52, para 35 (24 April 2013).

69 In Sweden, for example, unskilled migrant labour is channeled into different occupations through ‘ethnic recruitment networks’. See Diane van den Broek, William Harvey and Dimitria Groutsis, ‘Commercial migration intermediaries and the segmentation of skilled migrant employment’ (2015) Work, employment and society 1-12. This phenomenon was poignantly exposed in the Four Corners programme ‘Slaving Away: The Price of Our Fresh Food’ when a labour hire operator was caught on camera rebuking his recruiter, ‘Don't bring any more European people here’, and a bit later on ‘I want Asian girls’, after two European female workers spoke to him in order to recover unpaid wages from their time as pickers.

70 Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 at [38].

71 Compare the Swedish situation where intermediaries are paid large amounts of money to facilitate temporary migration flows: Samuel Engblom, ‘Reconciling Openness and High Labour Standards? Sweden’s Attempts to

The University of Adelaide 13criterion, entrepreneurs such as migration intermediaries will seek to meet this demand in order to make a profit. This can lead to the creation of migrant labour supply chains where the promised ‘triple win’ goes unrealised. Whilst the employer gets access to cheap labour and the intermediary makes a profit, 72 the migrant worker receives less their legal entitlement and is often treated in a manner that is unfair and undermines their dignity.73

Additionally, many horticulture workers are, in effect, undocumented workers as they work for growers who give them cash-in-hand payments. This makes them ‘illegal workers’ whose presence in the labour market ‘tends to result in sub-standard employment practices, breaches of health and safety laws and is associated with and encourages abuses of the welfare and taxation systems’.74

Typically, these workers are organised by intermediaries who possess invaluable links to growers and can provide these workers with access to jobs as well as the necessary supporting infrastructure such as accommodation and transport.75 A recent study of growers found that 79 per cent of growers

recognised the presence of undocumented workers in the horticulture industry with only three per cent stating a position that they were not used at all.76 In situations where these undocumented workers are visa overstayers or on visas without work rights such as tourist visas, they are even more susceptible to exploitative conduct by an intermediary given that if they are uncovered they face the possibility of deportation. For all temporary migrant workers, any breach in the performance of work could produce two extremely serious consequences: first, the temporary migrant worker faces the prospect of visa cancellation under section 116(1)(b) of the Migration Act 1958 (Cth); and, secondly, he or she commits a strict liability criminal offence under section 235 of that same legislation. An investigation by The Age newspaper described the business model of intermediaries in this situation in the following terms ‘agents in China levy spotters' fees to procure workers for labour hire contractors who then bribe migration agents’, which The Age exposed as part of a growing problem of illicit labour contractors infiltrating the horticulture industry in Victoria.77A more recent

Regulate Labour Migration and Trade in Services’ in Cathryn Costello and Mark Freedland (eds), Migrants at Work: Immigration and Vulnerability in Labour Law (Oxford, Oxford University Press, 2014) 354.

72 Underhill and Rimmer suggest that a contractor working in horticulture can make a profit of $10,000 per week, see: Elsa Underhill and Malcolm Rimmer, ‘Temporary Migrant Workers in Australian Horticulture: Boosting Supply But At What Price?’ in How Global Migration Changes the Workforce Diversity Equation (Cambridge Scholars Publishing, 2015) edited by Massimo Pilati et al, 159. Also, the use of migration intermediaries offering labour hire services in the offshore sector is another example. In the case of Fair Work Ombudsman v Pocomwell Ltd and Others (No 2) [2013] FCA 1139 four Philippine workers were hired by a labour hire company on an offshore drilling platform within Australia’s economic zone and were paid AUD$5.36 per hour to paint oil rigs when the minimum wage in Australia for that type of work was $14.31. The labour hire company Pocomwell, in contrast, was receiving $2,576 in respect of the hire of each painter, indicating the ability of intermediaries to make considerable profits from making low-cost labour available to employers. The Fair Work Ombudsman was unable to succeed in this case because it was unable to prove that the rig fell under the jurisdiction of the Fair Work Act 2009 (Cth).

73 As Tham, Campbell and Boese observe, employers possess not just a legal duty but a moral duty to ensure their workers are treated fairly and with respect and dignity: See: Joo-Cheong Tham, Iain Campbell and Martina Boese, ‘Why is Labour Protection for Temporary Migrant Workers so Fraught? A Perspective from Australia’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges

(Hart, 2016) Chapter 8 - forthcoming.

74 Stephen Howells, Report of the 2010 Review of the Migration Amendment (Employer Sanctions) Act 2007 (Department of Immigration, 2010) 25.

75 Stephen Howells, Report of the 2010 Review of the Migration Amendment (Employer Sanctions) Act 2007 (Department of Immigration, 2010) 22.

76 Jesse Doyle and Stephen Howes, Australia's Seasonal Worker Program: Demand-side Constraints and Suggested Reforms (2015) World Bank Group, Washington, DC13.

77 Andrew Rule, ‘Worker scam exposed’, The Melbourne Age, 10 October 2009.

The University of Adelaide 14investigation by FWO inspectors and DIBP officials into visa fraud and worker exploitation as part of Operation Cloudburst involving eleven operations, some of which were on farms, led to the detention of 38 illegal workers, six of whom had been working in breach of their visa conditions and two of which were operating exploitative labour hire arrangements.78 The shadowy presence of undocumented workers in Australian horticulture is not new. In their final report, the members of the Senate Standing Committee on Employment, Workplace Relations and Education refer to one of two memorable moments in their investigation of the future of the harvest workforce in 2006 as involving a situation during their tour of an isolated farm when a team of grape pickers took fright at the committee’s unexpected appearance, immediately dispersing amongst the vine rows.79 The committee had been mistaken for immigration officers conducting a raid on illegal workers. Thus, a number of inquiries and studies have consistently and independently confirmed the presence of undocumented workers in horticulture and their organization through migration intermediaries. There is a pressing need for this issue to be addressed.80 A failure to do so may lead to the realization of Costello and Freedland’s ominous warning that temporary migrant labour programmes may produce

‘permanent undocumented migration, and a permanent population of exploitable undocumented migrants’.81

IV Regulatory possibilities

With the preceding part of this paper attempting to shine a light on abusive labour hire practices by some migration intermediaries, the task of this final section is to explore the regulatory possibilities. Although some might argue that there is no legitimate role for migration intermediaries within the global labour migration process, this is not the view taken here. Whilst the use of these intermediaries, particularly when offering a labour hire service, has the potential to undermine labour standards for workers, I argue these risks can be moderated through a targeted and strong regulatory framework involving enforced and tough sanctions for non-compliance. The obvious exception here are migration intermediaries involved in organized undocumented workers, as evinced by the horticulture example above. The labour hire operations of these intermediaries are outside the law and need to be uncovered and closed down.

The regulatory possibilities, which I examine in this section, seek to achieve greater accountability, scrutiny and transparency for the actions of migration intermediaries and the employers who rely upon them. Other scholars focus their attention elsewhere. Martin proposes a ‘migration costs database’ to give migrant workers more information, thereby reducing the need for intermediaries and streamlining pre-departure processes and making these consistent across jurisdictions.82 His

78 P Dutton and M Cash, ‘Illegal Workers Targeted Nationally’, Minister for Immigration and Border Protection, Media Release, 28 May 2015.

79 Senate Standing Committee on Employment, Workplace Relations and Education, Perspectives on the Future of the Harvest Workforce (Commonwealth of Australia, 2006) vii.

80 By way of contrast, in New Zealand measures to address the challenge of undocumentedworkers in horticulture have been fairly successful. See further, Rochelle Ball, ‘Australia’s Pacific Seasonal Worker Pilot Scheme and its interface with the Australian horticultural labor market: is it time to refine the policy?’ (2010) 25 Pacific Economic Bulletin 114, 116; 2014a. Immigration New Zealand, Immigration fraud, Wellington: Immigration NZ.

81 Cathryn Costello and Mark Freedland ‘Seasonal Workers and Intra-Corporate Transferees in EU Law – Capital’s Handmaidens?’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 2 - forthcoming.

82 Philip Martin, ‘Reducing Worker-Paid Migration Costs’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 17 - forthcoming.

The University of Adelaide 15proposal addresses the problem of information asymmetry by empowering migrant workers to make decisions themselves rather than through reliance on intermediaries. Murray suggests governments should do more to foster collective organization and freedom of association amongst labour hire employees as a means of countering the tendency of these arrangements to undermine labour standards.83 Others focus on the promotion of the idea of the intermediary as a ‘critical public good’,84 engaged in ethical labour recruitment.85 The development of the ‘International Recruitment Integrity System’ (IRIS) by the International Organization for Migration exemplifies this approach. IRIS is an international voluntary ethical recruitment framework that seeks to benefit stakeholders in the labour migration process. The IRIS website draws attention to unethical recruitment practices and aims to create a voluntary accreditation framework with industry members and public-private alliances between governments and industry.86

The problem of ‘jurisdiction’ is commonly touted as a reason why migration intermediaries operating at a transnational level confound a regulatory response. The example of the comprehensive regulatory framework that has emerged in the Canadian province of Manitoba exposes this argument. In

response to growing concern over substantial recruitment fees that were forcing temporary migrant workers into an unfree labour situation, the Manitoba province passed legislation that required employers wishing to access overseas labour to register their interest with the authorities and for foreign recruiters to be licensed under the scheme.87 According to Fudge and Parrott, employer registration is the most critical part of Manitoba’s regulatory framework because it forces employers to register their interest and to await contact by the Immigration Branch of the province to ask questions as to the nature of the recruitment process and to be advised as to their liability in the event of recruitment costs borne by the worker.88 The legislation places full legal responsibility for illegally charged placement fees by a foreign recruiter on the employer and enables these fees to be returned to the worker through enforcement by the province’s Employment Standards Branch. This has precipitated a shift towards direct employer recruitment and a reduced reliance on intermediaries, as well as being a useful ‘mechanism for screening out unscrupulous employers’.89 In addition to employer registration, the legislative requirement that foreign recruiters be licensed goes some way to addressing the tendencies for intermediaries to be used as a way of exerting greater labour control or reducing wages and conditions. The licensing requirement involves a three stage process of qualifications. The recruiter must be a member of good standing of either the Law Society of Manitoba or the Immigration Consultants of Canada Regulatory Council and must provide

83 Jill Murray, Submission to the Inquiry into Labour Hire and Insecure Work, 25 November 2015.

84 Evesson et al suggest that ethical intermediaries do not emerge directly from the market but need support. Their study identified a labour hire firm operating in the Australian horticulture industry that provided improved job quality through developing alliances with large employers: Justine Evesson, Michelle Jakubauskas and John Buchanan, ‘Choosing a sustainable future: workforce development in Victorian primary industries,’ July 2009, University of Sydney, Workplace Research Centre Report, 47.

85 See: UNSW Law, Ingram Workshop on Migrant Worker Recruitment in the Asia Pacific Region (Australian Human Rights Centre, 22 October 2014).

86 For an example of one provider promoting its ethical labour recruitment approach, see: <http://iris.iom.int>.

87 Worker Recruitment and Protection Act, C.C.M.S.C. W197.

88 Judy Fudge and Daniel Parrott, ‘Placing Filipino Caregivers in Canadian Homes’ in Kendra Strauss and Judy Fudge, Temporary Work, Agencies and Unfree Labour: Insecurity in the New World of Work (Routledge, London, 2013) 85-89.

89 Judy Fudge and Daniel Parrott, ‘Placing Filipino Caregivers in Canadian Homes’ in Kendra Strauss and Judy Fudge, Temporary Work, Agencies and Unfree Labour: Insecurity in the New World of Work (Routledge, London, 2013) 87.

The University of Adelaide 16comprehensive financial information on the individual’s business and position. A bond must be provided of $10,000 in order to receive a license. Substantial penalties of up to $25,000 for an individual and of up to $50,000 for a corporation, are imposed for non-compliance with the legislation. The case of Manitoba reveals the potential for a highly regulated framework that effectively targets the potential for intermediaries to be involved as recruiters to exploit temporary migrant workers.

A similar but somewhat less effective approach is undertaken by the United Kingdom’s Gangmasters Licensing Authority (GLA). The GLA emerged as a regulatory response after the tragic drowning of Chinese undocumented migrant workers picking cockles in Morecambe Bay.90 The GLA is a non-departmental public body which regulates the supply of workers in agriculture, food-processing, forestry and shellfish gathering industries by requiring that labour hire agencies be licensed.91 Under the Gangmasters (Licensing) Act (2004), it is illegal both to operate as, or enter into an agreement with, an unlicensed gangmaster. In issuing licenses the GLA takes into account whether the applicant is a fit person and whether the applicant meets the detailed licensing standards, included being

registered for tax, arranging wage payments on time and above the legal minimum, not mistreating workers and not withholding identity documents. Additionally, the GLA scrutinises license applications relying upon checks with other government departments and can decide on the basis of these further inquiries as to whether an application inspection is necessary or a license should be refused. Twenty-seven per cent of applicants have had had their application rejected or additional license conditions applied.92 Nonetheless, a weakness of the GLA licensing scheme is that once a license is approved, its renewal each year is fairly simple and does not encompass an automatic inspection.93 The GLA has a team of inspectors and currently conducts around 180 inspections per year, out of an estimated 1180 gangmasters. The GLA also works with other enforcement agencies to achieve its objectives such as UK Border Agency and launches litigation where necessary. For example, the GLA was the first UK enforcement agency to secure a Slavery and Trafficking Prevention Order (STOP) under the Modern Slavery Act 2015 (UK) against two Lithuanian gangmasters who had transported two males, the Subatkis twins, to the UK and forced them to work in food factories in a highly exploitative arrangement. The convicted gangmasters were sentenced to a three and a half year jail term as well as the STPO which prevents them operating as gangmasters in the future.

According to Davies, the GLA model suffers from three weaknesses: first, the regulator does not have sufficient civil penalties at its disposal which forces recourse to litigation and stymies its ability to rely on other non-criminal penalties to induce cultural change amongst labour providers; second, the GLA finds it difficult to address the issue of phoenixing and third, the regulator’s remit does not extent to assisting affected workers when an operator has their license revoked and the workers lose their jobs. 94 So, for example, in the aforementioned case, the Subatkis twins lost both their jobs and their accommodation when their gangmasters were charged, described as being ‘cast adrift’ with ‘no family to turn to and no work in the UK but feeling unable to go back to Lithunia for fear of reprisals

90 For an overview of the GLA regime, see Mick Wilkinson with Gary Craig, and Aline Gaus, Forced Labour in the UK and the Gangmasters Licensing Authority (The Wilberforce Institute, University of Hull, 2010).

91 See further, <http://www.gla.gov.uk>.

92 Nick Clark, ‘Enforcement in the workplace’ in Bernard Ryan (ed), Labour Migration in Hard Times: Reforming Labour Market Regulation (Institute of Employment Rights, 2013) 89.

93 Gangmasters Licensing Authority, Licensing Standards (May 2012), para 5.5.

94 ACL Davies in Cathryn Costello and Mark Freedland (eds), Migrants at Work: Immigration and Vulnerability in Labour Law (Oxford, Oxford University Press, 1st ed, 2014) 93.

The University of Adelaide 17

from associates of Ratautas and Samurin [the convicted gangmasters]’.95 Although the GLA’s actions rightly convicted and stopped the business of the gangmasters, the affected workers were left without any formal assistance from the government agency. Going forward it seems likely that the GLA will have its role extended. The Cameron Conservative Government’s Immigration Bill 2015-2016 was introduced into the UK parliament in September 2015 and seeks to extend the GLA’s remit to all areas, with the agency renamed as the Gangmasters Licensing and Labour Abuse Authority and through the appointment of a Director of Labour Market Enforcement.96 Some have raised concern, however, that this extension of the GLA’s role will be diluted by other measures, such as the government’s proposal for ‘flexible’ licensing which will weaken the licensing requirement and prevent sufficient scrutiny and oversight over labour hire practices.97

Another regulatory possibility to address the challenge of unscrupulous migration intermediaries is the strategic and responsive enforcement of labour standards through holding employers at the top of large supply chains accountable for the conduct of intermediaries. An example of this is the Fair Work Ombudsman use of the accessorial liability provisions in the Fair Work Act 2009 (Cth) to encourage employers to be held responsible for their contracts with other parties which engage in

practices which breach labour standards. After launching litigation against Coles because of the exploitation of its trolley collectors by a labour hire company, Starlink,98 the FWO was ultimately able to secure an enforceable undertaking with Coles in which the company admitted its ‘‘ethical and moral responsibility to require standards of conduct from all entities and individuals directly involved in the conduct of its enterprise’.99 This enforceable undertaking saw Coles agree to move its trolley collection in-house, establish support structures such as a 24 hour hotline for its workforce, regular reporting lines to the FWO and a special holding account to efficaciously rectify wage underpayments. In a recent analysis of the effectiveness of the FWO’s conduct in this regard, Owens acknowledges the many achievements of the FWO but cautions that ‘a too soft approach has no real impact on those who profit greatly from the exploitation of these workers and the general deterrence effect of EUs is obviously weak. Responsive regulation also requires strong resourcing and in the end adequate back-up from litigation’.100 A somewhat similar approach is deployed by the Work and Hour Division (WHD) in the US Department of Labour which develops a risk matrix identifying the most vulnerable workers in the labour market by relying on a data-driven, evidence based analysis.101

Like the FWO, the WHD’s focus is on regulating the supply chain and ensuring

95 Felicity Lawrence, ‘Lithuanian gangmasters jailed in modern slavery and trafficking case’ The Guardian (online), 23 January 2016 <http://www.theguardian.com/uk-news/2016/jan/22/lithuanian-gangmasters-jailed-in-modern-slavery-and-trafficking-case#img-1>. For an example of a more responsive and strategic regulatory approach to labour market enforcement, see Rosemary Owens, ‘Temporary Labour Migration and Workplace Rights in Australia: Is Effective Enforcement Possible?’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 18 - forthcoming.

96 Department for Business, Innovation and Skills, Tackling Exploitation in the Labour Market: Government Response, January 2016.

97 See, for example, ‘Slavery experts “deeply concerned” at plans to water down UK labour inspection’, (12 January 2016) Focus on Labour Exploitation <http://www.labourexploitation.org/news/slavery-experts-deeply-concerned-plans-water-down-uk-labour-inspection>.

98 See: FWO v Al Hilfi [2012] FCA 116; FWO v Al Hilfi [2015] FCA 313; FWO v South Jin Pty Ltd [2015] FCA 1456.

99 See: Enforceable Undertaking between the Commonwealth of Australia (as represented by the Office of the Fair Work Ombudsman) and Coles Supermarkets Australia Pty Ltd, 6 October 2014.

100 Rosemary Owens ‘Temporary Labour Migration and Workplace Rights in Australia – Is Effective Enforcement Possible?’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 18 - forthcoming.

101 For more on the WHD and its work, see its website: <http://www.dol.gov/whd/>.

The University of Adelaide 18

that investigations of one employer have far-reaching effects throughout its sector. 102 The WHD seeks to, ensure that ‘those at the top of a supply chain to be aware of the compliance practices of those below them; and to get them to think twice about whether it is worth the risk to their brand, and possibly their bottom line, to do business with suppliers or subcontractors who skirt the law’.103 In this regard, the work of the FWO and the WHD is an important acknowledgment that in the face of complex vertical disintegration within the employing entity the business at the top of the supply chain can be held accountable.

V Conclusion and Recommendations

Employers should not be able to evade legal, moral and ethical responsibility for worker exploitation through reliance on migration intermediaries entering into labour hire arrangements on their behalf. Put simply, ignorance is no excuse. However, the problem with relying solely on the FWO/WHD approach is that it occurs after the fact. Whilst a high profile prosecution or enforceable undertaking has an educative value for other employers in the sector, placing the responsibility on the regulator to identify instances of exploitative conduct by unscrupulous migration intermediaries means that the

vast majority of illegal labour hire operations will never be exposed. Or as Owens so aptly observes, ‘if effectiveness is judged in terms of the results achieved in light of the size of the problem of compliance, then clearly the FWO’s operations barely scratch the surface in terms of achieving compliance with labour standards for all migrant workers’.104

A better approach is one that relies on a strong enforcement agency in tandem with a regulatory design that ensures both employers and labour hire migration intermediaries are acutely aware of their obligations and responsibilities. Labour hire migration intermediaries should not operate in a regulatory vacuum. The potential for exploitation of migrant workers is too high. Both the Manitoba and UK examples illustrate different models of regulation of both migration intermediaries and labour hire agencies. These reveal the need for a comprehensive governance structure to foster legitimate employment agencies and to expose unscrupulous ones. An essential starting point is to require labour hire agencies to be registered and licensed. Like in Manitoba there should be set criteria for obtaining a license and regular audits of labour hire arrangements based on a risk matrix of those labour hire workers who are most at risk of exploitation. Another aspect of this is to ensure that employers are jointly responsible for actions of labour hire agencies through strengthening the accessorial liability provisions in the Fair Work Act 2009 (Cth). Section 550(2)(c) which requires a party’s knowledge of the contravention of a civil remedy provision under the legislation renders it difficult to prove an employer’s actual knowledge of exploitative conduct by a migration intermediary, despite the fact the employer is benefiting from this conduct as a means of exerting greater labour control and reducing wage costs. The legislation should place the burden of ensuring the migration intermediary acting on an employer’s behalf is operating in a legal and compliant manner upon the employer. Finally, like in Manitoba, employers should be held responsible for fees

102 David Weil, ‘Strategic enforcement to maximise impact’, US Department of Labor blog, 31 October 2014, <http://blog.dol.gov/2014/10/31/strategic-enforcement-to-maximize-impact/>.

103 David Weil, ‘Afterword: Learning Lessons from a Fissured World: Reflections on International Essays regarding the Fissured Workplace,’ (2015) 37 Comparative Labor Law and Policy Journal, 209, 218.

104 Rosemary Owens ‘Temporary Labour Migration and Workplace Rights in Australia – Is Effective Enforcement Possible?’ in Joanna Howe and Rosemary Owens (ed) Temporary Labour Migration in the Global Era: The Regulatory Challenges (Hart, 2016) Chapter 18 - forthcoming.The federal Labor Party’s policy ‘Protecting Rights At Work’ released on 1 February 2016 refers to the FWO’s recent high profile investigations of major employers as the ‘tip of the iceberg’ and wants to introduce a new criminal offence for deliberate exploitation of temporary overseas workers.

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paid to migration intermediaries acting as recruitment agents, both onshore and offshore.105 These reforms should be supplemented by greater resourcing and enforcement powers being provided to the Fair Work Ombudsman.

The most obvious objection to the regulatory framework proposed here is that it would make the burden of compliance too heavy for employers using this route to meet their labour needs and make it difficult for migration intermediaries to be profitable. I think that is an acceptable price to pay for seeking the right kind of balance. This regulation is necessary to ensure that vulnerable temporary migrant workers are not exploited through a labour hire arrangement administered by a migration intermediary. Furthermore, the above requirements do nothing more than ensure that labour hire arrangements are being used for a legitimate purpose and guarantee that labour hire workers’ remuneration and conditions of employment are legal. This prevents the creation of a two-tier labour market and reduces incentives for unscrupulous employers and intermediaries to erode Australian labour market standards by relying upon temporary migrant workers.

105 This goes further than the current approach by requiring employers to reimburse workers for all fees paid to migration intermediaries. Under the Migration Regulations 1994 (Cth), Regulation 2.87 prohibits employers of 457 visa holders from recovering migration intermediary fees from their employees. See further, Minister for Immigration and Border Protection v Choong Enterprises Pty Ltd (No 2) [2015] FCA 553. In this case the employer made unlawful

deductions from the employees’wages to cover migration agent fees.

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