How can employers structure outsourced service contracts and avoid 'same job, same pay' orders
Australian employers seeking to keep outsourced work outside the Fair Work Act's "same job, same pay" regime are being urged to overhaul how they structure and run service contracts, as tribunals continue to apply a narrow test to the Service Contractor Exemption.
In an insight, King & Wood Mallesons (KWM) said that, in the current landscape, the closer an arrangement looks, feels, and is priced like embedded labour within the host's enterprise, the more likely a Regulated Labour Hire Arrangement (RLHA) Order will be available.
By contrast, the more an arrangement operates as a "genuine, specialist, independently delivered service" using the provider's own equipment, systems, and standards, the more likely the exemption will bar an order, the firm said.
The guidance follows the Fair Work Commission's decision in March to reject an application for an RLHA Order over cleaning work at Bartter Enterprises' poultry facility, finding the work was the provision of a service rather than the supply of labour.
KWM uses that ruling to spell out practical measures for employers and hosts seeking to rely on the Service Contractor Exemption.
The firm's first warning is that labels are not enough: contracts and on‑the‑ground practice must both support a service character.
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