The biennial senate estimates hearings took place last week in Canberra.
The estimates hearings are an opportunity for senators to question senior executives in the government departments.
Nick Xenophon took the opportunity to question the Fair Work Ombudsman, Nicholas Wilson, about issues relating to contracts of the Church of Scientology.
Proof Committee Hansard
EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS LEGISLATION COMMITTEE
Extract from transcript of 23 February 2011
Senator XENOPHON—Whilst I know you cannot discuss specific cases, there are some general principles I wanted to canvass with you. I think it was about a year ago that out of a very helpful suggestion of Senator Abetz, a number of complaints from former members of the Church of Scientology were sent through to your office. I am grateful for a very comprehensive letter I received from you that was dated 14 February. Without breaching any confidences in the investigations that are currently underway, under current legislation how does Fair Work Australia differentiate between an employee and a volunteer, and what are the protocols in place for that?
Mr Wilson—Ultimately, that is a matter of legal determination by a combination of the inspectors and our legal staff. There are principles which need to be applied about the intention to form legal relations and if there is an intention to form legal relations, what the nature is of those relations—whether it is intended to be an employment exercise or whether it is some other exercise. Clearly, it is a matter of engaging with the particular complainant and the respondent and testing through that circumstance.
Senator XENOPHON—If there is any further information to provide on notice, I would be grateful. I think you have given a good outline there, but if there is anything further that you wanted to add about any criteria that you look at.
Mr Wilson—The criteria are set out to some extent within the Fair Work Act, which—
Senator XENOPHON—We do not need to do that now. I am just conscious of it.
Mr Wilson—Yes. That contains a definition of employee and that clearly is instructive. The other thing to consider is a High Court case that I referred you to in my correspondence, which is Ermogenous v Greek Orthodox Community of SA Inc (2002) 2009 CLR 95. That case and others do set out some of the principles that would need to be considered. In some ways it is fairly rare that we need to test those principles, and clearly the cases you have indicated may require those assessments and that ultimately is a matter of the evidence of each particular complainant.
Senator XENOPHON—How does your office assess the credibility of contracts declaring that someone is a volunteer? For example, would the Church of Scientology asking its so-called volunteers to sign billion-year contracts to volunteer to work for the church, with the inclusion of a billion-year clause—it actually says a billion years—lead to your office rejecting the validity of such a contract.
Mr Wilson—We have not yet tested, and I do not know that we will test, that issue of validity with a contract. The issues that we are presently looking at are somewhat more basic. There was an allusion to that point in my correspondence to you, which was to indicate that in some but not all cases it might be—and I am yet to make my decision on these points—that they are simply not within time and therefore not capable of us investigating them in detail.
Senator XENOPHON—Time would be defined in what way? Is it a six-year statutory limit?
Senator XENOPHON—Is that an absolute limit or is there an ability to extend time in exceptional circumstances, or if there is new material or information? Is the limit of six years a sudden-death thing or is there some ability—
Mr Wilson—My understanding of the Fair Work Act is that it is a sudden-death matter and that there is not a capacity for an inspector to bring an application to a court outside of that time.
Senator XENOPHON—There is genuine concern that in some jurisdictions with some actions you can do so if there is a mature fact. I am sorry, Mr Wilson, I did not mean to interrupt you.
Mr Wilson—It is difficult for me to answer that question without going to the precise matters which are under investigation. Ultimately, the investigation of whether a person is a volunteer or an employee is a test of a number of matters, one of which may well be the purported legal arrangement between the two. It may well be other factors as to what actually went on, and that point was to some degree made within the Greek Orthodox case that I referred to where the person was held to be an employee for the purposes of the long service leave legislation, notwithstanding that they had a religious connection to the community and a religious function within the community. It is not outside the realms of possibility that that same arrangement might occur in any other relationship between a volunteer and the organisation they are working for. It is equally possible that it not be consistent with those tests.
Senator XENOPHON—So a contract with something as ludicrous as a billion-year contract clause in it could still be deemed valid?
Mr Wilson—I do not have a view on that point and I do not think I need to have a view on that point right now. That is really all I can say about that matter.
Senator XENOPHON—But, in terms of general principles, if there is something that is patently absurd— contracts that actually say, ‘You are volunteering your services for a billion years’—it actually says ‘a billion years’—wouldn’t that set off alarm bells in terms of assessing the criteria?
Mr Wilson—That is a different question to the one that you asked. Your question was whether—
Senator XENOPHON—it would be deemed valid.
Mr Wilson—the contract would be deemed valid. That is a different question from whether or not such a term may well set off alarm bells. What Mr Ronson just indicated to me is that you look behind the contract in any arrangement, whether it be an employment arrangement, a volunteer arrangement or some other arrangement, and you look to how that is actually played out between the parties—the work that they did, the payments that were made, the controls and all the rest of it. What I have indicated to you in my correspondence is that we are still in the process of gathering information and assessing the nature of that information and that a determination will be made by me towards the end of March. You are inviting me to make decisions in advance of that and I do not think it is proper that I do that.
Senator XENOPHON—So a contract with a billion-year clause in it could or could not be valid—the decision could be either way?
Mr Wilson—I do not have a view on its validity.
Senator XENOPHON—I go to the issue of the expertise your staff have in assessing some of these claims. It is not in any way criticism; I just want to try and understand.
Senator XENOPHON—When it comes to some of these issues, there is an issue of coercion. The question is: what expertise do your staff have in assessing whether someone has been psychologically coerced into signing a contract or accepting substandard conditions?
Mr Wilson—I will ask Mr Ronson to speak to that.
Mr Ronson—In this particular matter which I think you are referring to, the principal inspector in the investigation is someone with a psychology background, which we felt was appropriate in this particular investigation. The assisting inspectors are very experienced inspectors, and so we have ensured that they were appropriate for the nature of this investigation.
Senator XENOPHON—Apart from the expertise of the people that you referred to, are there any protocols in dealing with issues of coercion or assessing potential issues of psychological coercion?
Mr Ronson—I am confident that the inspectors who conducted this investigation were aware of extraneous issues or surrounding issues that, as you have described, may have been in place, or may not have been. They were alive to what are potential issues that are specific to this particular investigation.
Senator XENOPHON—On the issue of volunteer contracts signed by children—because I have had complaints in respect of that and met one young woman who was a minor at the time that she entered into this contract—how does your office treat so-called volunteer contracts signed by children?
Mr Ronson—Not just in this case but in other cases—and I know that it was followed in this case—it is very important that extra sensitivity is afforded and applied to those particular conversations. It is absolutely essential that parents are involved and, if that is the case, if minors have entered into contracts and their parents are aware of the nature of this investigation, that there is a level of comfort and so forth.
Senator XENOPHON—Sorry, perhaps I should clarify that: I mean if they are no longer minors but they were minors at the time they entered into this so-called volunteer contract.
Mr Ronson—Sorry, are you talking about child employment law specifically or just the nature of a conversation?
Senator XENOPHON—There is an argument as to whether it is an employment contract or, as I think the Church of Scientology says, it was simply a contract to be a volunteer. What is the policy, or how do you deal with cases, where a minor has signed such a contract to be a volunteer? What safeguards are there and what would that trigger in terms of any investigation?
Mr Ronson—There have been a number of cases where that occurs. I am confident that the training that we provide to our inspectors is sufficient to cover off what I suppose are the particular evidential difficulties that need to be tested with someone’s memory, particularly that memory as a minor, and if they are remembering what they did and signed.
Senator XENOPHON—Perhaps we are talking at cross purposes. Let us assume, again as a general principle, that from an evidentiary point of view you have the evidence that there is a contract to be a volunteer and it has been entered into by a minor. What effect would that have and what role could your office have in those cases if there is a complaint about that, even if there has been parental consent? What would happen in cases in the absence of parental consent and in cases where there is parental consent?
Mr Ronson—I think as a general proposition it is fair to say that we would be requiring greater explanation on behalf of the employer or the engager of work to account for what was going on at the time, what the intentions of the parties were. There would be a more robust questioning of what the precise nature of the intentions between the parties was.
Senator XENOPHON—But what ability does a minor have to enter into a contract? There is that threshold issue, isn’t there?
Mr Ronson—Correct. These are questions that we are dealing with on a daily basis, but in particular the investigation that you are interested in.
Senator XENOPHON—Sure. As a broader issue, Mr Ronson and Mr Wilson, about employers that drag someone in, whether they are a young adult or a minor, and say, ‘Have a bit of work experience with us,’ but in fact it is just cheap labour and it goes on for an extended period of time. I am sure that is quite a widespread thing that goes beyond this particular investigation that I am interested in.
Mr Wilson—If I talk generally about our approach on that, that might flush out some of the issues. There are of course many thousands of minors who are employed quite properly and ethically. What you do find, for example, in the large fast-food chains they are very conscious of the need to make sure that there is parental consent and so on, and that is done quite properly. Equally, there are cases where we see employment having commenced without necessarily that parental consent having been given. The role that we exercise in that is to make sure that people are not exploited and that they are paid the conditions and entitlements they are entitled to. When it comes to things like work experience or other volunteer arrangements, they fall into a number of categories. There are of course the bona fide work experience and volunteer arrangements, which are quite proper and ethical. Then there are some where they are just outright exploitation of holding out jobs with no pay at the end of that work experience period. On those issues we certainly take quite a strong line and make sure that underpayments are rectified. The kind of issues that you are talking about—
Senator XENOPHON—Mr Wilson, just in relation to that. There must be a case where you cross this threshold where someone is at first instance doing work experience but it becomes unpaid labour, and there sometimes could be a hybrid of the two, could there not? Initially it could be properly characterised as work experience and then it turns into something else.
Mr Wilson—I will call upon Mr Campbell, who has some experience in this area.
Mr Campbell—We do observe cases where employers attempt to engage people through work experience arrangements to gain access to what you describe as free labour. Where those matters come to our attention, we look at the facts of the case and at the intentions of the party but also whether the employer has gained benefit from having that person involved in that work during that period of time. If we assess that they have, and we come to a view that there was an intention to create a relationship, and perhaps an employment relationship, then we will enforce the minimum wage that would apply to that role. That could be whether or not the person was a minor or otherwise. It would be up to ultimately a court to decide whether that individual was capable of entering into the contract that we say existed between the parties. We could argue that it did, but it would again be a court who had to decide.
Senator XENOPHON—So it is a question of degree and the facts of each case?
Senator XENOPHON—Without referring to any specific case, if there are issues of coercion looking at the nature of the relationship between the parties, would they be relevant factors?
Mr Campbell—They would be factors that would ultimately have to lead in court to convince a judge or a court that there were certain behaviours by the employer that led to a relationship being created that may not have been the choice of the individual employee or volunteer that you refer to.
Senator XENOPHON—What happens in cases where initially it appears that there was free choice but it then becomes apparent as a result of a number of factors that that free choice is no longer there? Is that something that is taken into account?
Mr Campbell—Generally it could be and again it will go down to whether or not the individual involved received a benefit from the work of the individual. For all intents and purposes, if there is an employment relationship then we can enforce entitlements based on that view. Again, it is the case that we can put before the court and our ability to argue the facts to the court that will determine whether or not we are successful in proving that a person was an employee.
Senator XENOPHON—As a general principle, if a minor enters into a volunteer contract without theconsent of their parents, would such a contract be valid or not?
Mr Campbell—I could not provide a general principle on that because it is a volunteer arrangement.
Mr Wilson—The other distinction to be made is under the Fair Work Act; our jurisdiction obviously is in respect of employment arrangements. To take an extreme case, let’s say my daughter, who is almost 15, decided to volunteer for the local Red Cross without telling me. That might be wrong and there might beconsequences under whatever the volunteer arrangements are for that organisation. But there would not necessarily be a jurisdiction invoked for this organisation to investigate unless it was of the view that the arrangement was not that of a volunteer but instead an employment relationship.
Senator XENOPHON—Yes, it is different if it was a case of your family member being there 60 or 70 hours a week and having to work around the clock on direction and being told that they would be eternally damned or whatever if they did not keep doing it. That would change the nature of the relationship, would it not, potentially?
Mr Wilson—It might. That is the struggle of course that we have and ultimately that can only be answered by the facts of each individual case.
Senator XENOPHON—So it is a hybrid of really common law and statutory law?
Mr Wilson—It is, yes.
Senator XENOPHON—Thank you for your time.