A recent Federal Court decision ruled that the outsourcing of health services by the Victorian Government does not allow the new employer to provide inferior conditions of employment. According to the Australian Services Union (ASU), this was a landmark decision stopping employers from evading their legal employment obligations by outsourcing.
With the Federal Court ruling that employees of the new entity are entitled to the same conditions as employees had with the State Government, this threw doubt on Councils outsourcing work to a bidder which is not providing the same conditions for its workers.
As a result, a similar case involving Local Government outsourcing was recently settled out of court. This resulted in the contractor involved agreeing to pay 40 former Local Government home care workers their previous wages and conditions.
If a planned series of class actions by ASU is successful then companies that have taken over Council operations may now be forced to pay millions of dollars in back pay.
“These historic Federal Court actions have irreparably damaged a recent employers’ weapon, competitive tendering,” said ASU Assistant National Secretary, Brendan O’Connor.
“The recent Court decision, that has determined that employers cannot pay less by contracting out, will grind the competitive tendering process to a halt.
“Councils must only consider contractors that are willing to tender with their staff being on the same conditions as Council staff.”
Speaking prior to the out of court settlement, Mark Hayes, a Partner with Maddock Lonie and Chisholm, said that if this case, brought by the ASU concerning the awarding of a contract to an outside bidder by the City of Dandenong, was successful, then ‘Compulsory Competitive Tendering in this State as we know it is dead!’.
He urged Councils to alert tenderers to this situation and to amend conditions in their tenders to take note of it.
Dandenong’s awarding of its Home and Community Care contract to an outside tender had seen the winning bid come in at $1.5 million lower than its inhouse bid.
