Home based work is without doubt, although not without trepidation at least from the perspective of the trade union movement, a growing employment form. ACTU Assistant Secretary, Tim Pallas.
Until recently outworking was considered to be an anachronistic employment form, a mere remnant of an earlier phase of industrialisation. The very process of industrialisation has in fact been portrayed in terms of the gradual shift of production from the home to the large scale factory. Recent research has identified an apparent resurgence in outworking, in both blue and white collar occupations.
This trend has been particularly marked in Australia and has been linked to the intensification of international competition, production decentralisation and labour force fragmentation and the swelling of under employed labour pools in the world’s cities.
In a 1989 survey[1] approximately 241,500 persons were found to have worked at home in the course of their main job. Over half of these people were found to work in the service sector.
A more recent survey conducted by Roy Morgan Research[2] suggested that 450,000 people could be described “self employed” from home. This figure is expected to rise strongly over the next two years.
Telecom has recently estimated that about 700,000 Australian households or 12 percent of Telecom customers regularly conduct some for of their business from their home.
Indeed certain futurists have predicted the growth in home based work will exponentially expand. Suggestions that have been made that “one in four Australians will work at home within the next ten years as part of the communications revolution sweeping the world.”.
That this radical shift from traditional workplaces will save the economy $1.5 billion through productivity gains, reduced traffic congestion, pollution and noise. That by the year 2004 more than 2 million people may shift from their workplaces to their homes.
While this barrage of opinion and statistics are interesting I think the cautionary warning of statistician Claus Moser is worthwhile bearing in mind. Moser’s law goes something like this:
“If you ever find a really interesting statistic – it is probably wrong”
The problem of the characterisation and analysis of the extent of home based work is both a definitional and a substantive one.
Home based work can, depending upon the breadth of the definition applied to it, include a novelist penning their next best seller from their exclusive retreat high in the Swiss Alps, to a child labourer performing the most menial of tasks together with their seven or eight brothers and sisters in a third world country for wages and conditions that would otherwise be illegal.
What is clear is in the words of the International Labour Organisation (ILO):
“Home workers constitute a particularly vulnerable category of workers due to their inadequate legal protection, their isolation and their weak bargaining position.
They often receive less than the minimum wage, work very long hours, have no security of employment and are unable to ensure that contractual obligations are observed. The majority of Home workers are women who have not been able to gain access to regular employment because of family responsibilities or lack of skills.”.
This propensity for exploitation of home based workers is a far cry from the more appealing conception of a home worker being a computer literate yuppie coasting blithely along the information superhighway freed from physical constraint of employment time or place.
For the latter home based work may well be a lifestyle choice – for the more common home based worker it is often not a question of choice but subsistence, often without effective regulation or dignity.
The ILO defines homebased work as the production of goods or the provision of services for an employer or contractor under an arrangement whereby the work is carried out at a place of the workers own choosing, often the worker’s own home. It is normally carried out without direct supervision by the employer or contractor.
An important criteria for defining home based work is the place of work which is outside the premises of the employer. Home based work may be carried out in neighbourhood workstations, workshops or other premises where several home based workers work together, but which do not belong to the employer(s).
Usually home based workers receive the raw materials from the employer, but in some cases they may be by then on the market or from the employer or sub-contractor and sell the finished or semi-processed product back to him or her.
The most important criterion which distinguishes home based work from other types of home based economic activity is that there exists a relationship of paid employment between the home worker and the employer, subcontractor, agent or middleman. This relationship may be established through a written or verbal contract or an explicit or implicit agreement.
In many cases it is difficult to make a clear distinction between Home workers and independent (self-employed) workers. Many of those working at home may be counted as self-employed, and many consider themselves as such, even though they are essentially disguised wage earners.
The protection of Home workers under labour legislation often depends on whether it is fully established that they are in paid employment, in other words whether they are, or are not wage earners.
There are some basic characteristics which distinguish wage earners from the self-employed – the former receives payment for their labour whereas the latter represents the return on capital as well as labour, entrepreneurial skill and risk taking.
Unlike wage earners, the self-employed person has considerable independence, is responsible for a range of economic and financial decisions and bears a major share of the risks of failure.
James A. Peck in an article entitled “Outwork and Restructuring Processes in the Australian Clothing Industry”[3] considers that there are three areas of economic incentive for the use of out-working by employers:
(a) for most analysts the most important advantage of the outwork system is the savings on production costs which it allows;
(b) outworking also provides a means for the enhancement of labour and production flexibility; and
(c) outworking has a role in deunionisation strategies.
Employers of outworkers can achieve savings on both variable and fixed capital costs. Because outworkers in industries such as clothing are paid by the piece, employers pay only for actual output, with the result that the pay rate for outworkers are often exceptionally low. In addition to this, employers who use outworkers are also able to evade payments for overtime, sickness leave, maternity leave, holidays and redundancy compensation. Furthermore, many of the fixed capital costs associated with the operation of a factory can be displaced to the outworkers themselves (eg. rent, heating and lighting). Many of the costs of labour management are also displaced to the outworker, or to the middleman, as are the costs associated with the reproduction of labour (such as skill formation).
The issue of home based work and its proliferation throughout many of the economies of the world has prompted the ILO to include it as an issue on the agenda of the 82nd Session of the ILO Conference which will be held in Geneva this year.
In anticipation of the consideration of the Conference upon this issue a questionnaire was circulated to all ILO member countries. Each of the social partners (government, unions, employers) were asked to complete a response to these issues which were to be in turn included within the Federal Government’s reply.
The central features of the ACTU’s position upon the issue of home based work are as follows:
1. The matter of home based work should be the subject of an ILO Convention supplemented by a recommendation.
2. Self-employed people should be excluded from the definition of “home worker” for the purposes of any Convention. In effect acknowledging the need to distinguish the genuinely self-employed from those requiring the protection of an International Convention or code of conduct.
3. The ACTU is anxious to ensure that the definition of homework includes teleworkers, thereby ensuring that intellectual property not just material products are the necessary fruits of a home worker’s labour.
The ACTU has sought clear safeguards within the terms of any convention to ensure that children are excluded from falling within the definition and protected from the more sinister aspects of this practice.
Specifically, where a nominal adult is the home worker who then seconds the children of the household into the operation. Such involvement not being in the nature of play or learning, but an essential part of the subsistence of the entire family.
In the ACTU’s view it is important that the convention include a power for an independent authority. In Australia’s case the Industrial Relations Commission should have power to determine whether a person is performing home based work as an employee or as a self-employed person.
The criteria relevant for any such determination should be:
(i) the degree of economic dependence of the person performing the work upon the person providing the work;
(ii) the degree of autonomy and initiative of the person performing the work in the design of the product or in the performance of the service; or
(iii) the amount of control the person performing the work has over the price paid for the work, the time of its performance and the nature of its performance.
The ACTU is anxious to ensure that home based work is a lifestyle choice available to all workers and not a form a economic manipulation of those least able to otherwise obtain employment. Aligned with this concern is the added concern that home based work should not be used to undermine employment standards.
Accordingly, we believe that home based workers should have:
(i) the right to join unions and to bargain collectively with their employer;
(ii) the right to choose mode of employment without imposition;
(iii) protection in the field of occupational, health and safety;
(iv) minimum standards of remuneration;
(v) access to training;
(vi) provision of information on home worker rights;
(vii) the requirement for a written contract;
(viii) maternity protection and leave;
(ix) minimum age;
(x) hours of work regulation; and
(xi) access to leave.
Of course the best way for these standards to be effectively introduced and maintained in Australia is through the award system.
It is perhaps predictable but nonetheless disappointing to note that ACCI, the peak employer organisation, have expressed in their ILO questionnaire response opposition to an international convention establishing protections for employees who are all too often the subject of reprehensible home based employment practices.
Home based work is a legitimate alternative employment form. It is disappointing to see that the opportunities it provides for both employers, employees and the community could be compromised by those who seek to avail themselves of subsistence employment practices inconsistent with our national ethos.
Award regulation is the most reassuring and mutually advantageous means of effecting home based work arrangements.
On 14 February 1994 the Australian Industrial Relations Commission approved the Australian Public Service Home Based Work Interim Award 1994. At the time of ratification Commissioner Smith said:
“The proposed award is an innovative approach to the opportunities presented by changes in technology and to some contemporary issues including greater flexibility in the labour market and matters involving persons with family responsibilities. Whilst this is not, and is not put forward as an alternative to childcare, there would appear to be little doubt that it will assist those in our community who wish to achieve greater flexibility between home and work.”.
This consent award with minor alterations was extended to Telecom by means of a certified agreement on 4 May 1994.
The union responsible for the negotiation of this agreement, the then Public Sector Union (“PSU”), now the Community and Public Sector Union (“CPSU”) said in a joint media release with the Minister Assisting the Minister for Industrial Relations, the Honourable Gary Johns, on the day of the decision:
“Families and work should no longer be an all or nothing situation for men or women. Home based work will assist parents in striking a balance between family and work.
Home based work is an innovative option in flexible working arrangements. The award provides a sound legal framework to govern these arrangements with due protection to employees. It is also an example of contemporary unionism where the PSU has sought to enhance the trends in working patterns that are emerging into the 21st Century.”.
The main elements of the award are:
- it is voluntary
- the employer has to provide the equipment relevant to the job
- all current entitlements such as pay, superannuation etc remain unaltered
- the arrangements are not a right or an entitlement but must be mutually agreed
- applications for home based work are considered against clear criteria
- job characteristics exclude certain jobs from these arrangements such as continuous word processing
The PSU has produced an information kit for its members that sets out the manner in which the award applies and is to be administered.
It is a little disappointing that the level of access to these arrangements has not been as large as one would have hoped. It is interesting to note however that it is the union and its members who have been agitating for access to greater home based work opportunities.
It has estimated [4] that there may be as many as 60,000 outworkers in the Australian clothing industry, compared to a factory workforce of less than 50,000.
The “industrial twilight” that outworkers have long occupied was legitimised and partially protected by a decision of Deputy President Riordan of the Australian Industrial Relations Commission in April 1987[5].
In this decision the Commission varied the Federal Clothing Trades Award requiring employers to pay outworkers certain rates and conditions at least equivalent to those set out for employees performing work at the employers premises.
This decision is signified in so far at it was the first formal recognition in an industrial award of the concept of outwork or home based work. An outworker is defined as “a person who performs work in the clothing industry the subject of this award for an employee outside the employers workshop or factory under a contract of service.”.
In this case the union demonstrated that whilst an outworker performed comparably the same function as an employee based in a factory, there were major differences in how the work was distributed and the method and level of payment.
For example outworkers appeared to receive between $2 to $4 per hour which was well below the award rate. The award rate was in excess of $7 per hour for the same work.
The Deputy President commented that the remuneration and treatment of outworkers “is scandalous and represents serious affront to the moral and social conscience of the community.”. It showed a failure of the system of industrial regulation to protect these people and there was serious undermining of existing award standards.
In particular there was widespread exploitation of migrant women. It appeared that up to half of the total labour force in the industry could be outworkers.
The Commission found as a matter of fact and law that outworkers in this industry were employees and not independent contractors. In so finding the Commission acknowledged the strict control exercised over outworkers and the integral nature of their work to the industry’s operations functions that would otherwise ordinarily be performed by employees at the employers premises.
The Commission decided that the inclusion of such workers within the awards scope was instrumental in securing the protection of the award system.
The Commission further determined to apply the award to regulating the conditions of employees of contractors. In general terms the award as varied by the Commission required an employer bound by the award and contracting with an outworker should contract terms and conditions no less favourable than those prescribed by the award.
In addition the employer should keep a record of various details, including a description of the work to be reformed and the prices paid to the outworkers.
The Commission also required a respondent to the award to ensure that there was an agreement entered into between the outworker and the “maker-up”, so that outworkers would have a personal right to recover moneys that would be due on the basis of the award rates and conditions. The deputy president inserted a type of “bans clause”, which had the effect of prohibiting employers from engaging in conduct that would be likely to cause a breach of the award. Respondents to the award who wish to engage outworkers would also be required to place notices to that effect in daily newspapers.
The impact of this award on an “underground” and “cash-in-hand” occupation, is yet to be determined. However, in an industrial relations sense, this case marks a significant attempt to solve a problem that has bedevilled the clothing industry, in particular, for decades. It comes at a time when the number of outworkers is rapidly increasing. It will be important to the integrity of home based workers to see whether the awards sets a precedent for the responsible regulation of outworkers in other industries and whether it creates a momentum to bring other types of “quasi-employees”, in the transport or building industries, for instance within the terms of awards.
Indeed many unions are now availing themselves of recently expanded provisions in the Industrial Relations Act to enrol, represent and protect independent contractors.
Home based work offers important benefits for both employers and employees. International experience which is now being emulated by some private sector organisations in Australia has shown that home based work arrangements can contribute to improved productivity, reduced absenteeism and improved morale and employee commitment.
It is no longer a question of whether home based work will have widespread application as a mode of work in this country.
The only unresolved issue is how it will be implemented, regulated and what employee safeguards it should incorporate within its general scheme.
How we tackle these issues will demonstrate the depth and nature of opportunities from such work arrangements and also will effect the nature and very fabric of our society. A liberating high-tech dream or an Orwellian-Taylorist nightmare – the choice ultimately is ours collectively to make.
Presented by Tim Pallas, Assistant Secretary ACTU. Wednesday 15 March 1995.
[1] W. McLennan Canberra – Persons Employed at Home – Australia April 1989 – Australian Bureau of Statistics
[2] Reported in “The Australian” 31/1/95 p28
[3] Labour and Industry Vol. 3 No 2 & 3 pp.302-329 June/October
[4] Labour and Industry Vol. 3 No 2 & 3 pp.302-329 June/October
[5] In the matter of an application by the Clothing and Allied Trades Union of Australia to vary the Clothing Trades Award 1982 C. No. 4540 of 1985 Print G6996
