Newcastle council dumps union-backed labour hire company

LabourCo says it usually provides between 20 and 80 workers a day to the council

The decision has angered the unions involved, who say LabourCo, as a registered charity, makes less than $2 an hour out of the labour it provides to Newcastle and other councils, enough to meet its running costs. Union leaders are angry that the contract has been lost at a time when Labor has a majority on the council, including Lord Mayor Nuatali Nelmes, who is listed as a LabourCo director from August 2014 to April 2015.

But Cr Nelmes said the decision had been made by council staff, not councillors, and she had sought assurances that all labour-hire workers would be paid at the full rates under the relevant award.

LabourCo chair Daniel Wallace, who is also the head of Hunter Workers, said that if Forsythes paid new casuals at a lower classification it would still be “within the award, but could amount to a major reduction in wages”.

Mr Wallace said he and the rest of the LabourCo board were “pretty shocked” at what had happened.

Confirming the decision, council chief executive Jeremy Bath said he could negotiate Local Government Procurement contracts without council approval.

Mr Bath said it was prudent to put expiring contracts to tender to ensure “ratepayers are getting the best service possible”.

He said Forsythes had won the contract from LabourCo and one other short-listed tenderer on the basis of its workplace health and safety systems, its ability to supply labour, its interview and presentation, and its price.

Forsythes Recruitment managing director Geoff Crews said the company was locally-owned and had 30 years’ experience in providing labour hire. He said Forsythes won the contract after responding to a public tender.

“We will charge Newcastle council commercial rates and provide appropriate wages and conditions to workers,” Mr Crews said.

The switch in outdoor labour-hire contractors is one of a number of changes Mr Bath has made at the council in recent months, including the decision to move council offices to Newcastle West and last week’s axing of various senior managers.

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While Mr Wallace acknowledged that “business is business” when it came to the council letting tenders, he was concerned that the review was “a way to cut costs without saying they are cutting wages”.

He said LabourCo had been providing outdoor staff to Newcastle council for 21 years, with the council ringing with its labour needs for the following day at 3pm, and LabourCo having the allocation ready at 3.30pm.

He said LabourCo had been the council’s main source of new outdoor workers, with those who performed well as casuals being offered permanent jobs. He said LabourCo was the only labour-hire company he knew that did not charge an employer a fee – often in the thousands of dollars – when they took one of its workers permanently.

He said this sort of contract change often led to the casuals involved simply “swapping shirts” and starting with the new employer. But at this stage at least some of the LabourCo workers were saying they did not want to move across to Forsythes.

Forsythes declined to discuss its intentions for the work, saying it had until the contract began in May to put its arrangements in place.

Mr Wallace said LabourCo had been set up in the 1980s when BHP was laying off a lot of steelworkers. Over the years it had changed to the point where its main business was supplying casual labour to councils, across the Hunter and beyond.

He said the Newcastle contract was important as a “flagship” for the operation.

He said the council had previously employed casuals under the state local government award but it had told LabourCo it wanted quotes based on the federal “modern” award, which had lower rates of pay.

Mr Bath confirmed this, saying LabourCo could pay its people under either award. The new contract continued the arrangement.