For anyone, who is following developments with regard to regulation of the employment services industry in response to growing concerns about labour market exploitation[1], it might have been heartening to have seen the Australian Competition and Consumer Commission (ACCC) make use of its extensive enforcement powers[2] recently to deal with an especially egregious case of exploitation[3].

The Clinica  International Case

In Clinica Internationale Pty Ltd (No 2) [4], the ACCC sought declarations, injunctions, a disqualification order, non-party redress orders, pecuniary penalties, interest and costs in respect of contraventions by Clinica Internationale Pty Ltd (and its director) of ss 18, 21, 29 and 31 of the Australian Consumer Law (ACL). It also sought an order under  s 137H of the Competition and Consumer Act[5] that would allow findings of fact made by the Court against the respondents to be “recycled” in future actions brought by anyone against them.

Clinica Internationale Pty Ltd provided what was described as “recruitment consulting services” to work seekers in Australia on temporary visas, who were seeking to obtain permanent residence. The Company and its director were prosecuted for representations and unconscionable conduct in relation to a program offered by Clinica in which Clinica represented that:

  • it would arrange for work seekers, whom it regarded as “clients”, to complete a cleaning course (called the “Certificate III Asset Maintenance (Cleaning Operations)” course – for which they would have to pay a substantial fee;
  • it would find for the work seeker a cleaning job in a regional area of Australia;
  • it would instruct and liaise with a registered migration agent in relation to a permanent residence visa application and other immigration advice for the client; and
  • completion of the cleaning course and working in the cleaning job (and paying Clinica’s fees) would qualify the client for permanent residence under the Subclass 187 visa – Regional Sponsored Migration Scheme (187 Visa).

In order to attract work seekers to its program, Clinica placed alluring ads on public transport along the following lines:

By the time the case reached court, it was conceded by Clinica and its director that the cleaning course and cleaning work offered by Clinica could never have entitled its work seekers to apply for a 187 Visa.

Moreover, they admitted that Clinica did not have any cleaning jobs available for work seekers with sponsoring employers in regional areas and that no work seekers who completed a cleaning course with Clinica were placed in cleaning jobs.  The reasons for judgment include gory details of one “cleaning” job assigned to  that turned out to be a job in a regional abbitoir “cutting the legs off dead goats and sheep”.  The extent and impact upon the work seeker can perhaps be best summed up in his own evidence:

I am a Hindu and have been a vegetarian all my life. My experience … was scary and I was very emotional and upset. I was crying during work but I could not stop and talk to management about it, as I was on a production line. When I stopped working for a moment or two, the whole line stopped and people would start yelling at me. The experience was a real shock to me. In our discussions, [Mr Laski] had always told me that I would be working in asset maintenance, which he later explained was cleaning. He never told me that I would be working in the slaughter floor of an abattoir. I was not mentally prepared to deal with it.

Findings

The Court accepted that Clinica’s conduct was unconscionable within the meaning of the ACL, stating:

[140] Despite its knowledge about the unavailability of cleaning jobs, and the complete lack of certainty about the path to permanent residence, Clinica imposed a condition on those who signed regional sponsorship agreements that it would not continue to offer its services and would not provide a refund, if payments were not made when due. The contractual terms were harsh, typically including a condition that if a [work seeker] cancelled, there was a $5,000 cancellation fee. Its dogged pursuit of financial advantage for itself extended to making threatening demands on [work seekers] who defaulted on payment of fees or instalments, including threatening to commence legal proceedings. In relation to this vulnerable [work seeker] group, with the characteristics …, that threat was especially pernicious. Even worse was the actual commencement of proceedings against individual [work seekers], in circumstances where, … Clinica knew it could not, and did not, perform its own obligations under the regional sponsorship agreements. Added to this were the threats to report individuals to the Department of Immigration, which were no doubt calculated to cause particular alarm to this [work seeker] group and force them to continue to pay Clinica and stay in the scheme.

Orders

The Court imposed orders as follows[6]:

  • A fine of $700,000 against the company, Clinica, for false and misleading conduct and unconscionable conduct; and
  • A fine of $325,000 against the managing director, Mr Laski, for false representations and unconscionable conduct.
  • Restitution of $800,000, be paid back to the impacted workers.
  • A ban on Mr Laski from serving as a director of any company for 5 years.

In formulating the banning order the Court said:

…it is appropriate to restrain him from operating in the area of recruitment and employment consulting generally, not simply when it is linked to migration status or outcomes. In my opinion to avoid the real possibility of Mr Laski engaging in similar conduct in the future in relation to people looking for work more generally I consider such restraint is required. The way in which he sought out and placed up to 10 of Clinica’s clients in an abattoir shows that he has connections in the wider employer community, which he will use when it suits him, to further schemes he creates for his own profit. In particular, his conduct, through Clinica, of offering jobs where jobs did not in fact exist is enough to justify him being shut out of the labour hire/recruitment field altogether.

The court also granted the order that would allow its findings of fact made against the respondents to be “recycled” in future actions by anyone against them.

[318] …I am satisfied it is appropriate to make such orders in this proceeding. Despite the making of non-party redress orders, I accept the ACCC’s submissions that some [work seekers] may prefer to bring their own claims against Clinica or Mr Laski, and some [work seekers] may wish to rely on the Court’s findings in relation to Magistrates’ Court judgments entered against them by Clinica. The ACCC accepts it has not been able to identify each and every person who was a Clinica [work seeker], so that the Court’s orders concerning non-party redress may not reach each Clinica client. In those circumstances, the s 137H order sought is appropriate and will be made.

The way is now clear for individual work seekers to pursue further remedies against the respondents on the basis of findings already made.  In the meantime the asset freezing orders first made in August 2015 continue in force.

Concluding remarks

Labour market exploitation is a poly-centric problem that properly engages competition & consumer, equal opportunity, privacy, employment relations, work health & safety, revenue, and immigration regulators; as well as their industry, union, and consumer stakeholders.  Whilst several States are conducting “labour-hire inquiries” and the federal opposition is proposing tougher “crack down measures” against exploitation of this type, it is encouraging to see that the ACCC, operating in the domain of competition and consumer protection, was able to access and effectively execute measures that already exist.

Andrew C. Wood

[1] Including several State labour hire inquiries, reviews of employment agents regulations, review of UK Gangmasters Licensing Authority powers and employment agents regulations; and RCSA’s proposals for an Employment Services Industry Code – to name but a few.

[2] And not for the first time. See e.g. Australian Competition & Consumer Commission v Zanok Technologies Pty Ltd [2009] FCA 1124.

[3] Labour market exploitation includes all forms of unlawful or unconscionable conduct that negatively affect the ability of the labour market to regulate, efficiently and equitably, the supply of jobs, access to jobs, or the conditions or price according to which labour is offered and acquired. Relevantly to the employment services industry’s interest, labour market exploitation especially includes all forms of illegal, unprofessional and unethical conduct or “sharp practice” in dealings for the supply or acquisition of employment services that create conditions of unfair competition and worker exploitation that fails to meet acceptable standards for the protection of workers’ human rights including their labour rights.

[4] Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (No 2)2016] FCA 62

[5] Earlier, in 2015, the ACCC successfully obtained urgent ex parte asset freezing orders against the respondents and two associated companies.