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Making Textile, Clothing or Footwear products in Australia This presentation is provided in the way of general information. Every effort has been made to ensure that the representations made here are accurate but you should familiarise yourself directly with the obligations imposed by the relevant legislation and Awards or seek independent legal advice. This is not a substitute for legal advice. A guide to your Legal Obligations

Making Textile, Clothing or Footwear products in Australia · ECA Industry Training Presentation 2015 | Page The Award 4 Each industry or occupation is covered by a national Modern

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Page 1: Making Textile, Clothing or Footwear products in Australia · ECA Industry Training Presentation 2015 | Page The Award 4 Each industry or occupation is covered by a national Modern

Making Textile, Clothing or Footwearproducts in Australia

This presentation is provided in the way of general information. Every effort has been made to ensure that the representations made here are accurate but you should familiarise yourself directly with the obligations imposed by the relevant legislation and Awards or seek independent legal advice. This is not a substitute for legal advice.

A guide to your Legal Obligations

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ECA Industry Training Presentation 2015 | Page 2

Introduction

• This presentation is a guide to your obligations under

the Textile, Clothing, Footwear and Associated

Industries (TCFAI) Award (the Award).

• Before you begin, make sure you have a copy of the

Ethical Clothing Australia (ECA) Guide to the Award

The Guide and other documents referred to in this

presentation can be downloaded form the ECA

website or by contacting the ECA office.

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What laws apply to you?

3

Almost all businesses in the textile, clothing and footwear (TCF) industry

in Australia are covered by the National Workplace Relations System (see

pages 3-4 of the Award Guide). This includes the Modern Award, as well

as federal and state legislation including:

• The Textile, Clothing, Footwear and Associated Industries Award

2010 as amended from time to time.

• The Fair Work Act 2009 which includes the National Employment

Standards (NES).

See Award Guide page 29 for these and page 44, clause F.5.1 of Schedule F of the

Award.

• and any other relevant laws, such as:

– State Outworker laws;

– Workers Compensation;

– Workplace Health and Safety;

– Equal Opportunity; and

– Anti-discrimination laws.

See page 30 of the Award Guide.

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The Award

4

Each industry or occupation is covered by a national Modern Award.

In the TCF Industry, this is the Textile, Clothing, Footwear and Associated

Industries Award 2010.

• The Award applies to employers (referred to as Principals) and

factory workers and home based workers (who are both referred to

as workers).

• The giving out of work in the TCF industry has been regulated by

both federal and states clothing awards for decades.

• Schedule F of the Award contains specific conditions for outworkers

(referred to as ‘workers’ in Schedule F and sometimes called

‘homeworkers’).

See pages 41–53 of the Award Guide.

The Award is designed to make sure workers across the entire industry

receive fair pay and work in decent conditions.

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The Award – your responsibilities

5

Your key responsibilities under the Award:

• Consultation (Part 2)

• Dispute Resolution (Part 2.10-11)

• Types of employment (Part 3)

• Termination of employment (Part 3.18 and 3.19)

and redundancy

• Rates of pay and Allowances (Parts 4 and 5)

• Hours of work and related matters (Part 6)

• Leave and Public Holidays (Part 7)

• Superannuation (Part 8)

• Transitional provisions (Part 1 and Schedule A)

See pages 5-6 of the Award Guide.

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National Employment Standards (NES)

6

The National Employment Standards set out the key work-related

entitlements for your employees, under the Fair Work Act 2009.

There are 10 minimum standards for employment which you must comply

with:

1. Maximum weekly hours of work

2. Requests for flexible working arrangements

3. Parental leave and related entitlements

4. Annual leave

5. Personal/carer’s leave and compassionate leave

6. Community service leave

7. Long service leave

8. Public holidays

9. Notice of termination and redundancy pay

10. Provision of a Fair Work Information Statement

See page 29 of the Award Guide for more information.

These entitlements are in addition to your obligations under the Award.

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How to comply with the Award

7

If your business intends to give out work, there are 3 things it must first

do to meet its legal requirements under the Award:

• Have a Written Agreement with anyone that does your work.

• Register with the Fair Work Commission Board of Reference (BOR)

and keep lists of who work is outsourced to.

• Make and keep up-to-date award compliant Work Records (garment

specification sheet).

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Agreements to outsource: Principals

8

If you intend to give out work the first thing you must do is enter into a written

agreement with whoever you are outsourcing work to.

These can be with another principal business, or with an outworker, and there

are different obligations for each.

The first step is to define who you are entering an agreement with.

Principals

If you are making an arrangement with a:

• Business or person that may enter into agreements to have work done

outside its premises (is registered with the Board of Reference); or

• Business or person that employs people in the TCF industries; or

• Government or government authority; who is operating out of a business

premises

Then you are most likely making an agreement with another principal business.

Under the Award they are called a Principal.

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SampleWritten agreementwith another Principal

Editable copy of this Written Agreement

available on the ECA website

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Agreements to outsource: Outworkers

You are making an agreement with a Worker (outworker) if the person:

• Does the work at private residential premises, either their own or

someone else’s; or

• Does the work at premises not conventionally regarded as being

business premises; or

• Personally does the work that is the subject of the arrangement; or

• Is employed by you, but does not carry out their work on your

business premises; or

• Has an ABN or calls themselves a ‘contractor’ or ‘independent

contractor’, and does the work themselves; or

• Is a body corporate owned or managed by the worker or a member

of their family.

See Award Guide Schedule F, pages 42–43, sections F.2.3, F.2.6 and F.4.

Contact the Textile, Clothing and Footwear Union (TCFUA) for more information

about your particular situation....

You can also contact the Australian Industry Group or the NSW Business Chamber for

assistance.

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Agreements to outsource: Outworkers

Home based workers are entitled to the minimum safety net of terms and conditions which

apply in the TCF industry. This includes the conditions in the Award, and most of the Fair Work

Act. These include:

• Award compliant work record (e.g. garment spec sheet)

• Award compliant written arrangement in place

• Award level wages and entitlements

• Superannuation contributions paid by employer

• Annual leave, Personal Leave and Public Holidays

• Work cover insurance

• Specified hours

Note: You must also give outworkers a copy of the entire Schedule F of the Award when you

employ them.

Minimum part-time hours for outworkers are 15 regular hours per week (as agreed between

the principal and worker) or 10 regular hours per week (as agreed between the principal and

worker, and with the consent of the TCFUA). By such agreement, regular part-time hours may

be averaged over a period of 4 weeks maximum. Overtime rates must be paid for additional

hours.

See Award Guide page 39 for checklist for making an arrangement and Award Guide

Schedule F pages 44-46 for:

- clause F.5.2 Hours of work

- clause F.5.2 and 5.5 Payment

- clause F.5.7 Stand down information

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Sample Written agreement with an outworker

Editable copy of this Written Agreement

available on the ECA website

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Registration with the Board of Reference and keeping Lists

13

You must be registered with the Board of Reference (BOR) unless all of

your garments or products are produced solely by your employees at

your business premises.

This includes any aspect of production being performed outside of your

premises, including cutting, making, finishing, trimming, alteration, value-

adding (e.g. printing, embroidery), by either outworkers (referred to as

‘workers’ in Schedule F) or other manufacturers.

See Award Guide Schedule F pages 42 and 47 for:

– clause F.3.1 Registration

– clause F.6 Registration and Board of Reference

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Registration with the Board of Reference and keeping Lists

14

Under the Award, you can only:

• Make an arrangement with a contractor if they are also registered

with the Board of Reference (unless that business performs all the

work within their own factory premises).

• Engage up to 10 individual outworkers, other than in-house

employees, at any one time (If your business makes arrangements

with more than 10 outworkers you must have written consent from

the TCFUA or Board of Reference.).

If you give work out without being registered with the Board of

Reference, you are breaking the law and may face penalties.

See Award Guide Schedule F pages 42 and 47 for:

– clause F.3.1 Registration

– clause F.5.9

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How to Register with theBoard of Reference

15

• Board of Reference application forms are available from ECA, the Fair

Work Ombudsman, and the TCFUA..

• Complete and fax to the number provided on the form (ECA and the

TCFUA can help you complete the form if you have any questions).

• You will be given a registration number which you will need to use for

documents such as Work Records (for queries regarding your

registration call the Fair Work Ombudsman helpline on 1300 799 675).

• You must renew your registration with the Board of Reference

annually (unless there has been some concern about your compliance

with the Award or you have not provided sufficient information to

support your application, your registration will normally be renewed for

another 12 months).

See page 7 of the Award Guide.

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BOR forms available from

ECA and the TCFUA

How to Register with theBoard of Reference

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Keeping BOR Lists

17

Along with your Board of Reference registration, you must make lists 4

times a year, including:

• The name and address of each principal or person with which you

make an arrangement, and whether you have a written agreement

with each of them; and

• Whether they have an arrangement with others to give work out.

You must fax or post a copy of the quarterly list to:

• The Fair Work Ombudsman; and

• The TCFUA Branch in your state

When?

• Within seven days of the last working day of each of February, May,

August and November financial quarters.

See page 8 of the Award Guide.

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Keeping BOR Lists

18

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How to make and keepWork Records

Each time you outsource work:

• Your business must create and keep a Work Record (sometimes

called a Garment Specification Sheet). The Work Record must

include the time (including sewing time) for the work required and

the total make price.

• You must give a copy of this Work Record to the person completing

the work before the work begins.

• Copies of Work Records should accompany the relevant garments,

articles or material all the way through the contracting chain, down to

the worker who ultimately carries it out.

• Keeping Work Records is crucial to ensure transparency of supply

chains. Under the Award, you must keep work records for 6 years

(clause F.7.2).

See Page 8 and Page 42 (clause F.3.2) Award Guide.

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How to make and keepWork Records

20

Your Work Record must include:

• Business name, address, ABN/ACN and/or registered business

number.

• Business’s Board of Reference registration number.

• Name and address of the person to whom the arrangement applies.

• Address(es) where the work is to be performed.

• Time and date for beginning and completion of the work.

• Description and nature of the work required and the garments,

articles or material to be worked on (including diagrams where

available and details of the type of garment or article, seam type,

fabric type, manner of construction and finishing).

• Number of garments, articles or materials of each type.

• Make time for the work required on each garment, article or material

(and able to verify how it was calculated).

• Price to be paid for each garment, article or material.

See Page 10 of the Award Guide.

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Sample Work Record (Maker)

Editable copy of this Work Record

available on the ECA website

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How to make and keepWork Records

When making a work record with an outworker, it must contain:

• Time and date that the garments, articles or materials will be given to

the outworker before work begins, and picked up when completed.

• Time Standard (make time) details you used in order to work out the

time it took to make the product.

See page 26 of the Award Guide.

• Number of working hours needed to finish the work, calculated by

multiplying: the number of garments by the make time per garment,

article or material, and any additional tasks.

• Hours and days in the ordinary work week. . . . This is to make sure there

is enough lead time from the date of commencement, to finish the

work.

• The total amount to be paid to the outworker for their hours and

days.

See Pages 27–28 of the Award Guide for how to calculate an outworker’s pay rate.

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Sample Work Record (Outworker)

Editable copy of this Work Record

available on the ECA website

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Checklist:Working with another Principal

� Your Written Agreement with the other business contains the required

minimum terms – Pages 13 and 34 Award Guide.

� Registration with the Board of Reference – Page 7 Award Guide.

� Lists of arrangements your business enters into with others, using the list

in the Board of Reference forms – Page 8 Award Guide.

� Supplying copies of List to the Board of Reference and the TCFUA 4

times a year.

� The business with whom you are making an arrangement is also

registered with the Board of Reference (if applicable) – Page 7 Award

Guide.

� Work Record (including a make time) as specified in the Award Guide –

Pages 10 and 37 Award Guide.

� Work Record given to the business with whom you are making an

arrangement, before work starts. Note: this includes sampling as this is

part of your business.

See Page 40 of the Award Guide for a Checklist Diagram.

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Checklist:Employing an outworker

� Signed written agreement detailing the hours of work in accordance with the Award –

Page 16 Award Guide.

� Registered with the Board of Reference – Page 7 Award Guide.

� Keep Lists of this and other arrangements your business enters into with others, using

the list in the Board of Reference forms – Page 8 Award Guide.

� Work Record (including a make time) as specified in the Award Guide – Page 10 and 38

Award Guide.

� Work Records have the required extra information for arrangements with outworkers –

Pages 18 - 22 Award Guide.

� Time Standard used to calculate the time (including sewing time) for the work required

– Page 26 Award Guide.

� Copy of Schedule F of the award given to the outworker – Pages 41 - 53 Award Guide.

� Correct minimum Award conditions being provided – Pages 18 - 19 Award Guide.

� Paying the outworker on a weekly basis – Page 17 Award Guide

� Making sure that all materials, trimmings, threads, products, garments or articles are

delivered to and collected from the outworker at no cost to them – Page 15 Award

Guide.

See Pages 39 of Award Guide for Checklist Diagram and Page 30 for other laws employers

need to comply with.

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Skill levels

Refer to the TCFAI Award 2010 (Schedule B – Classifications/skill levels

and Schedule C – Definitions).

Skill levels are set out under Schedule B in the Award:

B.1 Trainee

B.2 Level 1

B.3 Level 2

B.4 Level 3

B.5 Level 4

B.6 Level 5

Definitions of tasks, skills, activities and methods relating to skill levels, are

set out in Schedule C of the Award.

If you are unsure about your employees’ skill level, contact the TCFUA for

assistance.

To read these Schedules online, visit the Fair Work Commission’s website at

www.fwc.gov.au/documents/modern_awards/award/MA000017/default.htm.

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Skill levels and minimum payment rates

The table below sets current wage rates under the TCFAI Award as of 1 July 2015

Skill level Weekly rate Hourly Minute rate*

(= weekly rate/2280)

1 $675.90 $17.79 n/a

2 $701.80 $18.47 n/a

3 $725.90 $19.10** 31.84 cents

4 $764.90 $20.13 33.55 cents

5 $812.80 $21.39 35.65 cents

** Skill Level 3 is the minimum wage for outworkers.

* The minute rate only applies to outworkers.

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Skill levels and minimum payment rates

To calculate an outworker’s pay rate:

a) calculate how many minutes it takes to do the work (including

ancillary tasks).

b) factor in any work to be done on a Saturday, Sunday and Public

Holiday.

c) calculate the total amount to be paid.

Refer Pages 27 – 28 of your Award Guide.

The weekly rates may increase each year. Always check the current

version of the Award for the most up-to-date rates.

Visit the Fair Work Commission at www.fwc.gov.au to register for Award Updates

(‘Quick Links’ – ‘Subscribe to updates’).

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Make Price

When working out the ‘make price’ for a garment or product, overheads

should be included in the calculation.

The make price must be enough to make sure that

• Any workers (including outworkers) employed directly by the

Principal, as well as

• Any workers employed by the Principal’s outsourced

maker/contractors (including outworkers)

receive correct wages and conditions under the Award.

The make time covers all processes of the manufacture or value adding of

an item or garment.

On top of that allow the operational costs of the maker.

Principals are liable for underpayments to workers in their supply chain so

it’s important to make sure you get these right.

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The Make Price Calculation

Workers at Skill Level 3:

Skill level 3 is the classification under the Award for a worker responsible

for the construction of a finished garment or working unsupervised.

Remember that Skill Level 3 is the minimum wage for outworkers. You

must allow a minimum of $0.43* per minute to make sure you are

covering the worker’s Award wage and entitlements (which include

personal and annual leave, public holidays, Super).

In addition:

A principal giving work to a maker/contractor should also cover overhead

costs and a profit for the maker/contractor in the make price.

These amounts will vary depending on a number of factors:

The location of the business; business rental/utilities costs, city/regional

costs differences, scale of operations, intellectual property and volume of

garments/products being produced.

See page 26 of the Award Guide for how to calculate the time (including sewing time)

for the work required.

*This amount may change as Award rates of pay can change each year.

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The Make Price Calculation

The Make Price is:

The make time x the total cost per minute*:

Cost of employing someone (at Award Skill Level 3 it’s 0.43 cents per

minute)

+

Cost of contractor overheads including profit margin (0.XX cents per

minute)

= Total cost per minute (i.e. the ‘make price’) (0.XX cents per minute)

See page 26 of the Award Guide for how to calculate the time (including sewing time)

for the work required.

*This amount may change as Award rates of pay can change each year.

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The entitlements are the items

that a business must factor into

their costing process.

This ensures the business

recovers the costs involved with

the minimum legal entitlements.

Make PriceThe 43c figure Labour Cost Recovery calculations

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Case studies:Work arrangements

EXAMPLE: White Tee Shirts Pty Ltd makes an arrangement with Tommy Tees Pty Ltd to get 200 T-shirts printed. Tommy Tees agrees to do the work on their own factory premises.

Single arrangement between 2 principals (you and another principal)

EXAMPLE 1: Etty Betty Kids Pty Ltd makes an arrangement directly with an outworker, Jen, to get flower badges sewn onto 10 children’s frocks, 15 hoodies and 30 tees.

Single arrangement between a principal and a worker (outworker)

EXAMPLE 2: : : : Paul, a dressmaker, enters into an arrangement with Molly’s Fashions to produce and finish 20 dresses in 3 days. Molly’s Fashions is run by the Rose family at their home and is a registered company with an ABN.

NOTE: Mrs Rose does the work at home, sometimes with the help of her husband. Because they do the work from their home (i.e. non-business premises) Mr and Mrs Rose are legally classified as ‘workers’ i.e. outworkers.

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Multiple work arrangementsWhen your business needs a range of services to meet production needs or more capacity, you

may enter into multiple arrangements with other principals and/or outworkers. The principals

may in turn make their own arrangements with other principals or other outworkers to get the

work completed.

Note: You can still be held responsible for the correct Award wages and entitlements.

This diagram shows the owner of Old Kent Road Fashions making arrangements with makers

Adam, Bob and Carla, and outworker Penny.

The owner of Old Kent Road Fashions is responsible for paying enough to the makers Adam,

Bob and Carla to allow them to pay the relevant Award obligations to their in-house employees,

outworkers and sub-contractors. The owner of Old Kent Road Fashions is also responsible for

paying the correct Award wage and entitlements to Penny the outworker.

This is important: Under the Outworker Provisions in the Award, your business is responsible

even if you don’t directly engage outworkers.

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Case studies – extended liabilityJane is an outworker that Lucy (the subcontractor) has made an arrangement with.

However, Jane knows she is making garments for Old Kent Road Fashions because of the label

she sews into garments. Jane has not received her correct Award wages and entitlements from

Lucy. Within 6 months of completing the work, Jane notifies the owner of Old Kent Road

Fashions of her underpayments,

Under the Award, the owner of Old Kent Road Fashions can withhold payment from Carla

(Principal D) until Jane (outworker) receives her correct pay and entitlements. Carla may also

withhold payment to Lucy (Subcontractor) until correct payment is made to Jane. Alternatively,

Old Kent Road Fashions, Carla and Lucy may enter into an agreement to share the

underpayment amount.

If the above options are not utilised, then Old Kent Road Fashions will be held responsible for

the correct wages and entitlements owed to Jane (outworker).

By keeping your supply chains shorter, your business is more likely to keep its making costs

down and comply with the Award.

See pages 23–25 of the Award Guide.

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What are the consequences of not complying with the Award?

What happens if I don’t meet my legal obligations?

Businesses may be fined up to $51,000 for each breach of the Award.

However, the courts have imposed significant fines on businesses found to

have committed multiple breaches of the Award, even where those

businesses haven’t directly engaged any external workers.

Businesses also risk adverse publicity and reputational damage if they are

found to be involved in unlawful practices.

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Other Resources

Award and Fair Work Act information

• Fair Work Ombudsman

www.fairwork.gov.au / Infoline 13 13 94

Information about Australia's workplace law, conditions, dispute resolution, and

wage rates and skill levels

• Fair Work Commission

www.fwc.gov.au / 1300 799 675

TCFAI Award, Fair Work Act and registering to receive TCFAI Award updates

Industry Contacts

• Australian Industry Group

www.aigroup.com.au

• New South Wales Business Chamber

www.nswbusinesschamber.com.au

Textile, Clothing & Footwear Union of Australia (TCFUA)

• Victoria, Queensland and Western Australia (03) 9639 2955

• New South Wales, South Australia and Tasmania (02) 9704 6000

www.tcfua.org.au

Translating Services

• Translating and Interpreting Service (TIS) National

• Telephone interpreting (24hr) 13 14 50

• On-site interpreting www.tisnational.gov.au

The Fair Work Ombudsman website also has information sheets in many languages

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More Information and Support

Ethical Clothing AustraliaHead Office

03 9419 0222

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www.ethicalclothingaustralia.org.au

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