Clothing manufacturing supply chains, contractual layers and hold harmless clauses: How OHS duties can be imposed on retailers for the safety of outworkers

The majority of retailers structure their businesses using the supply chain outsourcing model. Pursuant to this model retailers outsource production to suppliers who then outsource the actual clothing manufacturing work to factories and/or outworkers. The supply chain model is an extremely profitable business model for corporations. These retailers, rather than being involved with both manufacturing and marketing, devote all their attention to marketing and designing new products. For all intents and purposes, they are hollow corporations, focusing entirely upon marketing. Even though retailers are not involved in the manufacturing process, this does not mean they have no influence over this process. Weller has observed that the buyer driven model is not suitable for all retailers. The buyer driven model is however appropriate for major Australian retailers such as Coles Myer, Woolworths or Australian Discount Retail Pty Ltd. These large retail groups have sufficient market power to exercise substantial control over suppliers of clothing products and over traders who interact with outworkers. Nossa, Quinlan and Johnstone refer to these corporate groups at the top of supply chains as effective business controllers. Research has continually demonstrated that outworkers are vulnerable and operate in unsafe working conditions. Marshall J in Textile Clothing and Footwear Union of Australia v Southern Cross Clothing Pty Ltd explained: Outworkers in the clothing industry in Australia are some of the most exploited people in the Australian workforce. They perform garment making work often at absurdly low rates in locations outside their employer's premises. This frequently occurs in the homes of outworkers. In order to address the plight of outworkers legislative reforms have been introduced to extend industrial protection to outworkers in the Australian Capital Territory, New South Wales, Queensland, South Australia, Tasmania and Victoria. In a previous paper the author has focused on how these duties operate to impose OHS duties over the trader who directly supplies the outworker with work. This article will analyse if OHS duties can be pushed higher in the supply chain to vest over the parties who outsource work in the first place and often control the overall supply chain: retailers. Nossar, Quinlan and Johnstone argue that an 'overarching deficiency [of the current regulatory framework] has been the absence of any relevant formal legal obligations upon the major retailers, who effectively control the Australian clothing supply chains. This has provided an economic context in which the different parties competing further down the supply chains can only survive commercially by reducing their costs, most notably the costs of complying with formal legal obligations.' This article will analyse the OHS duties of retailers in four parts. First this paper will consider how deemed employment laws which require traders to manage outworkers’ workplace safety may be able to be extended up supply chains to vest over retailers. Secondly this paper will analyse how employers’ OHS duties for non-employees may create OHS duties for retailers to ensure outworkers safety. It appears that imposing OHS duties across several corporate relationships and across geographical locations may diminish the capacity of retailers to manage outworkers. The third part of this paper will demonstrate how the OHS duties only require parties to take all reasonably practicable steps to ensure safety. Finally this paper will analyze the capacity of retailers to utilize hold harmless clauses to avoid OHS duties. Hold harmless clauses have been subject to recent judicial and legislative attention in the principal/contractor relationship. The precedents established in the principal/contractor relationship on hold harmless clauses are applicable for all relationships, and this may include the retail/outworker relationship. As the relationship between retailers and other participants in supply chains is governed predominantly by common law contracts, hold harmless clauses may have significant potential to determine the scope of a retailer's responsibility for the OHS of outworkers in a supply chain. More importantly, if allowed to operate widely, hold harmless clauses have the potential to act as a significant limitation on the reach of OHS laws to a growing population of vulnerable workers