Closing the Loopholes Bill Introduced to Parliament
The Albanese Labor Government introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (the “Bill”) to Parliament yesterday afternoon (4 September, 2023). The Bill is the “third tranche” of major changes to core aspects of our workplace relations system which will impact most sectors of the economy.
What is Proposed to Change?
The Bill aims to close loopholes that undermine pay and conditions and improve work health and safety laws in the Commonwealth jurisdiction.
We have summarised the key changes proposed by the Bill below:
1. Definition of “employee” and “employer”
The Bill introduces an interpretive principle for determining the ordinary meanings of “employee” and “employer” for the purposes of the Fair Work Act 2009 (Cth) (“FW Act”). This will be determined by assessing the real substance, practical reality and true nature of the working relationship, by considering the “totality” of the relationship, rather than just the written terms of any contract governing that relationship. This change aims to overcome recent decisions made by the High Court which held that in most cases, the question of whether a relationship is one of employment should be answered solely by reference to the terms of the contract.
2. Existing definition of “casual employee” will be replaced
The Bill introduces indicia to assist in determining whether an employee is a casual employee or not, including whether there is a regular pattern of work.
3. Casual conversion
The Bill introduces a new “employee choice pathway” to permanent employment for eligible casual employees if they wish to change to permanent employment.
4. Criminalisation of wage theft and penalties
The Bill introduces a new criminal offence for wage theft, which applies to intentional conduct. Penalties include potential prison terms and maximum fines of up to $7.8 million or up to three times the value of the wage underpayment.
5. Family and domestic violence
The Bill introduces a new protected attribute to the FW Act to improve protections against discrimination for workers who have been, or continue to be, subjected to family and domestic violence.
6. Sham contracting
The Bill proposes to change the defence to misrepresenting employment as an independent contractor arrangement, known as “sham contracting” from a test of “recklessness” to one of “reasonableness”.
7. Labour hire
The Bill aims to protect bargained wages in enterprise agreements from being undercut through the use of labour hire workers who are paid less than those minimum rates. Specifically, the Bill gives the Fair Work Commission (“FWC”) the power to make orders to ensure labour hire workers are paid the same rates as those in the host employer's enterprise agreement, excluding specialist or expert services, and with a three-month default exemption for surge work and temporary replacements. There are also certain exemptions, including where the host is a small business employer.
8. “Employee-like” category
The Bill introduces an additional "employee-like" category for certain digital platform gig workers.
9. Minimum standards for gig workers
The Bill will allow the FWC to set fair minimum standards (including minimum pay) for “employee-like” workers. Employee-like workers will also be protected from being “unfairly deactivated” or removed from a platform with the FWC being able to weigh in on these matters but not other matters such as rosters or overtime.
10. Road Transport Industry
The Bill will allow the FWC to also set fair minimum standards to ensure the Road Transport Industry is safe, sustainable and viable.
11. Unfair contracts
The Bill will allow the FWC to deal with disputes about unfair terms in services contracts to which an independent contractor is a party. This will be a no-cost "small jurisdiction".
12. Compliance notices
The Bill clarifies that Fair Work Ombudsman compliance notices can require an employer to calculate the amount of an underpayment that is owed to an employee, and that a court can order the recipient of the notice to comply with its terms.
13. Further changes to enterprise bargaining
The Bill makes further changes to bargaining by:
a. enabling multiple franchisees of a common franchisor to voluntarily bargain together for a single enterprise agreement;
b. supported bargaining and single-interest employer agreements will be able to be replaced by single-enterprise agreements at any time where certain conditions are met; and
c. the FWC will be able to make and vary enterprise agreement model terms for flexibility, consultation and dispute resolution.
14. Union delegate rights
The Bill provides a framework for delegates’ rights, including protections for workplace delegates when seeking to exercise those rights.
15. Industrial manslaughter
The Bill introduces a new offence of industrial manslaughter. Penalties are $18 million for bodies corporate and up to 25 years imprisonment for individuals.
16. Federal OHS laws
The Bill provides for increases to maximum penalties five-fold, to $15 million for category one offences involving reckless or criminally negligent breaches of OHS duties, while maximum imprisonment will increase from five to 15 years.
17. Rights of entry to investigate underpayments
The Bill proposes to amend the right of entry provisions of the FW Act to enhance the ability of permit holders to enter a workplace to investigate suspected wage underpayments.
18. Small business redundancy exemption
The Bill addresses an anomaly in the operation of the exemption for small business from providing employees with redundancy pay under the National Employment Standards (“NES”). The amendments will mean that the existing exemption will not apply to employers that are bankrupt or in liquidation, and which have downsized due to insolvency to become a small business. This will mean that employees terminated due to the insolvency of their employer retain their entitlement to redundancy pay if their employer was not a small business prior to insolvency.
19. Support for first responders
The Bill will provide better support for first responders diagnosed with post-traumatic stress disorder through introducing a presumption that their employment significantly contributed to them sustaining post traumatic stress disorder for the purpose of a workers compensation claim.
20. Asbestos Safety and Eradication Agency
The Bill expands the functions of the Asbestos Safety and Eradication Agency to address silica-related diseases.
The contents of the Bill will be debated over the coming weeks. Many parties (largely employer groups) have expressed concerns about the Bill, including in relation to it adding uncertainty, complexity and costs. If the proposals are passed, it is likely we will not see the majority of changes come into place until mid to late 2024.
We will keep you up to date on the progress of the Bill.
The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your particular circumstances