The Federal Government says the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 aims to close loopholes that undermine pay and conditions and to improve work health and safety laws in the Commonwealth jurisdiction.
If the Bill is passed, the main changes will be a new casual employee definition, a new definition for determining whether a worker is an employee or contractor, criminalising wage theft and the latest workplace delegate rights.
Here is a summary of what the changes could mean for employers:
1. Updated casual employee definition & casual conversion
The Closing Loopholes Bill will introduce a new definition of casual employment into the Act. Under a new s 15A of the Act, an employee is a casual employee of an employer only if:
(a) The employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work and
(b) The employee would be entitled to a casual loading or a specific pay rate for casual employees under the terms of a fair work instrument if the employee were casual, or the employee is entitled to such loading or rate of pay under the employment contract.
Further changes are casual employees can issue a 'notification' to apply for casual conversion to permanent status where they no longer satisfy the definition.
A casual employee is eligible to give an employee choice notice only if they have been employed for at least six months at the time the notice is given (notice date) (or 12 months for small business employers)
2. Clarification on the definition of ‘employment’ & minimum standards set for ‘gig workers’
The Bill will introduce new powers for the Fair Work Commission to regulate ‘employee-like workers’ and the ‘gig economy’. It includes establishing mechanisms for employee-like workers to challenge decisions to deactivate their accounts or terminate their participation on the platform via a proposed unfair deactivation and unfair termination regime.
An ‘employee-like worker’ is someone who satisfies one or more of the following characteristics:
- low bargaining power
- low authority over the performance of work
- receives remuneration at or below the rate of employees performing comparable work.
Independent contractors who are not ‘employee-like’ and/or do not perform work for a digital labour platform are unaffected by these changes.
This change would mean a fairer test applies when determining whether a person is an employee, independent contractor, employer, or principal. It would mean the practical reality of the working relationship could be considered, not just the written terms of any contract governing that relationship.
3. Closing the labour-hire loophole
The changes give effect to ‘same job, same pay’ obligations and tackle any pay disparity between the employees of a host business and labour hire workers supplied by another business but are performing the same or similar work for the host business.
Note: This measure will not apply where the host is a small business employer (fewer than 15 employees). Where the Fair Work Commission is satisfied, the host is a small business employer; it will not have the power to make an order switching on entitlements and obligations under this measure.
4. Criminalising wage theft
There will be a level of criminalisation for underpayments that were not dishonest but were reckless or negligent. There will be pathways to a safe haven for small businesses that have tried to correct mistakes when paying their workers. Small businesses with underpaid employees will not be referred for criminal prosecution of the wage theft offence if they can comply with the new Voluntary Small Business Wage Compliance Code.
The government will develop the code in partnership with employer and employee groups.
5. Workers have the right to challenge unfair contractual terms
The Fair Work Commission will be able to conciliate, mediate, and arbitrate disputes relating to ‘unfair contract terms’ in services contracts on a compulsory basis.
Note: This jurisdiction will only include contractors earning below a contractor's high-income threshold.
6. Enhancing delegates’ rights
Workplace delegates are employees appointed as representatives in the workplace under their union’s rules. The changes ensure that delegates are provided reasonable access to communicate with members and potential members about matters of industrial concern and access to workplace facilities.
Delegates in businesses that are not small businesses will also have reasonable access to paid time for workplace delegate training. The proposed amendments will introduce general protection for delegates when carrying out their role at a workplace, including preventing an employer from unreasonably refusing to deal with them, misleading them, or hindering and obstructing the exercise of their rights as delegates.
Note: Small businesses will not be required to provide reasonable access to paid time for workplace delegate training. All other parts of this measure will apply equally to all employers.
7. Criminalising industrial manslaughter
One of the proposed changes, the Federal Government says, aims to ensure safe conditions at work by criminalising industrial manslaughter.
Schedule 4 of the Bill amends the Work Health and Safety Act 2011 (WHS Act) to introduce a new criminal offence of industrial manslaughter. This will align Commonwealth WHS laws with the Model Act, recently amended to provide for industrial manslaughter within the model framework.
The Model Act does not prescribe the exact provisions of the model offence so that each jurisdiction can implement (or maintain) an offence tailored to the criminal law framework of that jurisdiction.
8. Minimum standards for the transport industry
This proposal would allow the Fair Work Commission to set minimum standards for the road transport industry. The amendments would also introduce a consent-based collective agreements framework and access to dispute resolution for road transport contractors that have had a services contract unfairly terminated.
Where to from here?
If the Bill is passed (which is likely), it means most of the reforms will take effect from 1 July 2024.
Businesses should proactively review their policies and procedures to stay ahead of the curve.
Depending on the nature of your business, some suggested actions may include:
- Evaluate the proposed labour hire reforms and consider the systems and processes you must establish to comply with the proposed legislation.
- Start reviewing the working arrangements of any casual employees in your business to determine whether any risk of misclassification exists. Notably, casual employees work regular hours and shifts over an extended period.
- Consider whether any offers of casual conversion should be made or are appropriate for employees.
- Review your independent contractor agreements and engagement processes to ensure appropriate engagement models are chosen for particular roles.
- Review onboarding arrangements for contractors and ensure the day-to-day engagement of these workers is consistent with their contractual terms. Only true “independent contractors” should be engaged as such.