Despite employers only beginning to grasp substantial reforms introduced by the Secure Jobs, Better Pay legislation, further significant changes to Australia's workplace relations landscape are on the horizon.
The Federal Government's latest tranche of reforms, the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, aims to amend the Fair Work Act 2009 and related legislation to close perceived loopholes that undermine worker pay and conditions, and strengthen Australia's work health and safety framework.
The Closing Loopholes Bill seeks to drastically alter a wide array of areas in Australia's workplace relations landscape including casual employment, labour hire, union right of entry and considerable penalties of up to $7.825 million and imprisonment for intentional wage underpayments.
Employers can expect to be responding to a variety of new applications in the Fair Work Commission (FWC), with the Closing Loopholes Bill significantly expanding the power of the FWC to resolve disputes across a raft of the proposed changes.
It's important to note that the proposed reforms contained in the Closing Loopholes Bill are draft provisions only and are subject to change. The Closing Loopholes Bill also requires crossbench support before it becomes law, which will likely see further amendments introduced as it gets debated in Parliament. The Federal Government anticipates that the legislation will be passed by Parliament by November or December this year.
Such is the extent of changes in the Closing Loopholes Bill, it is impossible to provide an in-depth analysis of each of the changes in this alert. As the Bill progresses through the Parliament, we will provide further updates on the particular amendments.
Some of the key proposed amendments are summarised below.
Changing the definition of a "casual employee", and introducing pathways to permanent employment
A new definition of "casual employee" will be included and will be characterised by the presence or absence of a firm advance commitment to continuing and indefinite work, to be assessed against various factors that indicate the real substance, practical reality and true nature of the employment relationship.
The factors would include:
- a mutual understanding or expectation between the employer and employee;
- the employee's ability to accept or reject work;
- the future availability of continuing work;
- whether there are other employees performing the same work who are part-time or full-time employees; or
- a regular pattern of work.
A casual employee will also have the discretion to convert to permanent employment after 6 months of employment (12 months for small businesses) if the employee believes that their employment status no longer meets the definition of casual employment. An employer would have various grounds to refuse an employee's request, including if the employer believes the employee is still correctly classified as a casual employee.
A dispute between an employee and employer regarding a request for a conversion to permanent employment must first be attempted to be resolved at the workplace level, or if the dispute is unresolved, dealt with by the FWC.
Meanings of employee and employer
Introducing an interpretative principle to determine whether a person is an "employee" or an "employer"
The proposed amendments would determine the meaning of the terms "employee" and "employer" by assessing the real substance, practical reality and true nature of the working relationship, and the "totality" of the relationship.
Ensuring labour hire workers are paid the same as directly engaged employees
Employees, unions and host employers can apply to the FWC for an order requiring labour hire employees to be paid at least what they would receive under a host’s enterprise agreement or equivalent public sector determination.
The FWC cannot make an order if it is not fair and reasonable in the circumstances, which may include where work for a host is the provision of a service (which includes consideration of whether the work is specialist or expert work under a service contract) rather than an arrangement that is only for the supply of labour.
An order made by the FWC to pay the protected rate of pay will not apply where:
- employees are working for a host business under a training arrangement;
- the host is a small business employer (employing fewer than 15 employees); or
- the employee performs work for the host business for a period of three months or less, unless the FWC extends, shortens or removes this time period.
The FWC would also be empowered to resolve disputes in relation to labour hire arrangement orders if a dispute cannot be resolved at the workplace level.
Criminalising wage underpayments and increasing the maximum civil penalties for underpayments
A new criminal offence will be introduced for employers that intentionally underpay employees. The offence will carry the following penalties:
- maximum 10 years' imprisonment; and/or
- if the Court can determine the underpayment amount, the greater of 3 times the amount of the underpayment and $1.565m (for an individual) or $7.825m for a body corporate; or
- for an individual, $1.565m, or for a body corporate, $7.825m.
The Fair Work Ombudsman will be responsible for investigating suspected offences and will possess the discretion to not pursue criminal proceedings if an employer self-discloses a suspected wage theft offence.
The proposed amendments will also increase the maximum civil penalties for contraventions and serious contraventions of civil remedy provisions. This includes contraventions and serious contraventions related to wage underpayment, sham contracting, unlawful job advertisements and records misconduct.
A serious contravention will also apply to conduct that is engaged "knowingly or recklessly", instead of "knowing and systematic" contraventions.
The proposed amendments will also change the sham contracting defences. Employers can only successfully establish the defence if they can demonstrate that they reasonably believed the contract was a contract for services.
Introducing a framework for workplace delegates' rights, including paid time for delegate training
Workplace delegates, who are employees appointed as representatives in the workplace, will obtain specific rights under the general protections framework to represent the industrial interests of union members and potential members, including in disputes with their employer.
The changes provide that delegates are allowed reasonable access to communicate with members and potential members about matters of industrial concern and access to workplace facilities.
An employer must not:
- unreasonably fail or refuse to deal with the workplace delegate; or
- knowingly or recklessly make a false or misleading representation to the workplace delegate; or
- unreasonably hinder, obstruct or prevent the exercise of the rights of the workplace delegate.
Delegates in non-small businesses will also have reasonable access to paid time for workplace delegate training. This is dependent on the employer's size and nature, resources and facilities available.
The FWC will also prepare modern award terms to ensure that delegate rights are appropriately adapted for particular industries and organisations.
Union right of entry
Expanding right of entry rights for registered organisations
Holders of valid entry permits will have the ability to enter a workplace to investigate suspected wage underpayments. Registered organisations can apply to the FWC for an exemption certificate which would waive the usual 24-hours’ notice period for entry to workplaces.
The FWC will be required to issue the exemption certificate if satisfied that a suspected contravention involves the underpayment of wages affecting a member of the registered organisation. The FWC will also have the power to impose conditions on, or ban, exemption certificates in the event of misuse.
Allowing the FWC to set minimum standards for "employee-like" gig economy workers
The proposed amendments empower the FWC to set minimum standards for "employee-like" workers performing digital platform work. The FWC will have broad discretion to determine what terms and conditions will be set as minimum standards, but could include terms about payment terms, deductions, working time and insurance.
However, the FWC cannot include certain terms, including:
- overtime rates;
- rostering arrangements;
- terms that would change the form of engagement or status of workers covered by the minimum standards order;
- terms on matters that are primarily of a commercial nature that do not affect the terms and conditions of engagement of workers; or
- terms on matters relating to work health and safety that are otherwise comprehensively dealt with by other laws.
The amendments would also introduce a consent-based collective agreements framework and access to dispute resolution for unfair deactivation from a digital labour platform.
Road transport workers
Allowing the FWC to set minimum standards for Road Transport Industry workers
The proposed amendments would give the FWC the power 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.
The FWC's powers to set minimum standards would mirror its powers in relation to setting minimum standards for "employee-like" gig economy workers.
Unfair contract terms
Empowering the FWC to deal with unfair contract term disputes
The proposed amendments establish a new low-cost, flexible and informal jurisdiction in the FWC for resolving disputes between independent contractors and principals about unfair contract terms in services contracts. Contractors must earn below the high-income threshold.
Further enterprise bargaining changes
Targeted amendments to the enterprise bargaining framework and registered organisations amalgamation provisions
The proposed amendments include:
- enabling multiple franchisees of a common franchisor to access the single-enterprise agreement stream without removing the ability to bargain for a multi-enterprise agreement by amending the definition of "related employers". Currently, franchisees do not fall within the existing definition of "related employers", which may have prevented them from making a single-enterprise agreement.
- allowing a single-enterprise agreement to replace a single interest employer agreement or supported bargaining agreement (which are two types of multi-enterprise agreements) prior to the agreement's nominal expiry date.
- transferring the responsibility for issuing model enterprise agreement terms for flexibility, consultation and dispute resolution and the model dispute settlement term for copied State instruments from the Minister for Employment and Workplace Relations to the FWC.
- restoring the requirement for de-merger applications from amalgamated organisations to be made between 2 and 5 years after the amalgamation occurred.
Additional discrimination protections
The number of protected attributes under the discrimination, adverse action and harassment frameworks will be expanded to include "subjection to family and domestic violence".
The changes will make it unlawful for an employer to take adverse action against an employee or potential employee because they have been, or are being, subjected to family and domestic violence.
They will also prohibit the inclusion of any terms in enterprise agreements and modern awards that discriminate against a person on the basis of subjection to family and domestic violence.
Small business redundancy
Small business redundancy exemption
Currently, a small business is exempt from providing employees with redundancy pay under the National Employment Standards. However, the exemptions also apply to non-small business employers that become bankrupt or enter liquidation, and subsequently downsize into a small business.
The amendments ensure that the existing small business 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 allow the remaining employees of liquidated or bankrupt businesses to access redundancy pay.
Amendments to work health and safety legislation
The proposed amendments include amendments to the Work Health and Safety Act 2011:
- a Commonwealth industrial manslaughter offence with penalties of $18 million for a body corporate and 25 years' imprisonment for an individual;
- significant increases to the Category 1 offence penalties from $3 million to $15 million for a body corporate, from $600,000 to $3 million for a person conducting a business or undertaking or an officer, and from $300,000 to $1.5 million for any other person;
- a 39.03% increase to all other penalties in the Work Health and Safety Act;
- an indexing mechanism to annually increase penalties in line with inflation; and
- new criminal responsibility provisions for bodies corporate and the Commonwealth.