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Employment & Workplace Relations Alert: Fair Work Legislation Amendment (Closing Loopholes) Bill 2022, Impacts and Considerations

Sep 20, 2023

The Federal Government is introducing some of the most significant changes in industrial relations law since the Fair Work Act 2009 (Cth) (FWA).

These changes signal the Government is intent on making major reform to Australia’s industrial relations laws.

This alert contains a high-level summary of those proposed changes and their potential consequences for your business.

Will these changes affect you?

These changes, once given royal assent, will mainly affect employers who:

  • Employ casuals employees;
  • Engage independent contractors and labour hire services;
  • Have a heavy union presence and influence in their industry; and/or
  • Engage ‘gig economy’ workers (e.g., Uber Drivers).

Impending Changes

The impeding changes are contained in the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill) which was introduced to Parliament on 4 September 2023.

The Bill aims to ‘close loopholes’ in the FWA and represents significant reforms to Australia’s workplace health and safety laws.

The Bill consists of 278 pages and spans 28 distinct sections in which it proposes profound changes that will impact employers, employees, principals, and contractors.

This Bill represents a robust continuation of the Federal Government’s commitment to effecting major industrial relations reform.

Key highlights of the Bill include

  1. Definition of Casual Employment: The Bill introduces a multifactorial objective test for classifying a ‘casual employee’ based on the employment contract’s terms and the actual nature of the employment relationship. It emphasises the absence of a firm commitment to ongoing and indefinite work.
  2. Casual Conversion Changes: After six months of employment (or 12 months for small businesses), casual employees gain the right to request conversion to full-time or part-time employment if they no longer consider themselves casual employees.
  3. Minimum Conditions for ‘Gig’ Workers: Independent contractors in the digital platform and road transport sectors receive minimum working conditions and protection from unfair deactivation or termination.
  4. Labour Hire Arrangements: Labour hire workers under Enterprise Bargaining Agreements (EBAs) must receive the same pay as directly employed workers, excluding small businesses.
  5. Unfair Contracts Terms: The Bill changes the defence against sham contracting, shifting from ‘recklessness’ to ‘reasonable belief’ for misrepresenting employment contracts as independent contracting arrangements.
  6. Protections Against Discrimination: New protection against discrimination is proposed for employees who have experienced or continue to face family and domestic violence.
  7. New Criminal Offences: Wage theft becomes a criminal offense with severe penalties for deliberate underpayment. Industrial manslaughter is introduced as a Commonwealth offense.
  8. Rights of Unions and Workplace Delegates: Unions can apply to the Fair Work Commission to inspect employee wage records without 24 hours’ notice in cases of suspected underpayment. Employers are obligated to compensate workplace delegates for training and communication time with employees who are current or potential union members.

The Bill reflects a comprehensive and far-reaching reform agenda in workplace relations, with implications spanning various aspects of employment and labour laws.

How will these changes affect you?

  1. Increased risk of employee legal action

The emerging regulations expand the jurisdiction of the Fair Work Commission (FWC) significantly which will result in a surge in FWC applications made by affected employees.

FWC applications, which at present, are commonly made by employees for actions relating to unfair dismissal and general protections. Such applications can represent a headache for businesses as they are generally easy and inexpensive for applicants to file but are inevitably costly to defend (even where an applicant’s case lacks merit).

These changes will extend the kinds of FWC applications made to include actions relating to:

  • Contractors:
    • securing equitable pay for identical roles
    • minimum standards for employee-like workers;
    • addressing unfair service contract terms, for which penalties will be available;
  • Employees
    • casual conversion rights.
  1. Increased penalty amounts and liability

The Bill also signals changes to liability for civil penalties and increases the amounts payable as penalties by:

  • increasing civil pecuniary penalties that apply to existing contraventions (including serious contraventions) of wage exploitation-related provisions (penalties increased by 500%);
  • increase the civil pecuniary penalty for failure to comply with a compliance notice by 1000%, thereby aligning contravention with other penalties for other contraventions;
  • with respect to underpayment, increase the maximum penalty for a contravention to be determined by reference to 3 times the value of the underpayment; and
  • amend the scheme for ‘serious contraventions’ so that it applies to knowing and reckless contraventions of the relevant provisions.

As of 1 July 2023, the maximum penalties available are:

  • up to $18,780 per contravention for an individual;
  • up to $93,900 per contravention for companies; and
  • up to $187,800 per contravention for an individual and $939,000 per contravention for companies for ‘serious contraventions’.
  1. Criminal liability

Contravention of the new wage theft provisions shall be deemed an offence, which upon conviction is punishable as follows:

  • for an individual, by a term of imprisonment of not more than 10 years, a fine of the greater of 3 times the underpayment amount or $1.5M, or both; and
  • for a body corporate, a fine of the greater of 3 times the underpayment amount or $7.8M.

When to get in touch

If at all unsure of how these wide-reaching reform agendas will affect you, seek the advice of our Employment Law Team, their assistance will prove invaluable.

Without adept legal defence, employers, and principals are in the firing line for what are likely to be major fines, penalties, and payouts, not to mention, a disruption to business.

More Information

For more information on casual employees, or for general advice on employee entitlements or employment contracts, please contact a member of our Employment and Workplace Relations team:

Daniel Bean, Senior Associate
(03) 8600 8825 or dbean@kcllaw.com.au

Gemma Sibley-Lewis, Lawyer
(03) 8600 8849 or gsibley-lewis@kcllaw.com.au

Note: This alert is a guide only and is not intended to constitute legal advice.