What is the Bill?
On 4 September 2023 the Federal Government introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill). The Bill is aimed to amend the Fair Work Act 2009 (FWA) and related legislation with the intent of ‘closing loopholes’ in various elements of the workplace relations framework.
So that you can understand how the Bill may affect you, we have prepared a summary of the most notable elements of the Act which are being amended by the Bill.
Changes to casual employment
There is a new objective test for the meaning of casual employment. The definition now also considers the totality of the employment relationship rather than solely focussing on the terms of the contract.
Additionally, the Bill also introduces an employee choice pathway for eligible casual employees to request to change to permanent employment after six (6) months (or twelve (12) months for small business employers).
Definition of employment
New statutory definitions are introduced for the meaning of an ‘employee’ and an ‘employer’. In particular, whether a person is an employee or an employer of an individual, is to be determined by “ascertaining the real substance, practical reality, and true nature of the relationship” between the individual and the person. Assessment of the employment relationship will now go beyond the contractual rights and obligations of the parties and look at the real time written application.
The Bill is designed to reinstate the ‘multi-factorial’ test previously applied by courts and tribunals to determine if a worker is an employee or independent contractor. The ‘multi-factorial’ test considers several ‘indicia’ including both the conduct of the parties and the terms of any written contract to resolve the ‘substance and reality’ or ‘totality’ of the relationship.
The purpose of these changes is to discourage businesses from attempting to avoid a relationship of employment via carefully drafted contracts.
Same job, same pay
Businesses that pay employees under an enterprise bargain agreement are prevented from undercutting these wages by the use of labour hire. Employers who supply their employees to perform work for a ‘regulated host’ must pay their employees the same rate of pay as employees of the host who perform work of the same kind.
Given the broad nature of the drafting, it is likely that the relevant provisions will be interpreted broadly so as to cover any regulated employee if they perform any duties/tasks that were previously, or are currently, performed by employees covered by the host employment instrument, regardless of the significance of these duties/tasks. Watch this space for some interesting interpretations and disputes of wages.
New criminal offences
The Bill introduces a new criminal offence for certain types of intentional underpayments, significantly increases civil remedy provisions for many contraventions to the FWA and lowers the bar for what constitutes a ‘serious contravention’.
An employer will now commit an offence if the employer is required to pay an amount to an employee and the employer does an act or omits to perform an act which results in a failure to pay the payment owed to the employee in full on or before the day when the required amount is due. The criminal offence does not apply to underpayments that are accidental, inadvertent or based on a genuine mistake. The criminal offence is punishable on conviction with a fine for body corporates, and a term of imprisonment of up to ten (10) years or a fine for individuals.
Industrial manslaughter is also introduced as a Commonwealth criminal offence.
Minimum conditions for Gig Workers
The Bill establishes a mechanism for the Fair Work Commission (FWC) to set minimum standards for certain gig economy ‘employee-like’ workers and road transport industry workers. A person will be an ‘employee-like’ worker if they perform work under a service contract through a digital labour platform regardless of the type of entity they have adopted. Key determinants of the ‘employee-like’ worker test relate to whether the worker has low bargaining power in negotiations in relation to the services contract under which their work is performed for a digital labour platform operator. Other determinants include if they received remuneration at or below the rate of an employee performing comparable work, or they have a low degree of authority over the performance of their work. The Bill also introduces a mechanism for these workers to form collective agreements and challenge unfair contracts.
WHS and First Responders
The Bill introduces a rebuttable presumption that a first responder’s employment significantly contributed to the development of post-traumatic stress disorder (PTSD). This will enable first responders suffering PTSD easier access to workers’ compensation.
Discrimination against employees
Stronger protections prohibiting discrimination against employees who have been, or continue to be, subjected to family or domestic violence.
Defence to ‘Sham Contracting’
The FWA currently prohibits employees from misrepresenting an employment contract as an independent contracting arrangement. The Bill amends the defence to ‘sham contracting’ to provide that an employer will be liable if, at the time of the misrepresentation, the employer reasonably believed that the contract of employment was instead a contract for services. This reform will import a more objective analysis to the defence whereby focus is on what the employer ‘reasonably believed’ at the time.
Rights of Unions and Workplace Delegates
Unions can now apply to the FWC to remove the requirement to provide 24 hours’ notice to inspect employee wage records where there is reasonable suspicion of underpayment. Also, employers are now required to pay workplace delegates for training and time spent communicating with employees that are current or prospective union members.
What Happens Next?
The Bill passed both Houses of Parliament on 7 December 2023, and received Royal Assent on 14 December 2023. It therefore became the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 and the amendments to the FWA started coming into effect from 15 December 2023. The changes regarding union delegates will not come into effect until 1 July 2024 and the new offences for wage theft will only apply from 1 January 2025.
The Bill proposes reforms that will have a substantial impact on employers, employees, principals, gig-workers and contractors. It is significant in length and content. To read the full publication, click here. Otherwise, if you would like to discuss how these amendments may affect your business, feel free to reach out to Daniel Morgan firstname.lastname@example.org and the Workplace team at M+E today.