Fair Work (Closing Loopholes) Bill: Significant changes ahead

Another set of sweeping IR reforms are set to see employers across Australia impacted by the Government's third tranche of amendments to the Fair Work Act 2009 (Cth) (FW Act).

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill), has been referred to a parliamentary committee process, which means that the Bill will not be put to vote until early 2024. In the meantime, see below for some of the key changes being proposed.

Change to the definition of casual

According to the Bill, the contract is not king when determining whether an employee is ‘casual’, reversing a landmark recent High Court decision to that effect – Rossato. Instead, the Bill provides that casual employment can be established by a ‘form of mutual understanding or expectation not rising to a term of contract’, inferred from conduct of the parties. This will increase uncertainty and risk for businesses of all sizes.

The Bill outlines various other factors to determine an employee’s casual status, including:

· a right to accept or reject work;
· reasonable likelihood of continuing work;
· presence of full-time or part-time counterparts; and
· existence of a regular pattern of work.

The Bill also strengthens casual conversion entitlements by providing a ‘new employee choice pathway for eligible employees to change to permanent employment if they wish to do so’.

Employment / independent contracting distinction and gig worker regulation

The Bill requires the ordinary meanings of ‘employer’ and ‘employee’ to be determined by ‘the real substance, practical reality and true nature of the relationship’ between the parties rather than just contractual terms. In doing so, the Bill reverses the effect of two recent significant High Court decisions Jamsek and Personnel Contracting which had held that, if the terms of the contract were written, determining whether the relationship was one of employment or independent contract was determined from those terms, not the parties’ conduct in performing the contract.

The Bill will also insert a new definition of an ‘employee-like worker’ in the FW Act to apply to gig workers, and empower the Fair Work Commission (FWC) to set ‘fair minimum standards’ for these workers for the first time.

Wage theft

The Bill introduces a new criminal offence for intentional underpayment of wages, which has potential penalties of 10 years imprisonment and fines of up to $7.825 million (or three times the underpayment amount for underpayments of more than $2.6 million).

The Bill reinforces Fair Work Inspector powers to issue compliance notices that ask an employer to calculate (and pay) underpayment amounts if they have a ‘reasonable belief’ a contravention has occurred.

The Bill waives the requirement for 24 hours’ notice before right of entry is exercised by permit holders in situations of suspected underpayments.

Labour hire

The much-anticipated ‘Same Job, Same Pay’ changes to force labour hire providers to pay their employees the same as the host employer pays its employees are fundamentally different to the changes proposed by the Labor Party when in opposition. Unfortunately, unlike the labour hire licensing laws in some States, including Queensland, the Bill does not define labour hire services. Rather, under the Bill, Unions could apply to the FWC for a ‘regulated labour hire arrangement order’.

In determining whether to issue such an order, the FWC must have regard to a number of matters, none of which are determinative. If such an order is made by the FWC, the labour hire employer will need to pay its employees (when working with the regulated host) the full rate of pay (including allowances, penalties, loadings, overtime, etc.) that would be payable to the employee if the host employment instrument applied to them.

New rights for union delegates

The Bill also provides substantial new rights for union delegates to represent members of their union and employees who are eligible to be, but who are not, members of the union.

All modern awards will need to be amended to include a term dealing with the rights of union delegates. All new enterprise agreements will need to include a term dealing with the rights of union delegates which must be at least as favourable as the applicable award term.

Union delegates will be entitled to ‘reasonable communication’ with employees eligible to be members of the union and reasonable access to workplace facilities and paid time off work for union delegate training.

Other amendments

The 278-page Bill contains many further proposed amendments to the FW Act.

More changes to enterprise bargaining: franchisee employees will be allowed to access the single-enterprise stream, the right to collective bargaining will be supported by the Bill’s transitioning from multi-employer enterprise agreements and the FWC will be permitted to register consent collective agreements between a digital labour platform operator and an organisation entitled to represent employee-like workers.

A new protected workplace right of discrimination on the basis of family and domestic violence.

New FWC powers for contractor disputes: the FWC will be empowered to make orders to ensure labour hire workers are paid the same rates as employees directly employed by the host.

Key takeaways

The two earlier tranches have created substantial upheaval in Australian industrial relations. This third tranche looks to continue that trend of re-centralisation and re-collectivisation of the labour market. Hence it is critical that businesses are aware of the new minimum terms and conditions and other entitlements that have become law since November 2022, to avoid dispute and contraventions of the FW Act.

For more articles like these, see https://eandirconsulting.com.au/blog?blog=y

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