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Australia | Publication | September 2023
This article was co-authored with Isobelle Martin.
The third tranche of the Federal Government’s industrial relations reforms was introduced to Parliament on 4 September 2023 to make good on a number of reforms foreshadowed in the most recent Federal election and at the 2022 Jobs and Skills Summit.
After a year of significant development in the employment and industrial relations space, the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill) further builds upon the Government’s robust agenda for change.
This article contains a snapshot of the key changes proposed to be introduced by the Bill.
As widely expected, the Bill proposes to introduce a new definition of “casual employee” into the Fair Work Act 2009 (Cth) (FW Act), which harks back to the common law approach to identifying casual employment. This effectively moves away from the position set out in section 15A of the FW Act, which was added following the High Court of Australia’s decision in WorkPac Pty Ltd v Rossato [2021] HCA 23.
Key aspects of these proposed changes include:
The Bill also builds upon the existing casual conversion provisions in the FW Act, by providing an avenue for eligible casual employees to notify their employer that they consider they are eligible for permanent employment. Employers must respond within 21 days of a notification being made, and must consult the notifying employee before responding. Whilst there are various grounds on which the notification can be refused, a notification cannot be refused simply on “reasonable business grounds”.
Consistent with the proposed change to the definition of “casual employee”, the Bill also proposes that the ordinary meaning of “employee” and “employer” will be determined by looking at the “real substance, practical reality and true nature” of the relationship. This returns the approach to a more global consideration which looks at both the contract and other relevant factors regarding how the contract is performed in practice. This is consistent with how the issue was considered before the 2022 High Court decisions in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2.
In a nutshell, this proposed amendment targets situations where an employer has committed to wages for its employees through an enterprise agreement (or certain other, prescribed instruments), but uses labour hire employees to perform work at lower rates of pay.
The key facts are as follows:
The Government also proposes to deliver on its pre-election promise to criminalise wage theft. The new criminal offence will apply where an employer intentionally underpays an employee.
Victoria and Queensland have already criminalised wage theft. However, in Victoria the offence requires an employer to deliberately and dishonestly underpay an employee. Comparatively, the Queensland wage theft provisions in the Criminal Code 1899 (Qld) do not require intention to be established.
The headline points are as follows:
The Bill also proposes to significantly increase the civil pecuniary penalties for wage exploitation-related provisions and failure to comply with a compliance notice. It proposes further changes to the calculation of penalties for underpayment offences where the maximum penalty may be determined by reference to 3 times the value of the underpayment in certain circumstances.
The Bill proposes to introduce a raft of amendments to ensure that certain independent contractors are entitled to greater workplace protections.
These provisions will primarily relate to independent contractors who are either:
The FWC will be provided with a new jurisdiction to make minimum standards orders and non-binding minimum standards guidelines, for these independent contractors. Similar to the FWC’s unfair dismissal jurisdiction, the Bill will also introduce the concept of “unfair deactivation” from a digital labour platform for employee-like workers undertaking digital platform work, and “unfair termination” for regulated road transport contractors.
The regulated workers will also be permitted to make consent-based collective agreements and dispute unfair contract terms if earning below the contractor high income threshold, in the FWC.
The Bill also proposes numerous other changes in the employment and industrial relations space, including:
Unlike the earlier tranches of amendments, this Bill will take some months before it could become legislation. It has been referred to the Education and Employment Legislation Committee for inquiry and report by 1 February 2024.
This means we are unlikely to see any real progress until early in 2024. However, the Bill provides plenty of food for thought for employers in the lead up to the likely introduction of these proposed amendments. If you would like to discuss the proposed changes in more detail, including what they may mean for your organisation, please don't hesitate to contact us.
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