Clos­ing Loop­holes or Rad­i­cal Change? The Fair Work Leg­is­la­tion Amend­ment (Clos­ing Loop­holes) Bill 2023

Ear­li­er this week, the Albanese Gov­ern­ment intro­duced the Fair Work Leg­is­la­tion Amend­ment (Clos­ing Loop­holes) Bill 2023(Bill), which con­tains a num­ber of sig­nif­i­cant reforms to the work­place rela­tions land­scape. If ful­ly imple­ment­ed in its cur­rent form, the Bill will lead to a num­ber of impli­ca­tions in the way busi­ness­es and work­ers engage with each oth­er and will clear the path to an array of pro­tec­tions and reme­dies that some work­ers can­not cur­rent­ly access.

We high­light below some key areas for reform under the Bill, which are like­ly to be sub­ject of fur­ther com­men­tary and amendment.

As the Bill pro­gress­es and the final out­come becomes clear­er, we will con­tin­ue to mon­i­tor any amend­ments (which are almost inevitable) and high­light impor­tant imple­men­ta­tion dates for employ­ers and work­ers (both employ­ees and inde­pen­dent con­trac­tors includ­ing gig work­ers and labour-hire workers).

Amend­ing the Def­i­n­i­tion of Casu­al Workers

The Bill pro­pos­es an amend­ed def­i­n­i­tion of casu­al work­ers’ which con­sid­ers the total­i­ty’ of the employ­ment rela­tion­ship so that the test as to deter­min­ing who is a casu­al work­er is broad­er and less reliant on the spe­cif­ic terms of the contract. 

The amend­ed def­i­n­i­tion retains the notion that a casu­al employ­ee is some­one who has no firm advance com­mit­ment to con­tin­u­ing and indef­i­nite work but enhances this to allow for the con­sid­er­a­tion of the prac­ti­cal real­i­ty of the work­ing relationship.

The Bill pro­vides a list of indi­cia so that an objec­tive assess­ment of the employ­ee’s nature of work can be undertaken. 

Revert­ing to the old’ mean­ing of Employ­ment’

Some two years ago, the two High Court cas­es of Per­son­nel Con­tract­ing and Jam­sek upend­ed what the field of labour law and indus­tri­al rela­tions con­sid­ered to be the con­ven­tion­al approach of iden­ti­fy­ing employ­ment rela­tion­ships (as opposed to inde­pen­dent con­trac­tor arrangements). 

The two High Court cas­es gave pri­ma­cy to the terms of a writ­ten agree­ment in deter­min­ing whether the engage­ment between an organ­i­sa­tion and a work­er was one of an employ­ment rela­tion­ship or prin­ci­pal and inde­pen­dent contractor.

The Bill pro­pos­es to revert to the posi­tion before Per­son­nel Con­tract­ing and Jam­sek by using the well-estab­lished mul­ti-fac­to­r­i­al test to eval­u­ate whether an employ­ment rela­tion­ship exists between the parties. 

Labour Hire Loophole

This amend­ment is aimed at pre­vent­ing employ­ers, whose busi­ness­es are cov­ered by an enter­prise agree­ment, from pay­ing labour-hire work­ers a rate of pay that is less than the rate pre­scribed in the rel­e­vant applic­a­ble enter­prise agree­ment, in effect cir­cum­vent­ing the oper­a­tion of the enter­prise agreement. 

The Bill pro­vides for appli­ca­tions to be made to the FWC by employ­ees, unions and hosts to seek orders relat­ing to labour-hire arrange­ments. When cov­ered by an order of the FWC, com­pa­nies engag­ing labour-hire employ­ees will be required to pay all labour-hire employ­ees the equiv­a­lent of what they would receive under the host’s enter­prise agree­ment. Some exemp­tions will apply such as where the host is a small business.

Crim­i­nal­is­ing Wage Theft’

The Bill seeks to crim­i­nalise the delib­er­ate under­pay­ment of work­ers. While it has been unlaw­ful for employ­ers to under­pay their employ­ees, the under­pay­ment will now attract harsh­er, crim­i­nal offences.

If con­vict­ed of this new crime of wage theft, indi­vid­u­als can face a max­i­mum of 10 years impris­on­ment and cor­po­ra­tions could incur a max­i­mum fine of $7.8 mil­lion. It is cer­tain­ly going to give all employ­ers pause when mak­ing and review­ing arrange­ments for the pay­ment of staff and deter those who have been know­ing­ly and inten­tion­al­ly short-chang­ing employees. 

In con­sid­er­ing this pro­posed amend­ment it should be remem­bered that it will not apply to all cas­es of under­pay­ment. As with crim­i­nal mat­ters, the intent of the employ­er will be fun­da­men­tal. It will lend some rigour to the term wage theft’ which in col­lo­qui­al set­tings has been used loose­ly to even include sce­nar­ios where there has been inad­ver­tent under­pay­ment by a well-mean­ing but mis­tak­en employer. 

Indus­tri­al Manslaughter

The Bill intro­duces a new offence of indus­tri­al manslaugh­ter under the fed­er­al Work Health and Safe­ty Act 2011. The crime applies where the gross neg­li­gence or reck­less­ness of a duty hold­er (includ­ing a per­son con­duct­ing a busi­ness or under­tak­ing) leads to a work­place death. Indi­vid­u­als con­vict­ed of the offence can face a max­i­mum of 25 years impris­on­ment, and body cor­po­rates can face a max­i­mum fine of $18 million.

Pro­tec­tion of Employ­ee-Like Work­ers’ such as Gig Workers

The Bill pro­vides for the intro­duc­tion of min­i­mum stan­dards for employ­ee-like’ work­ers in the gig econ­o­my per­form­ing work on dig­i­tal labour plat­forms. Those eli­gi­ble would be able to apply to the FWC for Min­i­mum Stan­dards Orders’ tai­lored to their per­for­mance of work. The Min­i­mum Stan­dards Orders could include terms relat­ing to a num­ber of work­ing stan­dards, such as pay­ment, work­ing hours, record-keep­ing and insurances.

Fur­ther, the Bill pro­vides for employ­ee-like work­ers to have gen­er­al pro­tec­tions against adverse action, as well as pro­tec­tions against unfair deac­ti­va­tion’, sim­i­lar to the unfair dis­missal pro­tec­tions cur­rent­ly pro­vid­ed to employ­ees under the Fair Work Act.

If ulti­mate­ly passed and imple­ment­ed, it will be fas­ci­nat­ing to see how these reforms, par­tic­u­lar­ly as they relate to work­ers on dig­i­tal labour plat­forms, will actu­al­ly oper­ate in practice.

Unfair Ser­vice Contracts

The Bill pro­pos­es to pro­vide inde­pen­dent con­trac­tors, who are par­ty to a con­tract for ser­vices, with an avenue to chal­lenge unfair con­tract terms through the Fair Work Com­mis­sion. Such terms may relate to whether the work­er is paid less than the new con­trac­tor high income threshold’.

The Bill sets out a num­ber of fac­tors which the FWC will con­sid­er when deter­min­ing whether the terms of a con­tract for ser­vice are unfair. 

Small Busi­ness­es (busi­ness­es with few­er than 15 employees)

The Bill pro­vides a num­ber of exemp­tions for small busi­ness­es from the pro­posed changes under the Bill. For exam­ple, small busi­ness­es are exempt from the pay­ment oblig­a­tions imposed by the labour hire reforms. The devel­op­ment of a Vol­un­tary Small Busi­ness Wage Com­pli­ance Code is also pro­posed so as to ensure that only inten­tion­al wage theft is punished.

Fur­ther, most small busi­ness­es are cur­rent­ly exempt from mak­ing redun­dan­cy pay­ments to their employ­ees (sub­ject to the terms of an applic­a­ble mod­ern award or indus­tri­al instru­ment). The Bill pro­pos­es to add an exemp­tion to this part of the NES, where­by busi­ness­es which are the sub­ject of bank­rupt­cy or liq­ui­da­tion, and which were not ini­tial­ly a small busi­ness’ will be required to make redun­dan­cy pay­ments to any employ­ees remain­ing in the busi­ness fol­low­ing a bank­rupt­cy or liq­ui­da­tion process. 

As the Bill makes its way through fed­er­al par­lia­ment, we will mon­i­tor its sta­tus and pro­vide updates.