The Labour Government is bringing in a new age of Industrial law, bringing in substantial changes to the Fair Work Act 2009 (Cth) (FW Act) through the proposed Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Cth) (Bill). In summary, some of the proposed changes include:
- amending the definition and some terms and conditions for casual employees;
- ’same job, same pay’ provisions for labour hire providers;
- the test to decide whether a person is an employee versus a contractor;
- regulating the gig economy and transport workers
- an expansion on multi-enterprise agreements;
- introducing a federal wage theft regime;
- changes to the federal work health and safety regime;
- increased civil penalty provisions for any breaches of the FW Act; and
- increasing delegates rights.
In this article we will take a deep dive into some of these proposed key changes and what you as an employer may want to be aware of.
Casual Employment
If the Bill passes in its current form, starting 1 July 2024, the definition of a ‘casual employee’ will be altered. Employers will need to consider all aspects of the working relationship to decide if the employment is truly characterised as casual.
The employment contract will now be only one factor to be considered when deciding if an employee is truly casual. Factors such as likely continuity of service, consistency of hours, nature of the business, the work performed and working patterns are just a few of the factors to be considered.
Casual conversion will be applicable after a 6-month period as opposed to the existing 12-month period. This is except for small businesses (less than 15 employees) which are exempt from this rule.
Any disputes relating to casual employments can be referred to the Fair Work Commission (FWC) for arbitration or in small claims proceedings. Unreasonably mischaracterising an employment relationship as casual (and related conduct) will be subject to civil penalties for a breach of the FW Act.
Employers are encouraged to be mindful of the length of service of their employees and the nature of the work performed as 1 July 2024 approaches.
Labour Hire: Same Job, Same Pay
This Bill will require labour hire providers to pay employees at minimum an equivalent rate of pay as the host business’s own employees. There are limited exemptions to this requirement, namely:
- labour hire arrangements for 3 months or less; and
- small labour hire businesses (less than 15 employees)
If these requirements are not followed and the employer is not subject to an exemption, employees and their unions may apply for a “regulated labour hire arrangement order” in the FWC.
Penalties may apply if an employer does not comply with an order, a host fails to provide pay information to the employer or if an employer attempts to avoid the application of an order (such as new labour hire arrangements every three months, changing employees to independent contractors etc.,).
Employee vs Contractor
In determining whether a person is an employee or contractor, the totality and substance of the relationship needs to be examined or applying the previous ‘multi-factor’ test. This is to remedy the recent High Court authority which provided that the written contractual terms take supremacy of the form and substance of the relationship in situations where there is an absence of any alleged sham arrangements. Whether an employment relationship exists will be defined not only by contractual terms but also by looking at how the employment is performed in practice.
Building from this, the test for misrepresenting employment (sham contacting) has been changed against the employer’s favour, from ‘recklessness’ to the new test of ‘reasonableness’. The burden of proof will now be on employers to establish there was a ‘reasonable belief’ the relationship was a true contracting arrangement. These changes will be in effect from the day following the Royal Assent of the Bill.
Employers are encouraged to be wary of the nature of their contractor’s work and seek legal advice if there are concerns these new changes may affect their business.
Transport Workers and The Gig Economy
The Closing Loopholes bill further delves into the realm of independent contractors, particularly those working within road transportation and digital platforms, aka the ‘gig economy’. If the Bill as proposed passes, from 1 July 2024, the terms “employee-like worker” (for gig economy workers) and “regulated road transport contractor” for the transport industry will be introduced, creating a class of workers who can fall under a “minimum standards guideline” that may be made by the FWC.
Under these proposed amendments, the FWC will be empowered to:
- make orders setting minimum terms and standards to these workers (such as working hours, payment terms and record keeping etc.,); and
- approve collective agreements for gig economy and transport workers.
Additionally, wider workplace rights protections would become available to these workers and potential reinstatement and compensation may become available to workers earning less than a high-income threshold.
Enterprise Agreements
The proposed Bill would expand the scope of multi-enterprise agreements to include franchise arrangements and unrelated employers. It would also allow a single-employer enterprise agreement to replace a multi-employer agreement during its nominal term if, under a modified better-off-overall-test (BOOT), employees are better off overall, under the new agreement than the old multi-employer agreement and the underlying award/s.
Wage Theft
From the outset, it is important to note that the offence of wage theft would apply to amounts that are due under the FW Act and industrial instruments and not under contracts of employment.
Queensland and Victoria currently have wage theft laws, however this offence will be made federal with substantial penalties under this Bill. If found guilty, offending corporations are liable to incur a fine of (whichever is the greater amount):
- three (3) x underpayment amount; or
- $7,825,000 fine.
Offending individuals may face:
- $1,565,000 fine; or
- Maximum 10 years imprisonment.
It is imperative to keep in mind that the wage theft offence will only arise if the underpayment is intentionally done by the employer. Moreover, the “Voluntary Small Business Wage Compliance Code” offers small businesses some aspects of protection. If signed up to and complied with, the Fair Work Ombudsman (FWO) will be unable to pursue further regulatory action against the employer.
The FWO will also have authority to set up “cooperation agreements” with employers to incentivise them to voluntarily disclose any underpayments. During the duration of the agreement, the FWO is prohibited from pursuing criminal charges against the employer or the specific misconduct that is the subject of the agreement.
Civil Penalty Provision Increases
The maximum civil penalty that would apply to a single contravention of the FW Act, such as for a breach of a modern award or enterprise agreement would increase to $939,000 for a corporation and $93,900 for an individual. This is a significant increase on the current maximum penalties that apply for a single contravention.
Rights of Union Delegates
The rights of union delegates in the workplace are set to expand if the Bill is given royal assent.
Namely, Union delegates within the workplace will be given the express rights to:
- represent the industrial interests of current and potential union members;
- have reasonable communication with current and potential members;
- gain access to the workplace and its facilities; and
- have access to paid delegate training during work hours (note small businesses are exempt from this requirement).
It is prohibited for employers to deny interactions with union representatives at the workplace, provide them with false or reckless information intentionally or without care, or impede, hinder or prevent a delegate’s right to carry out their responsibilities. Violation of these rules can result in civil penalties.
Employers are encouraged to remain wary of these new obligations towards union delegates and seek legal advice where needed.
Protect Your Business – Contact NB Employment Law Today for an Obligation-free Consultation.
If you are an employer and you need help navigating the proposed substantial changes to the FW Act, reach out to NB Employment Law. We offer an obligation-free consultation and would be delighted to help. Simply email us or call to book your appointment time.
Email: [email protected]
Phone: +61 (07) 3876 5111
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About the Author
Jonathan Mamaril leads a team of handpicked experts in the area of employment law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars where his expertise is invaluable as a leader in this area as a lawyer for employers.
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+61 (07) 3876 5111
About the Co-Author
Michelle Chadburn is a Senior Associate at NB Employment Law. Michelle advises clients on all aspects of employment law, work health and safety, discrimination law, and industrial relations. This includes representing clients in defending unfair dismissals, general protections, drafting employment contracts, contractor agreements, workplace policies and advising clients on managing ill an injured employees, genuine redundancies and performance managing employees.
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[email protected]
+61 (07) 3876 5111
About the Co-Author
Grace Allaway Grace is currently completing her Bachelor of Laws (Honours) at the Queensland University of Technology (QUT) whilst working full-time at NoBorders Law Group within NB Employment Law.Grace has found her passion within employment law, initially being introduced to the IR law world within a Case Manager position at an Industrial Association advocating for employees. Grace has since continued to develop her skills and is committed to providing top results for all employers.
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Grace Allaway