The Government’s new ‘Closing Loopholes Bill’

Changes to casual employment

The proposed amendments will change the definition of casual employee so that the entire relationship is relevant, not just the way the employment is described in a contract. The amendments will include an addition to the existing casual conversion process in the National Employment Standards to include a new ‘employee choice’ pathway to change from casual to permanent employment. This new pathway will be entirely employee-driven, meaning that it is the employee’s responsibility to initiate the process.

Labour hire changes

The proposed amendments which are receiving the most media attention aim to allow employees and unions to apply to the Fair Work Commission (FWC) for an order requiring that labour hire employees be paid at least what they would receive under a host employer’s enterprise agreement.

This measure, also referred to “same job, same pay”, will not apply where the host employer is a small business. A host employer is one where employees of a labour hire company are working.

If the FWC is satisfied that the host is a small business, it will not have the power to make an order about entitlements of labour hire employees.

Compliance and enforcement: Criminalising wage theft, civil penalties and sham contracting

The proposed amendments will introduce a criminal offence for intentional underpayment of employees’ wages and certain entitlements.

Penalties for underpayments

Honest mistakes or miscalculations will not be caught by the new ‘wage theft’ criminal offence.

There will be pathways for small business who have tried to correct mistakes made with paying their workers:

• Small businesses that may have underpaid employees will not be referred for criminal prosecution if they can show compliance with the new Voluntary Small Business Wage Compliance Code. The Code will be developed by government in partnership with employer and employee groups.
• The Fair Work Ombudsman (FWO) will be responsible for investigating the new criminal offence. The FWO may also enter a ‘cooperation agreement’ with a person, including an employer, if they disclose underpayments. The FWO may agree not to refer the conduct for prosecution, after assessing the employer against a list of factors.

Civil penalties

The proposed amendments will increase the maximum civil penalties and serious contraventions of the FW Act will now include reckless conduct. A Court will still have discretion to order lesser penalties having regard to the circumstances of the breach, including the size of the business and the amount of the underpayment.

Sham contracting

Employers who have allegedly misrepresented employment as an independent contractor arrangement will need to show that they reasonably believed they were correct in classifying a worker as an independent contractor. Courts will be required to have regard to the size and nature of an employer’s business in determining whether the employer had reasonable belief that the worker was an independent contractor.

An employer’s ignorance or unreasonable mistake will no longer be a defence to a sham contracting claim.

Enhancing union delegates’ rights

The proposed amendments will provide specific rights and protections for workplace delegates to represent the industrial interests of union members and potential members, including in disputes with their employer. Workplace delegates are employees who are appointed as representatives in the workplace under their union’s rules.

The changes will provide workplace delegates with reasonable access to communicate with current and potential union members about matters of industrial concern and access to workplace facilities. The changes will also introduce a general protection for workplace delegates in carrying out their role, including preventing an employer from unreasonably refusing to deal with them, misleading them, or hindering or obstructing the exercise of their rights as delegates.

Workplace delegates will be entitled to paid time off work to attend workplace delegate training unless they are employed in a small business.

When will these changes come into effect?

The proposed changes are subject to the Bill becoming legislation. At this stage this is unlikely to happen until early 2024.

Further information about the Closing Loopholes legislation is available at: https://www.dewr.gov.au/workplace-relations

Small businesses can also seek information and advice from the Fair Work Ombudsman via the Small Business Showcase and the Employer Advisory Service.