The Closing Loopholes Bill to become Law
What is the Closing Loopholes Bill?
The Labour Government introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 on 4 September 2023. After passing the House of Representatives on 29 November, it moved to the Senate for further debate.
ABIC, along with other key associations across other industries has been working with the government to provide feedback on the Closing Loopholes Bill.
Specifically, our Founding Director & CEO @thestefmilla and Chair @reikaroberts have been in strong consultations regarding Same Job, Same Pay and proposed changes to contractor legislation for small businesses.
In an unexpected turn, the Labour Government reached an agreement with The Greens and Crossbench, including independent Senators Jacqui Lambie and David Pocock, leading to the Bill being divided into two parts. This split facilitated the rapid passage of several key measures through both the Senate and the House, seeing part 1 of the Closing Loopholes Bill passed by both Houses of Parliament on 7 December 2023. This expedited process allowed little time for detailed debate on these measures.
The remainder of the more contentious provisions in the original Bill will need to be debated in Parliament in early 2024 (post February) - now in the “Closing Loopholes No. 2 Bill”
The Closing Loopholes Bill represents significant reform to the country’s workplace laws. These changes, once implemented, are expected to significantly impact the employment landscape in Australia, with implications for employers, employees and unions.
What do businesses need to know?
Part 1 of the Closing Loopholes Bill has enacted a series of changes to workplace laws that will impact businesses, particularly those engaging labour hire workers and dealing with union activities.
‘Same Job, Same Pay’ rule
Key among these is the 'Same Job, Same Pay' rule, ensuring labour hire workers receive equivalent pay to regular employees, though small businesses with fewer than 15 employees are exempt from this rule.
Enhanced rights for union delegates
Additionally, workplace union delegates have been granted enhanced rights, including paid training leave, though again, smaller businesses are exempt from certain aspects.
New criminal offences
Intentional wage underpayment, often referred to as ‘wage theft’, will become a criminal offence with significant penalties including a maximum 10 year imprisonment and up to a $7.8 million fine. ‘Industrial manslaughter’ will also become a criminal offence, reflecting a tougher stance on workplace health and safety.
Redundancy and insolvency regulations
The government is also tightening regulations around redundancy pay in insolvency situations and allowing more union access to workplaces.
These reforms, effective mostly from the day after royal assent, with some like the wage theft criminalisation commencing by 2025, signal a shift towards greater worker protections and more stringent employer responsibilities. Employers should particularly note these changes, as they could have significant operational impacts, especially in terms of labour hire arrangements and union interactions. Staying informed and preparing for these changes is crucial.
Which provisions of the Closing Loopholes Bill will be made into law?
The provisions of the Closing Loopholes Bill that have now passed are:
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Provision |
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Effect |
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When will it commence |
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Labour hire arrangements (“Same job, same pay”) |
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FWC will have powers to make orders that where a labour hire firm is supplying labour to a host, the workers are paid no less than they would be under the host’s enterprise agreement.
Stops host business being able to avoid paying higher wages negotiated as part of their own enterprise agreement by engaging a labour hire firm (who would not be covered by the host’s enterprise agreement and therefore could pay lower rates under a modern award or their own enterprise agreement).
Exclusions for genuine service contractors, and small businesses (less than 15 employees). |
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Phased in on different dates from day after royal assent. |
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New rights for workplace delegates |
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Workplace delegates are union members who work in a particular business and are appointed to represent workers of that business.
Under the reforms they will have rights to paid union training leave during work hours (although this aspect does not apply to small businesses with less than 15 employees).
Workplace delegates will also be able to represent members and those eligible to join the union in disputes with their employer and must be allowed to have "reasonable communication" with them in relation to their industrial interests.
They must also be given reasonable access to the workplace and facilities.
Considerations:
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Day after royal assent |
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Greater protection for persons subject to family and domestic violence leave |
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This will be included as a protected characteristic under the general protections provisions of the Fair Work Act. Will mean someone cannot be discriminated on the basis of this characteristic. |
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Day after royal assent |
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Largely technical amendments to existing law to address concerns regarding non-compliance by a bargaining representative with an FWC order to attend a compulsory conference in a protected action ballot matter |
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When unions want to take industrial action (eg strikes) they must apply to the FWC for permission to take a “protected ballot” (ie a vote with employees re: going on strike).
The FWC is then required to make an order directing all bargaining representatives for the proposed agreement (eg the union, other employee representatives, the employer, etc) to attend a compulsory conference for the purposes of mediation or conciliation. The conference must occur on or before the day on which voting in the protected action ballot closes. These provisions were intended to provide an opportunity for bargaining parties to further negotiate and potentially reach agreement, or at least confine disputed issues, before industrial action is taken.
As non-attendance at the conference can render subsequent industrial action unprotected (ie unlawful), the new amendments are being made to clarify which representatives must attend (ie only those involved in the application). Without such amendments, industrial action could unwittingly become unprotected just because a bargaining representative not involved in the application failed to attend the conference. |
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Day after royal assent |
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The removal of the small business exemption to statutory redundancy pay in insolvency contexts |
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Businesses with less than 15 employees aren’t required to pay redundancy pay.
Previously, where a larger business downsized to a smaller business in an insolvency, redundancy pay could be avoided. The amendments will remove this anomaly. |
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Day after royal assent |
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Reforms enabling a union official without a Fair Work entry permit to enter workplaces, on request from a Health and Safety Representative to provide assistance. |
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Usually only union representatives with an entry permit issued by the Fair Work Commission are allowed to enter workplaces.
These reforms enable a union official without a Fair Work entry permit to enter workplaces to provide assistance on request from a Health and Safety Representative (ie a worker elected to represent their colleagues in WHS matters), to provide assistance. |
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Day after royal assent |
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Criminalisation of wage theft |
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A criminal offence for intentional underpayment of entitlements and associated compliance powers for FWO will be introduced.
Maximum 10 year imprisonment, $7.8 million fine.
The reforms include “safe harbour” measures where businesses can avoid penalties where they self-report.
The Minister for Employment and Workplace Relations must implement a Voluntary Small Business Wage Compliance Code before provisions commence - this is likely to shield smaller employers from the new sanctions on wage and superannuation theft if they comply with the Code. |
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TBC but not after 1 January 2025 |
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Introduction of criminal offence of Industrial Manslaughter |
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Will operate where there is a death caused by employer’s recklessness, with a maximum prison sentence of 25 years and a fine of up to $18 million. |
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1 July 2024 |
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Workers compensation easier to obtain for first responders (emergency service workers) who suffer PTSD |
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The changes will reverse the onus of proof for first responders who suffer PTSD as a result of their work - prior to this it would be the employee that would have to prove that work was the cause of the condition. Going forward there will be a rebuttable presumption that the PTSD is caused by work. The provisions will cover the Australian Federal Police, ambulance officers, paramedics, emergency services communications operators, firefighters and members of the Australian Border Force. |
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1 January 2024 |
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Amendments to the Asbestos, Safety and Eradication Agency Act 2013(Cth) |
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Greater regulations re: silica dust |
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Various dates |
Additional Government commitments
The Australian Government has also made several other commitments aimed at enhancing worker protections. At this time each of these are still under review or in progress.
Comcare Review
A notable commitment is the Comcare review, a proposed independent assessment to improve outcomes for injured workers in the public sector. This is particularly significant for businesses dealing with Commonwealth employees, as it focuses on workers' compensation.
Funding for the Small Business Advisory Service
Following discussions with Senator Lambie, the government has pledged to boost funding for the small business advisory service within the Fair Work Ombudsman (FWO). This planned funding increase is intended to provide enhanced guidance and resources for small business owners.
New guidelines for independent medical assessments
Moreover, in response to suggestions from Senators Pocock and Lambie, the government has agreed to consider new guidelines for independent medical assessments for workers. This change aims to establish an impartial system for medical evaluations, moving away from assessments by employer-nominated doctors.
What can we expect to see in Part 2 of the Closing Loopholes Bill?
The Australian Government is set to debate part 2 of the Closing Loopholes Bill in early 2024, tackling the following proposed reforms.
Redefining casual and independent contractor statuses
A central focus of these reforms is the redefinition of casual employment and independent contractor statuses. The new criteria will assess an individual's employment status based on their work patterns after engagement, rather than just the terms set at the start. This shift introduces a degree of uncertainty for employers, particularly in distinguishing between casual and permanent employees, as well as between employees and independent contractors.
A significant change would include greater rights for casuals to choose to convert to permanent employment, and the adjustment of the timeframe for casual employees to make this choice (reducing this from 12 months employment to six months employment for most businesses). This move is expected to streamline the transition process but may present challenges for employers in managing their workforce.
Additionally, the reforms propose tougher standards for employers in sham contracting arrangements, requiring a lower threshold of 'unreasonableness' rather than the current 'recklessness' standard, in order to fall foul of the provisions. This change is intended to better protect workers from being incorrectly classified as contractors.
Increasing penalties for breaches of the Fair Work Act
The government is also considering increasing penalties for breaches of the Fair Work Act and expanding the rights and powers of unions, particularly in relation to workplace entries and document inspections. Moreover, the Fair Work Commission's powers in enterprise agreement negotiations and terms determination are likely to be revised.
The ‘Right to Disconnect’
One of the more interesting aspects under discussion is a 'Right to Disconnect' amendment (not yet included in the Bill), which would grant workers the right to disengage from work-related communications outside of work hours.
Conclusion
Overall, these reforms represent a shift towards stronger worker protections and a more regulated employment environment. For employers, understanding and preparing for these changes is crucial, as they could significantly impact how your business might need to manage its workforce and comply with evolving employment laws.
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