Closing Loopholes: Guide to Regulatory Changes and Compliance in 2024

Key takeaways

• The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 passed both houses of the Australian government on 12 February 2024. The Bill awaits royal assent, and the new laws are expected to commence in mid-2024.
• Closing Loopholes introduces new worker rights and protections in Australia, including an objective definition of casual employment, the "same job, same pay" principle for labour hire workers, and stronger protections against discrimination.
• Significant reforms include the introduction of a multi-factorial test for employment status, the right to disconnect, the criminalisation of intentional wage theft, and an industrial manslaughter offence for negligent or reckless conduct leading to a worker's death.
• The Act also implements greater protections and standards for gig and road transport workers, revises casual employment definitions to reflect the true nature of work relationships, and creates Regulated Labour Hire Arrangement Orders to ensure fair pay and conditions.

Understanding the Fair Work Legislation Amendment (Closing Loopholes) Act 2023

The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 will align Australia’s workplace laws with the evolving nature of work, characterised by the gig economy, shifting employment contracts, and the influence of digital connectivity. The Act introduces new rights and protections, implements restrictions on work forms, and imposes new compliance obligations. The key goals of the Act include addressing casual employment definitions, preventing wage theft, and strengthening labour hire arrangements.

The Act provides the following key provisions:

• a more objective definition of casual employment
• a multi-factorial test for employment status
• prevention of undercutting of enterprise agreement wages by labour hire workers
• fortified protection against workplace discrimination, particularly for those affected by family and domestic violence
• pathways for casual workers to transition to permanent roles.

Download the snapshot of changes from the Fair Work Ombudsman here.

Return to multi-factorial test in determining contractor vs employee distinction

The Act seeks to identify the nature of an employment relationship through the reintroduction of a multi-factorial test. This test uses a structured approach, considering a range of factors, including the worker's level of control, provision of tools and equipment, as well as uniform requirements.

Empowering labour hire workers with equal pay rights

A significant change introduced by the Fair Work Act is the enforcement of the "same job, same pay" principle, ensuring labour hire workers and those in permanent employment are not paid less than direct employees for identical work. This principle is a crucial step towards establishing fair compensation practices in all sectors.

The Act empowers the Fair Work Commission to consider applications concerning equal pay rights for labour hire workers, thus promoting pay parity. From 15 December 2023, regulated labour hire arrangement orders requiring equal pay for labour hire workers can be sought, underlining the Act's proactive approach to pay parity.

Furthermore, the changes allow employees, unions, and host employers to apply to the Commission for an order stipulating that labour hire employees must receive at least the same remuneration as they would under a host's enterprise agreement.

Introducing the right to disconnect

In today's digital era, avoiding work-related communications outside office hours is challenging. Recognising the importance of work-life balance, the Act introduces the new right to disconnect for employees. This right allows employees to refuse to monitor, read, or respond to work communications, such as calls or emails, outside of their paid hours unless such refusal is deemed unreasonable.

To ensure this right is well understood and properly implemented, the Fair Work Commission is tasked with preparing and issuing written guidelines defining the operation of the Right to Disconnect. This measure ensures clarity for both employers and employees, striking a balance between work demands and personal life.

Proposed laws to criminalise wage theft

Ensuring fair compensation for employees is a fundamental aspect of employment law. The Act introduces a new criminal offence for intentional wage theft, setting the stage for stricter penalties for employers who fail to honour their wage obligations.

Under the proposal, the federal government introduced mandates that prosecutions can only be initiated by the Commonwealth Director of Public Prosecutions (CDPP) or the Australian Federal Police (AFP), with a stipulated 6-year limitation period for commencing any prosecution. The offence would be committed if an employer fails to pay wages or provide owed benefits to an employee due to deliberate conduct.

Introduction of industrial manslaughter offence and increased workplace penalties

Employers bear the responsibility of guaranteeing a safe workplace environment. The Act takes a firm stance on this by proposing an industrial manslaughter offence. This offence applies to persons conducting a business or undertaking (PCBUs) whose negligent conduct or recklessness results in the death of an individual.

The offence requires a demonstration of intentional engagement in conduct that breaches their duty under the WHS Act and results in the death of an individual. This measure underscores the seriousness with which the Act views workplace safety and the importance of adhering to safety obligations.

Enhanced support for employees affected by family and domestic violence

The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 significantly strengthens the protections for employees affected by family and domestic violence (FDV). In a shift towards more compassionate workplace regulations, the Act introduces crucial amendments to the Fair Work Act (FW Act) that address the needs of employees facing such challenges.

Previously, the status of being affected by FDV was not recognised as a protected attribute under the FW Act or federal anti-discrimination laws. However, it received protection under certain State and Territory laws. Recognising the importance of supporting all employees, the Act now makes the following pivotal changes:

• It officially recognises "being subject to FDV" as a protected attribute under the FW Act.
• It explicitly prohibits employers from taking adverse action against an employee or potential employee based on their experience of FDV.
• It forbids the inclusion of terms in enterprise agreements and modern awards that could discriminate against employees for reasons related to FDV.

These amendments mark a significant step forward in ensuring that workplaces are supportive environments for employees navigating the challenges of family and domestic violence, reinforcing the commitment to fairness and compassion in Australian labour laws.

Overhaul of gig worker rights

With the rise of the gig economy, there is an increased emphasis on protections for gig workers. The Act, proposed by the employment legislation committee, includes proposed amendments to enhance terms and conditions for "employee-like workers". The key amendments feature:

• new definitions of "employee-like worker" and "digital platform operator"
• enhanced powers for the Fair Work Commission to establish minimum standards
• protections against "unfair deactivation"
• an introduction of consent-based collective agreements.

These changes aim to provide a more level playing field for gig workers, ensuring they receive fair and equitable treatment.

Workplace delegates: enhanced rights and protections

Workplace delegates, including union officials, play a role in advocating for workers' rights. The Act introduces statutory workplace rights to support the role of workplace delegates in representing workers and fostering positive workplace relations while addressing intractable bargaining workplace determination challenges.

In an effort to protect workplace delegates from unfair treatment, the Act proposes certain protections such as:

• Safeguarding against employer behaviours like unreasonably failing to engage with them
• Providing false or misleading representations
• Obstructing the delegate's rights
• Reasonable access to paid time during working hours for training.

Protections for road transport contractors

The Act proposes significant protections for independent contractors in the road transport sector in Australia, encompassing areas such as:

• Payment terms
• Working hours
• Insurance
• Safety standards
• Dispute resolution

These protections are important for ensuring fair and safe working conditions in the road transport industry. They also include provisions for:

• Consent-based collective agreements
• Addressing unfair terminations of service contracts
• Disputing unfair contract terms
• Extending rights and protections for workplace delegates.

Changes to casual employment provisions

Casual employment constitutes a considerable segment of Australia's workforce. The Act proposes to revamp the definition of "casual employee", focusing on assessing the "real substance," "practical reality," and "true nature" of the employment relationship.

Under the new definition, an employee will be classified as a casual employee only if there is an absence of a firm advance commitment to continuing and indefinite work and if the employee is entitled to a casual loading or rate of pay under a fair work instrument or contract. This new definition aims to provide greater clarity and fairness in casual employment arrangements.

Closing the labour hire loophole

Labour hire arrangements have long been a prominent aspect of Australia's employment landscape. However, certain loopholes within these arrangements have been exploited, resulting in adverse effects on workers.

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 proposes significant structural changes to the Fair Work Act 2009 (Cth) regarding the regulation of third-party workforce arrangements. This includes addressing what has been dubbed as "closing the labour-hire loophole," which aligns with the Federal Government's broader "Same Job, Same Pay" reforms aimed at ensuring equitable pay for workers performing similar tasks.

One of the key measures introduced by the Act is the establishment of Regulated Labour Hire Arrangement Orders (RLHAOs). These orders are designed to govern worker pay arrangements between employers supplying employees and the "regulated host" – the entity procuring the workforce. RLHAOs aim to ensure fair and consistent pay rates and conditions for covered workers.

It's important to note that RLHAOs may come into effect after 1 November 2024, and there are exclusions and exemptions that warrant further exploration. These provisions seek to rectify existing loopholes, enhance worker protections, and promote fair and equitable labour practices within the labour hire sector.

Keeping Australian employers informed

It's imperative for Australian employers to stay updated on legislative changes. The Fair Work Ombudsman's website features a dedicated Closing Loopholes webpage where employers can find comprehensive information on the changes.

To aid this, the Fair Work Infoline and an interpreter service provide free advice and assistance to employers and employees on employment and workplace relations rights and obligations. Employers and employees are advised to proactively educate themselves on the new Closing Loopholes workplace laws to ensure full compliance.

Strategies for adapting to legislative changes

With the introduction of stricter industrial manslaughter laws, the urgency for workplaces to adapt to legislative changes has never been greater. Ensuring the safety of employees must be a paramount concern for all businesses. One vital strategy in this endeavour is the implementation of secure, anonymous reporting channels. Tools like Elker offer a lifeline for the early detection of workplace issues, including safety violations, sexual harassment, financial crime, bullying, and serious workplace misconduct, which cannot only improve working conditions but potentially save lives.

Although not explicitly a matter of compliance, the use of anonymous reporting tools like Elker can significantly protect your business's bottom line and reputation. By empowering workers to speak up about vital issues related to safety and security without fear of reprisal, businesses can address potential risks proactively. This approach not only aligns with the spirit of the new legislative changes but also fosters a culture of transparency and accountability within the workplace.