Swings, roundabouts and loopholes – more amendments to the Fair Work Act

On 4 September 2023, the Federal Government introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill), its third tranche of Industrial Relations reform in the last 12 months following the passing of the Secure Jobs, Better Pay and the Same Job, Same Pay amendments to the Fair Work Act 2009 (Cth) (Act).

While it was initially anticipated that this Bill would be passed by Parliament before the end of 2023, the Bill will now not be considered by parliament until after 1 February 2024 due to a senate inquiry. This delay will be welcome news to businesses that are already inundated with significant additional workplace regulations and change.

We set out below a summary of the main proposed amendments to the Act. However, we anticipate significant change ahead of the amendments being passed by parliament. Gadens will provide updates in due course.

Casual Employment

It is proposed that the existing definition of casual employee in the Act will be amended to implement a legislative checklist definition for casual employee. This is largely a multi-factorial test (taking many businesses back to how the test was for employees prior to the recent High Court decision in ZG Operations v Jamsek (Jamsek). In this respect, employers that have a largely casual employee workforce may be significantly impacted by this change as they may need to review their business practices and engagement methodology with regard to casual employees. Further opportunities for casual conversion to permanent employment are also proposed.

Further, amendments propose to update the Casual Employment Information Statement to be provided employees again after 12 months of casual employment.

Definition of employment

Further in response to Jamsek, the Federal Government has legislated to undermine the High Court’s decision (even stating in a note in the Bill that the intention of the amendment is a response to Jamsek and associated decisions).

This will take us back to being required to analyse the totality of the employment relationship. Businesses engaging independent contractors should be mindful of their engagement practices should these amendments be passed.

Small business redundancy exemption

In circumstances where a business has downsized to fewer than 15 employees due to insolvency-like events, the remaining employees will still be entitled to redundancy pay in circumstance where the business becomes bankrupt or is in liquidation. That is, the small business redundancy exemption will not apply in those circumstances.

Labour hire changes

New provisions will allow employees and employee organisations (unions) to apply to the Fair Work Commission (FWC) for a regulated labour hire arrangement order.

This will require a labour hire provider to pay their employees no less than what they would be entitled to be paid under a relevant host business’ enterprise agreement (or other employment instrument) if the employee were directly employed by the host. There will be limited exemptions to these provisions. We expect to see changes in the proposed amendments in this space.

Sham arrangements

Amendments are proposed to the sham-contracting provisions (that is, where a worker is engaged as an independent contractor when the worker would more appropriately be engaged as an employee) to make it more difficult for employers to defend such claims.

Wage theft

While wage theft has been introduced in some states, the Federal Government proposes to introduce a new federal criminal offence for wage theft, which applies to intentional conduct on behalf of the employers.

The offence of wage theft will carry a maximum of 10 years’ imprisonment, and/or a maximum fine of the greater of up to three times the amount of the underpayment or for an individual, $1,565,000 and for a body corporate, $7,825,000.

To assist with this change, the following is also proposed:

• Registered organisation will be able to obtain an exemption certificate from the FWC to waive the 24 hours’ notice requirement for entry if they reasonably suspect a member of their organisation has been or is being underpaid.
• Clarifying that Fair Work Ombudsman compliance notices can require an employer to calculate the amount of an underpayment that is owed to an employee, and that a court can order the recipient of the notice to comply with its terms.

Provisions relating to the gig-economy

One of the most controversial proposals is the introduction of provisions within the Act that will apply to gig-economy workers.

It is proposed the FWC will be empowered to:

• set fair minimum standards for ‘employee-like’ workers, including in the gig-economy;
• to set fair minimum standards to ensure the Road Transport Industry (aimed at improving the conditions of rideshare and delivery workers); and
• to deal with disputes about unfair terms in services contracts to which an independent contractor is a party (such a dispute may be in relation to a workers account be deactivated).

This is a significant shift in approach to these workers. However, the ramifications of this change is difficult to foresee, particularly in circumstances where the Bill is likely to change further.

Additional amendments

The Bill also includes the additional amendments:

We have not included the work health and safety amendments in this article. However, will do so separately.

We will be closely following the Bill as it is reviewed by the Senate Committee and when it is debated in Federal Parliament in 2024.

Please reach out to our team if you have any questions or concerns about how this proposed legislation may impact your business and we would be happy to assist.

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Authored by:

George Haros, Partner
William Marshall, Senior Associate
Lauren Chappill, Lawyer