On 4 September 2023, the Fair Work Legislation Amendment (Closing Loopholes) Bill was introduced to parliament to close loopholes that undermine pay and conditions. In addition, the Bill aims to improve work health and safety laws in the Commonwealth jurisdiction amongst other things.

Let’s take a look at what the key changes this Bill is actually proposing.

Wage Theft

As many of you will know from our previous blog, in Victoria, wage theft is already a crime so this isn’t exactly a new concept. However, this is new at a Federal level.

To recap, “wage theft” is the deliberate and intentional underpayment of wages. Under the proposed Bill, this offence will be considered criminal and attract a maximum penalties of 10 years in prison and fines of up to $7.8 million.

If an employer unintentionally pays or pays the incorrect amount by mistake they will not fall within the definition of wage theft.

Casual Employment

The Bill proposes to amend the definition of ‘casual employment’ to make sure that the entirety of the relationship is considered, instead of just the written contract component. In addition, it also introduces a new right to request casual conversion to permanent employment after 6 months or 12 months for small business employers. If the conversion from casual to permanent employment does occur, the employer will not be liable for any backpay and the casual loading will be dropped and instead the employee will receive paid leave and job security prospectively.

Definition of Employment

It is proposed that an employment relationship will be assessed based on practical reality and the true nature of the relationship which is determined by both the contract and how the relationship works in practice. This involves giving consideration to who has control over how and when the work is performed, how payment is made and whether the worker can delegate to others (amongst other considerations). This change is intended to overcome recent decisions made by the High Court of Australia (which previously found that contract is king!)

Unfair Contract Terms

It’s proposed to introduce a new, cost effective, flexible and informal process to the Fair Work Commission to allow for dispute resolution between contractors and principals about unfair contract terms in service contracts.

This would apply to Contractors that fall below a high income threshold (which is yet to be determined). In determining whether or not a term in the contract is unfair, the Commission would look at;

  • The bargaining power of the parties
  • Whether the contract displays an imbalance between the rights and obligations of each party
  • Whether the contract term in question is reasonably necessary to protect the interest of the parties
  • Whether the contract term in question is harsh, unjust or unreasonable
  • whether the services contract as a whole provides for a total remuneration for performing work that is less than that of comparable employees or independent contractors
  • and any other considerations the Commissioner deems relevant.

As a result, the FWC will have powers to either change the terms of the contract or make part or all of the contract ineffective should they consider it unfair.

Gig Economy

The proposed Bill will give the FWC the ability to set fair minimum standards for ‘employee-like’ workers. This may either be by a mandatory Minimum Standards Order or a non-binding Minimum Standards Guideline.

The definition of ‘employee-like’ worker is someone that works for a digital labour platform and satisfies one or more of the below;

  • Has low bargaining power
  • Low authority over the performance of work
  • Receives remuneration at or below the rate of employees performing comparable work

The minimum standards that the FWC could include things like;

  • Payment terms
  • Deductions
  • Working time; and
  • Insurance

The Commissioner however cannot include terms that would change the form of engagement or status of the workers covered for example overtime rates or rostering arrangement.

Additionally, ‘employee-like’ workers would also have a new ability to apply to the FWC for assistance if they believe they have been unfairly deactivated by a digital platform.

Minimum Standards for the Road Transport Industry

The proposed Bill gives the FWC powers to set minimum standards for the road transport industry. Similarly, to the gig economy above, these could either be in the form of a mandatory Minimum Standards Order or a non-binding Minimum Standards Guideline. These orders or guidelines will be established by an expert panel for the Road Transport Industry, informed by a road transport advisory group and subcommittees.

Additionally, a consent-based collective agreement framework and access to a dispute resolution process for road transport contractors will also be introduced.

Labour Hire Arrangement Orders

The proposal allows employees, unions and host employers to apply to the Commission for an order that labour hire employees must be paid at least the same as they would receive under the host’s enterprise agreement or equivalent public sector determination. The order must be fair and reasonable in the circumstances for the Commission to consider it. This proposed change will not take effect if the employee is working for the host business under a training arrangement or if the host has less than 15 employees (making them a small business employer).

Industrial Manslaughter a Criminal Offence Under Federal Law

Although this is already a criminal offence across a number of states and territories, it is proposed at a federal level with individuals facing up to 25 years in prison and body corporates facing fines of up to $18 million. The intention of these new criminal responsibilities is to ensure appropriate accountability for breaches of work health and safety duties.

Further Protections Against Discrimination, Adverse Action or Harassment

Introduced to further enhance the new entitlement to paid Family and Domestic Violence Leave, the Bill proposes a new framework making it unlawful for employers to take adverse action against an employee (or potential employee) because they have been or are being subject to family and domestic violence. In addition, it will prohibit any terms of enterprise agreements or modern award terms that discriminate again a person on this basis.

Final Take Away

The Bill has only just been introduced and not yet passed (although likely to be), so there is no need for immediate panic or change in your workplace. At this point, it’s a wait and see approach so be sure to keep across the Bill’s progress or keep reading the HR Guru blogs for regular updates!

Written by Madeleine Bray

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