The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 to amend the Fair Work Act 2009, was introduced to parliament on 4th September for debate. The bill introduces sweeping changes across the Fair Work Act, which if the bill passes, may have significant changes to the current employment relations landscape. This article will summarise some of the many proposed changes.
Casual employment
The bill introduces a new definition of casual employee, which is that the employment relationship lacks a ‘firm commitment’ to continual work on an indefinite basis and the employee is to be paid a casual loading regardless of the instrument covering or not covering the employee.
Criteria for assessing whether an employee meets this new definition includes the ‘substance, practical reality and true nature” of the employment relationship over time. Effectively the new definition is a substantial reversal from the recent Rossato decision by the High Court, which ruled that written contractual terms define the employment relationship and not the interaction between the parties during the operation of the contract.
Another reversal is the process of casual conversion. Presently, the Act places the responsibility of initiating the process to convert a casual employee to a permanent employee on the employer. The amendment gives right to the casual employee to initiate converting to a permanent employee after 6 months in medium-large enterprises and 12 months in small enterprises.
Minimum standards for ‘employee-like’ workers
Some contractors in the so-called ‘gig-economy’ supposedly are engaged more like employees. ‘Employee-like’ contractors according to the bill, have low-bargaining power, low authority over the performance of work and are remunerated at a rate less than employees performing similar work.
In circumstances the Fair Work Commission is believes it is reasonable to do so, it may set enforceable minimum standards for ‘employee-like’ employees performing work for an employer via a digital platform. ‘Reasonable to do so,’ is not yet defined. Minimum enforceable standards include payment terms, hours of work, deductions, dispute resolution, record keeping, insurance, cost recovery and more. ‘Unfair deactivation’ dispute resolution processes, which are effectively quasi-unfair dismissal provisions, will also be introduced in the bill. Employee-like contractors who believe they have been unfairly deactivated from their digital platform, can access this process to negotiate reactivation with the principal, or the commission will order their reactivation if the reason for deactivation is found to be unreasonable.
Elsewhere commentators have speculated these provisions extend to road transport workers as well as digital platform workers.
Labour-hire employees
Some commentators have suggested the bill will introduce labour-hire harmonisation provisions. Employees and their union representatives will be able to seek orders for pay parity across enterprises that engage labour-hire employees. Effectively, labour-hire employees will be entitled to be paid what they would receive under the agreement of the enterprise they provide work for. Host enterprises would be required under the order to provide the labour hire agency the necessary information to match the host enterprises wages. Small businesses and labour hire engaged for training arrangements are exempted from the harmonisation provisions.
Wages and entitlements
A suite of provisions is included in the bill that intends to criminalise all forms of ‘wage theft.’ Essentially, employers found to be intentionally underpaying employees their legislative (but not contractual) wages and entitlements may now be criminally prosecuted. An employer found likely to have deliberately underpaid their employees by the Ombudsman, will be referred to Australian Federal Police or the Commonwealth Director of Public Prosecutions, to commence criminal prosecutions if appropriate. Employers found guilty face up to 10 years imprisonment and the greater of 3 times the value of the underpayment or up to $1,565,000 for the individual, or $7,825,000 for body corporates.
In lockstep with these changes, is the threshold for what constitutes a serious contravention of the Act, in relation to the underpaying wages, has been lowered. A serious contravention will change from one that is done ‘knowingly and systematically,’ will change to one that is done either ‘knowingly or recklessly.’ Therefore, a broader range of offences may now meet the threshold serious enough to warrant referral for prosecution.
Lastly, the defence for sham contracting will be changed from ‘knowingly and recklessly’ to reasonably believed’ that the contract entered by the employer was a contract for services rather than employment. Once again, the threshold has been lowered to capture more employers who may be sham contracting, than as would be possible under the previous defence. To date it has been relatively easy for employers to demonstrate they did not ‘Knowingly and recklessly’ engage in contracting, thereby letting them off the hook. Simply ‘not knowing,’ or an ‘error,’ may no longer be a valid excuse to avoid culpability for sham contracting.
Further updates on this legislation will be available as more details come to light and once it has been passed by parliament.
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