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The Closing Loopholes Bill was split in two parts last December after the first part including laws around the Same Job Same Pay Bill was passed in parliament. Allowing applications to be lodged to the Fair Work Commission (FWC) which ensures labour hire employees are paid an equivalent wage to those directly engaged under a host enterprise agreement (EA).
The second part of the Closing Loopholes Bill has been passed through both Houses of Parliament as of February 2024, but is yet to receive Royal Assent (formal acceptance by the Governor-General).
Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 covers the following, but not limited to:
Definition of employee vs. employer vs. independent contractor
Definition of casual employee and casual conversion
Minimum standards and dispute resolution for employee-like workers performing digital platform work
Minimum standards and dispute resolutions regulated road transport industry
Right of entry for suspected underpayments and increased maximum penalties for underpayments
Right to disconnect outside of work hours
Definition of employee vs. employer vs. Independent Contractor
The new definition of employee and employer will provide clarity to their respective roles and in turn set foundations for protections, rights and entitlements offered, and will be determined by ascertaining the “real substance, practical reality and true nature of the relationship between parties”.
Employers will need to be mindful that once a contract is in place whilst the written terms are important, the behaviour and interactions of both parties will play a crucial role in determining the true nature of the relationship and will influence how the relationship will be legally interpreted e.g. employee or independent contractor. Consequently, this may create uncertainty for businesses when engaging contractors, as they may later be classified as employees.
The potential for misrepresentation claims known as ‘sham contracting’, will mean an employer must demonstrate that it is ‘reasonably believed’ that the engagement was for an independent contractor relationship to avoid heavy fines.
Furthermore, access to dispute resolution will be available to independent contractors below the high-income threshold via the Fair Work Commission in relation to unfair terms in service contracts.
Independent contractors who earn above the high-income threshold (undetermined), will have the right to opt out of the employee/employer definition and will continue to have access to solutions for unfair or harsh contract terms.
Definition of casual employee and casual conversion
Last year we worked on a blog that focused on casual conversion and the proposed amendments to the definition of a ‘casual’ employee. Casual employment will be where:
no firm advance commitment to continuing and indefinite work
the employee is entitled to a casual loading or a specific rate of pay for casuals
Employers will need to consider the employee’s work patterns, the likelihood of ongoing work availability, offering, accepting (or rejecting) work, and whether other part-time or full-time employees complete a similar role.
The pathway to permanent employment will be accessible for employees who have worked for 6 months (or 12 months in a small business) and will be able to request conversion to permanent employment if they believe their working arrangements or work practice no longer meets the definition of a casual. Employers will still be required to offer eligible employees conversion after 12 months.
Minimum standards and dispute resolution for employee-like workers performing digital platform work
Workers in ‘employee-like’ forms of work, including the gig economy are subject to minimum standards, a consent-based collective agreements framework, and access to dispute resolution regarding unfair deactivation from a digital labour platform e.g. Uber, Airbnb.
‘Employee-like’ workers are characterised by:
Low bargaining power
Low authority over the performance of work
Receives remuneration at or below the rate of employees performing comparable work.
Employers need to be aware of the distinction between ‘employee-like’ workers and independent contractors. Misalignment is common and could potentially raise questions regarding their classification and entitlements, highlighting the importance for employers to remain informed on the new law and uphold fair treatment to all.
Minimum standards and dispute resolutions regulated road transport industry
Workers in the road transport industry are subject to new minimum standards, a consent-based collective agreements framework and access to dispute resolution for road transport contractors that have been unfairly terminated. Standards may include terms about payment, deductions, working time and insurance. The Fair Work Commission cannot include terms that would change the form of engagement or how they are hired/treated. The new ‘unfair termination’ dispute resolution process will be available for road transport contractors who have worked for a road transport business for at least 12 months.
Right of entry for suspected underpayments and increased maximum penalties for underpayments
Unions currently give an employer at least 24 hour notice that they wish to enter a worksite. The new law will allow unions to go to the Fair Work Commission for an ‘exemption certificate’ which will waive the current process if it concerns the underpayment of wages or other monetary entitlements. Employers need to assess existing procedures to ensure they align with the new amendments.
Right to disconnect outside of work hours
The amendments will introduce a new law allowing employees to refuse to answer or monitor unreasonable work calls and emails in their unpaid personal time from an employer or third party. Employees will be able to raise a complaint via the Fair Work Commission, in which organisations can face hefty fines if found responsible. It is encouraged that employers set clear expectations to mitigate misunderstandings.
In conclusion, the industrial reforms that lie within the Fair Work Legislation (Closing Loopholes No.2) Bill presents a crucial opportunity for employers to understand and comply with the new updates. By staying up to date and proactive, organisations can adapt to these changes effectively and foster a culture of compliance and fairness in the workplace.
For more information about these changes, please visit the Parliament of Australia website.
If you found this blog post useful and want to stay updated with what is going on in your market, please email us at sirius@siriuspeople.com.au
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