A not so long time ago, in a Parliament House not so far away…
The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 has now been passed in two tranches with the various, and not insignificant amendments coming into effect over a nearly two year period from 15 December 2023 to 26 August 2025.
We have outlined the current legal requirements, the key changes introduced by the Bill which employers should be aware of, and what steps you may need to take. It is important that businesses take proactive steps in response to these changes and seek professional advice if they have any queries.
| Amendment | Pre-Loopholes Position | New Position | What do you need to do? | Date of amendment taking effect |
|---|---|---|---|---|
| Labour Hire | Currently, where an enterprise agreement is in place, the employer can undercut that rate by bringing in different workers through labour hire arrangements. | The amendments will allow 'Regulated Labour Hire Arrangements' (RLHAs) to be made on application by any of a number of parties, including employees, unions and host employers. These are effectively a 'same job, same pay' order from the Fair Work Commission. This requires that they are paid at the same rate they would be paid at if they were directly employed by the host. | We encourage employers who engage workers under a labour hire arrangement to be prepared for the fact that any labour hire providers may increase the rates under any commercial agreement to accommodate increased labour costs. Host employers may also be required to issue information on their rates of pay. Labour hire providers should be prepared for increased labour costs and to review commercial terms to ensure that they are able to tolerate the increased cost of doing business. It should be noted that:
| 15 December 2023 but RLHAs won't be effective until 1 November 2024 |
| Sham Arrangements | The current test to establish a sham arrangement is whether a person 'recklessly' made a false or misleading representation regarding an employment arrangement. | An employer will be required to establish that it 'reasonably believed' that the relationship was an independent contracting arrangement. This is a change from the current test of 'did not know and was not reckless.' | It is incumbent on employers to consider and if necessary, seek advice on arrangements with an understanding of what is an employee versus what is an independent contractor (noting that there are 'related' amendments regarding the definition of employment which revert to the previous position of the 'totality of the relationship' prior to the 2022 High Court decisions). | 27 February 2024 |
| Intractable bargaining workplace determinations | Currently, a bargaining representative for a proposed enterprise agreement can apply to the Fair Work Commission for serious breach declarations or bargaining related workplace determinations in relation to an agreement. | New 'intractable bargaining workplace determinations' amendments will require workplace determinations (other than in respect of wage increases and agreed terms) to be equally or more favourable to employees or employee organisations than corresponding terms in existing agreements. | It is fair to expect an influx of Fair Work Commission applications, including for 'stop orders' in relation to the new standards for intractable bargaining workplace determination. Businesses should have a clear strategy on how they intend to bargain with their workers. Consequently, businesses should be commercially prepared to implement compliance measures, undertake various multi-factorial tests and defend potential retaliatory applications. Bargaining strategies should be reviewed and alternative points of leverage considered. | 27 February 2024 |
| Casual Employees | Since 2021 amendments following the Workpac decision of the High Court, casual employees are defined as there being 'no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.' A new NES was introduced at that time in relation to casual conversion and Casual Employment Information Statements. | A new definition of 'casual employee' focusing on the 'true nature, real substance and practical reality' of the employment as well as other new indicia such as requirement to be paid as a casual (e.g. a loading), a new pathway for casual conversion based on employee election rather than employer offers, and new sham contracting provisions (similar to those for independent contractors) where there are misrepresentations regarding casual employment and dismissing employees to engage as casuals. Casual Employment Information Statements will need to be regularly issued to long term casuals (for new casuals at time of commencement, for non-small business employers after six months and then at twelve-month intervals). | Employers must ensure that casuals currently and future are employed on terms which meet the definition. They must also comply with legislative obligations regarding employee requests for casual conversion, and ensure that the Casual Employment Information Statement is issued and then regularly reissued as may be required. There may be an increase in arbitration of casual conversion disputes as the Fair Work Commission has greater discretion in this respect. | 26 August 2024 |
| Definition of 'employer' and 'employee' | The recent landmark High Court decisions of Jamsek and Personnel Contracting ensured that primacy was given to the characterisation of the worker based on any comprehensive written terms in a contract unless an exception, such as contract variation or a sham arrangement, applied. | The definitions of 'employer' and 'employee' will now be based on the "ordinary meaning" of the terms and are to be determined by "ascertaining the real substance, practical reality and true nature of the relationship-overturning (as is made explicit in the Fair Work Act) the decisions of Jamsek and Personnel Contracting. Employers can give workers a right to opt-out of employment classification. | It is recommended that employers review their employment contracts, and agreements with independent contractors, to establish the legal obligations and rights of each party and to ensure subsequent conduct is consistent with the characterisation they intend, having regard to the totality of the relationship. Consider risks and significance of workers opting out (given they can revoke these). | 26 August 2024 or another date by proclamation |
| Gig economy and road transport workers - 'employee-like workers' | The term 'regulated workers' is not currently defined in the Fair Work Act. The standards of pay and conditions for employee-like workers and transport contractors are not outlined, making these workers vulnerable to unfair conditions. | Extra protections are in place for gig economy/digital platform workers, as well the road transport industry. Notable standards that will be enforced include:
| If you:
expect to see more bargaining in these industries as workers are provided minimum standards (including payment terms, deductions and insurance) and protection from unfair termination/deactivation, not dissimilar to existing unfair dismissal protections for employees. | 26 August 2024 or another date by proclamation |
| The 'right to disconnect' | There was no current legislative right. | Employees will have a 'right to disconnect', allowing them to refuse contact or attempted contact from their employer or third parties outside regular working hours, where reasonable. Employees can seek "stop" orders from the Fair Commission in relation to this. The legislation provides that refusal regarding contact may be unreasonable in certain situations. For example if employees are remunerated for such contact and if they are contracted to work reasonable additional hours (above 38 hours per week). | Employers should review contracts and policies and update where necessary to ensure those who may be required to be contacted after hours are aware of and are compensated for this. In all other circumstances, employers will need to determine whether any refusals as they occur are reasonable and they will need to be confident of their position given this will also be a workplace right which may be the subject of general protections applications. | 26 August 2024 unless employer is a small business in which case 26 August 2025 |
| Wage Theft | Wage underpayment is currently not criminalised under the Fair Work Act. While other states such as Queensland and Victoria have criminalised wage theft at a state level, NSW is yet to do so. | Wage underpayment will be a criminal offence, with significant penalties including:
Intent is an element of this offence. | We recommend employers undertake a review or audit of their payroll to ensure that all employees are being paid the correct amount before the amendments come into effect. If an employer has self-reported a possible offence and provided full disclosure based on a genuine mistake, there will be the option of avoiding criminal prosecution by entering into a cooperation agreement with the Fair Work Ombudsman. This will not necessarily avoid the Fair Work Ombudsman seeking civil remedy provisions. | 1 January 2025 |
| Other amendments | Small business redundancy exemption
Strengthening protections against discrimination, including family and domestic violence protections
Criminalisation of industrial manslaughter
New framework for dealing with unfair contract terms of services contracts
Workplace delegates' rights
There are other amendments not set out here including:
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What this means for employers
The impact of the two Bills on businesses will vary depending on what current measures you have in place. Therefore, employers should familiarise themselves with the new requirements and consider any changes required to be made to business operations to ensure compliance. Most changes will have come into effect from 26 August 2024.
This article was written by Thea Price, Partner, Kathryn Dent, Partner, Francesca Musumeci, Senior Associate and Sofia Bryan, Solicitor.
