The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, introduced into the Federal Parliament by the Albanese Labor Government on 4 September 2023, is poised to usher in a new era for the Australian employment landscape.
If passed, these proposed amendments to the Fair Work Act 2009 will significantly impact on the employment landscape by introducing a raft of changes that will affect many businesses across the nation.
Key Proposed Changes
Strict Penalties for Intentional Underpayment
The Bill is firm in its approach to penalising intentional underpayment of employees. “Intentional” underpayments relate to businesses that consciously seek to underpay their employees. By contrast, an underpayment will be treated as inadvertent in instances defined as “accidental, inadvertent, or based on a genuine mistake”.
Individual employers found guilty of intentionally underpaying their employees could face up to 10 years in jail or fines reaching $1,565,000. Corporations, on the other hand, could face fines of up to $7,825,000 or three times the underpaid amount. If implemented, these provisions would introduce a criminal penalty for intentional wage theft.
Equal Pay for Labour Hire Firm Employees
In a bid to establish wage and condition parity, the Bill will allow for labour hire employees to be paid no less than what they would receive if they were directly employed by the host business. Under the proposal, employees, unions, and host employers can apply to the Fair Work Commission for an order (known as a RLHO or regulated labour hire arrangement order) that would require labour hire employees to be paid at least what they would receive under a host’s enterprise agreement.
Redefining Casual Employment
The Bill seeks to amend the definition of a “casual employee”. While the Bill will continue to apply the requirement that a casual employee is a worker who has no firm advance commitment to continuing and indefinite work, consideration would now need to be given to the ‘real substance’ and ‘practical reality’ of the employment relationship. This means that consideration would need to be given to the totality of the employment relationship - not just the terms of their employment contract.
When determining if there is “no firm advance commitment” to continuing work, consideration will need to be given to:
- the ability and actual practice of offering and accepting work;
- whether continuing work is reasonably likely given the nature of the business;
- whether part-time or full-time employees are undertaking similar roles; and
- whether the employee has a regular pattern of work.
In addition, casual employees who have worked for 6 months (or 12 months in a small business) will be able to notify their employers if they believe that their employment arrangement no longer meets the definition of a “casual” employee. Consequently, an employer will be required to consider the casual employee’s employment status and whether this should be converted to permanent employment.
This “employee choice pathway” would apply in addition to the existing casual conversion provision that applies after completing 12 months of service.
Further, the Casual Employment Information Statement (which employers are required to provide to new casual employees at the commencement of their employment) will be updated, and employers will now be required to provide the Statement again to casual employees after 12 months of employment.
Preparing your Business for the Change
Whilst it is unclear whether the Bill will be passed by Parliament, our Workplace Relations team advise businesses to prepare for the impact of these potential changes by:
- Integrating robust payroll systems to ensure accurate and timely employee payment.
- Educating management and HR on the legal ramifications of an underpayment claim.
- Maintaining detailed records to mitigate a potential underpayment.
- Developing transparent communication channels for employees to report pay discrepancies.
- Regularly reviewing and update pay records and employment policies.
- Enhancing employee engagement and union relations (where necessary) to mitigate underpayment and unequal pay issues.
Anecdotally, there appears to be a rising apprehension concerning the future efficiency and sustainability of Australian businesses. Some companies have stated that they are contemplating offshoring as a strategy to preserve their competitive edge. The Bill is facing staunch opposition from various industry stakeholders, criticising its potential impact on Australian businesses.
If the Bill become law, businesses will need to undertake a review of not only their wages and conditions of their workplace but assess the critical impact of changes in casual employment may impact their operations.
Bayside Group’s Workplace Relations team is dedicated to assisting businesses to be better informed and ready to address the impact of these changes. Our Employment and Workforce Management Solutions program can assist businesses in developing workplace policies, training, wage theft auditing, workplace relations advice, workplace expertise secondment plus outsourced payroll.
For further information, please contact Nick Wakeling, Workplace Relations Manager on 03 9864 6000.
Keep an eye on this space as we continue to provide updates and insights to navigate these unprecedented changes, ensuring that your business not only complies but thrives in the evolving employment landscape.
