1,125 words, 6 minutes read time.
The Fair Work Legislation Amendment (Closing Loopholes) Bill 2024 (Cth) is a bill that aims to improve the rights and conditions of workers in Australia by closing some of the loopholes that allow employers to undercut minimum standards and exploit workers. The bill was introduced by the Labor government and passed by the parliament with the support of the Greens and some crossbenchers. The bill includes the following key reforms:
- A new definition of casual employee that is based on the offer and acceptance of employment, rather than the actual pattern of work. This will prevent employers from misclassifying permanent employees as casuals and avoid paying them entitlements such as annual leave, sick leave and redundancy pay. The bill also introduces a new employee choice pathway for eligible casual employees to request and obtain permanent employment if they wish to do so, after working for the same employer for at least 12 months and having a regular pattern of work for at least 6 months.
- A new power for the Fair Work Commission (FWC) to make orders protecting bargained wages in enterprise agreements from being undercut by the use of labour hire workers who are paid less than those minimum rates. This is also known as the ‘same job same pay’ principle. The FWC will be able to make such orders if it is satisfied that the use of labour hire workers has a significant adverse impact on the bargaining power of employees covered by the enterprise agreement, or on the quality or safety of the work performed.
- An increase in the maximum penalties for underpayments by amending the civil penalties and serious civil contravention frameworks, and adjusting the threshold for what will constitute a serious contravention. The bill will increase the maximum civil penalty for underpayments from $66,600 to $133,200 for individuals, and from $333,000 to $666,000 for corporations. The bill will also lower the threshold for a serious contravention from ‘deliberate’ to ‘intentional’ conduct, and increase the maximum penalty for a serious contravention from $666,000 to $1,332,000 for individuals, and from $3,330,000 to $6,660,000 for corporations.
- A new criminal offence for wage theft, which applies to intentional conduct that results in an employee being deprived of their entitlements under the Act or a fair work instrument. The bill will make wage theft punishable by up to 10 years imprisonment, or a fine of up to $1,332,000 for individuals, or both; and a fine of up to $6,660,000 for corporations.
- A reversal of the impact of recent High Court decisions narrowing the meaning of employee by defining the meanings of ‘employee’ and ‘employer’ for the purposes of the Act which require a consideration of the ‘real substance, practical reality and true nature’ of the relationship. This will ensure that workers who are in fact employees are not excluded from the protections and benefits of the Act by being labelled as independent contractors, volunteers, interns or other non-employee categories.
- A new power for the FWC to set fair minimum standards for ‘employee-like’ workers, including those working in the gig economy and the road transport industry. The bill will allow individuals and organisations to apply to the FWC for orders for minimum standards in the gig economy, including on pay, penalty rates, superannuation, payment terms, record-keeping, insurance and deactivation. Deactivation is the process of removing a gig economy worker from an app, ending their ability to earn income despite claims workers are ‘independent’ of the platform. The reforms are limited to digital platform workers who have low bargaining power, low authority over their work or receive pay at or below the rates of comparable employees.
- A new power for the FWC to deal with disputes about unfair terms in services contracts to which an independent contractor is a party. The bill will allow independent contractors to apply to the FWC for a review of a services contract if they believe it contains unfair terms, such as terms that are harsh, oppressive, unconscionable, unjust or unreasonable. The FWC will be able to make orders varying, setting aside or declaring void any unfair terms in the contract.
- A new offence of industrial manslaughter in the Work Health and Safety Act 2011 (Cth). The bill will make it an offence for a person conducting a business or undertaking, or an officer of such a person, to engage in conduct that causes the death of a worker, and is negligent about causing the death of the worker. The bill will make industrial manslaughter punishable by up to 20 years imprisonment, or a fine of up to $10,000,000, or both.
The bill is expected to come into effect on 1 July 2024, subject to some transitional and commencement provisions. The bill has been welcomed by unions, workers’ rights advocates and some business groups as a positive step towards creating a fairer and more secure workplace system in Australia. However, the bill has also been criticised by some employer groups, legal experts and opposition parties as being too complex, costly and burdensome for businesses, and potentially creating more uncertainty and litigation in the labour market.
Australian Congress of Trade Unions (ACTU) secretary Sally McManus said the changes were a great win for workers. “Not only will casual and gig workers have more rights, protections, and choices, but all workers can look forward to a better working life.”
The UK and Australia have some similarities in their labour markets, such as a high proportion of service sector jobs, a relatively flexible employment system, and a common law tradition. They also face some common issues, such as the rise of the gig economy, the impact of automation and digitalisation, and the need to balance the interests of workers and employers.
Some of the potential benefits of the Australian reforms include:
- Providing more clarity and certainty for workers and employers about their rights and obligations, especially in relation to casual work, labour hire, and gig work.
- Enhancing the protection and enforcement of workers’ rights, especially for vulnerable and low-paid workers, by increasing the penalties for underpayments and wage theft, and creating a new criminal offence for industrial manslaughter.
- Promoting fair and decent work, by ensuring that workers have access to minimum standards and entitlements, such as annual leave, sick leave, and superannuation, regardless of their employment status or contract type.
- Encouraging a more balanced and productive industrial relations system, by preventing the undercutting of bargained wages, empowering the Fair Work Commission to set fair minimum standards, and allowing independent contractors to challenge unfair terms in their contracts.
Here in the UK we should consider the changes in Australia and the desirability of introducing similar measures here.
By Pat Harrington
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