“Closing Loopholes” Australian Legislation Update – Actions for Employers
Date: August 15, 2024
· In addition to many other changes to Australian employment and industrial relations laws, the Federal Parliament has enacted two significant (and far reaching) “closing loopholes” statutes.
· The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) (1st Closing Loopholes Act) was passed on 14 December 2023.
· The Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 (Cth) (2nd Closing Loopholes Act) was passed on 26 February 2024.
· Whilst most readers will be broadly, or very, familiar with the changes, the purpose of this Legal Update is to provide a consolidating summary of the key changes arising from both Closing Loopholes Acts with the relevant dates on which the various changes are effective from.
ISSUE 1: REGULATED LABOUR HIRE ARRANGEMENT ORDERS
These changes contained in the 1st Closing Loopholes Act amended the Fair Work Act 2009 (Cth) (FW Act) with effect from 15 December 2023.
The Fair Work Commission (FWC) is empowered to make regulated labour hire arrangement orders (Same Job Same Pay Orders) setting out the obligations of employers and regulated hosts covered by those orders.
The main purpose of these changes is to protect against regulated host employers using labour hire workforces to undercut the wages in enterprise agreements which they must pay to their own employees.
Where Same Job Same Pay Orders are made by the FWC “employers that supply labour to a host and are covered by the order [will] generally be required to ensure that employees working as part of the arrangement are paid no less than the rate at which they would be paid under the host employer’s enterprise agreement if they were directly employed (the protected rate of pay). In this way, the orders [will] protect bargained rates in enterprise agreements that host businesses have negotiated with their employees from being undercut by the use of labour hire” (see paragraph 604 of the Revised Explanatory Memorandum to the 1st Closing Loopholes Act).
The first decision on this new issue was handed down by a Full Bench of the FWC on 1 July 2024; Application by the Mining and Energy Union [2024] FWCFB 299. Whilst applications for Same Job Same Pay Orders can now be heard in the FWC, those Orders cannot start to operate from 1 November 2024 (see section 306E(9)(e)(i) FW Act).
Employers that have their own enterprise agreement/s and utilise labour hire workforces should be mindful of the potential application/s for Same Job Same Pay Orders.
ISSUE 2: PROTECTION AGAINST DISCRIMINATION ON GROUND OF FAMILY AND DOMESTIC VIOLENCE
The 1st Closing Loopholes Act also makes a series of changes to the FW Act which expand the grounds of unlawful discrimination to include the new ground of “family and domestic violence”, with effect from 15 December 2023.
The 1st Closing Loopholes Act provides that the Commonwealth’s legislative powers to enact these changes are derived from paragraph 51(xxix) (external affairs power) of the Constitution “as it relates to giving effect to Australia’s obligations under: (a) the ILO Convention (No. 111) concerning Discrimination in respect of Employment and Occupation, done at Geneva on 25 June 1958; and (b) the ILO Convention (No. 190) concerning the elimination of violence and harassment in the world of work, done at Geneva on 21 June 2019” meaning that those instruments may need to be considered in the event of any uncertainty about the scope of these important rights (section 789HC FW Act).
Employers should update their policies and procedures accordingly.
ISSUE 3: INDEPENDENT CONTRACTORS AND SHAM ARRANGEMENTS
The 2nd Closing Loopholes Act amends the law relating to independent contractors and sham arrangements, with effect from 27 February 2024.
Employers must not misrepresent what is, in fact, an employer-employee relationship as an independent contractor relationship. However, changes to section 357 FW Act provide that an employer will not be in breach of this section if when the representation was made, they reasonably believed that the contract was a contract for services. In determining whether that belief was reasonable: “(a) regard must be had to the size and nature of the employer’s enterprise; and (b) regard may be had to any other relevant matters”.
Other important changes have also been made to the laws relating to independent contractors. Please see our previous Legal Update on this topic: NEW AUSTRALIAN FINANCIAL YEAR 2024-2025 AND CHANGES TO THE FAIR WORK ACT 2009 (CTH): ACTIONS FOR EMPLOYERS – Whitehall – Workplace Law (whitehallworkplacelaw.com.au)
Employers should review their practices in relation to the engagement of independent contractors and consider if they are appropriate.
ISSUE 4: WORKPLACE DELEGATES’ RIGHTS
Another change arising from the 1st Closing Loopholes Act is that modern awards and enterprise agreements must now include a term that provides for the exercise of the rights of workplace delegates (Delegates’ Rights Term). These changes also amended the FW Act with effect from 15 December 2023 and made further changes in relation to regulated workers (by the 2nd Closing Loopholes Act) from 1 July 2024.
A workplace delegate is a “person appointed or elected, in accordance with the rules of an employee organisation, to be a delegate or representative (however described)” (section 350C(1) FW Act) “for either or both of the following: (a) members of the organisation who work in a particular enterprise; (b) members of the organisation who perform work for, or that has been arranged or facilitated by, a particular regulated business” (section 350C(1) FW Act as further amended by the 2nd Closing Loopholes Act).
Employers must allow workplace delegates a reasonable level of:
- communication with the members they represent or the employees they are eligible to represent;
- access to the workplace and workplace facilities; and
- access to paid time, during working hours, to attend training (unless the employer is a small business employer).
An employer of a workplace delegate must not: “(a) unreasonably fail or refuse to deal with the workplace delegate; or (b) knowingly or recklessly make a false or misleading representation to the workplace delegate; or (c) unreasonably hinder, obstruct or prevent the exercise of the rights of the workplace delegate under [the FW Act] or a fair work instrument” (section 350A(1) FW Act).
All 155 modern awards now include a Delegates’ Rights Term, effective from 1 July 2024. For example see clause 26A of Miscellaneous Award 2020 [MA000104] | Fair Work Commission (fwc.gov.au)
Employers should review the modern awards which cover their business and familiarise themselves with the new delegates’ rights and employer obligations. (Note that enterprise agreements made on or after 1 July 2024 must also include a delegates’ rights term.)
ISSUE 5: CASUAL EMPLOYMENT
New laws contained in the 2nd Closing Loopholes Act relating to casual employees are effective from 26 August 2024.
Please see our previous Legal Update on this topic: NEW AUSTRALIAN FINANCIAL YEAR 2024-2025 AND CHANGES TO THE FAIR WORK ACT 2009 (CTH): ACTIONS FOR EMPLOYERS – Whitehall – Workplace Law (whitehallworkplacelaw.com.au)
Employers should consider their existing arrangements with casual employees and consider updating their practices and employment contracts for new casual employees.
ISSUE 6: RIGHT TO DISCONNECT
The 2nd Closing Loopholes Act introduces new right to disconnect laws, effective from 26 August 2024 (or from 26 August 2025 for small business employers).
Employees may refuse to monitor, read or respond to contact, or attempted contact, from their employer (or from a third party if it relates to their work) outside of their working hours unless the refusal is unreasonable.
Modern awards must contain a right to disconnect term and there are overarching statutory rights and obligations.
It is clear that the new right to disconnect laws are not intended to prevent all contact with employees outside of their usual working hours. In determining whether it would be unreasonable for an employee to refuse to read or communicate outside of their usual working hours, the following matters will be relevant: “(a) the reason for the contact or attempted contact; (b) how the contact or attempted contact is made and the level of disruption the contact or attempted contact causes the employee; (c) the extent to which the employee is compensated: (i) to remain available to perform work during the period in which the contact or attempted contact is made; or (ii) for working additional hours outside of the employee’s ordinary hours of work; (d) the nature of the employee’s role and the employee’s level of responsibility; (e) the employee’s personal circumstances (including family or caring responsibilities)” (new section 333M FW Act).
Disputes about whether an employee’s refusal is, or is not, reasonable may be referred to the FWC for an order to stop refusing contact or to stop taking certain actions.
The changes to the legislation also make it clear that the statutory right to disconnect is a “workplace right” within the meaning of the general protections provisions in Part 3-1 FW Act. It would be unlawful for an employer to take adverse action against an employee because of a workplace right.
Please see our previous Legal Update on this topic: NEW AUSTRALIAN FINANCIAL YEAR 2024-2025 AND CHANGES TO THE FAIR WORK ACT 2009 (CTH): ACTIONS FOR EMPLOYERS – Whitehall – Workplace Law (whitehallworkplacelaw.com.au)
Employers should consider their existing practices in relation to after-hours working arrangements and consider updating their policies and contracts of employment.
ISSUE 7: REGULATED WORKERS
The 2nd Closing Loopholes Act introduces significant new laws into the FW Act in relation to regulated workers, with effect from 26 August 2024 (subject to potential earlier proclamation).
Regulated workers are employee-like workers who perform digital platform work and regulated road transport contractors. These changes introduce minimum standards for regulated workers and persons in a road transport contractual chain.
Given that these particular laws will apply only to a limited number of clients, please contact us if your business is involved in these industries and requires further information.
ISSUE 8: WAGE THEFT
New laws contained in the 1st Closing Loopholes Act relating to wage theft will commence from the later of 1 January 2025 or the day after the first time the Minister declares a Voluntary Small Business Wage Compliance Code under subsection 327B(1) FW Act.
New section 327A FW Act will mean that an employer will commit an offence if it is required to pay an amount to, on behalf of, or for the benefit of, an employee under the FW Act or award, enterprise agreement or certain other instruments and the employer purposely engages in conduct which results in a failure to pay the required amount to, on behalf of, or for the benefit of, the employee in full on or before the day when the required amount is due for payment.
The Fair Work Ombudsman (FWO) will be able to enter into a cooperation agreement with an employer who may have committed wage theft and in such case, while that agreement remains in place, the FWO must not refer the matter to the Director of Public Prosecutions or the Australian Federal Police for action in relation to a possible offence.
Whilst it is (and always has been) imperative that employers fully understand and comply with their payroll obligations, these new wage theft laws will apply to purposeful avoidance conduct and we do not anticipate them to have any effect on our clients seeking to ensure compliance with their obligations.
CONTACT
Please contact us if your organisation requires assistance with employment law or industrial relations matters.
Whitehall Workplace Law
Level 14, 330 Collins Street, Melbourne, VIC 3000
This publication is for general reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice should always be obtained before taking any action based on this publication. Liability limited by a scheme approved under professional standards legislation.
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