The Federal Government's third round of industrial relations reform since it was elected – the Fair Work Act Legislation Amendment (Closing Loopholes Bill) 2023 – passed the House of Representatives late this week. The Bill introduces a series of amendments reflecting, for the most part, Minister for Employment and Workplace Relations Tony Burke's negotiations with employer and industry groups focused on changes dealing with 'employee-like' gig workers, labour hire worker pay, and clarifying the new definition of casual employment.
The Government has also agreed to accept a number of other amendments including changes proposed by the Greens to secure the Bill's passage in the House.
Key amendments – what you need to know
Casual employment
As explained in our earlier update on the Federal Government’s third IR reform package, the Bill's original proposal was to insert a new definition of casual employment into the Fair Work Act 2009 focussed on whether there is an absence of a firm advance commitment to continuing and indefinite work based on the real substance, practical reality and true nature of the employment relationship – not the employment contract terms as currently applies. A firm advance commitment may be found in a 'mutual understanding or expectation' outside of the contract or inferred from the parties' conduct.
The changes agreed to by the Government this week address concerns raised by, among others, the Australian Hotels Association, that employers should be able to offer regular and systematic casual employment to workers who are willing to accept it, including without risk of penalty under the Bill's casual misrepresentation provisions.
These latest changes aim to clarify that the existence of a regular pattern of work does not of itself indicate a firm advance commitment to continuing and indefinite work for the purposes of the new casual employee definition. This means that, if the Bill passes the Senate in its current form, in practice employers will need to assess the true nature of their employees' status (casual or ongoing) by considering the real substance, practical reality and true nature of the employment relationship, not by looking at a single factor in isolation. These changes are proposed to start on 1 July 2024. Organisations who have not already audited their 'casual employment' arrangements should be starting to think now about how these changes may impact their workforce structure and planning.
Labour hire loophole
The Government's proposed 'labour hire loophole' reforms (otherwise known as 'Same Job, Same Pay') seek to address circumstances where employers have negotiated wages for their employees under an enterprise agreement, and then use labour hire to perform the work at lower rates.
As a recap, under the proposed reforms the Fair Work Commission (FWC) will have the power to make a regulated labour hire order requiring a labour hire provider to pay its employees the 'full rate of pay' received by the employees of the host employer who are performing, broadly, the same work.
In this week's amendments, the Government has sought to address industry concerns (particularly from the mining industry) by clarifying that the FWC will not be able to make a regulated labour hire arrangement order which relates to the provision of a service, rather than the supply of labour. To determine this question, the FWC will need to take into account a number of factors outlined in the Bill. The Supplementary Explanatory Memorandum provides the example of where an employer directs, supervises or controls work being performed for the host, that this would weigh in favour of the FWC finding that the arrangement is for the provision of a service rather than the supply of labour.
This week's amendments include a number of other changes related to labour hire (including to provide a general anti-avoidance provision that applies where the employer or regulated host enters into or carries out a scheme for the sole or dominant purpose of avoiding a regulated labour hire arrangement order that is already in force).
Gig economy
The Government has made a number of changes to the Bill's provisions designed to protect 'employee-like' gig workers who perform work, broadly, on a digital platform. The changes have been reportedly welcomed by industry and include, among other changes, amendments to:
- to clarify the matters the FWC must have regard to when performing functions or exercising powers under these reforms;
- amend terms that may be included in an 'employee-like' minimum standards order (ELMSO) that the FWC will have the power to make (e.g. an ELMSO will not be able to include, among other things, penalty rates for work performed at particular times or on particular days); and
- provide circumstances where temporary deactivation from a digital labour platform would not be unfair.
Superannuation theft and intractable bargaining workplace determinations
After striking a deal with the Greens, the Government also included amendments that propose to criminalise superannuation underpayments under the wage theft proposals and make changes to the intractable bargaining laws which allow unions or employers to seek arbitration in the FWC where the parties cannot reach agreement, provided various conditions are satisfied including that the parties have been bargaining for at least nine months. Amongst the changes proposed to the intractable bargaining provisions, is a requirement that any terms imposed by the FWC, dealing with matters at issue in bargaining, cannot result in employees' conditions becoming 'less favourable' than their conditions under an existing enterprise agreement.
Other changes
There are a number of other miscellaneous changes under the Bill including to amend the Fair Work Act 2009 to address concerns that a bargaining representative’s non-compliance with a FWC order to attend a section 448A conference (a new conference introduced under the Government's first Secure Jobs, Better Pay reforms) could render subsequent industrial action unprotected – for both those represented by the non-complying bargaining representative, and for others participating in the action. These changes demonstrate the complexity of Australia's enterprise bargaining regime, made all the more so by these recent reforms.
Where to from here?
2024 promises to be another significant year for IR reform.
The Senate Inquiry into the Bill is due to report on 1 February 2024 after a public hearing in late January with Department of Employment and Workplace Relations officials. The Government was keen to ensure the Inquiry had the amended Bill from the House of Representatives before it, so neither the Senate nor business groups could push for further delays to this latest round of reforms.
We expect that key stakeholders (industry and unions) will now be lobbying Senators in the lead up to the Inquiry. The amendments will not be voted on by the Senate until at least February 2024.
We will be following the passage of the Bill closely. If you would like to discuss the potential impact of these amendments for your business, please contact us.