On Monday, 4 September 2023, the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 was introduced by the federal government. This Bill introduces a series of further reforms to better protect workers in Australia; and there are some big-ticket items for private practices to be aware of. This blog explores key reforms discussed during our recent HIES member only HR Scope.

Wage Theft

Wage theft is a serious issue that affects around 3 million workers in Australia, with employers underpaying wages by around $5 billion. In the last few years there have been several high-profile cases of wage theft (think Woolworths, 7-11) and the Closing Loopholes Bill is another piece of legislation that is designed to combat this issue.

The proposed amendments would introduce a new federal criminal offence of ‘wage theft’, with significant maximum penalties. Critically, an employer would only be guilty of the offence if they are deliberately engaging in conduct (or the inaction) to pay people correctly. A guilty finding may result in Directors, officers and decision makers within the business facing criminal charges including a maximum of 10 years in jail or significant fines costing the company millions and millions of dollars. These penalties will only apply if an employer is aware (has intent) of the underpayments and chooses not to do anything about it, but these penalties will not apply if they are honest mistakes.

Casual Employees & Conversion

We have seen various updates on the definition of a casual and when casual conversion is applicable for employees depending on whether they employed by a small or large business.

In 2021, the former Coalition Government included a definition of ‘casual employee’ in the Fair Work Act, which provides that whether a person is a casual employee is to be assessed on the basis of the offer of employment and not on any subsequent conduct of the employer and employee. The Closing Loopholes proposed legislation however would replace the definition of ‘casual employee’ with a new definition based on ‘the real substance, practical reality and true nature of the employment relationship’. This means that what the employer and employee do in practice would be relevant to determining whether an employee is a casual employee – essentially returning us to casual employment principles that existed prior to the Rossato v Watpac case.

Closing Loopholes Bill also introduces:

  • A new ’employee choice’ process whereby a casual employee could notify their employer that they believe they no longer meet the requirements of the new definition of casual employee. This is in addition to the existing processes for employers to offer, and employees to request, conversion from casual employment to permanent employment.
  • Obligations on the employer to offer casual conversion within the first six months of employment for large businesses making it easier for employees to move to a permanent position with relevant entitlements.
  • A requirement to provide a Casual Employment Information Statement to casual employees after 12 months of employment, in addition to when the employment commences.

If passed, the new and amended provisions regarding casual employees would take effect from 1 July 2024. As such, private practices should review their:

  • existing casual arrangements to assess the risk the employees are permanent.
  • casual employment contracts
  • processes for determining whether an employee can be engaged as a casual
  • casual conversion processes.

Access to Redundancy when business becomes insolvent/bankrupt

Closing Loopholes proposed legislation will address an anomaly which causes some employees of employers – that are bankrupt or in liquidation – to miss out on a NES entitlement to redundancy pay which would have otherwise been payable at the end of their employment. This means, businesses that downsize due to insolvency / bankruptcy and become a small business as a result cannot rely on the small business redundancy exemption and will be required to pay eligible employees redundancy pay.

 Industrial Manslaughter to be Criminalised

The government is concerned about the sheer amount of workplace deaths occurring and they hold the belief that this number should be zero. A Federal approach is now being considered as part of the Closing Loopholes legislation for industrial manslaughter to be a criminal offence under Commonwealth work health and safety laws. As a result, businesses could face up to $18 million in fines if they are found to be reckless or negligent and individual(s) responsible can also face up to 25 years in jail for their involvement in a workplace death.

For more information about the Closing Loopholes Bill, or HR in Health support you might need, please fill in our contact form.