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Closing Loopholes Bill 2023

Closing Loopholes Bill 2023

Rhonda McFadden and Stephany Dobbelstein

The Albanese Government has recently unveiled the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, which is poised to bring about substantial transformations to employment in Australia and increase employer’s obligations. Some of the key take outs are below:
Underpayment of Wages
Employers who intentionally underpay their employees may face jail time as a penalty. However, it's important to note that these penalties won't be applied to employers who make "honest mistakes." In cases of accidental underpayments, support will be offered to employers who voluntarily report these errors. Additionally, Fair Work will have the discretion to decide not to pursue criminal proceedings, especially if the employer chooses to enter into a 'cooperation agreement' to rectify their mistakes. Furthermore, there is an upcoming increase in the maximum penalties for civil breaches related to underpayment provisions. These increased penalties are set to take effect on 1 January 2024, assuming the bill is passed.
In anticipation of these potential changes, it is advisable for employers to prioritise regular payroll audits and exercise due diligence in maintaining accurate time and record-keeping practices. Please get in touch with us if you would like assistance in conducting wage audit.

Gig Economy and Labour Hire
The upcoming bill introduces significant changes regarding gig worker and labour hire, including the inclusion of a clear definition of an employee and the clarification of what constitutes someone as "employee-like."
To determine this classification, several factors will be considered:

  • Their bargaining power: Do they have limited negotiating power in their work arrangement?
  • Their level of control over their tasks: Do they have minimal autonomy in deciding how they perform their work?
  • Their compensation: Are they receiving lower pay compared to what they would earn as regular employees?
Additionally, gig workers will gain access to a new jurisdiction within the Fair Work Commission (FWC). This jurisdiction allows them to file claims for "unfair deactivation," which is akin to the concept of unfair dismissal. It enables gig workers to contest being banned from a specific platform, such as the UberEats app, if they believe the deactivation occurred without a justifiable reason.
As well as protections for gig workers, certain employers (excluding small businesses) will also no longer be able to introduce labour-hire workers to undercut the wages of those working under an enterprise agreement. Employees, unions and host employers will be able to apply to the FWC for an order that labour hire employees be paid at least the wages outlined in the host employer’s enterprise agreement

Casual Employment
One of the most eagerly anticipated aspects of this bill is the introduction of a new definition for casual employees and the establishment of a structured conversion pathway. The proposed definition seeks to draw a clear line between casual and permanent employment, taking into account various factors, such as:
The absence of a firm advance commitment to ongoing and indefinite work;
  • The mutual ability to offer and accept work; and
  • The likelihood of sustained employment, and comparisons with part-time or full-time positions.
These changes are intended to enhance the transparency of casual employment arrangements.
Nevertheless, it is essential to recognise that these amendments have sparked apprehensions, particularly among employer groups within the business community. The Australian Chamber of Commerce and Industry (ACCI) has expressed concerns that these modifications might increase the complexity of engaging casual employees, especially for small businesses. The shift toward more abstract and wide-ranging definitions could potentially introduce uncertainty into employment relationships, a matter of concern shared by both employers and employees alike.
On a positive note, the bill introduces new avenues to permanent employment and seeks to streamline the resolution of conversion-related disputes, improvements that ACCI acknowledges. They also appreciate the Government's commitment to retaining existing offsetting requirements for back pay. However, ACCI underscores the importance of having unambiguous legislation regarding the prohibition of back pay.
Another influential industry player, the Australian Industry Group (Ai Group), believes that these changes have the potential to profoundly reshape the casual employment landscape in Australia. They express reservations that the proposed definition and conversion measures might introduce uncertainty and risk for employers, potentially discouraging the hiring of casual staff and offering regular work to existing ones. Ai Group asserts that while unions may welcome these changes, they could have adverse effects on businesses and employees.
The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 proclaims significant alterations in casual employment arrangements in Australia. While it aims to bring clarity and enhance conversion pathways, concerns linger within the business community about potential uncertainties and disruptions. We remain vigilant in monitoring the progress of this bill and will provide updates as further details emerge.

More Information
For those affected by these changes, we understand the potential impact on your business, and our team is prepared to offer support throughout this transitional period.