Over the past 18-24 months, the Federal Government has introduced wide-ranging changes to remove observed "loopholes" used to undermine wage and working conditions in Australia. The comprehensive program of legislative reform began with the Fair Work (Secure Jobs Better Pay) Act 2022 (Cth), the contents of which are summarised in this article here. Several pieces of legislation have followed since then, including the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) (Closing Loopholes No. 1 Act) and the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) (Closing Loopholes No. 2 Act), which will be collectively referred to as the "Closing Loopholes Legislation".
In a series of articles, we summarise the key changes introduced by the Closing Loopholes Legislation, which makes numerous amendments to the Fair Work Act 2009 (Cth) (FWA). As part of these changes, the Fair Work Commission (FWC) has been granted new functions to oversee a wider range of subject matters and a wider class of persons, including contractors. In this article, we will deal with the changes introduced by the Closing Loopholes No. 1 Act. Our next article deals with the Closing Loopholes No. 2 Act, which received royal assent on 26 February 2024 and largely commenced operation from 26 August 2024.
What are the amendments?
The amendments introduced by the Closing Loopholes No. 1 Act include, but are not limited to:
- Small business redundancy exemption;
- Regulated labour hire arrangement provisions;
- Workplace delegates' rights provisions;
- Protections against discrimination for employees subjected to family and domestic violence;
- A new criminal offence for intentional wage theft.
Many of these amendments commenced in December 2023, with the exception of the intentional wage theft provisions.
Small business redundancy exemption
The Closing Loopholes No. 1 Act has amended the exemption for small business employers from the obligation to provide redundancy pay under the FWA. Previously, a small business employer was exempt entirely from the obligation to make redundancy payments, where an employee is terminated, either, at the employer's initiative, where the role is no longer required, or due to the employer becoming insolvent or bankrupt.
The amendments now mean that a small business employer will no longer be exempt from the obligation to make redundancy payments, if:
- at the time of the employee termination, the employer was bankrupt or in liquidation (other than by way of a members' voluntary winding up); and
- the employer is a small business employer due to the
termination of one or more employees, where those terminations
occurred, either:
- 6 months before the employer became bankrupt or went into liquidation; or
- 6 months before an insolvency practitioner was appointed; or
- due to insolvency 1.
Regulated labour hire arrangement jurisdiction
The Closing Loopholes No. 1 Act introduced Part 2-7A into the FWA, which empowers the FWC to make orders regarding labour hire arrangements. Employees supplied under labour hire arrangements are referred to as "regulated employees" for the purposes of the FWA.
The new Part 2-7A enables the FWC, on application, to make a regulated labour hire arrangement order if it is satisfied that:
i. an employer supplies, or will supply, their employees to a regulated host (other than a small business) to perform work for the benefit of the regulated host or an enterprise carried on by the regulated host; and
ii. a covered employment instrument, such as an enterprise agreement or workplace determination, would apply to the employees if they were to be employed by the regulated host for the same work; and
iii. the regulated host is not a small business employer.
Any of the following people may apply for a regulated labour hire arrangement order:
i. a regulated employee;
ii. an employee of the regulated host;
iii. an employee organisation that is entitled to represent the industrial interests of an employee mentioned in paragraph (i) or (ii);
iv. the regulated host.
Although the FWC has the power to issue regulated labour hire arrangement orders now, they can only come into force from 1 November 2024 onwards.
Once an order is in force, the regulated employees covered by the order must not be paid less than the protected rate of pay, being a rate of pay that would be otherwise payable if the regulated employees had been engaged directly as employees of the regulated host under a covered employment instrument. An employer will be exempt from this requirement in very limited circumstances.
The amendments also empower the FWC to extend, vary, and resolve disputes regarding regulated labour hire arrangement orders, as well as other orders concerning alternative protected rate of pay arrangements.
These amendments allow the FWC to exercise a significant amount of discretion in a category of workplace relationships that is prone to disputation. As of 8 October 2024, the FWC has received 17 applications for regulated labour hire arrangement orders from unions. Of the 17 applications, one has resulted in an order being issued by the FWC, while another has been discontinued by the applicant 2. It has taken about 5 months for the FWC to issue an order in that successful application, which may indicate a lengthy wait ahead for those seeking regulated labour hire arrangement orders.
Workplace delegates' rights and delegates' rights terms
The Closing Loopholes No. 1 Act introduced specific rights and general protections for workplace delegates into the FWA. From 1 July 2024 they must be included in modern awards, enterprise agreements and workplace determinations in the form of a workplace delegates' rights term.
A workplace delegate is a person appointed by an employee organisation to be a delegate or representative for members of the organisation. A workplace delegate has a right to represent the industrial interest of members and is entitled to engage in reasonable communication with those members. To represent those interests, they are also entitled to reasonable access to the workplace or workplace facilities.
An employer must not unreasonably fail to deal with the workplace delegate, or make false or misleading representation, or unreasonably hinder the exercise of the workplace delegate's rights.
A workplace delegates' rights term in an enterprise agreement cannot be less favourable than an equivalent term in one or more modern awards that cover the workplace delegate. A workplace delegates' rights term that is less favourable than the equivalent term, in one or more modern awards, will be taken to have no effect. If this occurs, under the new s 205A of the FWA, the FWC will determine the most favourable of the equivalent terms from the modern awards to be taken as the workplace delegates' rights term in an enterprise agreement.
Protections against discrimination for those subjected to family and domestic violence
The Closing Loopholes No. 1 Act has also introduced new protections against discrimination against employees subjected to family and domestic violence. The protected attribute will be added to the prohibitions of:
i. discriminatory terms in modern awards and enterprise agreements;
ii. an employer taking adverse action on specified discriminatory grounds; and
iii. an employer terminating employment on specified discriminatory grounds.
Additionally, it will now be possible to include provisions in enterprise agreements as special measures to achieve equality for those subjected to family and domestic violence.3
Criminalisation of wage theft
Another change introduced by the Closing Loopholes No. 1 Act is the addition of a new Part 14 to the FWA, which contains provisions criminalising intentional wage theft. No date has been fixed for the wage theft provisions to come into force, but they can only commence on the later of the following dates: 1 January 2025 or on the day after the Voluntary Small Business Wage Compliance Code is first declared by the Minister for Employment and Workplace Relations. However, some wage theft provisions may not commence at all if the Voluntary Small Business Wage Compliance Code is not declared.
The amendments in relation to wage theft have been considered in a previous article which you can read here. These amendments were largely unchanged and passed by the Parliament after lengthy debate, with the addition of a provision clarifying that employers can only be prosecuted for wage theft if the offending conduct, or course of conduct, occurs after the commencement of Part 14.
Further amendments
There are further amendments which commenced on 26 August 2024 under the Closing Loopholes No. 2 Act which you can read about here.
Footnotes
1 FWA, s 121.
2 The details of these applications are published under
the Major Cases section of the FWC's website: https://www.fwc.gov.au/hearings-decisions/major-cases
3 FWA, s 195(4).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
