Closing Loopholes

Since forming government in 2022, the Albanese Government has made a significant number of changes to the Fair Work Act 2009 (FW Act) and the regulation of employment in Australia more broadly. While the first and second tranche of amendments to the FW Act focused on secure work, better pay and protecting worker entitlements, the third (and for now final) set of amendments has sought to “close the loopholes”.

In this article we examine the latest set of changes with a particular focus on those which are likely to have an impact on the hospitality industry.

Background

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (CL Bill) was introduced to Parliament on 4 September 2023. This Bill sought to make a number of amendments to the FW Act, some of which were more controversial that others.

On 7 December 2023 the CL Bill was split in two to allow the less controversial changes to be passed before Christmas, with the CL Bill receiving royal assent on 14 December 2023 and becoming the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (CL Act 1).

The Fair Work Legislation Amendment (Closing Loopholes No 2) Bill 2023 contained the more controversial changes (including those to casual employment). This Bill passed on 12 February 2024 after the Government was able to reach agreement with the Greens and Senators David Pocock and Lidia Thorpe on a number of matters. The Bill received royal assent on 26 February 2024 becoming the Fair Work Legislation Amendment (Closing Loopholes 2) Act 2004 (CL Act 2).

The Amendments

The various amendments are summarised below in a chronological order based on the commencement date of the provision. Please note due to the breadth of the changes, only those which may have an impact on the hospitality industry are considered in this article. Amendments related to the road transport industry and gig economy are not included in this article.

Small Business Redundancy Exemption

This amendment formed part of the CL Act 1 and commenced on 15 December 2023.

Under section 121 of the FW Act, a small business employer (being an employer with fewer than 15 employees – see section 23 of the FW Act) is exempt from the need to pay redundancy pay to an employee whose position is made redundant provided the employer is a small business employer immediately before the termination of the relevant employee(s).

The amendment to section 121 of the FW Act in CL Act 1, has sought to address the anomalous situation in which an employer downsizes and becomes a small business employer only because of an insolvency event (that is the employer became bankrupt or was placed into liquidation). In such situations, redundancy pay may now still be applicable even though the employer would be considered a small business employer at the date of termination.

Same Job Same Pay

This amendment formed part of the CL Act 1 and commenced on 15 December 2023.

This amendment, known as the “closing the labour hire loophole” was aimed at addressing issues arising (mainly) in the mining sector but will have an impact across a variety of industries which utilise labour hire workers.

The Fair Work Commission has been given the power to make a regulated labour hire arrangement order if it is satisfied that:

(a) the employer supplies employees, directly or indirectly, to perform work for a regulated host (which includes a constitutional corporation); and

(b) an enterprise agreement (or various other instruments) that applies to the regulated host would apply to the employees if the employees were engaged directly by the regulated host; and

(c) the regulated host is not a small business employer (see section 306E of the FW Act).

The order would require the employer to pay the labour hire worker the same rate of pay as any non-labour hire workers engaged by the employer to perform the same work.

This amendment is unlikely to have a significant impact on the hospitality industry as it does not apply to employers who are covered by and apply a modern award. It will only apply to those employers that apply an enterprise agreement should such employer seek to utilise labour hire employees.

General Protections and Family and Domestic Violence

This amendment formed part of the CL Act 1 and commenced on 15 December 2023.

Section 153(1) of the FW Act was amended to include subjection to family and domestic violence as a protected attribute for the purposes of the general protection’s provisions. An employer must not take adverse action against an employee because they are or may be experiencing family and domestic violence related issues.

Wage Theft

This amendment formed part of the CL Act 1 and will not commence until 1 January 2025 at the earliest.

The new section 327A of the FW Act introduces a new criminal offence of wage theft. This new provision covers intentional conduct by an employer that results in a failure by that employer to pay an amount to an employee that the employer was required to pay under the FW Act, a fair work instrument (for example, modern award) or a transitional instrument. These new provisions are not designed to capture genuine mistakes or unintentional conduct, rather just the most severe underpayment matters.

The offence will carry a penalty which may include a period of imprisonment (for an individual) or substantial fines for a body corporate.

Employers may enter into cooperation agreements with, or self report to, the Fair Work Ombudsman which will provide a safe harbour from prosecution while the agreement is in force.

Casual Employment

These amendments formed part of the CL Act 2 and will commence on 26 August 2024.

Definition of Casual Employee

Since 2021, whether an employee is a casual employee (for the purposes of the definition of casual employee in section 15A of the FW Act) has been determined by focusing on the initial offer of employment, not what the employment relationship may become post engagement. The initial offer of employment must be on the basis that there is no firm advance commitment to continuing and indefinite work.

The amendments seek to change the definition in section 15A of the FW Act somewhat by focusing not only on the absence of a firm advance commitment to ongoing and indefinite work but also the ‘real substance, practical reality and true nature’ of the relationship. There are several factors that may be taken into account in assessing whether there is an absence of a firm advance commitment to ongoing and indefinite work, and importantly for the hospitality industry, whether there is a regular pattern of work does not of itself indicate a firm advance commitment.

Despite the change to the definition, it is important to note that an employee remains as a casual employee until a specific event occurs which has the result of a change to the employee’s employment status (for example, the employee requests to covert from casual to a full or part time employee).

How the new definition will be applied in practice and whether it will have a significant impact will remain to be seen, however it is likely that the only arrangements that will be impacted will be those that were never really a casual from the beginning.

In due course, the AHA|SA will provide further advice and recommendations to members on how casual employment should be managed prior to the commencement of the new definition.

Employee Choice Provisions

In good news for members, the casual conversion provisions in division 4A of Part 2-2 of the FW Act will be repealed and replaced with the employee choice provisions. This amendment will remove some, but not all, of the administrative burden that has been placed on employers.

Under the employee choice provisions the employer will no longer be required to offer to convert an employee’s employment status from casual to full or part time, rather the employee will be able to request such conversion if they believe their employment no longer meets the definition of a casual employee. Such request may only be made after certain time periods have been met, and an employer will be able to refuse the request on reasonable business grounds.

The Fair Work Commission will be able to deal with disputes under this new division.

Despite the changes, employers will still be required to provide casual employees with a Casual Employment Information Statement on commencement and on various anniversary dates of the persons employment.

Right to Disconnect

This amendment formed part of the CL Act 2 and will not commence until 26 August 2024.

This amendment was rushed through at the last minute in order for the Government to gain the support of the Greens to the balance of the changes.

While the amendment has been heavily discussed in the media, whether the amendment will have any significant effect from a practical perspective will remain to be seen.

A new section 333M will be inserted into the FW Act which will provide an employee with a right to “refuse to monitor, read or respond to contact, or attempted contact, from an employer (or a third party) outside the employee’s working hours unless that refusal is unreasonable”.

Section 333M of the FW Act will set out a number of factors that may be taken into account when determining whether the contact or attempted is reasonable such as the reason for the contact, whether the employee is compensated for being available outside their ordinary work hours, the employee’s personnel circumstances and the nature of the employees role and level of responsibility.

The Fair Work Commission will be given the power to deal with right to disconnect disputes.

Other amendments

Further amendments have been made to the definition of employee (to deal with the employee/independent contractor distinction), increase to pecuniary penalties for more serious contraventions and union delegates rights amongst others. Please contact the AHA|SA for further information if required.

Summary

While members need to be aware of the amendments, the majority of the changes are likely to have little impact on the hospitality industry on a day to day basis. The practical reality of how the change to the definition of casual employee and the right to disconnect provisions will impact members will remain to be seen. Members will be provided with more information on the yet to commence provisions in due course. Please contact the Workplace Relations Team for further information in the meantime.

This article contains information that is of a general nature and is for informational purposes only. This article, and its contents, does not constitute legal advice.