Government Tables further IR Reforms: Closing Loopholes Bill 2023

OWEN WEBB - AHA | SA WORKPLACE RELATIONS MANAGER

On 7 September 2023 the Federal Government tabled their 3rd tranche of industrial relations reforms through the introduction of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Closing Loopholes Bill). The Closing Loopholes Bill has been referred to the Senate Education and Employment Legislation Committee (Committee) for inquiry and report by 1 February 2024.

The Australian Hotels Association has provided a submission to the Committee Inquiry and will be making further representations to the Committee and Government on the Closing Loopholes Bill.

The Bill proposes amendments across four broad areas:

• Employee and ‘employee-like’ pay and conditions

• Employee entitlements

• Work health and safety reforms

• Changes to existing enterprise agreement arrangements

In this article we look at some of the proposed amendments that would have the most significant impact across the hotel industry if the legislation was passed, with a particular emphasis on the changes being proposed to casual employment.

CASUAL EMPLOYMENT

Casual Definition

Undoubtedly one of the most significant amendments being proposed in the Closing Loopholes Bill for the hotel industry are the changes to the definition of casual employment. The Federal Government is seeking to amend the definition of a casual employee in section 15A of the Fair Work Act 2009 (the Act).

The current definition of a casual employee in section 15A defines a casual according to the terms of the initial offer of employment on the basis that there is no firm advance commitment to continuing and indefinite work. In determining whether there is no firm advance commitment to continuing and indefinite work, a range of factors are taken into consideration, including:

• Whether the employer can elect to offer work and whether the person can elect to accept or reject work

• Whether the person will work as required according to the needs of the employer

• Whether the employment is described as casual employment

• Whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument .

Under the proposed amendment to the casual definition in section 15A the Government is seeking to retain the principle that the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work. However in determining whether the commitment exists, the proposed definition will not only take into consideration what terms were agreed to as part of the initial offer of employment but also focus on ‘the basis of the real substance, practical reality and true nature of the employment relationship’. The absence of a firm advance commitment to continuing and indefinite work will also be determined having regard to:

• the offering of work by the employer and acceptance or rejection of work for the employee;

• the likelihood of future availability of continuing work in that enterprise of the kind usually performed by the employee;

• whether there are full time or part time employees performing the same kind of work as the employee;

• whether there is a regular pattern of work for the employee.

Despite the terms of the contract of employment agreed to between the employee and employer, the definition allows for the fact that a firm advance commitment can be inferred simply because of a mutual understanding or expectation between the employer and employee.

In respect to a regular pattern of work, the pattern of work can still be considered regular even if it is not absolutely uniform and includes some fluctuation or variation over time.

The impact of the proposed change to the casual definition is that the determination of whether an employee is categorised as a casual or not, will no longer come down to what has been agreed to between the employer and employee in the initial offer of employment. The determination will be assessed based on the contractual arrangements and the postemployment behaviour of the employee and employer taking into consideration hours of work, roster patterns and availability of work.

MISREPRESENTATION OF CASUAL EMPLOYMENT

The Closing Loopholes Bill proposes a new section 359A of the Act regarding the misrepresentation of casual employment. Under the proposal an employer “… that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for casual employment under which the individual performs, or would perform, work other than as a casual employee” .

The proposed new section 359A would be a civil remedy provision and therefore penalties could exist against an employer who is found to be misrepresenting casual employment.

Misrepresentation will not occur under the proposed amendments if the employer proves that, when the representation was made, the employer reasonably believed that the contract was a contract for employment as a casual employee.

There are currently no provisions in the proposed new section which refer to misrepresentation brought on by an honest mistake or as a result of an unintentional error. The new provisions also don’t make it clear as to whether or not there is the potential for an employee to make a claim for backpay of wages and entitlements in the event of misrepresentation.

EMPLOYEE CHOICE ABOUT CASUAL EMPLOYMENT

The Closing Loopholes Bill proposes a new section that deals with “employee choice” regarding casual employment.

Under the proposed amendments a casual employee who has been employed for a period of at least 6 months (or 12 months for a small business) would be able to give a written notification to their employer, that based on their working arrangements they believe that they no longer meet the definition of casual employment.

The employer would be required to respond to the employee’s notification within 21 days after the notification, providing a statement about either accepting the notification or not accepting the notification. If the employer accepts the notification, they will need to provide the employee with information regarding changing to full-time or part-time employment, the change to their hours of work and the day the change would take effect from.

The employer would only be able to decline the notification on any of the following grounds:

• The employee still meets the definition of casual employment under the Act;

• Accepting the notification would be impractical because substantial changes would be necessary to the employee’s terms and conditions of employment to ensure that a fair work instrument (i.e. Award, Enterprise Agreement) is not contravened;

• Accepting the notification would result in the employer not complying with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.

If there are disputes in relation to the non-acceptance of the notification or the notification process under the new section and it cannot be resolved at the workplace then the matter can be referred to the Fair Work Commission (FWC).

These proposed ‘employee choice’ amendments would operate in unison with the existing casual conversion provisions.

WAGE THEFT

The Closing Loopholes Bill is seeking to introduce a new criminal offence ‘wage theft’ for instances where an employer deliberately underpays an employee(s) wage(s) and or entitlements.

The new provisions would not apply to superannuation payments or contractual entitlements. They apply to amounts payable under the Act, a Fair Work Instrument (i.e. Award, Enterprise Agreement) or Transitional Instrument.

Under the proposed amendments employers who are found guilty of the offence can be subject to a maximum penalty of 10 years imprisonment and or a maximum fine of the greater of 3 times the amount of the underpayment or for an individual $1,565,000 or for a body corporate $7,825,000.

The amendments propose avenues that an employer could enter into to avoid prosecution if they selfdisclosed their conduct, this includes an option for an employer or person to enter into a ‘cooperation agreement’ with the Fair Work Ombudsman (FWO). Under such an agreement the FWO would not refer the employer to the Director of Public Prosecutions or the Australian Federal Police for action in relation to a possible offence.

‘EMPLOYEE - LIKE” WORKERS

The Closing Loopholes Bill proposes amendments to implement new provisions in the Act to enable the FWC to set minimum standards orders and minimum standard guidelines for workers in ‘employee-like’ forms of work, such as those in the gig economy.

An employee-like worker under the proposed amendments would be a person who is working under a services contract, the work that the person performs under the services contract is digital platform work, they are not an employee under the services contract and they satisfy one or more of the following:

• the person has low bargaining power in negotiations in relation to the services contract under which the work is performed;

• the person receives remuneration at or below the rate of an employee performing comparable work;

• the person has a low degree of authority over the performance of the work

• the person has such other characteristics as are prescribed by the regulations.

An application for a minimum standards order can be made by a digital labour platform, a registered organisation representing digital labour platform workers or businesses or the Minister for Employment and Workplace Relations. The FWC can also set minimum standards of their own motion.

A minimum standards order may include terms about any of the following matters: payment terms, deductions, working time, record keeping, insurance, consultation, representation, delegates’ rights and cost recovery.

A minimum standards order cannot include terms about any of the following matters: overtime rates, rostering arrangements, a term that would change the form of the engagement or status of workers, WHS matters dealt with by a law of the Commonwealth, a State or a Territory .

MEANING OF ‘EMPLOYEE’ AND ‘EMPLOYER’

In response to the High Court decisions in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2, the government in their Closing Loopholes Bill are proposing to amend the Act by determining an ‘employee’ and ‘employer’ based on the “real substance, practical reality and true nature of the relationship between the individual and the person” .

The High Court decisions referred to above confirmed that the interpretation of an independent contractor/ principal relationship versus employee/employer relationship can be determined based on the contractual arrangements entered into by the parties.

The Government’s proposed amendments in the Bill seek to go beyond the terms governing the relationship by looking at the totality of the relationship between the individual and the person and how the contract is performed in practice.

LABOUR HIRE

The Closing Loopholes Bill proposes to make amendments to the Act to enable employees, unions and host employers to apply to the FWC to make a ‘regulated labour hire arrangement order’. Such an order would provide for labour hire employees to be paid at least the same amount that an employee would receive performing the same work under a host employer’s enterprise agreement.

The FWC must only make a regulated labour hire arrangement order where it is fair and reasonable in all of the circumstances to do so.

An order would not apply in the case of an employee working for a host employer under a training arrangement (i.e. apprenticeship, traineeship).

Members who would like any further information in relation to the Closing Loopholes Bill can contact the AHA|SA Workplace Relations team.