October 2023 – Fair Work Legislation Amendment

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 was introduced on the 4th of September 2023 by the Minister for Employment and Workplace Relations. The Bill is said to improve the workplace relations framework by:
  • Improving job security by replacing the existing definition of ‘casual employee’ with a fair and objective definition and by introducing a new employee choice pathway for eligible employees to change to permanent employment if they wish to do so.
  • Addressing anomalous consequences of the small business redundancy exemption in insolvency contexts by providing an exception to its operation when a larger business downsizes to become a smaller business employer due to insolvency.
  • Making targeted amendments to the bargaining framework by:
    • Enabling multiple franchisees to access the single-enterprise stream;
    • Allowing supported bargaining and single interest employer agreements to be replaced by single-enterprise agreements at any time if certain conditions are met;
    • Authorising the Fair Work Commission (FWC) to make and vary enterprise agreement model terms for flexibility, consultation and dispute resolution in place of the existing provisions according to which these terms are made by regulation.
  • Protecting bargained wages in enterprise agreements from being undercut by the use of labour hire workers who are paid less than those minimum rates.
  • Supporting workplace delegates by providing a framework for delegates’ rights and including protections for workplace delegates when seeking to exercise those rights.
  • Establishing a new protected attribute in the FW Act to improve workplace protections against discrimination for employees who have been, or continue to be, subjected to family and domestic violence.
  • Changing the defence to misrepresenting employment as an independent contractor arrangement, known as ‘sham contracting’ from a test of ‘recklessness’ to one of ‘reasonableness’.
  • Enabling a registered organisation to obtain an exemption certificate from the FWC to waive the 24 hours’ notice requirement for entry if they reasonably suspect a member of their organisation has been or is being underpaid.
  • Empowering the FWC to take action in relation to the future issue of such exemption certificates if those rights are misused (for example, by imposing conditions, or banning their issue for a specified period).
  • Increasing maximum penalties for underpayments by amending the civil penalties and serious civil contravention frameworks, and adjusting the threshold for what will constitute a serious contravention.
  • Clarifying that Fair Work Ombudsman (FWO) compliance notices can require an employer to calculate the amount of an underpayment that is owed to an employee, and that a court can order the recipient of the notice to comply with its terms.
  • Repealing amendments made by the Fair Work (Registered Organisations) Amendment (Withdrawal from Amalgamations) Act 2020 , relating to the withdrawal of parts of amalgamated organisations (de-merger).
  • Introducing a new criminal offence for wage theft, which applies to intentional conduct.
  • Inserting into the FW Act an interpretive principle for determining the ordinary meanings of ‘employee’ and ‘employer’ for the purposes of the FW Act. This would enhance fairness by requiring consideration of the real substance, practical reality and true nature of the relationship by reference to the totality of the relationship between the parties.
  • Allowing the FWC to set fair minimum standards for ‘employee-like’ workers, including in the gig economy.
  • Allowing the FWC to set fair minimum standards to ensure the Road Transport Industry is safe, sustainable and viable.
  • Allowing the FWC to deal with disputes about unfair terms in services contracts to which an independent contractor is a party.
  • Repealing a unsettled clause regarding applications to vary modern awards if already being dealt with in a four yearly review.
  • Extending the functions of the Asbestos Safety and Eradication Agency to address silica related diseases.
  • Introducing a presumption according to which first responders covered by the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) who sustain post-traumatic stress disorder (PTSD) will not have to prove their employment significantly contributed to their PTSD for the purpose of their workers’ compensation claim.
  • Introducing a new offence of industrial manslaughter in the Work Health and Safety Act 2011, reflecting recommendations 23b of the Review of the Model Work Health and Safety Laws – Final Report (Boland Review) and 13 of the They Never Came Home Report (Senate Inquiry), and significantly increasing the penalties for the existing Category 1 offence.
  • Aligning the WHS Act offence framework with recent changes to the Model WHS Law by indexing the penalties for existing offences to the Consumer Price Index.

Jail time for wage theft

Employers who deliberately underpay their staff could face a maximum of 10 years in jail or million-dollar fines (capping out at $7.8 million, or three times the amount that was underpaid if that exceeds the maximum fine).

Penalties won’t apply to employers who make “honest mistakes” and support will be afforded to employers who self-report accidental underpayments and the Fair Work Ombudsman will be able to use its discretion in instances where it doesn’t pursue criminal proceedings, such as if the employer elects into a ‘cooperation agreement’ to right their wrongs.

The government has also announced an increase to the maximum penalties available for civil breaches of underpayment-related provisions (as advised by recommendation 5 of the Migrant Workers’ Taskforce report) which will come into effect on 1 January 2024, if the Bill is passed.

Aaron Goonrey, Partner at Pinset Masons, says that the legislation could target anyone who was involved with purposefully withholding payments. Without seeing details of the Bill in full, he speculates this could include the company director, a CEO, payroll officer, legal advisor, accountant or an HR manager.

In determining what constitutes a deliberate underpayment, he says “consciousness and intent” will need to be proved. “Under the Victoria Wage Theft Act, the test to prove ‘dishonesty’ of a person in underpayments is “according to the standards of a reasonable person”.

“It may be a similar test to the existing accessorial liability provisions under the Fair Work Act. Accessorial liability occurs when a person is involved in the contravention of a workplace law.”

A contravention occurs when someone:

  • Assisted, recommended or caused the contravention
  • Influenced the contravention
  • Was knowingly concerned in or a party to the contravention
  • Conspired with others, which resulted in the contravention
Jonathon Woolfrey FCPHR, Chair of AHRI’s Industrial and Employer Relations Advisory Panel says, “Most employers will have little to fear in regard to ‘deliberate acts of underpayment’, but they will want to ensure they aren’t “reckless”, which may bring them within the parameters of the proposed bill.”
A detailed understanding of the National Employment Standards and Modern Award obligations is critical, he adds.“It’s a common misconception to assume that paying at, or above, Modern Award rates automatically meets an employer’s obligations. A more thorough assessment is needed,” says Woolfrey, who is the Managing Partner at Talenting and an AHRI Board member and State President.

To prepare for these potential changes, Goonrey says regular payroll audits and due diligence around time and record-keeping should be a key priority for employers.

“It’s unlikely that a person will be jailed if they can prove that they have taken all reasonable steps to ensure that workers are being paid correctly.”

Woolfrey adds that employers could also implement or revise a remuneration framework that outlines an organisation’s salary, superannuation and other compensation strategies.

“[HR could also implement] ongoing monitoring mechanisms, such as regular reports to management or the board, to adapt to the dynamic IR environment, or [perform] scenario tests to assess how the organisation handles complex employment situations and whether it meets or exceeds legal requirements.”

Woolfrey says “no HR professional would argue against the broad intent of wage theft legislation”, but feels it misses broader issues.

“[The legislation] essentially serves as a distraction from the fundamental issue – the complexity of the industrial relations system. Ironically, given the rapid pace of IR reform over the past year, this new legislation contributes to that complexity. While Minister Burke has assured that the “objective is not to send people to jail,” the legislation’s big-stick approach seems to sidestep the real concerns of businesses.”

Small businesses (those with fewer than 15 employees) will be exempt from this new law.
“Ideally, you want the same rights for people in every workplace, but we have to take into account the fact small businesses don’t have an HR department,” said Burke.

The Government is pledging $32.4 million over four years to act on its plans to criminalise wage theft, which could include a “strong and visible” regulator. If passed, these changes are said to come into effect no later than 1 January 2025.

Permanent pathways for casuals

The legislation proposes that casual workers who engage in regular and systematic hours should have access to leave entitlements and guaranteed hours by changing their employment status to permanent should they wish to.

“There would be no back pay of wages or entitlements prior to the period of conversion,” says Goonrey. “In essence, it would be another pathway for casual employees to convert to more permanent employment.”

Currently, an employee may request casual conversion any time after their 12 month anniversary of engagement, he says.

Woolfrey says the new law would see employers required to offer a pathway to permanent work within the first six months.

“It’s estimated that this may allow up to 850,000 current casual employees the opportunity to request permanent work, which could have significant impacts on many employers.

“This, combined with proposed changes around the use and payment of gig and labour hire workers, mean that HR practitioners need to have a thorough understanding across the various modes of employment their employer uses and ensure they’re fully aware of the employment situation and contract of each and every worker they directly or indirectly engage.

“A set-and-forget approach was a risky approach before, but now it’s not a viable approach for any employer.”

Small business owners will be given a 12-month service period window before their casual employees can access new voluntary conversion pathways.

Criminalising Industrial manslaughter

Ninety-one workers have been killed on a worksite in 2023 so far and the government wants to introduce laws to bring that number down to zero in future years.

Industrial manslaughter legislation is already enshrined in most states and territories – or is in its proposal stages. The new Bill will introduce a federal approach.

Industrial manslaughter will become a criminal offence under Commonwealth work health and safety laws and individuals could face 25 years in jail and body corporates could face up to $18 million in fines if “gross negligence or recklessness” is found to have contributed to the death of a worker. These changes could come into effect from 1 July 2024.

The contents of the Closing Loopholes Bill are likely to be debated over the coming weeks. If the proposals are passed, it’s likely we won’t see the majority of changes come into place until mid to late 2024.


  • https://www.hrmonline.com.au/
  • https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r7072

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