Industrial relations changes introduced into Parliament

Sweeping changes to workplace relations laws were introduced into Parliament yesterday in the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023.

The bill makes extensive changes to the workplace relations framework including changes to labour hire and contractor arrangements as well as allowing the Fair Work Commission to set fair minimum standards for employee-like workers including those in the gig economy.

The bill also introduces a new criminal offence for wage theft, which applies to intentional conduct.

Minister for Employment and Workplace Relations Tony Burke said the amendments would support Australian workers by “closing loopholes that undercut pay and conditions”.

Mr Burke said the bill would address certain loopholes being used by a minority of employers including the labour hire loophole.

“The labour hire loophole is where an employer and employees have agreed in an enterprise agreement to a particular rate of pay for particular work – but then the employer brings in different workers through labour hire to undercut that rate of pay because they’re technically employed by a different employer,” said Mr Burke.

“The loophole is only relevant where there is an enterprise agreement – already in place and signed up to by the workers and the employer.

Having agreed to that rate of pay with workers and registered it – it’s currently legal for an employer to undercut the agreed rate of pay through the use of labour hire.”

The Closing Loopholes Bill provides exemptions for small businesses comprising 15 or fewer employees in relation to labour hire and the measure to enable casual employees with a pathway to permanent work.

The Voluntary Small Business Wage Compliance Code will also be developed to provide certainty for those who inadvertently commit wage underpayments, ensuring only intentional wage theft is punished.

Minister for Small Business Julie Collins said Labor wants to ensure the policies are appropriately targeted and provide the support that small businesses need.

Business Council of Australia chief executive Jennifer Westacott said the changes in the bill represent “one of the most radical overhauls of Australia’s system in decades and will impact every worker, contractor and business.”

“The reality is these changes will stifle productivity – increased productivity drives wage growth – leaving Australians facing another decade of low, stagnate wages

“Everyone believes that Australian workers deserve to be paid a fair rate for their labour, but these changes are taking Australia in the wrong direction at precisely the wrong time.”

Ms Westacott said that while there were elements of the Bill that had been improved from the original consultation papers, the exemption of small business only highlights how complex the changes are.

“The overall case for change has not been made given the scale of the impact,” she said.

Ms Westacott said the government’s proposed delay to one element of the changes would only create months of further uncertainty for employers and workers and was at odds with the Government’s claim that it needed to act urgently to close ‘loopholes’.

“While the Minister has made broad statements that the measures will only have limited impact. Instead, what has been tabled is a lengthy set of measures that no business or worker will be able to interpret or apply without the benefit of lawyers or other expert advisers,” she stated.

“This is of significant concern given the dramatic increase to fines and the inclusion of criminal penalties, including gaol time, for breaches of these new laws.”

While the BCA supports the concept of a safe harbour to support the identification and quick rectification of wage underpayments caused by an unintended error, Ms Westacott said it had concerns with other aspects of the reforms.

“We must encourage businesses to have strong processes in place to ensure workers are paid correctly,” she said.

“However, giving unions additional rights to enter workplaces and inspect payrolls raises serious concerns regarding over-reach and privacy for all businesses.

“The major problem is the complexity already within the system with more than 120 awards which is leading to unintended errors and this is the real issue which has to be addressed.”

Ms Westacott said the Government’s proposed changes to labour hire arrangements were also unworkable.

“Given the breadth of these changes, there is no justification for rushing the Bill through parliament and we encourage the Senate to take a comprehensive look at what is proposed.

The Australian Industry Group has also raised concerns that the changes would add further complexity to an “already byzantine workplace relations system” and make it harder for businesses to hire staff and manage their workplaces.

“The same job same pay policy will make it harder for employers to get the workers they need. The measures amount to an unfair and unjustified attack on labour hire employers as well as the businesses and workers that depend upon the sector,” said Ai Group chief executive Innes Willox.

“Crucially, the Government hasn’t gone far enough in ensuring that a change that is directed at closing a ‘labour hire loophole’ isn’t able to be used by unions to challenge and interfere with a raft of other commercial arrangements between businesses that haven’t traditionally been considered ‘labour hire’.”

Mr Wilcox said while the new wage theft measures would focus on those few ‘intentionally underpaying’ this approach does nothing to address the root cause of underpayments, the complexity of the system.