Closing Loopholes: 2023 recap & 2024 outlook

[Update on 28 February 2024: The Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 received Royal Assent on 26 February 2024. References to this Bill now refer to the Act and most of the planned changes will commence this year.]

In 2023, Australian employers experienced the most substantial changes in a decade to the industrial landscape. These changes were far reaching, from the Fair Work Act 2009 (Cth) (FW Act) and Respect@Work reforms, to work health and safety laws. Not only did the changes introduce new rights and protections, they also introduced new restrictions on forms of work and compliance obligations forcing the need for businesses to consider their workforce strategy.

In the latter half of 2023, the Federal Government introduced further changes contained in the Fair Work Amendment (Closing Loopholes) Bill 2023.

Some of the changes were referred to a Senate Committee, with its report tabled earlier this month. However, on 7 December 2023, the Bill was divided and some components were passed in the Federal Parliament and received Royal Assent on 14 December 2023. Those changes became the Fair Work Amendment (Closing Loopholes) Act 2023 (Closing Loopholes Act).

The remaining components of the Bill became the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 (Closing Loopholes No. 2 Bill). The Closing Loopholes No.2 Bill passed the Senate on 8 February 2024 and is now set to return to the House of Representatives.

In this article, we provide a high-level summary on the key changes to workplace relations and safety laws arising from the Closing Loopholes Act, as well as introduce a summary of the key legislative changes under the Closing Loopholes No. 2 Bill.

Key changes in force

Key changes to come into force in 2024

The changes under the Closing Loopholes Act mark just the beginning of what is to be a year full of employment law change. While the changes under the Act are substantial, the more controversial and complex parts of the Closing Loopholes reform agenda have been transferred to the Closing Loopholes Bill No.2, which is still to be debated by the Senate in early 2024.

Business leaders are well advised to consider the impact of these proposed changes on their organisational strategy and workforce matrix. The implications are significant in the following areas:

personal service contractors – the legislation seeks to restore the state of the law regarding the distinction between contractors and employees to that of what it was prior to the two High Court decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2. Whether a personal service worker is an employee or contractor will be determined by the “real substance, practical reality and true nature of the working relationship”, meaning that post-contractual conduct will be relevant as well as the terms of the contract. At the same time, the defence to the civil liability offence of “sham contracting” is made harder for alleged offenders, by requiring putative principals to prove their belief that the putative contractor they had engaged was in fact a contractor, was objectively reasonable.
casual employment – again the legislation will wind back the clock to the situation of the law prior to the Workpac decisions, whereby an employment relationship will not be a casual engagement if the practical reality of the employment relationship is one of permanent employment, resulting in the employee having rights as permanent employees.
gig contractors – the FWC will be empowered to set minimum standards for ‘employee-like’ workers in the gig economy and in the road transport industry
right to disconnect – employees will have the right to refuse unreasonable employment related contact out of hours. Employees will have the right to apply to the FWC for an order that the employer stops unreasonable out of hours contact
unfair contracts – an informal jurisdiction of the FWC will be created to resolve disputes about unfair contract terms in service agreements between independent contractors who are below a high-income threshold, and principals
enterprise bargaining – the amendments fine-tune the sweeping changes introduced last year by the Secure Jobs, Better Pay legislation to enterprise bargaining arrangements. The FWC cannot make a term in an intractable bargaining workplace determination less favourable to each employee and employee organisation than a term in the existing enterprise agreement. The FWC will determine model terms for enterprise agreements, allowing multiple franchisees to bargain together for a single enterprise agreement and providing for single interest employer agreements to be replaced by single enterprise agreements
enforcement – the combination of impending criminal liability for underpayment and higher penalties for civil liability means that organisations should review the systems they have in place for ensuring compliance with industrial laws concerning wages and conditions.

We will continue to provide updates on the substance of the 2023 and 2024 changes. If you have any questions about any of the changes that have passed or are upcoming, please reach out to a member of our national Workplace Relations & Safety team below.

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Megan Cant

Natasha Jones

Chloe Hamer