In September, the Labor Government presented the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, commonly referred to as “the Bill,” to Parliament.
This legislation represents a substantial overhaul of the Fair Work Act 2009 (Cth). Let’s take a closer look at the details:
What industrial relations changes are proposed?
The Federal Government has introduced a Fair Work Act Amendment Bill to the Federal Parliament, proposing significant changes to the industrial relations landscape which will impact the way we do business.
The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 was introduced on Monday 4 September 2023 and proposes several measures, including:
- Wage theft: Deliberate underpayment of wages will be a criminal offence with maximum penalties of 10 years’ prison and fines of up to $7.8 million. Employers who unintentionally underpay will not be prosecuted and pathways will be available for those who self-report and take reasonable steps to repay the correct amount.
- Labour hire / same job same pay: For businesses with an enterprise agreement (EA), any labour hire employees will be required to be paid the same as those under the EA.
- Redefining casual employees: The existing definition of casual workers would be redefined according to a range of factors including the absence of a firm advance commitment to future work.
- Casual conversion: Casual employees will be able to request to convert to more permanent employment after six months (or 12 months for small businesses)
- Redefining employment / independent contractors: The existing definitions would be changed in favour of a new ‘interpretive principle’ that examines the totality of the relationship between parties not just the contract.
- Regulating the gig economy: The Fair Work Commission (FWC) will be able to set minimum standards in the gig economy, including for pay, penalty rates, payment terms, record-keeping, and insurance as well as make orders requiring deactivated or suspended workers to be reactivated.
- Union delegate right of entry: The FWC will have greater power to permit the right of entry to investigate suspected underpayment.
The bill and its explanatory memorandum are available here.
What about small business exemptions?
The Government has outlined there would be some exemptions for small business:
- Wage theft: There will be pathways to safe haven for small businesses who have tried to correct mistakes with paying their worker. Small businesses that may have underpaid employees will not be referred for criminal prosecution if they can show compliance with the new Voluntary Small Business Wage Compliance Code. The Code will be developed by government in partnership with employer and employee groups.
- Labour hire / same job same pay requirement: This measure will not apply where the host is a small business employer (fewer than 15 employees).
- Casual conversion: The existing casual conversion pathway will remain where small businesses (fewer than 15 employees) are exempt from the requirement to offer casual conversion to their employees. Under this pathway, their employees will still be entitled to request conversion where they have been employed for 12 months and have had a regular pattern of work for at least 6 months. Reasonable grounds for refusing a request will remain.
- Union entry: Small businesses will not be required to provide reasonable access to paid time for workplace delegate training.
Further information is provided in this government fact sheet.
What is COSBOA’s position?
The Council of Small Business Organisation of Australia (COSBOA) is opposed to the proposed changes due to their complexity, inconsistency with productivity gains, and red tape.
At a time when small businesses are managing increased costs of supply, of rent, of power, of wages; we don’t need changes that detract business from their sales and service delivery.
The legislation is complex and will make it harder for businesses to employ people, particularly casual, and will not lead to higher wages, or more secure jobs. The Federal Government has not made the case for more complex change.
Small business seeks genuine reform that enhances productivity and opportunity, not broad impacting confusion about what they are and aren’t allowed to do.
The small business ‘exemptions’ do little to assuage concerns about the overall complexity of the bill. COSBOA is particularly concerned about changes in definitions to casuals and contractors. In particular, the existing, clear, and reliable definition of some 2.2 million casual workers will be replaced with a more ambiguous, changeable, and contestable approach.
We were also highly concerned that the bill’s impact statement did not assess the real-world cost of compliance to small business.
Some of these concerns were expressed in the Daily Telegraph opinion section yesterday (attached), and our media release is also available here. Previous comments are available here.
What are the next steps? How can COSBOA help?
The bill has been referred to the Senate for examination and inquiry, with a reporting date of no later than 1 February.
This provides a timeline for COSBOA to actively participate in the inquiry process through both written and oral submissions and engagement with MPs and Senators.
COSBOA will continue advocating our concerns with the bill on behalf of the small business sector, with a particular focus on the disproportionate impact that further red tape creates for small businesses.
COSBOA will hold a dedicated webinar to unpack proposals in more detail for members in the coming weeks including representatives from the department.
In addition, we welcome member associations and members to raise questions and concerns with us, including any particular small business examples or case studies that can be used in COSBOA representations.
The information provided below is attributed to Luke Achterstraat, the CEO of COSBOA (Council of Small Business Organisations Australia).
More from COSBOA here.
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