The Federal Government’s Closing the Loopholes Bill marks the third tranche of workplace reforms in less than 12 months. Read more to see how, if passed, this legislation will affect your business through further complex regulations and no real productivity benefit.
As the government introduces a new wave of workplace relation reforms, the Australian business landscape finds itself on the brink of significant change. The unveiling of the Closing the Loopholes Bill, has confirmed the grave concerns of business and industry associations, as it moves workplace relations reform in the wrong direction.
If passed, this proposed legislation is expected to create more uncertainty, more costs, and a more complex regulatory environment, while also reshaping key aspects of employment, including casual work and gig economy roles, along with handing ever increasing invasive rights to unions.
It is imperative that the government’s workplace relations legislation focuses on productivity.
Unfortunately, this legislation is only set to make the workplace relations system even more complex and difficult to manage, particularly for small to medium businesses in the retail sector.
Research has shown that employment growth has been strong since 1983 and particularly strong from 2015 to today. In addition, workforce participation has risen strongly, so it is no wonder why the business community is so perplexed as to what this legislation is trying to achieve.
Key proposed changes outlined in the legislation include.
Redefinition of Casuals
- Perhaps one of the most contentious aspects of the proposed reforms is the redefinition of casual employment. Under the Closing the Loopholes Bill, the definition of casual work would no longer rely solely on the content of employment contracts but also consider consistent work patterns.
- A casual employee who has been employed for 6 months (12 months for a small business employer) would be able to issue their employer a notification that they believe they no longer meet the definition of a casual and should therefore be a permanent employee. There are limited grounds for an employer to reject such a notification. Further, the employee would be able to issue such a notification every 6 months.
- This is another administrative process that employers would be forced to navigate, and potentially attaches employees who have been engaged to meet needs at peak trading times to then remain in ongoing employment.
- The existing requirements regarding casual employees, including that employers need to advise every casual who has reached 12 months of employment whether they are being offered casual conversion or whether no offer will be made, and casual employees’ right to request conversion, will be retained.
- A further change that creates significant risk for employers is that the legislation will include an offence, similar to the offence regarding sham contracting, of misrepresenting employment as casual employment. There is a very real risk that employers could be subject to substantial penalties where they enter into casual employment arrangements, even with employees who want the higher casual rate of pay.
Wage underpayment
- The bill will make the deliberate underpayment of workers a criminal offence, with jail terms of up to 10 years and maximum fines of up to $7.8m – or three times the amount that was underpaid if that amount exceeds the maximum fine.
- Employers would have to demonstrate that any underpayment of wages was not intentional. We understand that most instances of underpayment are honest mistakes, due to the complexity of the workplace relations system.
- Whilst this will deter deliberate and intentional underpayment, the vast majority of wage underpayments are unintentional, so the Government needs to reduce complexity in our workplace relations system to minimise unintentional underpayment mistakes.
- For our small business members, there will be a Voluntary Small Business Wage Compliance Code which, if complied with by the small business, will mean they cannot be the subject of criminal action for underpayments.
Union Right of Entry
- A concerning part of the proposed legislation is that unions, who already have rights to enter premises with notice, will be given even greater rights to enter a workplace and inspect payroll records without any notice, if underpayment is suspected.
Delegate Rights
- The Bill will also give retail workers who are union site delegates access to additional paid time off work to attende delegate training and, additional rights to represent other employees in the workplace. Modern Awards will be required to contain clauses conferring these rights.
Gig Work and Independent Contractors
- Currently, these contractors are free to engage with the gig economy when they like, to suit their circumstances. Under this legislation however, gig economy workers engaged by the likes of Uber and Menulog would fall under the jurisdiction of the Fair Work Commission, and would be entitled to the National Minimum Wage and other minimum entitlements which apply to employees.
- Additionally, the government has already conceded that the new rules would likely push up prices for consumers, at a time when families and households are already facing the financial stresses of increased cost-of-living.
Labour Hire Workers
- Labour hire workers would be guaranteed the same terms as employees directly employed by a business in a similar role, subject to an application being made to the Fair Work Commission and the Commission making an order to that effect.
- Labour hire is not widely used in the Retail sector and enterprise agreements often include a safety net for these workers.
- It is welcomed that the Government have agreed to limit the operation of the provisions to where the union makes an application, however changes to the bill are necessary to put beyond all doubt the exclusion of service contracting from the broad definition of labour hire.
Whilst we support an equitable and balanced workplace relations system is necessary, this Bill seeks to implement complex regulations without any real productivity benefit. It is now down to the Opposition and Crossbench to ensure this Bill is not passed unamended and is shaped into one that, whilst protecting workers, also assists in driving productivity, creating jobs and increasing workforce participation.
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Members with any queries should contact the ARA workplace relations team via email membership@retail.org.au or on 1300 368 041.
