HR to Go podcast episode 9: Closing the loopholes (transcript)
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Welcome to HR to Go by Effective Workplace Solutions. In this episode of HR to Go, we’ll be chatting about the recent legislative changes, also known as ‘Closing the Loopholes’ legislation.
I’m Greg Arnold, Founder and Senior Consultant at EWS, and today I will be unpacking the new IR and employment laws introduced by the Government in 2023.
In December of last year, the Government passed a raft of changes to industrial relations and employment law in this country. Some of these changes are significant and will impact some industry sectors more than others.
So, what’s the background to these changes?
If we go back to earlier in 2023, the Government introduced the “Closing Loopholes” Bill into Parliament. The Government was hoping at that time to rush the Bill through the House of Reps and the Senate.
That wasn’t to be, as many of the Independents and minor party’s realised the significant impact that these changes were likely to have on business and forced the Bill to be sent to a Senate Committee for Enquiry.
The Senate Committee accepted submissions from many parties in the later months of last, including the peak employer bodies, Unions and academics about these proposed changes. The outcome of that Senate Enquiry is due in February, so very soon.
In the meantime, the Government became frustrated with this process, and negotiated a deal with the Independents for certain parts of the Bill to be passed. Those parts to be passed were considered the less controversial elements of the initial Bill, whilst the more controversial parts were left to be debated in 2024, after the outcome of the Senate Enquiry.
So, in essence we have a splitting of the initial Bill with some elements being passed on 7 December last year, and the rest to be dealt with sometime this year.
Now that we have covered the background of the most recent raft of IR and Employment Law changes, our focus turns to what this means for your business.
The changes will have different impacts on different sectors, and indeed the size of the business. For example, the changes to labour-hire provisions will only affect those industry sectors where labour hire is prevalent, such as the mining and construction industry – but not much in say, the hospitality and retail sectors where labour-hire is not widely used.
Similarly, the new laws around Union delegates at the worksite are more likely to affect larger companies and, in some aspects, small businesses are exempt from parts of these laws.
Let's go through these changes one by one.
We will start with the labour hire provisions, and as I said this is more likely to have an impact on those industry sectors where labour hire is frequently used (eg construction, aviation and mining).
In essence, employers who engage labour hire workers, such as airlines, mining companies and warehouses, will soon have to pay them the same as full-time, normally engaged employees.
If your organisation is one that relies on labour hire workers, it would be advisable to look at your enterprise agreement and do a mapping exercise to determine if there is crossover between the work of your labour hire workers and the work that’s covered by the enterprise agreement.
The new laws also include anti-avoidance provisions which will take effect immediately on Royal Assent (ie 15 December 2023).
So, if an employer is engaging in conduct to attempt to avoid these provisions, that conduct could be looked into by the FWC.
For example, where an employer purposefully misrepresenting the nature of the work the labour hire workers are doing to suggest an enterprise agreement at the host employer does not apply.
With the exception of the anti-avoidance provisions, which had effect on 15 December 2023, the Fair Work Commission won’t be empowered to make ‘Regulated Labour Hire Arrangement Orders’ until November 2024.
Wage Theft Provisions
The next new law introduced is “wage theft provisions at a Federal level. This is an important one to understand.
As of 1 January 2025, employers could face fines up to $7.8 million and 10 years in jail for deliberate acts of underpayment of wages. I stress the word ‘deliberate” as it has been emphasised in both government communications and media reporting, these new laws will only pertain to employers who deliberately underpay their staff. That is, there is a wilful act of underpayment, not simply a mistake made by not understanding or misinterpretation of Award or Act provisions.
When it comes to these provisions a court will look at the knowledge, conduct and intention of executives of the business. They will look at whether or not they knew this was happening and did nothing to fix the issue.
This means HR operatives and Employers should treat this as a warning to “double down” on compliance exercises around payroll.
The new legislation will also include provisions for the underpayment of superannuation, so not only will underpayment of super be a breach of Tax laws, it will also be a breach of the Fair Work Act.
Our advice is that employers should regularly undertake payroll audits or reviews to ensure that they are compliant with Awards, agreements and the FW Act.
Enhanced rights for workplace union delegates
The next change is Enhanced rights for workplace union delegates. This is a provision that is likely to have a significant impact on many employers.
From 1 July 2024, all modern awards, and new enterprise agreements are to include a term relating to the rights of workplace delegates. It is expected that such terms will go into greater detail for particular industries, organisations and enterprises over and above the minimum rights under the FW Act.
Under the new laws a workplace delegate will have the right to:
• represent the industrial interests of members, and any other persons eligible to be a member, including in a dispute with their employer;
• reasonable communication with members, and any persons eligible to be a member, in relation to their industrial interests;
• reasonable access to the workplace and workplace facilities for the purpose of representing those interests; and
• reasonable access to paid time, during normal working hours for the purposes of related training. This right will not apply if the delegate's employer is a small business.
FW Act will be amended to provide specific protections for workplace delegates. Under the changes, an employer would be prohibited from:
• unreasonably failing or refusing to deal with a workplace delegate;
• knowingly or recklessly making a false or misleading misrepresentation to a workplace delegate; and
• unreasonably hindering, obstructing or preventing the exercise of rights of a workplace delegate.
These provisions will apply from 1 July, and the FWC is already in the process of developing the new “model” terms to be inserted into the Awards. However, it is expected that each Award will have different provisions to others, depending on the nature of the industry.
Small Business Redundancy Exemption
We now move on to the Small Business Redundancy Exemption. These amendments will mean that the existing exemption will not apply to employers that are bankrupt or in liquidation, and which have downsized due to insolvency to become a small business employer. This will ensure that employees terminated or made redundant due to the insolvency of their employer, retain their entitlement to redundancy pay if their employer was not a small business prior to insolvency.
For example, if an employer is winding up operations and payroll and finance employees are retained for the purpose of processing redundancy payments, when it comes time for their employment to be terminated for reasons of redundancy, the employer is not obliged to pay Redundancy Pay because at the time that the employment relationship ended, they had fewer than 14 employees. This is now changed and those employees will be entitled to the redundancy payments.
Family and Domestic Violence - Stronger protections against discrimination, adverse action and harassment
We then move on to Family and Domestic Violence. The changes here have resulted in stronger protections against discrimination, adverse action and harassment. These new provisions apply to employees who have been, or are, subjected to family and domestic violence.
This change strengthens the Act’s anti-discrimination framework to protect employees who have been, or are being, subjected to family and domestic violence from discrimination in the workplace.
It is now unlawful for an employer to take adverse action against an employee or potential employee (for example, by dismissing them or refusing to hire them) because they have been, or are being, subjected to family and domestic violence.
Unions Officials Entry to Assist Health and Safety Representatives
Finally, there are new provisions that provide that Union officials, who do not hold a Fair Work entry permit, may enter workplaces to assist health and safety representatives (HSRs).
This means that if a Union official does not have a Fair Work Right of Entry permit, they can still enter a business for the sole purpose of assisting the Health and Safety Representative.
This change is more likely to affect the building and construction sector where there are a number of Union officials that do not have Entry permits (for one reason or another) – they are now able to enter construction sites to assist health and safety representatives. Using a crystal ball and in my experience – I see this as being problematic with Union officials using this provision to undertake other activities at the worksite.
And so that was a brief synopsis of the main changes to the laws. Obviously, this is a complex area and how the changes apply to business will vary from business to business.
If you would like to chat with one of our team to get some further information about these changes, and how they might impact your business and operations, please do not hesitate to contact the office.