The Australian government has tabled a bill to amend the Fair Work Act 2009 aimed at eliminating loopholes that it considers to be jeopardising pay and conditions. The changes are likely to spell significant extra costs for employers, especially when it comes to hiring staff. We’ll speak to a Sydney-based lawyer about that.
On 4 September, the Federal Government introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 in the House of Representatives. Running to 278 pages it’s a clear indication of the government’s continuing robust agenda for industrial relations reform. On 7 September, the Senate decided to postpone an inquiry into the proposed reforms, which will delay their passing until 2024. This decision stems from mounting concerns regarding the Bill's extensive scope of reforms and the time required to consider their impacts.
As The Guardian reports, under the proposed laws companies with more than 15 workers will be forced to pay labour hire staff the same wages as those engaged under enterprise agreements. The changes to labour hire arrangements form one of four elements of the bill which aim to improve the conditions and pay of gig economy workers and casuals, along with criminalising wage theft with tougher penalties including jail time.
The bill’s other key features centre around beefing up the commission’s powers to protect workers. For example, the industrial umpire will be able to set minimum standards for hundreds of thousands of “employee-like workers” on digital platforms from 1 July 2024. That could mean raising the rate of pay for gig workers and preventing them from unfair deactivation by digital labour platforms.
The commission will also be able to probe medium and large companies alleged to have deliberately underpaid workers while having the discretion not to pursue criminal proceedings if they cooperate. Under the bill, deliberately underpaying workers will be 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.
Aaron Goonrey sets out the detail in this analysis piece for Out-Law: ‘Australia proposes workplace reforms targeting loopholes’. He says: ‘Some employer groups are concerned that these changes would introduce confusion, increase hiring process uncertainties, and impose extra costs for consumers. Now is a good time for employers to consider their organisations' use of casual employees and labour hire, to ensure that they are prepared to implement the changes once it becomes certain exactly how and when they will come into effect.’
So, let’s take a closer look at this. Earlier Aaron joined me by video-link to discuss the biil and I asked him for his key message to clients:
Aaron Goonrey: “The key message that we've been telling clients is to be prepared. We're not sure how much of the bill will be passed, it's currently being reviewed and assessed by various committees. Business groups, clearly have a view about it, and they are not impressed. So, it's debatable as to how much of the current bill that's been presented before Parliament will actually be passed. With that said, our view is that some of it will be passed and for employers, what they should be doing, is assessing from a business perspective worst case scenario, how much is this going to cost us as it as a business because it will have some significant, if not tremendous, costs for the whole economy, if it is passed. There has been an assessment - there was an economic assessment impact report that was attached to the bill - and it's quite extraordinary in terms of how much it will cost financially.”
Joe Glavina: “As I understand it Aaron, trade unions are back at the centre of this and are going to be given the tools to help protect workers’ rights in the way that the government is seeking to do. What do you make of that? It appears to be a lurch to the left, this legislation, isn’t it?”
Aaron Goonrey: “It is, Joe. I think the reform agenda more generally for the current government has been focusing in on how it can support the union movement more generally. I think that the current bill highlights that, particularly in relation to a union delegate rights and what that will look like going forward, and that will introduce a number of different things if it gets passed, for employers. I think a lot of employers, particularly the questions that we've been fielding, are concerned about how this will impact them because you do not need to necessarily have union members in your workplace on your site, all you need have is people who are eligible to be members of a particular union for that union to have certain rights in relation to going on to the site, or into the workplace, to speak with those potential eligible members.”
Joe Glavina: “You mentioned employers need to be prepared for increased costs, significant increased costs, and probably immediately What practical steps should employers take to mitigate those costs?”
Aaron Goonrey: “I think practically what employers should be doing is not looking at it necessarily from a legal perspective, or from an HR people perspective, but also looking at it from how much is this going to cost our business in a finance sense and getting together the relevant people within your organisation - that could be your internal counsel, that could be your people function - and also getting your finance people involved in this and saying this is what we're looking at. Have we, or are we, provisioning for this because this is a whole business type scenario and I don't think, particularly in terms of the current reform agenda, many employers are used to doing that from a practical perspective. They're very used to doing it from a legal perspective, they're very used to doing it from a people perspective, from an industrial relations and employee relations perspective, but I'm not sure how many organisations have necessarily gone to their finance function and said, these are the potential changes, we should be looking at how much this is going to affect our bottom line.”
Joe Glavina: “You mention getting the relevant people together to tackle this. I guess HR could have a role in coordinating that, at least?”
Aaron Goonrey: “Yes, that's right, Joe. I think that coordinating it probably should come from the HR people function and if the HR people function is not able to do that then it certainly should be the legal function that comes to this and says who do we need involved in these types of discussions, to look at what the impact would be for the business. I think you can only be so prepared for these things but really what we see is that there could be a significant cost to businesses because of these reforms if passed in their current form, definitely, even if passed in some partial form. It’s always better to be prepared, particularly from a financial perspective, regarding what that will look like for the business because the people HR function, and the legal function, will be able to deal with this when it comes through and obviously consulting with the external lawyers if need be, but I think what this may mean for businesses, particularly listed businesses, large private corporations, that will really be quite interesting to see and particularly when you look at the detail of some of these measures such as the labour hire changes that are that have been contemplated. That will really be quite significant, and I think it's sometimes overlooked when we look at reform agendas in the workplace relations space, particularly with these current reforms, that is something that we should be saying to everyone, all stakeholders involved. This is what we're currently looking at, this is what we've planned and, as you say Joe, who should be coordinating it, this is some something that HR could be doing in terms of planning and preparing it, this is what we're looking at. What's the worst-case scenario and what's the best-case scenario? That way the surprises, if there are any, will be minimal if the legislation is passed in whatever form.”
Aaron’s analysis piece looks at this in some detail if you are interested. That’s ‘Australia proposes workplace reforms targeting loopholes’ and we’ve put a link to it in the transcript of this programme for you.
LINKS
- Link to Out-Law article: ‘Australia proposes workplace reforms targeting ‘loopholes’
