South Australian Business News

Closing loopholes or shutting down productivity and flexibility?

Karen van Gorp
Thursday, September 7th 2023

Photo Credit: Alex Ellinghausen

Federal Minister for Employment and Workplace Relations, Tony Burke, introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 on Monday (4/9) as part of the Federal Government’s Industrial Relations agenda. 

This has sparked concerns amongst business leaders, with the Australian Chamber of Commerce and Industry (ACCI) stating this legislation will be bad for productivity, those wanting to be their own boss, and consumers struggling with the cost-of-living crisis. 

Business leaders were equally concerned that the government intended for this legislation to be approved by December this year, with a Senate Inquiry process to be finished by 23 October, which would not allow parliament sufficient time to consider these radical and risky changes. The South Australian Business Chamber has just been advised today that the Senate Inquiry process has been locked in and the reporting back date for the committee is 1 February 2024. Therefore we will be asking members to contact us with their feedback after attending a briefing webinar.

The Bill includes proposed changes to the following main areas:

Definition of Employment

Currently, the Fair Work Act uses the common law definition of employee” which is determined solely by reference to the terms of the contract. The Bill proposes to introduce a new statutory definition of employee” which would look beyond the contract to the real substance, practical reality and true nature” of the relationship. This is a return to a multi-factor test” of the employment relationship, which was previously applied, before it was rejected by the High Court and considered the totality of the relationship”.

Casual employment

Currently, the definition of casual employee” in the Fair Work Act is defined solely by what is in the employment contract. The Bill proposes a change to the definition that considers not only the contract of employment but also the real substance, practical reality and true nature” of the employment relationship. Attention must also be paid to:

  • whether there is an inability of the employer to elect to offer work or an inability of the employee to elect to accept or reject work
  • whether having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee
  • whether there are full-time employees or part-time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee
  • whether there is a regular pattern of work in determining if an employee is a casual
  • just what is in the employment contract 

Taking on a casual employee will be less certain and riskier, meaning employers will be less likely to offer casual employment. This will for example inhibit entry level employment to our youth.

Other changes to casual employment include new conversion provisions. Under the Bill, casual employees who believe their working arrangements satisfy the new definition can request conversion to permanent employment after six months (or after twelve for small businesses). The employer can refuse the request in writing if; the employee is still a casual; substantial change to the employee’s terms and conditions would be required to meet the request. The written reply must be detailed and advise the employee of their options regarding disputes.

Employers are demanding that the government fulfil its public commitment to prohibit backpay and make that explicit in the legislation along with its commitment to retain the existing offsetting requirements for backpay. 

Employee like’gig platforms and independent contractors

The scope of changes will impact a broad range of contractor arrangements. This goes well beyond the election commitment to set minimum standards for the rideshare and food delivery sectors.

The minister has already admitted we will see costs increase because of these changes. The cost of your takeaway pizza on a Friday night will become more expensive. The cost of getting a ride home will also be more expensive, but this will also impact care platforms supporting people on the NDIS and access to trades services. This will restrict people who want to run their own business and advertise on digital platforms that control the payment process. 

The solution is a limited list of standards for rideshare and food delivery sectors only.

Road transport and our supply chains

The Bill proposes providing the Fair Work Commission with powers to set minimum wages and conditions for road transport owner driver contractors. This will effectively revive the failed Road Safety Remuneration Tribunal. Owner drivers will again lose the flexibility to set their rates and conditions which will hurt remote and regional communities, and small business.

The proposed legislation also has the power to impact everyone from ships to supermarkets and roads to restaurants. Into hundreds of pages of legislation, the government has snuck in a small provision that gives the minister the power to make regulations for supply chain participants”. In doing so he is handing over control of our supply chains to the Fair Work Commission.

Risk to labour hire 

The Bill introduces the Same Job, Same Pay’ (now called Closing the Labour hire loophole’) régime, where unions and employees will be able to apply to the Fair Work Commission for a Regulated Labour Hire Arrangement Order’ which would entitle employees performing work for a host corporation (e.g., through a labour hire or service arrangement) to the same pay as an employee covered by and enterprise agreement of the host corporation. 

This reform is aimed at ensuring that so-called bargained rates’ cannot be undercut by using outsourced labour.

We are happy to report that there have been changes to the initial drafts of the bill, making changes to provide exemptions for small business, and training arrangements, which will go some way to protect apprentices and small business owners. 

Wage theft

No one working in Australia should be deprived of what they are entitled to. The Government is attempting to limit wage theft with laws against deliberate and intentional underpayment of employees and we support this stance. We are also encouraged by the South Australian Labor Government’s decision to hold back draft state wage theft legislation in lieu of the proposed federal laws, given the wages system is primarily federal. This will protect South Australian businesses from attempts at double dipping and forum shopping.’

Businesses trying to do the right thing and make a mistake should not face jail time or onerous penalties. However, the reality is that many laws, regulations and agreements in the workplace are outdated, convoluted and complex, resulting in the under and over payment of employees. 

If the minister is serious about addressing underpayments, he should start by simplifying the awards system.

Right of entry and training payments for delegate’s rights

The Bill contains significant new entitlements for right-of-entry for union officials and union delegates. 

The Fair Work Commission, if satisfied, will now be able to grant an exemption certificate to unions to allow them to enter an employer’s premises without notice where a union is seeking to enter a site to investigate a suspected contravention involving underpayments of wages or other monetary entitlements of union members. Currently, entry without notice to investigate a suspected breach is only allowed where notice might result in the destruction, concealment, or alteration of relevant evidence.

Delegates who have been appointed in accordance with union rules are provided with new rights under the Bill to deal with the employer and represent and communicate with members and people eligible to be members. An employer of a workplace delegate must not unreasonably fail or refuse to deal with the workplace delegate. Delegates will have right of access to the workplace and facilities to represent members and concerningly (unless the business is a small business) they will be entitled to reasonable access to paid time during normal working hours for the purposes of related training. 

In determining what is reasonable, the size and nature of the enterprise, the resources of employer and workplace delegate, and facilities available at the enterprise will be taken into account. 

This régime will also apply to employee-like’ workers not just employees. 

Modern awards will be updated to include a delegates’ rights term in addition to enterprise agreement, and this will form a part of the BOOT for enterprise agreements going forward.

There is no justification for increasing these already-existing powers.

The South Australian Business Chamber is concerned that these reforms will increase the complexity of doing business and, in particular, make casual employment far more complex for SA businesses. 

The Bill’s Regulatory Impact Statement estimates the cost to businesses from labour hire and gig-economy changes alone will be $9 billion over 10 years nationwide, should the Bill pass. 

Fortunately, small businesses will be exempt or have the impact from several of the changes to the proposed laws delayed.

Whilst we believe this Bill will be detrimental to South Australian businesses, the South Australian Business Chamber has, in partnership with the Australian Chamber of Commerce and Industry, participated in the consultation process. We will continue to advocate for changes and attempt to mitigate the worst effects of this Bill. 

You can be involved by replying to surveys we may send out to support our arguments on your behalf or contacting us with your questions. You may also make your own submissions.

Watch this space as we will continue to provide updates including a briefing webinar to members regarding these developments. 

The South Australian Business Chamber are experts in industrial relations and here to support you through this challenging time — for assistance call one of our friendly Workplace Advisers on our Business Advice Hotline on 08 8300 0000 (select option 1) or lodge your on-line query here.

The South Australian Business Chamber’s policy team has been working with ACCI on this matter. For policy queries please email policy@​business-​sa.​com

Author

Karen van Gorp

Senior Policy Adviser
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