Closing the Loopholes Act: A Guide for Employers Phase One Reforms

Introduction

The Australian government has recently introduced workplace changes through the Closing the Loopholes Act in response to evolving workplace dynamics.

These changes will be delivered through two separate phases that aim to address gaps in existing workplace legislation and enhance protections for employees and workers.

The first phase of these reforms have been a key point of discussion recently, with considerable scrutiny of the changes from the legal and business community as the changes have significant implications for employers in Australia.

These reforms will be implemented over an extended period of time.

Wage Theft and Underpayment

A primary focus of phase one is tackling wage theft and underpayment.

This legislation criminalises intentional theft of wages and superannuation and empowers regulatory bodies to take decisive action against businesses engaging in such practices, reinforcing the importance of fair remuneration for all workers.

Intentional underpayments of wages and superannuation will have heavy penalties. 

This change will take effect from 1 January 2025.

Labour Hire

The legislation introduces a new ‘same job, same pay’ provision.

This provision allows the Fair Work Commission to make an order that employees working under a labour-hire arrangement be paid no less than the rate of pay under the host employer’s enterprise agreement.

These provisions will come into effect on 1 November 2024.

Small Business Redundancy Exemption

The legislation closes the loophole in which large employers claim the small business redundancy exemption under the Fair Work Act 2009 (Cth) in circumstances where they have incrementally downsized due to insolvency.

Under the new rules, employees will be entitled to redundancy pay if they are made redundant in connection with the bankruptcy or liquidation of the employer, and the employer only qualified as a ‘small business’ at the time because they had recently terminated other employees.

New Protections against Adverse Action

The legislation will strengthen protections by including ‘subjection to family and domestic violence’ in the list of protected attributes in the Fair Work Act.

These changes (which are now in force) make it unlawful to take adverse action against an employee because they have been or are being subjected to domestic or family violence.

Work Health and Safety (WHS) Protections

The legislation introduces a new Post Traumatic Stress Disorder (PTSD) presumption that if any first responder covered by the Safety, Rehabilitation and Compensation Act 1988 is diagnosed with PTSD it will be assumed, for worker’s compensation purposes, that their employment significantly contributed to their condition.

Additionally, the Asbestos Safety and Eradication Agency will now cover silica and rename itself as the Asbestos and Silica Safety and Eradication Agency, and a Silica National Strategic Plan will also be created.

These changes are now in force.

Manslaughter

Currently Queensland, Victoria, the Northern Territory and the Australian Capital Territory have industrial manslaughter laws.

The Work Health and Safety Act 2011 (Cth) will now be amended to criminalise the offence of industrial manslaughter at the Commonwealth level.

The new legislation will also increase penalties for reckless or negligent conduct which causes the death of a worker.

Industrial Relations

Recognising the importance of collective bargaining in achieving fair employment conditions, the Closing the Loopholes Act strengthens the rights of workers to engage in collective bargaining.

This empowers employees to negotiate better wages and working conditions collectively, fostering a more balanced employer-employee relationship.

The legislation introduces new rights and protections for workplace delegates which ensure that delegates are given reasonable access to union members (and potential members), to paid time (during normal work hours) for training and to workplace facilities.

These changes to the Fair Work Act also prevent the exercise of workplace delegates’ rights from being hindered or obstructed by an employer. Some of these rights and protections (which are now in force) will be enshrined in all Modern Awards and future Enterprise Agreements.

These changes have taken effect.

Second Phase Amendments

The second phase of the legislation will include amendments dealing with more complex and controversial measures including casual employment, the definition of employment in the Fair Work Act, minimum standards for gig economy workers and road transport workers, intractable bargaining workplace determinations and sham arrangements.

Employer Implications and Compliance

These changes require employers to conduct a thorough review of their employment practices to ensure that they are compliant with the new legislation.

This is particularly important when considering the new stricter penalties imposed.

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