Important Industrial Relations (IR) Update - Q1 2024

As a leading workforce solutions provider, ManpowerGroup is pleased to provide an overview of some of the most recent developments in the Australian Industrial Relations (IR) legislative landscape. For a discussion on how ManpowerGroup may be able to assist you to prepare for these changes from a workforce solutions perspective please reach out to your local ManpowerGroup Australia office for a confidential discussion.

Closing Loopholes Bill Part 1

In a last-minute piece of political negotiation, several key provisions of the Federal Governments Closing Loopholes Bill passed through Parliament in December 2023. This followed a deal struck with Independent Senators Jacqui Lambie and David Pocock. Key provisions which were passed include:

Criminalisation of wage theft

Starting from 1 January 2025, employers will face potential criminal penalties for intentionally engaging in conduct which leads to the underpayment of employees (including with respect to the payment of superannuation contributions). The key to proving the criminal act is that the underpayment is intentional. The provision is not intended to capture accidental conduct or payrolling errors.

The offence will carry a maximum fine for companies of the greater of either:

• $7.825 million; or 
• three times the amount of the underpayment. 

For individuals the offence will carry a maximum of 10 years' imprisonment and/or a maximum fine of the greater of either:

• $1.565 million; or 
• three times the amount of the underpayment.

“Same Job, Same Pay” provisions

From 1 November 2024 the Fair Work Commission, upon application, be empowered to make a “regulated labour hire arrangement order” (“Labour Hire Order”) with respect to a particular workplace. A Labour Hire Order, once in place, will require a labour hire employer who supplies labour to the relevant workplace to pay their employees at the same rate of pay as the host employer if the employee were employed to do the same job under an enterprise agreement which governs the workplace.

While the application of the legislation is quite limited, it will have a significant impact on some sectors of the workforce.

Strengthening protections against adverse action, discrimination, and harassment

Commencing from 15 December 2023 “subjection to family and domestic violence” has been added to the list of protected attributes in the Fair Work Act. The effect of this change is to introduce stronger protections to employees who have been the victim of family or domestic violence. It also means that employers cannot take adverse action against an employee who has been subjected to family or domestic violence.

Closing Loopholes Bill Part 2

The second tranche of amendments passed through Parliament, after a couple of rounds of amendments, on 12 February 2024. The scope of amendments is extensive and will have an impact on most employers operating in the Australian marketplace. A brief summary of the key amendments are summarised below.

Insertion of new definition of “employee”

(6 months from assent)

The amendments inserted a new definition of employee into the Fair Work Act which focuses on an analysis of the true nature of the relationship between the parties. The definition necessitates looking at both the contract terms and the performance of the contract in reality to determine whether an employment relationship exists between the parties.

Under this new definition, some independent contractors (those for example who work systematic hours for one company) could find themselves characterised as “employees” given the focus on the true nature of the relationship post-contract formation. This potentially leads to a risk for employers of claims by independent contractors to back payment of employment related entitlements. There is the ability for high income earning independent contractors to “opt out” from being defined as employees.

Casual employees

(Effective 6 months after assent)

The Bill introduces a new definition of casual employment which focuses on casual employment being characterised by an “absence of a firm advance commitment to continuing and indefinite work”. The definition requires an analysis of the totality of the employment relationship, with the written contract being just one consideration. The “real substance, practical reality and true nature of the employment relationship” needs to be considered.

The definition sets out the following non-exhaustive list of criteria for determining if a casual employment relationship exists:

• whether there is an inability of the employer to elect to offer, or not offer, work or an inability of the employee to elect to accept or reject work
• whether it is reasonably likely that there will be future availability of continuing work in the employer’s business 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 business that is usually performed by the employee
• whether there is a regular pattern of work for the employee.

The definition is clear that no single criteria is determinative of status.

Changes to the casual path to conversion

The existing casual conversion provisions which resulted in significant administrative burden for employers will cease to operate and a casual employee will now need to request conversion to permanent, if they choose to do so, provided certain criteria are met. For non-small business employer’s this right is triggered at 6 months service and 12 months for small business employers.

The employee can notify the employer that they wish to convert if they no longer believe they meet the definition of a casual employee discussed above.

The new provisions do allow an employer to refuse the request to convert if the employee still meets the definition of casual or on “fair and reasonable operational grounds” including that to allow the conversion would require substantial changes to the employer’s business or would have significant impacts on operations.

Right to disconnect

(6 months after assent, 18 months for small business)

Under the new rules an employee may refuse to monitor, read or respond to contact, or attempted contact, from an employer (or a 3^rd party if the contact is about work) outside of the employee’s working hours unless the refusal is unreasonable.

The provision lists the following non-exhaustive list of criteria to be considered when assessing whether a refusal is unreasonable:

(a) the reason for the contact or attempted contact;

(b) how the contact or attempted contact is made and the level of disruption caused;

(c) whether the employee is compensated:

(i) to remain available to perform work during the period; or

(ii) for working additional hours;

(d) the nature of the employee’s role and the employee’s level of responsibility;

(e) the employee’s personal circumstances (including family or caring responsibilities).

Sham Contracting

(Commencing from the day after assent)

The Bill amends the current defence to an allegation of sham contracting in the Fair Work Act. The current defence just requires an employer to prove that “they did not know and were not reckless” that a contract of employment existed. Under the new defence an employer will need to establish that they “reasonably believed” that the engagement was a contract for services.