The Closing Loopholes Bill factsheet

This represents the culmination of months of negotiations, speculation, and fanfare regarding the potential impacts of the reforms which make changes across a number of areas set out below.

Wage theft

The deliberate and intentional delay and underpayment of superannuation, wages and allowances will be a criminal offence with maximum penalties of 10 years in prison and fines of up to $8 million.

Employers who unintentionally underpay or pay the incorrect amounts by mistake will not be captured. 

This offence will commence either the later of 1 January 2025 or the day the Minister prescribes the Voluntary Small Business Wage Compliance Code (Code). At this stage there is little detail regarding this Code but appears to be a compliance tool in lieu of imposing criminal penalties.

Labour hire arrangements

For those businesses that have an enterprise bargaining agreement (EBA) in place any labour hire employees will be required to be paid the same as those directly engaged under the EBA.

HIA successfully lobbied to ensure these arrangements did not apply to apprentice or training arrangements through, for example, Group Training Organisations.

These arrangements commence from 1 November 2024.

Role of the unions

The Bill introduces new rights for workplace delegates to communicate with union members and potential members, access a workplace and attend paid training related to this role.

In conjunction with these new workplace delegate rights an employer not unreasonably fail or refuse to deal with delegates, or unreasonably hinder, obstruct or prevent the exercise of rights of a delegate.

These arrangements commenced on 16 December 2023.

Members should be aware that the unions will be able to apply to the Fair Work Commission to remove the requirement to provide 24 hours' notice to inspect employee wage records where there is a reasonable suspicion of an underpayment in cases where advance notice of entry into the workplace would hinder an effective investigation into suspected underpayments.

These arrangements will commence from 1 July 2024.

Industrial manslaughter to be criminal offence under federal law

The Bill also makes industrial manslaughter a crime, with individuals facing imprisonment for up to 25 years and body corporates fines of up to $18 million.

The changes to the Federal WHS laws will also increase maximum penalties five-fold, to $15 million for category one offences involving reckless or criminally negligent breaches of WHS duties, while maximum imprisonment will rise from five to 15 years.

Most jurisdictions have already adopted an offence of industrial manslaughter and/or increased penalties for breaches of WHS laws.

The changes will take effect from 1 July 2024.

Union right of entry to assist health and safety representatives

Union officials, without union right of entry permits, can now enter a premises to ‘assist’ a health and safety representative.

Without holding a permit, there are no checks and balances on who can enter a worksite, equally there is very little recourse for business to influence their behaviour while on site.

These arrangements commenced from 16 December 2023. 

Definition of employment

An employment relationship will be assessed based on the real substance, practical reality and true nature of the relationship informed by both the contract and how the relationship works in practice.

This approach should allow the well - known common law test to apply which generally involves the consideration of for example, who has control over when and how work is performed, how payment is made (whether on a project basis or on an hourly rates) and whether the worker can delegate the work to others.

Independent contractors can opt out of this definition where a contractor earns above a high-income threshold ($175,000)

These arrangements commence from 26 August 2024.

Changes to penalty amounts

The Bill significantly increase penalties (up to 5 times the current penalties) across a range of areas including failing to provide payslips or keep employee records. This is in conjunction with a proposal to change the test for a serious contravention of workplace laws from a systematic pattern of conduct, to being reckless as to whether the conduct would breach workplace laws.

A person would be considered to have been reckless if:

• The person was aware of a substantial risk of a breach of workplace laws, and
• It was unjustifiable to take that risk in the circumstances.

These arrangements commence from 27 February 2024.

Casual employment

The definition of casual employment will be amended to ensure that the entire relationship is considered (as opposed to just the written contract). The Bill also introduces a new right for a casual employee to request convert to more permanent employment after 6 months (or 12 months for small business employers).

Importantly, if an employee converts to more permanent employment, the employer will generally not be liable for any backpay.

Find out more about changes to casual employment and casual conversion.

These arrangements commence from 26 August 2024.

Gig economy

The Fair Work Commission (FWC) will be able to set minimum standards for ‘employee – like’ workers. For a worker to be ‘employee like’ they must:

• perform work through a digital labour platform; and
• have low bargaining power, and/or are low paid compared with an employee doing the same job and/or have low control over their work. A worker must satisfy two out of these three criteria to be 'employee-like'

While there has been much speculation that these measures would capture independent contracting in the residential building industry, it is now abundantly clear that they will not. 

These arrangements commence from 26 August 2024.

Unfair contract terms

The Bill introduces a new jurisdiction into the FWC to allow businesses to challenge unfair contract terms. While the provisions largely mirror existing arrangements under the Independent Contractors Act, who would be captured by the new jurisdiction and how it will operate remains unclear.

Under the provisions, a contractor whose annual income is less than the threshold (to be set by regulations) will be able to challenge their contract on the basis that it is harsh or unfair. Contract terms that could be challenged include those dealing with:

• remuneration, allowances or other amounts;
• leave entitlements;
• hours of work;
• enforcing or terminating contracts;
• making, enforcing or terminating agreements ;
• disputes, or the resolution of such disputes;
• industrial action;
• any other matter that is substantially the same as a matter that relates to employees or employers.

HIA remains concerned regarding these measures which will commence from 1 July 2024.

The road transport industry and supply chain

It is proposed that the FWC be empowered to make minimum standards orders in relation to the road transport industry contractual chain participants.

These arrangements commence from 26 August 2024

The right to disconnect

Employees will be afforded the right to refuse to monitor, read or respond to contact outside work hours from their employer or a third party, if that contact is work-related and unless that refusal is unreasonable.

These arrangements commence from 26 August 2024 and for small business, 26 August 2025.