The Closing Loopholes Reforms Factsheet

Wage theft

The deliberate and intentional delay and underpayment of superannuation, wages and allowances is 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. 

A Voluntary Small Business Wage Compliance Code (Code) is available to assist small business ensure they pay their employees correctly, and if complied with, criminal penalties will not be imposed.

Find out more about wage theft and access the Code.

This offence commenced on 1 January 2025.

Labour hire arrangements

For those businesses that have an enterprise bargaining agreement (EBA) in place any labour hire employees are 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 commenced on 1 November 2024.

Role of the unions

Workplace delegates have the right 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 must  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 15 December 2023.

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

Find out more about union right of entry to a workplace.

These arrangements commenced on 1 July 2024.

Industrial manslaughter is a criminal offence under federal law

Industrial manslaughter is a crime under Federal WHS laws, with individuals facing imprisonment for up to 25 years and body corporates fines of up to $18 million.

Maximum penalties have also increased five-fold, to $15 million for category one offences involving reckless or criminally negligent breaches of WHS duties, while maximum imprisonment rose from 5 to 15 years.

These changes took effect on 1 July 2024.

Union right of entry to assist health and safety representatives

Union officials, without union right of entry permits issued under the Fair Work Act, can now enter a premises to ‘assist’ a health and safety representative who is exercising their rights under WHS laws, and requests the assistance of the union.

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. Note that a WHS entry permit may still be required under the relevant WHS jurisdiction.

These arrangements commenced on 15 December 2023.

Definition of employment

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

This approach uses the well-known common law test of employment 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, being $183,100 for the year starting 1 July 2025. This rate will be adjusted annually on 1 July.

These arrangements commenced on 27 August 2024.

Changes to penalty amounts in the Fair Work Act

Penalties have significantly increased (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 change to 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 is 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 commenced on  27 February 2024.

Casual employment

The definition of ‘casual employment’ has been amended to ensure that the entire relationship is considered (as opposed to just the written contract). The reforms have also created a new right for a casual employee to request to 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 commenced on 27 August 2024.

Gig economy

The FWC can 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’.

These measures do not capture independent contracting in the residential building industry

These arrangements commenced on 27 August 2024.

Unfair contract terms

The FWC has new functions relating to unfair terms in a services contract made on or after 26 August 2024.

Under the provisions, an independent contractor whose annual income is less than the high income threshold can challenge their contract on the basis that it is harsh or unfair. Contract terms that can 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.

Where a term of the services contract is found to be unfair by the FWC, that contract term can be cancelled or changed. This new function commenced on 1 July 2024.

The right to disconnect

Employees have the right to refuse to monitor, read or respond to contact outside work hours from their employer or a third party, unless that refusal is unreasonable.

Read more about the right to disconnect.

These arrangements commenced on 27 August 2024 and will commence for small business on 27 August 2025.

To find out more, contact HIA's Contracts and Compliance team

Email us