How Labor’s ‘Closing Loopholes’ legislation will help workers
Labor’s Fair Work Legislation (Closing Loopholes) Bill 2023 will better protect casuals, gig economy workers and criminalise wage theft.
Predictably, business groups say it will end investment, destroy productivity, smash economic growth – and make the sky fall in.
Shadow Minister for Employment Relations, Michaelia Cash, expressed the most nonsense – claiming the legislation will end the entire economy.
The truth is the Omnibus bill will mean changes in four key areas.
Labour-hire crackdown
Currently, a loophole allows companies to employ workers through labour-hire businesses and then pay them less than regular employees.
Qantas is one of the most egregious offenders here.
It uses 28 different companies to employ staff to avoid paying the same wages as required by relevant enterprise agreements.
In fact, it famously sacked 1700 baggage handlers and then re-employed them through labour-hire companies – a move the Federal Court found was unlawful.
The case is currently on appeal to the High Court which will deliver its findings this week.
The Closing Loopholes bill will allow the Fair Work Commission (FWC) to order a company to pay its labour-hire workers the same as listed in the enterprise agreement.
There are many exceptions, however. For example the law doesn’t apply to small businesses.
The Closing Loopholes bill will allow the Fair Work Commission to order a company to pay its labour-hire workers the same as regular workers.
New class of employee
Currently, the law treats gig economy workers as independent contractors with none of the rights that employees get, such as base pay, paid leave and penalty rates.
The Closing Loopholes bill will instead create a new class of worker: “employee-like” workers.
The FWC will have the power to decide who qualifies as “employee-like” and set minimum conditions for them.
Moreover, the FWC will also ensure that these workers get the protection of insurance.
This is important considering at least 13 gig workers have died in accidents in recent years, leaving their dependents with nothing.
Employers claim this will result in higher prices for food delivery and care services.
The Closing Loopholes bill will create a new class of worker.
Wage theft now a crime
Wage theft is widespread across Australia affecting dozens of industries.
It happens when employers fail to pay the legal minimum entitlement and can come in many forms. For example, failing to pay overtime or penalty rates or superannuation.
It can also involve cash-back schemes and refusing rostered breaks.
In many instances, wage theft is deliberate.
The Closing Loopholes legislation will make intentional wage theft a criminal offence.
It will attract a 10-year maximum jail sentence for individuals such as CEOs.
The new law will also quintuple the maximum civil penalty to $4.7 million or three times the total amount of the wage theft.
As an example of what this could look like, 7-Eleven ultimately copped to $173 million worth of underpayments.
The Closing Loopholes legislation will make intentional wage theft a criminal offence.
Business Council reaction
Crikey’s Bernard Keene and Glenn Dyer noted the reaction of the Business Council of Australia (BCA) recently writing:
“As the lobby group for the biggest businesses, the Business Council of Australia (BCA), can’t bring itself to oppose criminalisation. That might relate to the fact that, by our count, 39% of BCA members have been pinged for underpaying workers. And that includes some of the worst offenders, such as Wesfarmers, BHP, the big banks, the Go8 universities and a number of big law firms.
“That two in five members of the business elite engaged in underpayment illustrates the extent to which wage theft became not merely an epidemic in Australia, but a defining feature of the way Australian business conducted itself, and a core part of its operating model.
“But while systemic wage theft was being carried out across the economy, CEOs and company executives were, luckily, spared. They didn’t even endure any of the wage stagnation that faced Australian workers from 2013 onwards. According to data compiled last year by the Australian Council of Superannuation Investors, the average remuneration of ASX100 CEOs increased by nearly 90% between 2014 and 2021 in nominal terms, compared with an 18% increase in the wage price index in the same period, or from less than 80 times average adult earnings to more than 100 times.
“Which is fine, of course, because we know CEOs work 100 times harder and longer than, say, nurses, teachers, factory workers and delivery drivers.”
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Who is a casual?
In 2021, the former Coalition government defined a ‘casual employee’ in the Fair Work Act.
It said that a person is a casual employee based on the offer of employment rather than the nature of the work.
The Closing Loopholes bill will change the definition based on ‘the real substance, practical reality and true nature of the employment relationship’.
This means that what the employer and employee do in practice will be relevant.
For example, if the employee works a regular pattern of work, even if it is not absolutely uniform, this would indicate the employee is a permanent employee.
The law will also introduce a new ’employee choice’ – where an employee can request to be changed from casual to permanent employment.
There will be limited grounds for an employer to reject an employee choice notification.
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Fair Work Claims is a private consultancy and advocacy firm with no affiliation to any government agency, commission or tribunal.
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