Government finds further loopholes to close 5 min read
The Federal Government's Closing Loopholes Bill passed the House of Representatives on Wednesday, 29 November 2023.
In this Insight, we examine some of the key amendments incorporated into this amended Bill.
As we have previously reported (see here), the Closing Loopholes Bill includes a new definition of 'casual employee' based on 'the real substance, practical reality and true nature of the employment relationship', and taking into account a range of factors. One factor is whether the employee has a regular pattern of work. Proposed amendments to the Bill confirm that no single consideration is determinative of whether an employee is casual or permanent and that an employee who has a regular pattern of work may still be a casual employee if there is no firm advance commitment to continuing and indefinite work. Despite this amendment, it is likely that a regular pattern of work would generally be a factor weighing heavily in favour of the employment being permanent, not casual.
A further change to the Bill in respect of casuals is that the existing provisions regarding employee requests for casual conversion would be removed for employees engaged after the laws come into effect. This would leave only the proposed new 'employee choice' process for a new employee to initiate casual conversion. Importantly, under the new employee choice process, employers would be unable to rely on reasonable business grounds to refuse an employee choice for casual conversion.
For existing casuals, their existing right to request casual conversion would be preserved until they are able to initiate the new employee choice process. This means six months1 after the Bill commences, existing casuals would lose their existing right to request casual conversion, but would be able to use the new employee choice process.
The amendments also remove the proposed offence for misrepresenting permanent employment as casual. However, there would remain a risk that a casual employee may bring a claim against their employer for unpaid permanent employment entitlements (such as annual leave and redundancy pay) on the basis that they have been mischaracterised as a casual employee.
The provisions of the Bill regarding regulated labour hire arrangement orders (RLHA orders) have been amended to provide that the FWC must not make an RLHA order unless it is satisfied that the relevant work is not for the provision of a service. Workplace Minister Tony Burke has previously stated that this amendment is intended to provide a 'clear exclusion' for service contractors. However, to avoid an RHLA order, a service contractor would still need to convince the FWC it is providing a service and not supplying labour, having regard to the matters specified in the Bill.
The amended Bill also includes new provisions:
- permitting the FWC to determine that an RLHA order applies to multiple employers that supply employees to perform the same kind of work for the regulated host, either at the time the order is made, or by subsequent variation if a new employer starts to supply employees to perform the work after the order is made;
- extending the anti-avoidance provisions to include schemes undertaken for the sole or dominant purpose of avoiding the application of an RLHA order that has been made;
- in respect of the calculation of termination payments for labour hire workers;
- providing that if an RLHA order has been made and the instrument covered by the order is replaced by a new instrument, the RLHA order will have effect as if the new instrument were covered by the order; and
- imposing positive obligations on regulated hosts to:
- apply to the FWC to vary an RLHA order if a new employer starts to supply employees to perform the same work that is covered by the RLHA order after the order is made;
- advise prospective tenderers that they may become covered by an RLHA order if they are tendering for work that may result in them being covered by an existing RLHA order; and
- notify employers covered by an RLHA order if a new enterprise agreement is approved by employees and will be covered by the RLHA order if it comes into operation.
The amended Bill includes changes to the intractable bargaining provisions, which were introduced as part of the Secure Jobs, Better Pay reforms last year (see here and here for our previous Insights on these reforms).
Under the current regime:
- the FWC has the power to resolve enterprise agreement bargaining disputes by issuing intractable bargaining declarations and intractable bargaining workplace determinations; and
- in making an intractable bargaining workplace determination in relation to disputed terms not agreed during bargaining, the FWC must take into account certain factors, including the merits of the case and the interests of the employers and employees who will be covered by the determination.
The amended Bill proposes to introduce an additional requirement that the FWC, in making an intractable bargaining workplace determination that will replace an existing enterprise agreement, will only be permitted to include terms that are 'not less favourable' to each employee and union than a term of the existing enterprise agreement that deals with the matter.
If passed, these reforms could substantively undermine enterprise bargaining by disincentivising employees and unions from making any real concessions, tradeoffs or agreeing any changes to existing enterprise agreement terms that may benefit the employer. They could do so in the knowledge that, if the bargaining becomes intractable, the Fair Work Commission would be unable to arbitrate a term into any workplace determination that has this effect. These reforms would almost certainly result in more inefficient and intractable bargaining.
Or 12 months if the employer is a small business employer.