The Fair Work Amendment (Closing Loopholes No 2) Bill was recently passed, making significant changes to the Fair Work Act 2009 (FW Act). Among these changes is a new definition of ‘casual employee’ which will come into effect on 26 August 2024. 

Previously, under section 15A of the FW Act, the definition of casual employment was if:

1. An offer of employment by the employer is made on the basis of no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
2. The person accepts the offer.  
3. The person is an employee as a result of the acceptance. 

The new definition of casual employment considers the practical reality of the relationship, as opposed to merely the terms in the employment contract (as was previously the case). Broadly put, the new definition encompasses an absence of a firm advance commitment to continuing and indefinite work, and in circumstances where the employee is entitled to a casual loading or specific rate of casual pay under an industrial instrument. 

There are a broad range of considerations to determine whether there is an absence of firm advance commitment to continuing and indefinite work, including the real substance, practical reality and true nature of the employment relationship, and whether: 

• There is an inability of the employer to elect to offer work, or an inability of the employee to accept or reject work.
• It is reasonably likely there will be future availability of continuing work.
• There are full-time or part-time employees performing the same kind of work.
• There is a regular pattern of work for the employee.
• These amendments acknowledge a firm advance can take a range of different forms, including in an employment contract, but importantly, through a mutual understanding or reasonable expectation.

New pathways for casual workers to convert to permanent employment

The changes also include a new pathway for employees to change to permanent employment status, previously known as casual conversion. The new pathway replaces the existing right to casual conversion. 

If an employee has been employed for six months (12 months in a small business), they can choose to change their employment status to permanent. There must be a specific event which clearly shows the transition, and it’s now up to the employee to initiate the shift to employment. 

The upside is that the onus is no longer on the employer to review and offer casual conversion.

“The new definition of casual employment considers the practical reality of the relationship, as opposed to merely the terms in the employment contract.”  

Akin to requests for flexible work arrangements, casuals can write to their employer to notify them that they’d like to change their employment status, and employers are required to respond within 21 days. 

An employer may refuse a notification on any one of the following grounds:

• They believe the employee has been correctly classified as a casual employee, e.g. they aren’t working on a systematic basis.
• There are fair and reasonable operational grounds for not accepting the notification, such as if substantial changes would be required to the way work in the business is organised to allow the employee to convert. 
• A change of employment status to full-time or part-time would not comply with a recruitment or selection process required by law, such as the Public Service Act 1999, which outlines that casuals cannot convert without a competitive selection process.

Avoidance penalties to be aware of

The changes will also introduce new anti-avoidance provisions to prevent employers from improperly engaging casual workers. This means employers must not: 

• Dismiss or threaten to dismiss an employee with the plan to then re-engage them as casual. 
• Make false statements to persuade an individual to enter a casual employment contract, such as telling them they will be financially better off.
• Misrepresent employment as casual.

Breaching these provisions can attract civil penalties. The maximum payable under the FW Act increased by 500 per cent for both standard civil contraventions and serious contraventions from 27 February 2024. Companies can now face fines of $469,500, or $4,695,000 for serious contraventions.

Implications for employers engaging casual workers

HR professionals should get across these changes and update their casual conversion processes and procedures to ensure a smooth transition and compliance with the new regime.  Factors to consider include: 

• While not having a firm advance commitment to continuing work is a consideration in determining whether an employee is casual, employers should still consider any conduct on their behalf which could suggest the employee is not a casual (e.g. while a contract says there will not be commitment, sending a text to the casual promising to give them a specific shift every week).
• Ensuring casuals are paid a casual rate or casual loading where they would otherwise be entitled to one under an industrial instrument.
• Being aware that casuals can now request conversion to permanency, and considering what grounds (if any) an employer has to reject such a request.

Fay Calderone is an Employment Partner at Hall and Wilcox. 

A version of this article was first published in the June 2024 edition of HRM Magazine.

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Reading this article might spark a sense of déjà vu for some people: another busy year drawing to a close with the promise of significant industrial relations changes awaiting them in the new year.

This time last year, many HR professionals and employers were wrapping their heads around the Secure Jobs, Better Pay Bill. Now, it’s the Closing Loopholes Bill that they need to familiarise themselves with.

“These changes are a reflection of the changing business and industrial landscape. For instance, while it’s not part of this tranche of changes, the regulation of gig workers is a product of an evolving economy and society. It’s about ensuring that workplace relations laws keep up,” says Michael Byrnes, Partner at law firm Swaab.

Part one of this Bill was passed by the Senate on 7 December 2023, with more controversial aspects tabled for further discussion in 2024. More on that in a moment.

First, here are some of the most significant aspects of the Closing Loopholes Bill.

Criminalising wage theft

In just over a year, by 1 January 2025, employers could face fines up to $7.8 million and 10 years in jail for deliberate acts of underpayment. 

The new legislation will also include provisions for the underpayment of superannuation, following a deal struck with the Greens party to support the Bill. 

Greens Senator Barbara Pocock said superannuation theft should not be treated as an “optional extra” and that Australian employees are currently losing $1,700 in “intentional non-payment of their superannuation”, according to estimates from Industry Super.

The rest of Australia will join Queensland and Victoria, which criminalised the deliberate underpayment of employees (wage theft) in September 2020 and July 2021 respectively. 

Byrnes believes this will be the most significant aspect of the first tranche of IR changes. 

“This has been an important issue for some years, particularly since the introduction of the serious contravention provisions of the Fair Work Act, which were significant enough, but this takes it to another level.

“Even though I suspect there won’t be many prosecutions, the fact that employers face the possibility of criminal penalties, including imprisonment, will certainly focus the minds of employers on ensuring they’re compliant in terms of their payment obligations.”

“While it might seem daunting at first blush, it’s a matter of stripping it down and looking at the amendments that actually impact your business.” – Michael Byrnes, Partner, Swaab.

As has been emphasised in both government communications and media reporting, these new laws will only pertain to employers who deliberately underpay their people.

“A court will look at the knowledge, conduct and intention of executives of the business. They will look at whether or not they knew this was happening,” he says.

Importantly, Byrnes says if your business is currently on notice for underpayment – even if, in this instance, it was an accidental underpayment – and doesn’t remedy this by the time the new legislation is effective in 2025, that could be deemed a deliberate act of underpayment.

“It could be said that they are continuing a practice of underpaying employees with knowledge of it.”

Byrnes says HR and employers should treat this as a warning to “double down” on compliance exercises around payroll.

He recommends:

• Ensuring you have compliance measures in place to identify which industrial instrument applies to an employee’s role.
• Checking that employee classifications are accurate.
• Implementing sound record-keeping processes.
• Ensuring you’ve remedied any existing, historical underpayment notices before the new legislation is enacted.

Small businesses (those with fewer than 15 employees) will also be protected before this legislation is enacted.

“As part of this process, the crossbench Senator Jacqui Lambie demanded, as a condition of support, that small businesses be provided with some additional support and assistance in order to ensure they weren’t inadvertently caught up in the web of these wage theft provisions.”

These resources include the development of a small business Code of Conduct, to be created prior to the wage theft laws coming into effect, and extra funding for the Fair Work Ombudsman to assist in communicating these new obligations to small businesses, according to a report from Smart Company.

Read about the Victorian restaurant that was the first Australian business to face criminal wage theft charges.

Labour hire: same job, same pay

Employers who engage labour hire workers, such as airlines, mining companies and warehouses, will soon have to pay them the same as full-time workers. 

While the law is expected to receive Royal Assent and be implemented either late in 2023 or early 2024, the Fair Work Commission won’t be empowered to make ‘Regulated Labour Hire Arrangement Orders’ until late 2024.

“Applications might be able to be made prior, but the applicable orders  can’t be made until November 2024,” says Byrnes.”This is to give the Fair Work Commission [and employers] time to prepare.”

However, he notes that the anti-avoidance provisions will take effect upon implementation.

“If an employer is engaging in conduct to avoid these provisions, that conduct could be looked into.”

This might look like purposefully misrepresenting the nature of the work the labour hire workers are doing to suggest an enterprise agreement at the host employer does not apply, for example.

The government has estimated that around 66,000 labour hire workers could receive a pay increase based on this new legislation, and Byrnes says the industries most likely to be impacted by this are construction and mining.

This has sparked pushback from many people in the business community, including Australian Industry Group. Its CEO Innes Willox said, “The sad result will be uncertainty for businesses across a raft of crucial sectors that will need to grapple with how they respond to this unworkable legislation.

“Employers will now inevitably need to decide between navigating costly litigation before the Fair Work Commission in order to argue why they shouldn’t be caught by the new laws or simply reassess their willingness to offer job opportunities.”

According to a report from The Guardian, Workplace Relations Minister Tony Burke was able to get two powerful business groups over the line – Australian Hotels Association and the Australian Resources and Energy Employer Association – by excluding service contractors from the changes.

“This draws on the distinction between employees and independent contractors, to some extent,” says Byrnes. “The rationale is that it should only apply to labour hire workers who are being used as de facto employees or a supplementary workforce. You don’t want it to apply to people who are genuine contractors providing a specific service.”

To determine if someone is a “de facto employee” or genuine contractor, he suggests considering the following as a general guide:

• Is it a provision of a service as opposed to a supply of labour? If yes, then they are likely a service provider.
• Does the employer direct, supervise or control the work? If not, then they are likely a service provider.
• The extent to which the worker uses the employer’s systems, plants or structures. If they’re not using them consistently, then they are likely a service provider.
• Is the work of a specialist or expert nature? If yes, then they are likely a service provider.

“In some ways, it draws on the principles that have traditionally applied in distinguishing an employee from an independent contractor.”

If your organisation is one that relies on labour hire workers, Byrnes says it would be advisable to look at your enterprise agreement and do a mapping exercise to determine if there is crossover between the work of your labour hire workers and the work that’s covered by the enterprise agreement.

“It’s also worth assessing the potential economic impact that [this new legislation] could have on your supply of labour.”

Criminalising industrial manslaughter at a Commonwealth level

New Commonwealth industrial relations changes are unlikely to have a wide-reaching impact, says Byrnes, as workplace health and safety legislation is largely governed at a state level.

Most Australian states and territories have existing industrial manslaughter legislation in place, or are in the process of passing it.

“[The new law] applies to government employers who are covered by the Commonwealth system.”

As with the state-based legislation, this will apply to officers and persons conducting a business or undertaking (PCBUs) that demonstrate “a high degree of recklessness” or negligence to safety that result in an employee’s death.

The consequences of this could involve fines of up to $18 million for body corporates or the Commonwealth and a maximum imprisonment of 25 years for individuals.

Read about an employer who was jailed for an employee’s death in Western Australia.

PTSD supporters for first responders

Under the Bill, the onus of proof for first responders (emergency service workers, paramedics, etc.) to prove they have experienced post-traumatic stress disorder will be reversed.

Under the current system, it can be challenging for these workers to navigate workers compensation claims, as it requires them to prove that the nature of their work was a contributing factor to their deteriorating mental health – which only becomes more challenging if they are still recovering.

“[This change] is incredibly significant and important for the people affected, and a positive development so they can get the compensation and support they need,” says Byrnes.

“It’s essentially a rebuttable presumption that if you’re a first responder and have PTSD, that your work was a significant contributor to that PTSD.”

These reforms will cover Commonwealth and ACT government first responders, including Australian Federal Police employees, ambulance officers, paramedics, firefighters, emergency services communication operators, State Emergency Services operators and all other roles covered under the Emergencies Act 2004 (ACT).

The second act: controversial aspects of the Bill

While some would argue that the details outlined above are controversial, the most divisive elements of the proposed Bill are yet to be passed.

In September this year, when the Government first introduced the Closing Loopholes Bill, it faced significant backlash from both business groups and members of the crossbench, namely Jacqui Lambie and David Pocock. 

Both wanted to see the Bill split, as they felt it was unwieldy and that certain aspects required further discussion.

After agreeing to hold off on provisions of the Bill related to reforms to the gig economy, road transport industry and casual workforces, the government was able to get its other changes over the line in the final sitting week of 2023.

Byrnes notes that while the government opted to take an expedited step in getting some of the less controversial aspects of the Bill passed quickly, that’s not to say the rest of the Bill will be forgotten about.

“The most controversial and broadest change of all will be the casual employment changes, if [they’re] implemented. It will potentially impact a significant majority of employers.”

He also notes that the gig economy changes are interesting, as they will introduce regulation to a previously unregulated space.

“It will broaden the conception of what employment and workplace relations law is about in some ways, by extending it to [include] ’employee-like’ workers.”

He suggests that the second tranche of the Bill will be a priority in 2024, but we’re probably unlikely to see further changes until the Senate Committee’s inquiry is complete in February.

Getting across the details of all these changes might feel like a daunting and time-consuming task, which is why Byrnes suggests HR professionals take a high-level view of these changes.

“While it might seem daunting at first blush, it’s a matter of stripping it down and looking at the amendments that actually impact your business. 

“There are a raft of changes, but not all of them apply to all businesses. It’s important to be across these changes at a high level, but you don’t need to dig into the minutiae of them all.

“Compared to the changes from a year ago, which did have, by and large, universal application, this tranche of changes applies to more specific situations.”

He says wage theft is the main change that employers should be across, but notes that most employers would already have many of the appropriate safeguards in place.

“This is something that businesses should have already turned their minds to, so it’s just a matter of making sure that compliance is strict. The prospect of criminal prosecution also gives HR a card to play with senior management about the importance of ensuring there are resources and support for HR to implement the processes necessary for compliance.”

Keep an eye out for AHRI’s new Advanced HR Law short course in the new year, which will focus on a range of HR law topics, including Industrial and Employment Relations. In the meantime, browse AHRI’s existing suite of short courses that are on offer.

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The Australian government has unveiled plans to introduce industrial relations reforms that would offer more than 850,000 casual workers with regular hours a pathway to permanent employment. 

In a press release published last week, Workplace Relations Minister Tony Burke announced that a fresh definition of casual work will likely be introduced, empowering eligible workers to decide whether they wish to transition to permanent positions. 

According to Burke, the proposed amendments aim to address a legal “loophole” that enables certain employers to treat casual workers as if they were permanent employees, depriving them of essential job security and leave benefits.

The government plans to present these reforms to the parliament later this year as part of a broader suite of workplace relations measures to improve worker conditions and pay.

If passed, the reforms will prompt employers to consider how ‘casual’ their casual employees really are, says Will Snow, Employment and Safety Partner at Finlaysons.

“They’re seeking to reflect the reality that if you’re working regular hours, you should be able to become a permanent employee, and you should have those protections of a permanent employee, [such as] paid leave, notice of termination, redundancy pay and the certainty that you’re not going to lose your job next week because the hours go down,” he says.

“This sort of a change may well breathe new life into the rights of individual workers to choose certainty and security over that week’s pay packet.”

What issues are these changes trying to address?

The handling of casual employment has already shifted drastically in the last few years. One of the catalysts for this was a controversial series of court cases – Workpac v Rossato. 

In a 2020 case, the Federal Court found that a casual employee at Workpac, a labour hire company servicing the coal mining industry, was in fact permanent, due largely to his regular and predictable work hours, and therefore had a right to leave and other entitlements. However, once the ruling was passed down, Workpac sought leave to appeal to the High Court. 

In August 2021, the High Court overturned the Federal Court’s ruling and found that the employee was casual for the purposes of the Fair Work Act 2009 and Workpac’s enterprise agreement. The ruling clarified that a casual employee must have no firm advance commitment to ongoing work, and any commitment must be contained in an enforceable agreement. 

“This decision effectively said that, if you had a written contract which describes someone as casual and uses words like, ‘You agree that there’s no firm advance commitment,’ then that would be a very determinative factor in whether or not someone was casual,” says Snow.

“This sort of a change may well breathe new life into the rights of individual workers to choose certainty and security over that week’s pay packet.” – Will Snow, Employment and Safety Partner at Finlaysons

In light of these decisions, many businesses began carefully designing their casual contracts to include “magic words” like these which would automatically establish the employee as casual in the eyes of the courts, he says.

“What these proposed amendments would do, if passed, is simply say, ‘If you’re working regular hours, you should be able to elect to be able to become permanent, regardless of how careful the drafting of your particular contract may be,’” Snow explains.

“They want to make it more subject to the employee’s choice rather than the employer’s choice.”

Currently, under the Fair Work Act, employers are obliged to consider offering conversion from casual to permanent employment after 12 months of regular and systematic employment, or explain in writing why an offer to convert cannot be made on genuine business grounds.

Read HRM’s article on when employers must convert casual workers to permanent positions.

Although the full details of the bill have not yet been announced, Snow predicts that the changes will make it much harder for employers to push back on requests for casual conversion. The definition of ‘reasonable business grounds’ – which currently includes the expectation that the hours of work will significantly change or decrease – may also narrow.

However, it’s important to note that casual workers will have no obligation to convert to a permanent role if they don’t want to, regardless of how regular their hours are. While employers may see an increase in requests for casual conversion if these laws take effect, there are also many employees who are casual by choice and will not wish to convert, Snow says.

What challenges could this pose for employers?

While the proposed new legislation was welcomed by the Australian Council of Trade Unions, business groups such as the Australian Chamber of Commerce and Industry have argued that changing the definition of a casual worker is unnecessary and will reduce the flexibility of these workers.

According to Snow, one of the biggest concerns that businesses might have about the changes is the resourcing issues they could pose.

“The cost of labour is going to be similar – the Minister has said it’s not going to be an imposition on businesses, because you’ll be paying less per hour, but that will go towards people’s leave. 

“It will, however, be harder to manage short-term rostering and demand issues, and it may also affect overtime,” he says. 

“If I’m a permanent part-time employee working 20 hours per week, and I had to work 25 hours per week because of a spike in demand, then those five hours will most likely be [classified as] overtime and have significant penalty rates.”

To manage rostering issues, employers will need to budget for labour in advance rather than from pay period to pay period, he says. This is likely to be challenging for employers in industries that rely on casual labour, including hospitality, aged care and manufacturing.

Particularly for employers in these industries, it will be crucial to assess the organisation’s data on the usage of casual employment and the costs related to it in preparation for these changes.

“Think about your workforce requirements and the use of casuals, and understand that the flexibility which you might have built into those practices may not be available when these laws come into play,” he says.

“Again, many people won’t choose this – lots of people will say, ‘I’m not interested. I want to hang on to the money.’ But I would think that if [the employer has] less power to refuse, then more people will become permanent. 

“I’m certainly aware of a number of instances when people have wanted to become permanent and the employer has said ‘no’ on those ‘reasonable grounds’, and it will be interesting to see how those reasonable grounds might change.”

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HR and legal departments have been kept busy in 2018. They’ve seen changes to the modern slavery act, flexible work laws, long service leave (in Victoria), domestic violence leave, and 2019 will see Australia’s whistleblowing protection laws strengthen.

There are some specific legal changes worth taking a look back on. Some might not encompass the entire working population, but they’ve been extremely influential in their specific area.

The casual workforce

With the Parliament of Australia estimating there were approximately 2.5 million casual workers in Australia in 2016, (a quarter of the entire workforce), the ruling from Workpac v Skene was quite a big deal.

Skene claimed he was a permanent employee under the applicable enterprise agreement and the Fair Work Act, and was therefore entitled to annual leave, annual leave loading and penalties. The court agreed with Skene, ordering Workpac to pay his accrued leave entitlements on top of the casual rate of pay he’d been receiving.

“While the government could change the law to provide clarification, or address the practical issues arising from the decision, the current political climate doesn’t lend itself to change anytime soon. On this basis, employers and HR managers will need to be aware of the implications of the decision,” says Aaron Goonrey, partner at Landers and Rodgers.

Read the full article here.

The gig economy

It’s been a tumultuous year for the gig economy in Australia. While we’ve seen it grow, with Unions NSW estimating it adds $504 million per year to the NSW economy alone, and provides income for NSW 45,000 residents, we’ve also seen a big player exit the market.

On 20 August this year, Foodora officially ceased servicing the Australian community with door-to-door food delivery – with more than one sham contracting case hanging over their heads.

In the meantime a senate committee report pushed for changes to Australia’s employment laws, including tighter regulation of labour-hire companies, and better protections and entitlements for ‘non-standard’ workers.

Then, in November, the Fair Work Commission ruled that a Foodora rider, Joshua Klooger, was in fact an employee – not a contractor – creating a precedent that could empower gig workers and devastate some employers.

“It’s a tricky one because these companies want to deliver a higher level of service, but the more control and management you have, the more you’re pushed closer to an employment relationship,” says Andrew Jewell, principal lawyer at McDonald Murholme.

“This decision is quite big, and it’s quite big not just for Foodora (which has ceased trading) but for all of these gig economy companies,” he says.

Read the full article here.

Organisations with sensitive data

Data has been a hot topic in 2018, due to the Facebook/Cambridge Analytica scandal, CBA’s medical data breach, the ramifications of the Heathrow Airport USB debacle –  the list could go on.

So it’s appropriate that in February this year, new data breach laws came into effect applying to all organisations with obligations under the Australian Privacy Principles. The law requires organisations responsible for data to inform anyone who has had that personal information compromised, if it’s perceived to result in “serious harm”. Employers must also notify the Office of the Australian Information Commissioner (OAIC) of any serious breaches.

“Serious harm” seems like a fairly ambiguous description. At the time Landers and Rogers partner Aaron Goonrey and lawyer Luke Scandrett suggested employers err on the side of caution when assessing if “serious harm” would occur from a data breach.

“OAIC has published some guidelines on this topic, which suggest that serious harm may include serious physical, psychological, emotional, financial, or reputational harm. It also recommends that the risk of serious harm be assessed holistically, having regard to both the likelihood of harm to the individuals involved, and the consequences of that harm.”

“Failure to meet the requirements of the new scheme will be considered equivalent to interfering with the privacy of an individual under Australia’s privacy laws,” they write.

Read the full article here.

Women at work

It’s been a huge year for women across the globe. In the wake of #metoo many cases of sexual harassment have been exposed. While fears of a backlash remain,  never before have women been so able to stand up and speak out on issues of sexual harassment and violence.

In a January case, Carmelo Sapienza v Cash in Transit Pty Ltd T/A Secure Cash, the Fair Work Commission supported the dismissal of Mr Sapienza – who admitted to hugging and asking to kiss some of his female clients – despite the employer not even turning up to the hearing. At the time, Fay Calderone of Hall and Willcox said this perhaps signalled that in the era of #metoo and #timesup, cases of sexual behaviour in the workplace will not be tolerated.

“It was accepted Mr Sapienza was not provided with an opportunity to respond to the reasons for the termination clearly documented in the termination letters, and that he was summarily terminated without even a verbal conversation with his employer… it was found the process was seriously lacking in procedural fairness.”

“Nevertheless and quite bullishly by the FWC’s standards (pun intended), it was held that in view of Mr Sapienza’s admissions in respect to his physical contact with young female staff of a client, that the summary dismissal was not harsh, unjust or unreasonable,” she said.

Read the full article here.

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