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Understanding the Closing Loopholes Bill (No 2)

Australia’s employment landscape is on the cusp of significant transformation with the recent passage of the Closing Loopholes Bill No 2 through the Senate on 8 February. Aimed at tightening the reins on workplace practices, this legislation brings to the fore new protections for employees, casual and gig workers, along with a revised legal definition of ’employee’. With the Closing Loopholes Bill expected to make it through the House of Representatives, thanks to Labor’s majority, Australian employers must ensure their business and its practices are compliant with the new legislation. The urgency to review employment contracts and internal processes has never been more critical to ensure compliance with the impending changes.

The Right to Disconnect

In an era where work-life boundaries are increasingly blurred, the Bill introduces a groundbreaking ‘right to disconnect’. This provision empowers employees to unplug outside of work hours without fearing repercussions, unless in circumstances deemed unreasonable. The criteria for what constitutes reasonable contact hinges on the nature of the outreach, compensation for after-hours work, the employee’s role, and personal circumstances. A failure to respect this right could see employers facing adverse action claims, emphasising the need for businesses to recalibrate their after-hours communication strategies.

Redefining ‘Employee’

The Bill seeks to clarify the murky waters surrounding the employee versus contractor distinction (something we’ve covered in an article previously) by adopting a holistic approach that considers the “real substance, practical reality, and true nature of the relationship.” This shift away from contractual formalities to a more substance-over-form evaluation aims to better capture the essence of modern working arrangements. The introduction of this definition underscores the importance of accurately classifying workers to avoid the pitfalls of misclassification.

Casual Workers Redefined

The legislation also proposes a new definition for ‘casual worker’, emphasising the absence of a ‘firm advance commitment’ to ongoing work as a key determinant. Coupled with ‘casual conversion’ provisions that place the onus on employees to seek permanent status, the Bill mandates employers to consider these requests fairly, marking a pivotal change in how casual employment is managed.

Addressing Intractable Bargaining

Building on previous reforms, the Bill enhances the Fair Work Commission’s (FWC) authority to intervene in cases of intractable bargaining. It ensures that arbitrated outcomes cannot undercut the terms of existing workplace agreements, thereby providing a safety net for employees and unions engaged in collective bargaining processes.

Cracking Down on Underpaying Workers

In response to the persistent issue of wage theft, the Bill escalates the penalties for underpaying workers to include substantial fines and the possibility of imprisonment. This measure, coupled with provisions allowing unions expedited access to workplaces under suspicion of underpayment, signals a robust crackdown on exploitative labour practices.

Protections for Gig Workers

Recognising the vulnerability of workers in the gig economy, the Bill introduces minimum entitlements and safeguards, including the right to challenge deactivations from digital platforms. This move seeks to balance the scales for gig workers, ensuring they are not left behind in the digital age.

What Now?

The Closing Loopholes Bill No 2 represents a significant leap forward in the protection of workers’ rights in Australia, extending its reach to include the modern nuances of employment. As these changes are brought into force, the message to Australian business owners is clear: the time to act is now. Ensuring compliance with the new legislation is not just a legal obligation but a crucial step towards fostering a fair, respectful, and balanced workplace. Failure to adapt could have far-reaching consequences, making it imperative for businesses to understand and embrace these changes with immediate effect.

If you’re unsure about the nature of the working arrangements you have with your employees, including the contracts under which they are employed, we recommend seeking advice from a HR or legal professional, or the Fair Work Commission for clarification and guidance on these issues.

Detailed information about the Bill can be found here: Closing Loopholes – Department of Employment and Workplace Relations, Australian Government (dewr.gov.au)

written by:

Ben Teti

Ben’s career began in April 2008 specialising in taxation and business advisory by managing a small portfolio at a young age. He joined McKinley Plowman in 2014 as a Senior Accountant and with his passion for business and assisting clients in achieving their objectives he has progressed to a Business Services Manager, and more recently being appointed as an Associate Director.

As a qualified Certified Practising Accountant, his areas of expertise include but are not limited to, assisting clients with new business start-ups, advising on business structures, tax planning, business valuations and management reporting across many industries.

Ben prides himself on being part of his client’s business journey in taking them from where they are now and working towards where they want to be.