Introduced to federal Parliament earlier this month, the Fair Work Legislation Amendment Bill is more than 270 pages of changes to workplace law, including the introduction of a criminal offence for wage theft.

Other additions are a new definition for “casual” employment and new rights for that classification of worker, a new definition of “employee”, better conditions for gig economy workers and changes to labour hire arrangements.

Federal Labor’s proposed changes are broadly welcomed by SA Unions and somewhat opposed by Business SA, which sees some of the new requirements as onerous for small businesses.

But according to DMAW Lawyers principal Paul Dugan – an experienced industrial relations and workplace lawyer in South Australia – the planned amendments to the Fair Work Act are “winding back the clock”.

“They’re winding back the clock a little bit in terms of developments that have occurred over the last few years in workplace law, partly through court decisions and partly through amendments that were made to the Act by the previous government that bowed from those court decisions,” Dugan told InDaily.

“They were perceived to be employer-friendly or a bit more black letter law.”

He highlights the new definitions for “casual employee” and “employee” generally as changes that are diverting from what the Court has previously determined.

Under the Closing Loopholes Bill, the new definition for a casual employee takes into account the characterisation of a relationship between employer and employee, rather than what is agreed upon under a contract.

It also empowers those on casual contracts to ask to be made full-time or part-time after one year in the case of small business workers or six months for non-SMEs if they have been working hours as if they were already full-time.

Similarly, the definition of employment will change if the Bill passes by “ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person”, rather than what’s written down in a contract between two parties.

“Both of those issues were the subject of considerable litigation and High Court cases,” Dugan said.

“Ultimately, the High Court interpreted the common law definition – in a very black letter law way – to say whether someone is a casual or an employee must be determined by reference to the contract that you enter into rather than ‘well this person looks like and is operating very much like an employee and therefore they’re an employee’.”

Business SA senior policy adviser Karen van Gorp said the changes to current arrangements for casual employees will have an effect on small businesses in SA, particularly those like retail, food and hospitality businesses that rely on casual workforces.

“They hire casual staff which fill in the changing needs,” she said.

“But they try to make it as regular as possible for those casuals. If an employer felt that they needed to change how they manage casuals they would not have any regular work.

“Entry-level employment for a lot of our younger people – and this is how they get experience in the workplace – is not going to exist because employers are going to feel that they’re at risk by following that sort of pattern.”

Gig workers in the fast lane

The Closing Loopholes Bill will also give those who work for digital rideshare and delivery platforms minimum pay standards and protection against “unfair deactivation”.

While less of a problem for South Australian businesses, the move has been welcomed by SA Union’s Beasley who recently penned an op-ed for InDaily comparing the plight of app-based gig work to the unregulated workplace of 150 years ago when “workers were employed on seasonal or daily basis, lining up every morning down at the wharves and at farm and factory gates in the hope there’d be some work available for them”.

Speaking to InDaily, Beasley said it was “honestly outrageous that we have seen the re-emergence of that style of work”.

“Whether or not it is dressed up in a nice shiny phone or table, it’s not right,” he said.

“All workers should be able to have a level of fairness and security in their working lives that allows them to plan for their futures and provide for their families.

“We hope that the reforms that are being made in the Closing Loopholes Bill are going to provide some of that fairness and security to gig workers.”

Bolstering pay for labour hire workers

Another element of the Bill will give workers under labour hire contracts the right to be paid at award rates as if they were direct employees of the host.

DMAW Lawyers principal Paul Dugan. Photo: John Krüger

“The catalyst for these amendments… is a general perception that labour hire employees shouldn’t necessarily be paid less just because they are engaged by a labour hire employer,” DMAW’s Dugan told InDaily.

“The concern there is that the whole outsourcing process has the potential to disadvantage employees by enabling a labour hire entity to circumvent workplace relations conditions that have been developed over a long period of time and under enterprise arrangements.

“Employers obviously perhaps try to avoid what they consider to be unnecessarily onerous legacy-type enterprise agreements driven by unionised workforces.”

The proposal to change labour hire arrangements has caused concern from Business SA members according to van Gorp.

“They’re very small labour hire firms in niche markets and they’re concerned because they currently pay their people higher than the award anyway,” she said.

“What will happen? Will the unions become more involved? Will they end up having an order from the Fair Work Commission saying that they have to pay the various enterprise agreements? They’ll have to learn the provisions of every single one of those enterprise agreements.

“It’s fine for the really big companies, but not so much for the smaller niche organisations. It doesn’t take into account the needs of small organisations.”

SA Unions’ Beasley was “not surprised” that Business SA would take a position against changes that “might see wages or rise or insecure jobs become more secure”.

“What is proposed in this Bill is some very sensible reforms to deliver some much-needed fairness and security to working people,” he said.

“In South Australia, we are somewhat the insecure work capital of the country – nationally there are about one in four people in one or another form of insecure work; here in SA it’s one in three.

“South Australia is a jurisdiction that has a very large small business sector, and we know that that sector is particularly reliant on regular people spending their pay packets so it’s really important that workers have enough money to survive if we’re expecting workers to spend money on the local economy.”

Criminalising wage theft

One of the major objectives of the Bill is to criminalise intentional underpayments of employees by introducing a “wage theft” offence.

This would mean companies face criminal penalties for intentionally engaging in conduct that results in the underpayment of workers, with the offence to carry a maximum fine of the greater of either $7.925 million or three times the amount of the underpayment.

Individuals who engage in intentional wage theft face up to 10 years in jail and/or a fine of the greater of either $1.565 million or three times the amount of underpayment.

Business SA’s van Gorp said members were “highly unlikely to be caught up in this”.

“Recklessness is what the legislation is looking for, and members of an organisation like Business SA get access to our business advice hotline – they can ring with any question about the Awards and how they work; they can get their employment contacts checked; they get an Award service so they’re told when wages increase and that’s all calculated for them,” she said.

“We aren’t really concerned.”

What Business SA was worried about however is the potential that there will be ‘overlapping’ wage theft laws between state and the Commonwealth which could expose businesses to competing lawyers of penalties.

“Employers already face ‘‘severe challenges’’ managing complex workplace obligations to avoid underpayments,” she said.

SA Unions secretary Dale Beasley addresses a protest rally before the bill was debated in the Upper House. Photo: Brett Hartwig/InDaily

“There is no need to waste scarce resources, we should be focused on prevention and education.”

SA Unions welcomed the criminal provision, noting that a recent Parliamentary Committee in South Australia found wage theft was “endemic” in the state.

“It’s practically a business model for a lot of businesses,” Beasley said.

“And there is a cost associated with that – about $500 million a year out of workers’ pockets and out of the local economy.

“The laws we currently have are not enough to break that business model and ensure that workers are getting the wages they’re entitled to.”

Reform wish list and help for businesses

As comprehensive as the Closing Loopholes Bill is, Beasley said there was still more the federal government could do to protect employees.

He particularly was pushing for a “right to disconnect”, whereby workers have a legal right to not be contacted while out of office.

“What we find is that a lot of workers are doing about six and a half weeks of unpaid overtime every year,” Beasley said.

“Ensuring that there are strong protections for people to be able to clock off from work and addressing unpaid overtime is another key element that we’re really focused on.”

Meanwhile, the Business SA representative said that businesses concerned about the proposed legislative changes should get on the front foot and start planning for the changes, some of which would come into effect from 1 January 2024 if passed by federal Parliament.

“We’re available to help. We review your contacts, policies and procedures. Check your casual employees and offer people permanent if that’s something they want. Review all your contractor arrangements – there is going to be a significant change in contractor arrangements,” she said.

“We’re going back towards that more common law approach which means that it’s not just what’s written in the contract but it’s how everyone behaves.

“Conduct a payroll audit, ensure that you’re complying with the terms and conditions, and keep an eye on the Business SA site.”

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