"Closing loopholes" Bill - An update for APSCo Members

Authored By Carly Fordred

Since our update last month, a lot has happened. Tony Burke delivered a speech to the Press Club last Friday outlining key elements of his newly titled “Closing Loopholes” Bill with subsequent introduction in Parliament on Monday September 4.

While the Government was set on passing this second tranche of IR reform before Christmas, the Senate Opposition and cross bench has (only hours ago and as a result of lobbying by us and others) successfully delayed its passage until after 1 February 2024 when a Senate Education & Employment Committee Inquiry into the Bill (Inquiry) will report.

What happens next?

The Bill is still likely to be debated for several weeks in the House of Reps, noting the Government has the numbers there. However, there will now be a more appropriate length of time for the Inquiry to take submissions, hold hearings and report on the Bill –important for a 284 page Bill and 521 page Explanatory Memoranda virtually no one had seen until this week. Given further Senate debate follow the Inquiry’s report, this effectively means the Bill is not likely to pass until at least mid-February 2024.

APSCo will make submissions on amendments required as part of the Inquiry process, thankfully now focussed on an income cap for existing casual conversion laws, given successful outcome from our lobbying on other areas of previous concern. More on this below.

What does this mean for your business?

We are pleased to report largely positively developments in line with the direction flagged in our last update, with a better-than-expected result on a high income carve out for the new no-cost unfair contracts jurisdiction. Further lobbying to try and get a high income carve out from the existing casual conversion obligations is required.

While not a comprehensive list of the Bill’s obligations, key new loopholes covered (and on which we lobbied) are:

1.     Allowing the FWC to set fair minimum standards for ‘employee-like’ workers, including in the gig economy. As previously reported, in order to be captured workers must meet the following two definitions, which effectively exclude APSCo member professional engagements:                               

i.   Engage in digital labour platform work                           

 ii. Be an ‘employee-like’ worker.To meet this, the worker would have one or more of the following characteristics:

  • Low bargaining power
  • Receives remuneration below the rate of an employee performing comparable work
  • Low degree of authority over performance of work

2.     New power for FWC to deal with disputes about unfair terms in independent contractor services contracts below the s15C defined/s536ND(2) high income threshold (to be set out in regulations). The existing (mostly unused) Independent Contractors Act pathway will only continue for those above this threshold. Our lobbying efforts will now focus on what the Regulations should include in relation to an income threshold and the ability for it to be annualised.

3.     Protecting bargained wages in enterprise agreements from being undercut by the use of labour hire workers who are paid less than those minimum rates labour hire. To close this loophole, the Bill would enable employees and organisations entitled to represent their industrial interests, as well as host businesses, to apply to the FWC for an order that would require labour hire employees to be paid  no less than what they would receive if they were directly employed by the host business and paid in accordance with the host’s enterprise agreement or other employment instrument. As per our last update this will not apply to any professional engagements via labour hire to the extent that there is no relevant enterprise agreement in place. Further, labour hire workers who are paid higher rates than directly employed workers would not be affected.

4.      Providing casual employees with a new pathway to change their employment status/convert to permanent via a new proactive notification procedure (i.e. the employee can communicate a desire to go permanent after 6 months). The existing casual conversion procedure (via required employer offer after 12 months) remains. The amendments also:

1.       establish a robust new framework for dealing with disputes about (casual) employment status which, again, are not likely to arise for professional

2.       introduce a requirement to provide a casual employment information statement to casual employees at 12 months of employment, in addition to when the employment commences.

We will continue to lobby for the addition of an income cap to the existing conversion obligation given the stats on the low rate of take up and significant administrative burden.

What are the challenges of this Bill?

  • the new proposed definition of “employee” with a reversion to the pre Jamsek common law multifactor test requiring the totality of the relationship to be considered when assessing whether a worker is an independent contractor or an employee. The new definition would only apply for the purpose of the Fair Work Act, not other laws relating to employment.
  • the existing definition of “casual employee” is also to be replaced with an objective pre Workpac v Rossato definition (which is based on whether the employment relationship is characterised by "an absence of a firm advance commitment to continuing and indefinite work"), “having regard to the real substance, practical reality and true nature of the employment relationship” versus what the contract says on its face.  

The amendments would also:

  • prohibit sham arrangements, whereby employers unreasonably misclassify employees as casual, dismiss a permanent employee to engage them as casual or make a misrepresentation to engage an employee as a casual, and
  • have the effect that, for a casual employment arrangement to be lawful, the employee would have to receive an identifiable casual loading, regardless of whether the employee is entitled to such a loading under an industrial instrument. 
  • Upshot of these new “employee” and “casual employee” definitions - Members should not be alarmed but should err on the side of caution by considering all relevant, objective factors when entering new contracts or re-considering existing ones -to ensure that they are not engaging someone as a contractor (when various common law factors indicate they are an employee) or as a casual (when objective factors suggest permanence). Further briefing on the specific factors to be considered will be provided once the Bill is closer to passage. Comfort should lie in the fact these matters are only likely to be tested in the case of a dispute, and a low incidence of professionals disputing the nature of their engagement is likely to continue. 

Other elements of the Bill of interest but which were not the focus of our lobbying are:

  • A new criminal offence for wage theft has been introduced, although it only applies to intentional conduct, not inadvertent underpayment
  • A new offence of industrial manslaughter is proposed for the Work Health and Safety Act 2011
  • Changes to the sham contracting provisions of the Fair Work Act. The new test would require employers who have misrepresented employment as independent contractors to prove they reasonably believed that the employee was an independent contractor, not merely that they were not reckless as to the employee’s correct status

Harmonised versus national labour hire scheme - Licensing and Reporting

Recent DEWR meetings included advice that the labour hire licencing component of IR reform has been moved to a cross jurisdictional Ministerial Working Group led by QLD and Victoria, which is tasked to report back to the Federal Govt by October. That group is charged with coming up with a harmonised labour hire model (where all states harmonise with model national laws, similar to WHS). The Federal Parliament will then decide on next steps-including whether it imposes a national scheme.

What is APSCo doing?

We subsequently met with Victorian IR Minister Pallas’s office (given Victoria has the most far reaching and only universal scheme without a high income carve out) and have lobbied for a high income carve out. We have also sought meetings with relevant QLD and NSW ministerial offices in an effort to ensure that any harmonised scheme (preferably) focuses on art risk industries only (like in SA) and, (at least) includes a high income carve out (like QLD and ACT).

It would appear Victoria’s unwillingness to pare down its overreach on labour hire licencing is the reason that this component of IR reform has been hived off by the Federal Government. We will continue to lobby with all states on the need to focus FWC resources on at-risk industries/workers (given the massive delays caused by Victoria’s universal scheme). We will also continue to highlight statistics provided as part of our national submission around the significant administrative burden of labour hire schemes (reporting hours and licensing fees) and lack of any policy justification in the professional context (given they don’t deliver any greater protection to professionals).

New NSW Commission of inquiry into Health funding and NSW Greens call to remove external locum recruitment

After reaching out via Cornerstone to NSW Health Minister, Ryan Park’s, office to determine Government intentions, if any, to review the use of external recruitment agencies for locum doctors, we ascertained that an independent NSW Health funding Inquiry led by Mr Richard Beasley SC will include this in its scope. The Inquiry was established on 24 August 2023 and will report by 24 August 2024. We will ensure that APSCo makes submissions to it and are also awaiting a response to our request for a meeting with Minister Park’s office. We will additionally seek a meeting with Greens politician, Amanda Cohn, who is pushing for locums to be brought in house in NSW.