Startups to be impacted by major changes to Australian employment laws

The newly proposed Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 has sparked a wide range of reactions: to supporters, it is a landmark change in worker protections but for employers the changes may create significant challenges to existing arrangements.

For startups and SMEs in Melbourne (and across Aus generally), understanding the potential impact is crucial for future planning and operations. There are 6 major changes to be aware of:

1. Labour Hire: The "Same Job, Same Pay" provision means that if you rely on labor hire providers, you'll be mandated to pay these workers the same rate as your direct employees for similar roles. However, the Bill carves out businesses with fewer than 15 employees and short-term hires (less than 3 months).

2. Wage Theft: The proposed criminalisation of wage theft imposes penalties of up to 10 years imprisonment and fines up to $7.825 million.

3. Casual Employees: If your startup employs casual staff, new definitions and rules around casual employment will likely impact your workforce strategy. Casual employees can request a status change after six months, requiring a response within 21 days.

4. Gig Economy: If you're in the gig economy space, pay attention to the new "ramp" of worker types, as the Fair Work Commission (FWC) will set minimum standards for gig and transport industry workers which you will need to abide by

5. Anti-Discrimination and Safety: New discrimination protections and industrial manslaughter offences add layers of compliance that startups should be aware of.

6. Regulatory Oversight: With the FWC and new expert panels playing significant roles, expect increased oversight and potential interventions in disputes.

Whilst Minister Tony Burke argues that the bill will have a 'minor' impact on most businesses, the legislation's vast scope suggests that startups should closely monitor its progression and prepare for its implications. Failure to adapt to these changes could result in hefty penalties and operational setbacks. As the bill faces debate in the House of Representatives and the Senate, now is the time to re-evaluate your startup's HR policies and consult legal experts to navigate the complexities of this potential labour law overhaul. We’ve set out each of the major changes below in a bit more detail, but please reach out directly if you wish to discuss.

Labour Hire

• Aim: Ensure "Same Job, Same Pay" to discourage undercutting traditional labour costs with labour hire arrangements.

• Impact: The Bill estimates that around 67,000 workers will be impacted.

• Mechanism: The FWC can mandate that labour hire providers pay the same rates as the host employer for the same work.

• Exclusions: Small businesses (less than 15 employees), genuine service contractors, and short-term hires (less than 3 months).

Wage Theft

• Aim: Introduce criminal wage theft offences.

• Penalty: 10 years imprisonment and fines up to $7.825 million or three times the underpaid amount.

• Exclusions: Only intentional conduct is punishable; small businesses who can show they have followed the small business compliance code will be protected.

Casual Employees

• Aim: Redefines ‘casual employee’ based on the real nature of employment, rather than contractual provisions.

• Mechanism: Employees can request a status change after six months (12 for small businesses), and employers must respond within 21 days. The use of long term casuals will need to be seriously considered if these changes come into effect.

• Protections: Employers cannot reduce hours or change work patterns to avoid these provisions.

A New 'Ramp' for Workers

• Aim: Create a spectrum from full-time employees to independent contractors.

• Mechanism: FWC will set minimum standards for "regulated workers" like gig workers and transport industry contractors.

• Dispute Resolution: FWC can intervene in cases of unfair deactivation or termination.

Anti-Discrimination Protections

• Aim: Include protections against discrimination based on family and domestic violence.

Work Health and Safety Changes

• Aim: Introduce industrial manslaughter offense and other penalty changes.

• Penalty: Up to $18 million for bodies corporate and 25 years for individuals.

Where to from Here?

• The House of Representatives will debate the Bill for four weeks before it goes to the Senate.

• Opposition from various parties and independents suggests passage might be challenging, but the Government aims for approval by Christmas of 2023.

These are major changes to Australia’s current labour laws. If they’re passed you should reconsider your existing employment / contracting arrangements to ensure they are compliant. Reach out to us here if you would like to discuss.

The above article was written by Pippin Barry (BA; JD, Unimelb) an Australian Legal Practitioner.