The Federal Government has introduced into parliament the Fair Work Laws Amendment (Closing Loopholes) Bill 2023 which contains a wide range of proposed changes to the Fair Work Act and related workplace laws. While the Bill is not yet law and has yet to be properly examined and debated by the Parliament, it will pose significant impacts for all employers, subcontractors and independent contractors if the changes in the Bill are passed into law.

The following information provides an overview of the main changes proposed and what they mean for workplaces in the building and construction industry.

Overview of Key Changes

  1. Casual definition and new rights to request conversion: The proposed changes will replace the existing definition of ‘casual employee’ with a new (less certain) definition and introduce a new “employee choice pathway” for workers to change to permanent employment at their request. The new ‘employee choice pathway’ changes pose a range of problems for employers, including that they will only have extremely limited grounds to refuse workers who want to change from casual to permanent. Disputes will have to be resolved by the Fair Work Commission.
  2. “Same Job, Same Pay” – Labour Hire changes: These changes are said to prevent bargained wages in EBAs from being “undercut” by the use of labour hire workers who are paid less than the EBA rates. The amendments proposed in this area are complex and go much further than traditional labour hire. As written, the changes will capture subcontracting in building and construction, and operate on the basis that subcontractors are covered unless they can prove otherwise before the Fair Work Commission.
  3. “Employee-like” workers and the ‘gig economy’: New provisions will be created allowing the FWC to set minimum standards for ‘employee-like’ workers. Although the Government says it intends these changes to be limited to workers in the ‘gig economy’ the terms of the Bill are highly complex and result in a broad scope with significant potential to capture independent contractors and self-employed tradies, including those who list their services on platforms such as Airtasker and Hipages.
  4. Unfair contracts disputes: The Fair Work Commission will have new powers to deal with disputes about unfair terms in services contracts to which an independent contractor is a party. These powers will replicate and expand certain elements of the existing Independent Contractors Act 2006 but also broaden the scope of what represents an “unfair contract term”. It will also mean these claims are heard by FWC rather than a Court, who can also make orders about what can and can’t be included in a commercial contract. Unions will have the power to bring applications to declare a contract term unfair.
  5. New legal principles to determine the meaning of “employee” and “employer” – These amendments will insert new principles into the Fair Work laws to be used when determining the ordinary meanings of ‘employee’ and ‘employer’. The changes are designed to overturn the clear and simple rules upheld by the High Court and replace them with a range of complex factors to determine the “real substance, practical reality and true nature of the relationship” by reference to the “totality of the relationship” between the parties. If passed, these changes will likely see many independent contractors forced into becoming employees against their will, create confusion for employers and vastly increase the associated legal risks.
  6. Watering down existing “Sham Contracting” rules: The laws that define what is “sham contracting” (e.g., misrepresenting employment as an independent contractor arrangement) will be watered down by replacing the existing test of ‘recklessness’ to the lower threshold of ‘reasonableness’. Combined with changes to the rules about who is an employee vs independent contractor, these amendments will result in a big increase in the legal risks for businesses engaging independent contractors.
  7. New rights for union delegates: The amendments proposed will create a new framework for delegates’ rights and new protections specifically for workplace delegates when seeking to exercise those rights. There are new offences for employers when dealing with union delegates, new rules about union representation and the requirement for standard facilities for union workplace delegates. The new changes will operate on the basis that employers must first prove they’ve done nothing wrong, if a union or delegate alleges a breach has occurred. 
  8. Changes to Right of Entry notice requirements: These amendments allow unions to obtain an exemption certificate from the FWC to waive the 24 hours’ notice requirement for entry if they suspect that somebody has been underpaid. This will make it much easier for union officials to access workplaces and sensitive business records.
  9. Wage theft and increased penalties: These changes will introduce a new criminal offence for “wage theft” which will include the potential for employers to be imprisoned for up to 10 years if they’ve underpaid workers. Other penalties and fines will be substantially increased and the existing test for what constitutes a “serious contravention” will be watered down.
  10. Enterprise bargaining changes: There are a range of changes proposed to bargaining laws. The most significant of these include a new pathway for employers covered by multi-employer EBAs to shift towards a single-interest EBA that applies only to their workplace. Other changes include that the Fair Work Commission will have new powers to make and vary model terms for flexibility, consultation and dispute resolution to be included in all Modern Awards and EBAs, despite such terms having only been reviewed and settled by the FWC very recently.
  11. Protections for workers experiencing family and domestic violence: Amendments proposed give more protections against discrimination for employees who have been, or continue to be, subjected to family and domestic violence.
  12. Union demerger rules: These changes will repeal amendments made in 2020 making it easier for divisions within amalgamated unions to withdraw from other divisions following a merger. These changes won’t affect employers in building and construction but may make it harder for divisions within the CFMEU who have voted to withdraw from amalgamations with the Construction and General Division.
  13. Road Transport rules: FWC will receive powers to set minimum standards for owner-drivers in the road transport sector.
  14. Asbestos Safety and Eradication Agency (ASEA) – expanded role to include silica: The Bill will extend the functions of the Asbestos Safety and Eradication Agency to address silica related diseases. This will allow for a more central and coordinated approach to upcoming changes to safety rules about the use of engineered stone.

Master Builders SA oppose this Bill which will potentially have a negative impact on productivity and add increased costs to businesses and consumers at a time when all Australians are struggling with the cost of living.

For more information on how the ‘Closing Loopholes’ industrial relations Bill will impact you and how you can defend your rights, visit https://defendyourrights.com.au. If you have any questions, please contact our Employment Law and Safety team by calling (08) 8211 7466.