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Changes to Workplace Laws – Significant Federal Government Reforms

3 min read ·  

Prime Minister Anthony Albanese and the Labor Party have won the federal election and are looking to implement their promised “secure jobs plan.” This would see major changes to workplace laws. It includes tougher laws for using contractors, clarity around when people can be classified as casuals, making job security an element of the Fair Work Act, and other reforms.

It’s likely that the Federal Parliament will pass these reforms. While legislation only becomes law once it’s passed, Tanda believes all businesses should be preparing for these changes – gearing up and being ready for significant change is key to staying compliant and avoiding hefty fines from Fair Work. Recently, Tanda’s Head of Product Compliance, Andrew Stirling, hosted a webinar outlining how these changes would affect Australian businesses. You can watch the webinar here, and for a complete summary, you can also read below.

Contractor Crackdown

The new Government believes that many contractors are offered the role at a lower rate than permanent employees to save costs, and also don’t receive benefits like annual leave. A new law will be introduced that will apply to contractors doing “employee-like” work. Labor’s plans are targeted at the gig economy but will apply to all businesses that use contractors There are also plans to reign in fixed-term contracts – where people permanently work on a contractual basis.

Employee-like Work

Currently, contractors aren’t covered by the Fair Work Commission. This means they don’t have a right to the minimum wage and other entitlements like annual leave. The new definition would see contractors that do “employee-like” work come under the umbrella of Fair Work and receive these entitlements. This would be one of the biggest changes to workplace laws that’s being proposed.

This would represent a significant change to the way contractors actually operate in Australia, but there is still confusion over how it would work in practice. If “employee-like” work is broadly defined, it could mean that most contractors would be given these rights. If it’s defined narrowly, only specific industries will be affected. Tanda has written about this proposal in detail, including a number of scenarios for how the Government might proceed.

Limiting Fixed Term Contracts

The Government intends to limit fixed-term contracts to a maximum period of two years. There is an important distinction between fixed-term contracts and ongoing contracts. A great example of a fixed-term contract is footy players – they’re often renewed on a “three-year” contract. By comparison, ongoing contracts mean that someone is contracted indefinitely.

The Government believes fixed-term contracts can be used to exploit workers and are an insecure form of work, and they will be limited to a maximum of two years. At this point, a continuous contract would have to be offered, or permanent employment. It will be interesting to see if this also applies to footballers as part of the changes to workplace laws being proposed.

New Rules For Casuals

Labor is proposing major changes to workplace laws which alter the way contractors can be used in Australia. The Government argues contractors working in the gig economy have been exploited, and that other industries have abused the system to pay people less per hour than full-time workers. To combat this, several changes have been proposed:

Definition Of Casual Work

The Government intends to create an objective test to determine whether a worker can be classified as a casual employee. To get technical for a second, in the past, the courts have characterised being a casual worker as “the absence of a firm commitment of the duration of an employee’s employment, or the days or hours they will work”. In plain English, this means that a casual is someone who doesn’t have confirmed long-term work, and doesn’t know exactly when they will work.

The previous Coalition Government made slight changes to these rules through legislation that gave some casuals the right to convert to permanent roles. The incoming Government will move changes to workplace laws to restore the old definition, which will tip the law back towards casuals. Casuals will have more rights to become permanent workers through casual conversion. If you’d like to read more about casual conversion, Tanda has comprehensively broken down the issue here.

Same Job, Same Pay

Many casuals are offered roles through labour-hire companies at a lower rate than permanent employees to save costs. These contractors also go on to work in very similar ways to permanent employees. To combat this, a “same job, same pay” guarantee will be introduced, meaning any employee doing the same job as anyone else would be entitled to the higher pay rate. These changes to workplace laws could completely overhaul the way casuals work.

To understand the context here, imagine a coal mining company that has struck an agreement with a union to pay its employees $30 an hour. Now, imagine it contracts a labour hire company. It pays a fee to the labour hire company, and the employees are hired through that company. This means they aren’t covered by the union agreement and don’t have to be paid the $30 hourly rate. The Government will outlaw this practice.

Other Changes To Workplace Laws

Criminalising Wage Theft

Labor is promising to criminalise wage theft on a national level. Many companies have been found to have underpaid their workers over the past five years. The new laws would criminalise wage theft in the worst circumstances – typically where the employer has deliberately underpaid their workers, rather than accidentally. These laws would be somewhat similar to state laws that have already criminalised wage theft. Tanda has covered wage theft in an underpayments webinar, which you can view here.

Making Job Security an Objective of the Fair Work Act

Job security will be made a core objective for the Fair Work Commission as part of the suite of changes to workplace laws. It’s unclear how this plays out in practice and a lot will depend on the cases the Commission hears and who the Commissioners are. What it will do is force the Commission to consider job security every time it makes a decision.

Portable Entitlements

The Government will consult with unions and industry on the viability of portable entitlement schemes. This could see workers take built up personal annual leave and personal leave with them when they change jobs. At this stage, this proposal is only in a consultation stage and it will be some time before legislation is drafted.

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