An article by Jackson Inglis, Partner and Ben Keenan, Senior Associate at Sparke Helmore Lawyers
The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, if passed as currently drafted, is set to make a series of significant changes to workplace law. Relevant to the agriculture sector, these changes relate directly to commonly utilised employment relationships including labour-hire workers and casual employment and implements changes to the determination of an independent contractor.
The agricultural industry relies on labour-hire, casual, and contract workers, due to the seasonal and unpredictable nature of the work. The law surrounding these employment relationships is set to change following the introduction of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill). This Bill is designed to ‘close the loopholes that have undercut secure jobs, better pay and safe workplaces.’ Proposed changes include the ‘same job same pay’ provisions, anti-avoidance clauses, and an ‘employee choice’ framework. We discuss each of these further below.
The Bill aims to require the employers of labour-hire workers (the suppliers) to pay their employees at the same rate of pay as the employees of the ‘regulated host’ (the business engaging the labour-hire workers) when doing the same work. Exceptions have been specified where the worker is under a training arrangement or where they are engaged to work for a host business for less than three months. The purpose of this is to prevent host businesses undercutting their workforce by engaging external (labour-hire) workers and paying them less than they would otherwise pay their employees under an enterprise agreement. The pay entitlements can be enforced through a Fair Work Commission (FWC) ‘regulated labour hire arrangement order.’ Notably, the labour-hire workers, employees of the host, and a union representing either a labour-hire worker or a host employee are empowered to apply for an order. The Commission will only grant an order where it considers it ‘fair and reasonable’ to do so. Relevant considerations pertaining to what is ‘fair and reasonable’ is contained in the Bill. Further guidelines on the operation of these provisions are anticipated to be published by the FWC by 1 November 2024.
The implications for hosts include an obligation to provide payroll information to labour-hire suppliers and penalties for businesses who attempt to avoid the proposed changes. Furthermore, businesses engaging labour-hire workers will need to consider the commercial impact of these provisions, with labour-hire costs likely to increase as suppliers pass on the increase in rates to the hosts, and the potential associated operational impacts.
As already outlined, short term labour-hire arrangements of less than three months are not required to pay the labour-hire workers at the same rate of pay as the employees of the host business. However, broad anti-avoidance provisions attracting civil penalties for businesses are included in the Bill to prevent a business entering a scheme where the primary purpose is to circumvent the FWC making an order. In relation to host businesses this may be where they enter short-term labour-hire arrangements to enliven the short-term exception. Importantly, these provisions are already in effect. Provided the Bill passes, any changes made now aimed at avoiding these labour-hire provisions will be prosecutable.
Casual employment and ‘employee choice’ framework
The Bill proposes to amend the definition of casual employment to consider the totality of the employment relationship, not just the terms of the contract. Perhaps more significantly, after six months of casual engagement, or 12 months for small business employers, a casual employee can notify their employer they would like to change their employment status to full-time or part-time employment. The employer must provide detailed reasons if they do not accept the notification and the grounds for rejection must be one of the following:
- The employee continues to meet the definition of a casual employee.
- Accepting the notification would be impractical as the change would result in the employer contravening a term of an enterprise agreement, a modern award, or a FWC order.
- Accepting the notification would result in the employer not complying with a recruitment or selection process required by law.
It is also important to note the test for establishing whether an employment relationship exists, primarily if the dispute relates to whether someone is an employee or independent contractor, is reverting to the ‘multifactorial test’ under the Bill. This is following a series of High Court decisions that held the contract between the parties was the only relevant factor in determining the relationship.
If you have any questions or concerns, please reach out to our Queensland workplace and employment team: Jackson Inglis at Jackson.Inglis@sparke.com.au, Partner; or Ben Keenan at Ben.Keenan@sparke.com.au, Senior Associate.