The Fair Work legislation Amendment (Closing Loopholes) Bill 2023

Employers to Face 10 Years Imprisonment and $7.8 Million in Fines Under Proposed Wage Theft Laws

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 was introduced into Federal Parliament on 4 September 2023. If passed, the proposed legislation would introduce the new criminal offence of wage theft for employers which would attract a maximum penalty of 10 years imprisonment and maximum fine of up to $7.8 million.

The Bill will also allow unions to apply to the FWC to immediately enter and inspect employee records of a business, and to bypass the 24 hour notice requirement.

The intention of the proposed legislation is to deter employers who knowingly underpay their employees in contravention of the National Employment Standards and/or the relevant industrial instruments.

It is critical now more than ever to ensure employers are auditing their Award coverage, classification levels and pay systems on a regular basis to ensure compliancy with employment laws.

Labour Hire Loophole Closure

The Closing Loopholes Bill will also seek to address the issue of labour hire employees being paid less than the host business’s employees.

The proposed Bill would allow the labour-hire employees to apply to the Fair Work Commission for an order that they be paid no less than what they would receive if directly employed by the host business and paid in accordance with the host’s enterprise agreement or other applicable industrial instrument.

However, to protect small businesses, labour hire employees will not be able to apply to the FWC if the host business is a small business employer with the meaning of the FW Act.

Definition of Employment – Back to Uncertainty

The Bill seeks to override the recent High Court decision of CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 which gave clarity to employment relationships by reinforcing the notion that the terms of the contract are key to determining the nature of the employment relationship.

The Bill seeks to revert back to the common law ‘multifactorial test’ which determines the employment relationship by reference to the real substance, practical reality and true nature of the relationship of the parties.

This involves analysing the totality of the employment relationship, including not only the terms of the employment contract but also the manner of the performance of the contract and the character of the relationship.

It is clear that it is crucial for employers to ensure their employment documentation is in place to provide certainty and clarity to the nature of their employment relationships.