Insight,

Consultation open on next tranche of workplace reforms

21 April 2023

The Federal Government has commenced consultation on its third round of reforms to the Fair Work Act 2009 (Cth) (FW Act), which are set to be introduced in the second half of 2023.

There are presently four consultation papers released for feedback tackling complex and challenging issues including criminalising wage underpayments, ‘Same Job, Same Pay’, the regulation of employee-like forms of work and new stronger protections for workers in the form of changes to anti-discrimination measures and the general protections regime under the FW Act.

The consultation papers were released on 13 April 2023 with submissions open until Friday 12 May 2023.

Background

The proposed reforms now open for consultation are a key part of the Government’s broader Industrial Relations reform platform presented during the May 2022 Federal Election. Last year, the Government enacted a number of these reforms through the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Secure Jobs, Better Pay Act), the implications of which many employers are still assessing and responding to.

This latest tranche of substantive reforms contains changes that would materially affect the regulation of a range of work types and models and is likely to generate significant debate as employers and business grapple with how the introduction of the reforms may impact their operations.

This alert summarises some key elements of the proposals that are open for consultation.

The Proposals

Criminalising Wage Theft Consultation Paper

The issue of workplace non-compliance and wage ‘theft’ continues to dominate headlines. The underpayment or non-payment of wages and entitlements remains a live issue for Australian businesses - both big and small. Despite significant measures taken by the Fair Work Ombudsman to hold employers accountable, non-compliance remains widespread.

The Criminalising Wage Theft Consultation Paper addresses four of the five recommendations put forward by the Migrant Workers’ Taskforce that recognises these ongoing issues and proposes to make wage underpayment a criminal offence federally, as well increasing the maximum civil penalties for wage exploitation provisions of the FW Act.

Whatever happens to these reforms through the consultation and parliamentary process, there can be no doubt that concerns about wage compliance are not going away, and active investment in and oversight of proper payroll compliance is going to remain a live governance issue for Boards and senior leadership.

Key issues:

New criminal offence	A criminal offence for wage underpayment based on knowledge, recklessness, or both A criminal offence for related record-keeping misconduct Multiple offences may be evidence of a ‘course of conduct’ and charged as a single offence The possibility for a due diligence defence to the recklessness offence, if the employer took reasonable steps to mitigate the risk of underpayment
Increased civil penalties	Increase the maximum civil penalties available for 20 workplace provisions five-fold: $142,500 per breach for companies, $4.125m for serious breach $82,500 per breach for individuals, $825,000 for serious breach Alternate option to increase the penalty for contraventions involving underpayment five-fold
Sham contracting defence	Reform the defence to a sham contracting claim, allowing no liability for an employer that ‘reasonably believed’ the contract was for services and not for employment

You can access the Criminalising Wage Theft consultation paper here.

‘Same Job, Same Pay’ Consultation Paper

In what may become one of the most controversial aspects of the Federal Government’s workplace reforms, the ‘Same Job, Same Pay’ measure is touted as looking to tackle the issue of employers using labour hire arrangements to deliberately undercut bargained pay and conditions as well as a work around to engaging in enterprise bargaining. In essence, the reforms would ensure labour hire workers are paid at least the same as directly engaged employees doing the same work.

The scope, complexity and impact of these proposed changes is likely to be significant for employers and businesses utilising this form of labour – particularly from a compliance perspective. The Consultation Paper grapples with novel, multifaceted and intricate concepts including identifying and defining how different labour hire arrangements are captured by the proposed reforms, determining how the performance of the ‘same’ job is assessed and the components necessary to calculate ‘same pay’.

Key issues:

Labour hire arrangements	Consideration of which labour hire arrangements the reforms would apply to beyond the traditional labour hire model
Determining ‘same job’	The use of criteria to inform whether a labour hire worker is performing the ‘same job’ including whether duties align to a classification, job or duties under an applicable enterprise agreement of the host employer and/or the same duties as an employee covered by a modern award and/or the same duties as a specific directly employed employee.
Calculating ‘same pay’	A requirement for host employers to provide labour hire workers with the same pay-related benefits as their direct employees under enterprise agreements, awards, or contracts, including bonuses, incentive-based payments, allowances, loadings and penalties
Access to labour hire	The Government recognises the need for labour hire arrangements to address short-term work surges, but is exploring the possibility of restricting their prolonged use to combat job insecurity and promote wage growth
Dispute resolution	Whether the Fair Work Commission’s powers should be extended to a role in resolving disputes about the ‘Same job, Same Pay’ principle including through conciliation, mediation or arbitration.
Enforcement	Whether the ‘Same Job, Same Pay entitlements’ and/or obligations should be classified as civil remedy provisions

You can access the Same Job, Same Pay consultation paper here.

‘Employee-Like Work and Contractors’ Consultation Paper

The rapid rise of the gig economy and the ongoing vexed question of the characterisation of employees versus independent contractors poses genuine challenges to existing models of regulating employment and work. The distinction impacts both businesses and workers in terms of understanding their respective rights and obligations as well as the provision of workplace entitlements, superannuation and a range of other protections (such as under work, health and safety laws, anti-discrimination laws and on cessation of the work relationship). The proposals under this Consultation Paper, if implemented, would create a new jurisdiction and form of regulation in Australia by empowering the Fair Work Commission (FWC) to set minimum standards for workers in ‘employee-like’ forms of work.

Key issues:

Minimum standards for workers in ‘employee-like’ forms of work	Empower the FWC to make orders setting out enforceable minimum standards for ‘employee-like’ forms of work Introduce a future-focused model that applies beyond the gig-economy and allows the FWC to set minimum standards for contractors
Content of minimum standards	Empower the FWC to set minimum standards for a broad range of matters including pay, definitions of ‘work’, workplace conditions, business costs, record keeping, training and dispute resolution
Collective bargaining	Enable contractors to engage in collective bargaining and exploring the possibility of establishing a new jurisdiction within the Fair Work Commission to deal with unfair contract disputes

You can access the Employee-like Work and Contractors consultation paper here.

‘Stronger Protections for Workers’ Consultation Paper

Protection from discrimination in the workplace is regulated at the Commonwealth, State and Territory levels. The FW Act also provides protection against workplace discrimination. For employers and businesses this patchwork of regulation can be difficult to navigate with each jurisdiction having a slightly differing framework and requirements. The changes proposed in the ‘Stronger Protections for Workers’ Consultation Paper are aimed at creating a greater alignment under the FW Act with other Federal anti-discrimination laws.

Key issues:

Anti-discrimination measures	Whether indirect discrimination should be expressly prohibited in the FW Act Amending the inherent requirements exemption under the FW Act to consider ‘reasonable adjustments’ as included in the Disability Discrimination Act 1992 (Cth) Implement a new complaints process to require discrimination disputes to be first heard in the FWC via conciliation Align the vicarious liability discrimination provisions in the FW Act to be consistent with the new sexual harassment provisions introduced in March 2023 as well as other Commonwealth anti-discrimination laws
Adverse Action	Whether any improvements could be made to the general protections in the FW Act to ‘clarify protections for a person engaging, or not engaging, in industrial action’

You can access the Stronger Protections for Workers consultation paper here.

Other Proposals

In early April 2023 the Government introduced the Fair Work Legislation (Protecting Worker Entitlements) Bill 2023 (Cth) which proposes, among other things, changes to parental leave entitlements in the FW Act. For more information on these proposals, see our previous alert, available here.

Next Steps

Written submissions on any of the four consultation papers can be made to the Department of Employment and Workplace Relations until 11:00pm AEST on Friday 12 May 2023. If you would like to discuss any of the proposed reforms, the consultation process or the impacts of the Secure Jobs Better Pay or proposed Protecting Worker Entitlements reforms on your business, please get in touch with any of our Employee Relations and Safety experts.