Closing the Loopholes Bills 2024: What it means for you and your employees

a group of people in a meeting
Most employers - and many employees - will be aware that the Closing Loopholes Bill 2023 was voted on in parliament at the end of last year, and the beginning of this year. Part 1 of the Bill passed last year, and many of it’s changes have commenced, with other changes commencing in July and November this year and January next year.
At the beginning of February this year, Part 2 of the bill was pushed through. Overall, the bill’s key thrust was to regulate the gig economy, redefine what it is to be a ‘casual’, an ‘employee’ or independent contractor, and to allow Unions power to investigate immediately if there is a belief that underpayments are occurring . Also, with the much publicised ‘right to disconnect’, for workers’ free time to be more protected in an age when constant connection with your work is an everyday reality.
However, there are some concerns that these amendments are based on the assumption that everyone wants a permanent job, including seasoned independent contractors who often enjoy a healthy pay packet; it takes away some of the flexibility – for both employers and employees – required for certain industries to thrive; and it brings confusion and red tape to casual/employee definitions that had previously been simplified three years ago.
In practice, here’s how all of that might affect you, your leaders and your employees.
Please note, this update is for general information purposes only and is not the provision of legal advice. It should not be relied on as specific advice. Please consult a legal practitioner for legal advice on how these changes may affect your business.

1.Right to disconnect 

Starts: July 2024 (November 2024 for small businesses – those with less than 15 employees) 
Overview: Gives employees the right to ignore an employer’s attempts to contact them outside of their standard work hours – although there are several caveats to that including the nature of the call or e-mail, the employees level of responsibility, the nature of their role, and even the employee’s personal circumstances at home.
How it might affect your business: Any disputes can likely to be resolved at work and shouldn’t require the Fair Work Commission to issue a Stop Order. But it is part of a workers’ rights now and so should be adhered to if the employee has a reasonable case.
How to prepare: It would be prudent for organisations to do a survey of out of hours practices to review their current culture, and to ensure managers understand the new regulations.  

2. Changes to statutory definitions of casuals, employees and contractors:

Starts: July 2024 (November 2024 for small businesses)
Overview: For a worker to be defined as an employee as opposed to an independent contractor, this new definition takes us back to the previous multi-factorial common law test. The employee definition will be based on the real substance, practical reality and true nature of the relationship rather than what their contract says. Similar criteria for who is a casual employee apply, with added focus on whether there is a firm advance commitment from the employer to provide ongoing work and while no one factor is determinative, a regular pattern of work indicates the presence of a firm advance commitment.
How it might affect your business: Something of a return to uncertainty around classifications and there could be more claims for unpaid entitlements due to misclassifications.
How to prepare: A review of day-to-day contractor operations is required, similarly with casual employees. For casuals themselves, they may need to make the choice between a regular work pattern or the extra dollars casual loading provides. 

3. Changes to Casual Conversion

Starts: July 2024 (November 2024 for small businesses)
Overview: Along with the change in definitions, the process for conversion from casual to full-time or part-time employment is also changing. Previously the onus was on employers to offer the change to casuals after 12 months; now it is the employee’s choice to instigate the request after six months.
How it might affect your business: A lot more requests from casuals to become full-time or part-time, leading to far more bureaucracy than desired and a lot less flexibility in the workforce – especially for businesses who need to pivot constantly and quickly. 
How to prepare: Requests can be refused on reasonable operational grounds and must be responded to in 21 days in writing, so staff need to be trained in the new casual conversion process.

4. Setting minimum standards for the Gig Economy 

Starts: July 2024 (November 2024 for small businesses)
Overview: Allowing individuals and organisations within the gig economy (think car drivers, food delivery drivers, freelancers etc) minimum standards such as payment terms, deductions and insurance, while maintaining their status as independent contractors. Also, if an employee-like worker meets certain tenure and pay criteria, and they believe they have been ‘unfairly deactivated’, they can make an application to the FWC to be ‘reactivated’.
How it might affect your business: Introducing costs not previously required that will need to be absorbed by the business model, hopefully without unduly effecting the cost of products and services.
How to prepare: Have a strategy prepared for how this will affect the business – because large amounts of extra costs are bound to do that. 

5. Increased Union rights to investigate underpayments

Starts: July 2024 (November 2024 for small businesses) 
Overall: Unions will no longer require 24 hours’ notice to enter a business and investigate claims of underpayment, they can get an exemption order from the FWC and enter premises immediately if they reasonably suspect one or more of their members have been or are being underpaid. 
How it might affect your business: Unwelcome intrusions and claims that can affect productivity, brand and social license.
How to prepare: Constantly monitor breaches are not inadvertently occurring and that the business has clear boundaries around employee and casual workers as they are now defined. 

6. Changes to union bargaining powers

Starts: Now
Overall: When bargaining discussions are entered into, the terms agreed upon cannot be less favourable than the starting point.  This ‘no less favourable’ requirement does not apply to terms that provide for a wage increase.
How it might affect your business: When having bargaining talks with employees and unions, an important part of possible leverage has been removed, meaning bargaining may occur more regularly.
How to prepare: Ensure you have a robust industry strategy with other points of leverage. 
It’s important to acknowledge that these six summaries form a very brief and simplified overview of the changes the Closing Loopholes Bill is bringing. It’s equally important to stress though that managers at all levels of the business understand the IR Law changes at a basic level, and that legal teams in any organisation are across the finer details. There are consequences for businesses that breach the new rules either inadvertently or not.

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