Australia’s employment landscape is set for a significant overhaul in 2024 with proposed amendments to the Fair Work Act. These changes, stemming from the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 and the Fair Work Legislation Amendment (Closing Loopholes) Bill, redefine several crucial aspects of workplace rights and obligations.
This article unpacks the impending amendments, exploring the nuances and implications of the proposed changes within the Fair Work Act.
What are the changes to the Fair Work Act?
Right to superannuation in the National Employment Standards
From 1 January 2024, there’s a new rule about superannuation. The law says employers must pay superannuation based on the employee’s ordinary work hours. This rule reinforces that superannuation is an integral part of the employee’s compensation package.
This change means that regardless of the nature of an employee’s job, they should receive fair and equitable superannuation. Employers must follow this rule and pay the correct amount on time. Employers should consult with an employment lawyer if they are unsure of their obligations.
Some employees might ask, “Don’t we already have rules for this?” Yes, we do. But these new regulations make it even more important and easier to ensure employers pay the right amount of superannuation.
Changes to unpaid parental leave
From July 2024, the new provisions of the Fair Work Act allows employees to take unpaid leave when they have a new child. The new law matches up with updates to the paid parental leave scheme, which came into effect in July 2023.
The new rules will make it easier for employees to take unpaid leaves to care for their new baby. Previously, employees could take up to 30 days’ leave in the first year. But now, they can take up to 100 days’ leave whenever they want in the two years after the baby is born or placed with them. Moreover, employees can take unpaid leave up to six weeks before the due date if they are expecting a baby.
There used to be a rule saying both parents could not take more than eight weeks’ leave. That rule is gone now. That means both parents can take up to a whole year off whenever they want in the first two years after the birth of their child. And if they both want more time, they can each apply for an extra 12 months after the first year. So, in total, both parents can take up to two years’ leave if they want to.
Interaction between enterprise agreements and workplace determinations
Authorised employee deductions
From 30 December 2023, the new law allows employees to authorise recurring deductions. Employees can have money withdrawn from their salary regularly, even if the amount sometimes changes. This agreement stays valid even if the deduction amounts increase or decrease. And if employees want to stop these deductions, they can write a simple note to their employer.
Earlier, employees had to sign a new form every time the deduction amount changed. But now, this extra paperwork is gone, making it much simpler to manage salary deductions.
Employees can still agree to specific deductions, but these must be in favour of the employee and recorded in writing. This way, the new law gives employees many options, and it helps to ensure that their interests are protected while giving them more control over their salary.
Protections for migrant workers
Migrant workers in Australia have always had the same rights in the workplace as everyone else, regardless of their migration status. But now, there is a new regulation that provides clarity.
The new regulation is simple:
- migrant workers keep their rights and entitlements, regardless of their migration status, under the Migration Act 1958; and
- if a migrant worker breaches a provision of the Migration Act 1958, this won’t affect their employment or service contract.
This rule also applies even if a migrant worker:
- breaks a provision in their visa;
- doesn’t have permission to work; or
- doesn’t have the right to reside in Australia.
Casual employees in the black coal mining industry
The new provisions of the Fair Work Act aim to ensure that all workers, including casual workers, receive the right payment for their long service if they work in the coal mining industry.
Now, when the workers are paid for their long service leave, they’ll also receive the extra pay they earned as casual workers.
There is also a new way for casual workers to earn long service leave. It’s a system where they can save up their long service leave over time.
Introduction of a new Federal criminal offence of 'wage theft'
From 1 January 2025, the Fair Work Act 2009 will introduce a new federal criminal offence known as ‘wage theft’. This new offence targets employers who deliberately fail to pay their employees what they should under the Fair Work Act and enterprise agreements (excluding employment contracts).
The new wage theft law focuses on intentional underpayments. Employers are only in breach of the law if they deliberately attempt to withhold what employees are owed. Accidental mistakes aren’t considered an offence under the wage theft law.
The penalties for violating this law are severe. However, the law also provides a potential protection mechanism for employers to avoid penalties. They can enter a ‘co-operation agreement’ with the Fair Work Ombudsman. For more information, employers should consult with an employer lawyer.
Increased maximum penalties for breaches
Under the proposed amendments, the fines for a single breach of the National Employment Standards, a modern award or an enterprise agreement are going way up. For big companies, the maximum fine for breaching rules such as fair pay or agreements could reach $469,500. For individuals, it could be up to $93,900. That is five times more than before.
If an offence involves failing to pay employees the remuneration to which they’re entitled, the penalties will be even bigger. The fines can be five times the standard amount or three times the amount underpaid. The rules will also be changed to decide when an offence is serious. If someone knew or was really negligent in not paying their workers right, the fine for large companies can be up to $4.695 million.
These tougher penalties will come into force on 1 January 2024, but only if the new laws are passed.
New definition of casual employees
The proposed Bill changes the definition of the term ‘casual employee’. It’s not just about what is written in contracts, but about the actual employment relationship. If an employer regularly offers work and the employee regularly accepts it, this can mean that they’re permanent, even if the tasks aren’t exactly the same every time.
However, for a casual job to be considered lawful, the employee must receive a recognisable casual loading of the casual work, even if this isn’t mentioned in the contract.
The Bill also gives casual employees more say. There’s a new ’employee choice’ process. Employees can indicate whether they don’t meet the new definition of casual. Employers can offer to take on casual workers on a permanent basis and employees can also request this. If the employer agrees at the interview, the employee will be made permanent. If not, the employer must provide a detailed explanation.
Introduction of an obligation on labour hire providers
The proposed bill aims to ensure fair pay for workers from labour hire companies when they work for another business. If a company supplies workers to another, they must pay them at least a ‘protected rate of pay,’ but only if a special order from the Fair Work Commission (FWC) covers them.
This ‘protected rate of pay’ means these workers should receive what they would if employed directly by the company they’re working for, including bonuses, overtime, and allowances.
The FWC may set a different ‘protected rate of pay,’ not based on the company’s rules but from another agreement the company has entered into. There is an exemption for short-term work — usually less than three months — unless the FWC decides otherwise.
New meaning to the independent contractor relationship
The Bill sets out criteria to determine who is an ’employee’ or an ’employer’.
For instance, the actual circumstances of the relationship are important and not just what’s written in the employment contract. Other factors that should be taken into account include what’s in the contract, how things happen in practice, and more.
The changes to the Fair Work Act reinstate the previous Common Law definition, which had been overturned in two High Court cases in 2022. Those cases instead stated that an independent contractor arrangement was to be primarily determined by reference to the contract.
This new meaning only applies to the Fair Work Act definition of employee. However, it does not apply to other work laws like superannuation or long service leave laws.
Changes to Awards and enterprise bargaining
The new Bill wants to change how agreements work in companies. It suggests new ways to decide things like flexibility, discussions, and sorting out problems in agreements between workers and bosses.
One big change is that the Fair Work Commission might get more involved in deciding these terms, similar to how they create modern awards. But these model terms won’t replace what’s already agreed upon in a company’s agreement, as long as they follow the Fair Work Act rules.
These changes could affect businesses in various ways:
- the Commission might make it stricter for bosses to talk with workers or might limit flexible work options, which could affect how businesses operate.
- the bill would let different franchisees from the same company create one agreement together, making it easier for them to agree on things.
- employers in these franchises can ask for changes without having to prove that every boss has at least 20 employees.
- there’s a new plan for digital platforms and transport businesses to agree on work terms with workers through collective agreements.
- the bill also changes how bosses under a big agreement can make a new agreement for just their company.
Other IR reforms
If this Bill becomes law, there will be significant changes in workers’ rights and how unions and employers can operate. Employment law firms are eagerly awaiting the final version of the legislation, however here are some of the expected reforms:
- workplace delegates may gain more power to represent workers, discuss work matters, access workplaces, and receive training pay. New agreements would need to secure these rights of delegates.
- employers would face new rules, unable to stop delegates without a good reason and prohibited from lying to lie to them.
- unions would be able to investigate workplace violations without the usual notice but with special permission.
- gig workers and those in digital jobs would receive new protections if they have no bargaining power, are paid less or have little control over their work. These include minimum standards and protection against unfair dismissal.
These changes, if passed, are expected to take effect on 1 July 2024.
Frequently asked questions
The Bill is currently being debated in the Australian Parliament. It was introduced to the House of Representatives on 5 September 2023, and passed its second reading on 16 November 2023.
The bill is currently before the Senate Education and Employment Legislation Committee, which will report on 1 February 2024.
If both Houses of Parliament approve the bill and it receives Royal Assent, it’s likely to become law in early 2024. However, the exact date depends on how the legislative process goes and whether amendments are made to the bill.
Some changes from the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 have already come into effect, while others are still on the way.
Changes that are already active:
- migrant worker protections began on 1 July 2023, giving them the same rights as other employees.
- from 1 July 2023, employees can take up to 100 days of flexible unpaid parental leave within 24 months of the birth or placement of a child.
Changes still to come:
- casual employees will start receiving superannuation contributions from their employers from 1 January 2024.
- clarification of workplace determinations and enterprise agreements is underway at the Fair Work Commission.
- the extended deduction options will come into effect on 30 December 2023.