The Australian Government’s introduction of the Closing Loopholes Bill represents a significant shift in the employment landscape for small and medium-sized enterprises. The landmark legislation is set to reshape the country’s workplace laws, Ben Thompson, CEO of Employment Hero shares what you need to know.

While employers may already be on the back foot following yet another challenging 12 months and nearing the busiest time of year, small business owners must prioritise assessing what these new employment changes mean for them and how they will impact their business in 2024 and beyond.

Understanding the Closing Loopholes Bill, Part 1

The Closing Loopholes Bill, divided into two parts, is a comprehensive reform that signals a shift towards greater worker protections and more stringent employer responsibilities.

Part 1 was enacted on 7 December 2023 and focuses on wage protection and equality, with measures criminalising intentional wage underpayment (‘wage theft’) and the introduction of ‘same job, same pay,’ which ensures labour-hire workers receive equivalent pay to regular employees (note: businesses with less than 15 employees are exempt).

Additionally, enhanced rights have been granted to workplace union delegates, including paid training leave, though again, smaller businesses are exempt from certain aspects. The government is also tightening regulations around redundancy pay in insolvency situations and allowing more union access to workplaces.

These changes could have significant operational impacts on SMEs, especially regarding labour-hire arrangements and union interactions, making staying informed and preparing for reforms crucial.

Additional government commitments

While each of these is still under review or in progress, the Australian government has also made additional commitments to enhance worker protections. The Comcare review is an independent assessment proposed to improve outcomes for injured workers in the public sector. The Government also aims to boost funding for the small business advisory service within the Fair Work Ombudsman (FWO), which would provide enhanced guidance and resources for small business owners.

Understanding the Closing Loopholes Bill, Part 2

Part 2 of the Bill, expected for debate in early 2024, will delve into casual employment definitions and the rights of independent contractors, which may alter SMEs’ workforce flexibility and present challenges for employers in managing their workforce.

This part of the Bill aims to alter how workplaces define casual employment and independent contractor statuses, introducing a degree of uncertainty for employers in distinguishing between casual and permanent employees and between employees and independent contractors.

The government is also considering increasing penalties for breaches of the Fair Work Act and expanding the rights and powers of unions, particularly concerning workplace entries and document inspections. Meanwhile, one of the more interesting aspects under discussion is a ‘Right to Disconnect’ amendment (not yet included in the Bill), which would grant workers the right to disengage from work-related communications outside of work hours.

The Bottom Line for Australian small businesses

As 2024 approaches, employers should consider assessing the impact of the new laws on their business. This includes evaluating the effects on current and future enterprise bargaining and their response to any Fair Work Commission applications for ‘same job, same pay’ orders.

These reforms will become effective mostly from the day after royal assent, with some, like the wage theft criminalisation commencing by 2025. Collectively, they represent a shift towards stronger worker protections and a more regulated employment environment. Understanding and preparing for these changes is crucial for businesses, as they could significantly impact how they manage their workforce and comply with evolving employment laws.

Find out more about the Closing Loopholes Bill

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