The Closing Loopholes No 2 legislation has passed parliament, after the House accepted amendments made in the Senate.  The original Loopholes Bill went to an inquiry last year that continued beyond the splitting of the Bill and the first tranche's passage through parliament.  The Senate split the Loopholes Bill last year, and passed a significant portion of the measures in the original legislation before Christmas. This left the No 2 Bill to be dealt with this year.

The CL No. 2 Bill's passage through Parliament will:

•    "End the concept of a forced permanent casual by providing a proper pathway for casuals seeking to convert to more secure permanent work and simplify the process for employers.
•    Introduce world-leading minimum standards for gig economy workers such as rideshare drivers and delivery riders.
•    Ensure a safe, sustainable and viable trucking industry – including for owner drivers.
•    Stop unpaid overtime for workers through a right to disconnect from unreasonable contact out of hours."

Casuals

The Bill introduces a new, commonsense definition of casual employment that replaces the Morrison-era test determined effectively by the terms of a contract.  An employee will be a casual if their work is characterised by “an absence of a firm advance commitment to continuing and indefinite work”.  The Act will also be amended to explicitly provide that higher education academic and teaching staff covered by the relevant modern awards cannot be casual employees if they are on a fixed term contract.
This part of the Bill will become operative 6 months after the date of Royal Assent.

Definition of employment

The Bill will also introduce a definition of employment, that again, looks at the practical reality of the employment relationship, rather than the terms of the contract alone, which the High Court had decided was the approach in the 2022 Jamsek and Personnel Contracting decisions. The new definition draws on the previously common law approach of examining multiple indicia as to whether or not a worker is an employee or independent contractor. There will be an opt-out provision that applies where an existing worker considers that their earnings are above the contractor high income threshold (currently $167,500).

This part of the Bill will become operative 6 months after the date of Royal Assent or earlier by proclamation.

Unfair contracts

The Bill brings key provisions from the rarely used Independent Contractors Act back within the Fair Work Act and scope of the Commission, making this a far cheaper, easier and quicker option for independent contractors seeking to challenge unfair contract terms.

Sham arrangements

The Bill improves the FW Act’s currently flawed sham contracting provisions by inserting a tighter employer defence based on its reasonable belief with reference to the new definition of employment (as above).

Wage theft –civil penalties

The Bill changes the penalties for mostly wage theft-related matters and the definition of “serious contravention”. Penalties of up to 3 times the value of the contravention can also apply. A serious contravention will now be one that is “knowing” or “reckless”, replacing the previous test of a “systematic pattern of conduct”. Civil penalties will not increase for small businesses.

Wage theft – improvements to right of entry.

A permit holder can now apply for a certificate issued by the FWC to be exempt from notice requirements on the additional grounds of a “suspected contravention” by the employer relating to underpayments if the FWC is satisfied that advance notice would hinder an effective investigation. This is in addition to the ground of holding a reasonable belief that relevant evidence might be destroyed, concealed or altered if notice were given, which has been difficult to prove in practice.

Wage theft – compliance notices.

Courts will be given specific power to order compliance with a notice given by the FWO. FWO inspectors will also be given a specific power to order a person to calculate and pay an underpayment.

“Employee-like” or regulated workers

The Bill creates minimum standards for certain classes of “employee-like” or “regulated workers”. A regulated worker is someone engaged by a digital labour platform and is not an employee.

They must also satisfy at least two of the following:

• Low bargaining power,
• Receives remuneration at or below an employee performing comparable work,
• A low degree of authority over their work
• Or other characteristics as prescribed by regulation.

Road transport

Similarly, the Commission will be able to make minimum standards orders in the Road Transport Industry, covering road transport contractors and businesses including across “contractual chains” of parties in the industry.

The right to disconnect

The Bill introduces a “right to disconnect” for employees: a right to refuse to monitor, read or respond to employer or work-related contact unless that refusal is unreasonable. That right will appear in the FW Act, as well as become a mandatory term in awards.

The right will become operative 6 months after the date of Royal Assent and 18 months after that date for employees of small businesses.

Intractable bargaining declaration

The Bill will address two weakness with the intractable bargaining provisions of the 2022 Secure Jobs Better Pay changes by requiring that:

• Any terms in a IBD determination are more favourable to an employee than the equivalent term in the applicable enterprise agreement, and
• “Agreed terms” between the parties are assessed at the time the IBD application is made, and any further agreement reached after that point.

Other parts of the Bill

The Bill will also:

• Enable multiple franchises to access the single-interest stream.
• Transitioning from multi-enterprise agreements
• Withdrawal from union amalgamations
• Coal long service leave board name change

Review of the Bill

There will be a review into the operation of the amendments within 2 years of Royal Assent