Workplace relations: December 2023 snapshot

As an action-packed year on the workplace relations front draws to a close, this update explores the latest developments for Australian employers to be aware of now and in the year ahead:

• Significant further changes to the Fair Work Act 2009 (Cth) (FW Act) that were recently passed by the Federal Parliament and have now commenced as part one of the Closing Loopholes Bill; and
• Other key changes to the FW Act which take effect this month, including in relation to fixed-term contract requirements, the demise of zombie agreements, and employee authorised deductions.

Closing Loopholes Bill part one (with part two to follow in early 2024)

In September the Federal Government tabled in Parliament the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023. This was part of its third tranche of industrial relations reforms, following successful passage of its Secure Jobs, Better Pay and Protecting Worker Entitlements legislation over the course of 2023.

The Closing Loopholes Bill proposed wide-ranging further reforms, including in relation to labour hire arrangements, casual employment, employees versus independent contractors, regulation of the transport industry and the gig economy, workplace delegates' rights, and wage theft.

The Bill was initially referred to the Senate Education and Employment Legislation Committee for inquiry and report by February 2024, with no further action expected until Q1 of 2024.

However, in a surprise development, the Federal Government negotiated with key crossbench senators to split the Closing Loopholes Bill into two parts, with part one passing on 7 December 2023.

Part one, which has now become law upon royal assent, deals with:

• closing the labour hire loophole (i.e. a system to ensure that labour hire employees are paid the relevant full rate of pay under their hosts' industrial arrangements);
• expanding workplace delegates' rights;
• introducing specific workplace protections for persons subjected to family and domestic violence;
• criminalising wage theft (expected to commence from January 2025);
• establishing an industrial manslaughter offence under federal work health and safety laws (to commence July 2024);
• introducing a presumption for relevant first responders that their employment is a significant contributor to contraction of PTSD; and
• changes to redundancy payment exemptions for small businesses.

Part two of the Closing Loopholes Bill remains with the Senate Committee for inquiry and report by February 2024.

The proposed reforms under part two include:

• changes to union right of entry to investigate suspected underpayments;
• amending the existing sham contracting arrangements defence from recklessness to reasonableness;
• changes to rules regarding intractable bargaining determinations;
• changes to the transport industry and gig economy, including new definitions of "employee-like worker" and "digital platform operator";
• a new definition of "employee", with a return to the multi-factorial test where the totality of the relationship is relevant; and
• a new definition of "casual employee" that considers the real substance, practical reality and true nature of the employment relationship, including post-contract conduct.

We will provide further detailed analysis on these changes under parts one and two of the Closing Loopholes Bill, and what they mean for employers, in the New Year.

Other changes to the FW Act

Fixed-term contracts

New restrictions on fixed-term / maximum-term employment contracts came into effect on 6 December 2023. These include limiting the use of fixed-term contracts to a period of two years, and prohibiting the renewal of these types of contracts more than once.

Under the changes, employers are also required to give any employees engaged on a new fixed-term contract a Fixed Term Contract Information Statement (FTCIS). This document must be provided to relevant employees before, or as soon as practicable after, entering into a fixed-term contract.

For a more in-depth understanding of the changes relating to fixed-term contracts effective 6 December 2023, including where exceptions apply, please see our previous insight.

The Fair Work Amendment (Fixed Term Contracts) Regulations 2023 (Cth) set out additional categories of work to which the limitations on fixed-term contracts will not apply, including in the higher education sector and for professional and organised sport. Importantly, the exemptions are only available for a limited period of time and are subject to meeting specific definitions.

Zombie agreements

Effective 7 December 2023, zombie agreements made before 1 January 2010 will automatically terminate ("sunset") unless an extension is ordered by the Fair Work Commission (FWC).

Zombie agreements may include pre-FW Act certified agreements, collective agreements, Australian workplace agreements and individual transitional employment agreements, and certain individual and enterprise agreements.

Except where an extension is ordered by the FWC, employers who previously had zombie agreements in place should ensure the correct industrial instrument is being applied to their relevant employees to avoid the risk of underpayment claims, failure to provide other employee entitlements, and civil penalties under the FW for breach of applicable industrial instruments.

For more information relating to the sunsetting of zombie agreements, please see our previous insight.

Employee authorised deductions

Effective 30 December 2023, the amendments from the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 (Cth) (Worker Entitlements Act) and the Fair Work Amendment (Employee Authorised Deductions) Regulations 2023 (Cth) (Regulations) will provide additional safeguards in relation to authorised salary deductions.

Regulations

Schedule 1 of the Regulations specify what must be included in the written authorisation for both deductions of a specified amount and multiple or ongoing deductions:

• For a specified amount, the authorisation must include the purpose, date of deduction and name of person to whom the deduction is to be given.
• For multiple or ongoing deductions, the authorisation must include the purpose, the specified amount if it is to be specified, dates of deductions or date and frequency in which deductions are to be made, and the name of the person to whom deductions are to be given.
  • If one or more amounts are deducted from the gross amount of payment the payslip must also include the deduction amount and the name, or name and number, of the fund or account to which the deduction was paid.

The Regulations stipulate a circumstance in which a deduction is not reasonable pursuant to section 326(1) of the FW Act, namely when a deduction is for an amount that may be varied from time to time.

Worker Entitlements Act

Schedule 5 outlines further amendments to employee authorised deductions.

An employer must not make a deduction that is:

• directly or indirectly for the benefit of the employer or related party; and
• for an amount that may be varied from time to time;

unless the deduction would be made in circumstances prescribed under subsection 326(2) to be reasonable.

The Act reiterates that the written employee authorisation must include the information prescribed by the Regulations above and stipulates that:

• the amount must be specified for a single deduction; or
• for multiple or ongoing deductions, it must be specified whether the deductions are for a specified amount or amounts that will vary from time to time.

Following the changes, employees will be permitted to authorise their employers to make varying and recurring salary deductions. This change will ease the administrative burden for both employers and employees ─ whereas previously, a new authorisation was required for every change in deduction amount, only one written authorisation will now be required.

Employees will also enjoy greater protection, as varying deductions are only allowed where the deductions do not directly or indirectly benefit the employer and are not unreasonable in the circumstances.

The impact of the changes is significant as the framework provides substantial flexibility and agency for all stakeholders. The changes also embed increased certainty as to when a new written authorisation is mandated for deductions to continue.

The only circumstance in which a novel authorisation must be completed is when updating or varying the amount of an existing deduction where the initial authorisation specifies a deduction amount.

Please find more on this subject in our previous insight.

For more information on how these changes might apply to your organisation, please contact Lander & Rogers' workplace relations and safety legal experts.

Image by Jacob Lund via AdobeStock