Navigating Workplace Reforms: Compliance Expectations For Businesses

The Federal Government introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Cth). This bill proposes changes that will impact employers, employees, principals, and contractors.

So what does this mean for businesses?

Australian businesses must now navigate these new reforms to ensure compliance and maintain operational integrity.

Select key areas of reform:

Same job same pay orders

One of the most prominent reforms is the introduction of “same job same pay” orders, aimed at closing the labour-hire loophole. Historically, labour-hire arrangements have allowed businesses to engage workers at lower rates than their direct employees performing the same roles. This has often led to discrepancies in pay and conditions, disadvantaging labour-hire workers.

The Act now empowers the Fair Work Commission (FWC) to make orders requiring employers who supply their employees to perform work for a ‘regulated host’ to pay their employees the same rate of pay as employees of the host who perform work of the same kind. Hosts must also provide sufficient payroll information to those employers to enable them to comply with their new payment obligations, and the Act introduces penalties for businesses who attempt to avoid the scope of the FWC’s new powers. 

New definition of casual employment

Currently, a person is a casual employee if they accept an offer for a job from an employer knowing that there is no firm advance commitment to continuing and indefinite work according to an agreed pattern of work. 

The Bill seeks to change the definition of a ‘casual employee’.

The amendment of the casual employee definition will mean that employers must consider a broader range of matters when determining whether an employee is a casual employee or not. Employers will lose a degree of control in defining the nature of the relationship it has with their employees. 

Under the new definition, an employee is a ‘casual employee’ if both of the following conditions are met: 

• The employment relationship is characterised by an absence of a firm advance commitment to  continuing and indefinite work
• The employee is paid a casual loading or a specific rate of pay for casual employees (under an industrial instrument such as a modern award or enterprise agreement or under the terms and conditions of their employment contract). 

This change is designed to provide greater clarity and security for casual workers. Businesses must revisit their employment contracts and ensure they accurately reflect this new definition.

Underpayments, compliance, and enforcement

The Act introduces criminal offences in relation to certain types of intentional underpayments.

There will be a new Criminal Offence that will apply to employers in relation to certain types of intentional underpayments, and Related Offences that could implicate employees,  officers and agents of employers.  

It’s stated the Criminal Offence does not apply to underpayments that are accidental, inadvertent or based on a genuine mistake.

Businesses must conduct thorough audits of their payroll systems and ensure that all employees are paid correctly according to their entitlements. Implementing robust compliance frameworks and regular internal audits will be crucial in preventing underpayments and avoiding legal repercussions.

Ensuring compliance with the amended legislation

To navigate these extensive reforms successfully, businesses must be proactive in relation to compliance. Here are several strategies to ensure adherence to the new legislation:

Conduct comprehensive audits

Performing comprehensive audits of current employment practices, contracts, and payroll systems is essential. These audits will help identify areas of non-compliance and guide necessary adjustments. Engaging external legal and HR experts can provide valuable insights and ensure that all aspects of the business are aligned with the new legislative requirements.

Update policies and procedures

Businesses must update their internal policies and procedures to reflect the new reforms. This includes revising employment contracts, casual conversion policies, and compliance frameworks. Clear and updated policies will help prevent inadvertent breaches and provide a solid foundation for training and communication efforts.

Train staff and management

Training is a critical component of ensuring compliance. All staff, particularly those in legal, HR and management roles, must be well-versed in the new legislative requirements. Regular training sessions, including CPD points webinars, can keep everyone informed and up-to-date. Investing in continued professional development (legal CPD) for key staff will ensure compliance but also enhance the overall competence and confidence of the workforce.

Implement robust compliance frameworks

Developing and implementing robust compliance frameworks is vital. This includes establishing clear reporting lines, regular internal audits, and mechanisms for employees to report concerns or breaches anonymously.

Monitor legislative updates

Legislation often changes and staying informed about new developments is crucial. Subscribing to legal updates, attending industry conferences, and participating in professional networks can help businesses remain abreast of changes and adapt swiftly. Leveraging educational resources such as law podcasts in Australia will help businesses stay ahead of potential issues and support a more transparent and accountable work environment.

Engage with legal and HR experts

Regular consultation with legal and HR experts can provide businesses with the necessary guidance to navigate complex legislative changes. These experts can offer tailored advice, conduct risk assessments, and support the implementation of compliance measures. Building strong relationships with these professionals will be invaluable in maintaining ongoing compliance.

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 introduces significant changes that will impact aspects of employment relationships. Businesses must adopt a proactive and comprehensive approach to compliance, leveraging audits, training, policy updates, and expert guidance. Continued professional development is crucial for equipping businesses with the knowledge and skills needed to navigate these reforms successfully. By staying informed and adaptable, businesses can ensure compliance and mitigate risks.