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Small businesses need to assess the impact of stronger worker protections and a more regulated environment.
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How the Closing Loopholes Bill changes the employment landscape
04 January 2024
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The introduction of the Closing Loopholes Bill represents a significant shift in the employment landscape for SMEs. The landmark legislation will reshape the country’s workplace laws for a sector that forms the backbone of our economy.
While employers may already be on the back foot following yet another challenging 12 months and the busiest time of year, SMEs must prioritise assessing what these new employment changes mean and how they will impact their business in 2024 and beyond.
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 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 fewer than 15 employees are exempt).
Additionally, enhanced rights have been granted to workplace union delegates including paid training leave, although 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.
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These changes could have significant operational impacts on SMEs, especially regarding labour hire arrangements and union interactions, which makes staying informed and preparing for reforms crucial.
Additional government commitments
While each of these is still under review or in progress, the 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, which would provide enhanced guidance and resources for small-business owners.
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 workforce flexibility for SMEs and present challenges for employers in managing their workforce.
This part of the bill aims to alter how workplaces define the status of casual employment and independent contractors, 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.
HR practices must adapt
For many SMEs, these changes will require a shift in employment and payroll practices, necessitating a more strategic approach to HR. While the aim is to create fairer workplaces, the impact on SMEs may be considerable, particularly in relation to administrative burdens. However, with effective systems in place, businesses can adapt and continue to thrive.
The bottom line for SMEs
Employers need to assess 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 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 SMEs, as they could significantly impact how they manage their workforce and comply with evolving employment laws.
Ben Thompson is chief executive of Employment Hero.
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