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Nick BancroftFebruary 28, 20246 min read

Closing Loopholes Bill: Key considerations in 2024

Earlier this year, the CEOs of Australia's business chambers urged the Senate to assess the ramifications of the second Closing Loopholes bill thoroughly. Their statement cautioned that the bill could lead to "unintended consequences" for employers, employees, and the broader community, adding extra financial burdens on businesses.


Their urges went unanswered as after six months of debate and negotiations, the government’s Closing Loopholes legislation passed the Senate last week and the House of Representatives earlier this week, including several commonsense recommendations proposed by the ARA and other employer groups, tabled by crossbench senators.


The ARA has consistently opposed the Bill as poorly conceived and continued to express our concerns about the rushed approach, back-room deals and poor consultation through this process.


Highlighting that their members, comprising mostly small businesses, employ millions of Australians across various regions and sectors, the CEOs expressed concern that additional constraints and costs would hinder their operations. They emphasised that these costs could ultimately be transferred to the community, result in job losses, or both.


The CEOs identified several aspects of the legislation that troubled them, including employee-like forms of work, casual employment, powers for union officials, road transport, intractable bargaining, and the right to disconnect.


Calling on the Senate to consider the legislation from the perspective of mainstream Australia, where family enterprises and small businesses are vital to the economy and community, the CEOs emphasised the importance of not allowing industrial relations laws to impede hard-working business owners from contributing to the nation's prosperity.


Key changes to come into force in 2024

The changes under the Closing Loopholes Act mark just the beginning of what is to be a year full of employment law change. While the changes under the Act are substantial, the more controversial and complex parts of the Closing Loopholes reform agenda have been transferred to the Closing Loopholes Bill No.2.


Business leaders are well advised to consider the impact of these proposed changes on their organisational strategy and workforce matrix. These are some of the main summaries:


Strengthening protections against discrimination - stronger protections against discrimination for employees who have been, or continue to be, subjected to family and domestic violence


Sham contracting arrangements - an amendment to the defence that is available to an employer who misrepresents employment as an independent contracting arrangement


Definition of employment - A new “ordinary meaning” definition of employee and employer, designed to revert the employee vs independent contractor characterisation to the multi-factorial test and unwind recent High Court authority


Road transport and employee-like worker conditions/unfair contracts - Introducing minimum conditions, collective agreements and rights to challenge termination/deactivation, for certain nonemployee gig economy workers and road transport contractors, a new FWC unfair contracts jurisdiction for services contracts and a new Digital Labour Platform Consultative Committee to be established as a consultation platform


Strengthening workplace protections - A 'right to disconnect' which entitles employees to ignore unreasonable contact outside work hours and empowers the FWC to issue 'stop orders' to enforce this right


Underpayments, compliance and enforcement - New criminal offence for wage and superannuation theft


Changes to casual employment - A new casual employee definition that will consider the totality of the employment relationship, the introduction of an anti-avoidance and ‘employee choice’ framework, increased access to the small claims jurisdiction, and the repeal of the residual right of employees to request, and the obligation on employers to offer, casual conversion every 6 months


Workplace delegates’ rights - New requirements on employers to allow workplace delegates paid time to attend training and reasonable time and facilities at the workplace to communicate with nonemployee regulated workers who are current or prospective union members


personal service contractors – the legislation seeks to restore the state of the law regarding the distinction between contractors and employees to its state before 2022. Whether a personal service worker is an employee or contractor will be determined by the “real substance, practical reality and true nature of the working relationship”, meaning that post-contractual conduct will be relevant as well as the terms of the contract. At the same time, the defence to the civil liability offence of “sham contracting” is made harder for alleged offenders, by requiring putative principals to prove their belief that the putative contractor they had engaged was a contractor, was objectively reasonable. 


casual employment – again the legislation will wind back the clock to the situation of the law prior to the Workpac decisions, whereby an employment relationship will not be a casual engagement if the practical reality of the employment relationship is one of permanent employment, resulting in the employee having rights as permanent employees.


gig contractors – the FWC will be empowered to set minimum standards for ‘employee-like’ workers in the gig economy and the road transport industry

unfair contracts – an informal jurisdiction of the FWC will be created to resolve disputes about unfair contract terms in service agreements between independent contractors and principals who are below a high-income threshold


How can employers prepare for the new legislation?

As the Bill is expected to move into effect shortly, employers should be aware that they will now have less say in when they can expect responses from their employees (if contact is occurring outside of agreed work hours).


The Bill has been criticised for its one-size-fits-all approach, which may need to be more effective given the range of workplaces and industries the federal legislation will cover. However, in anticipation of an employee's right to disconnect, employers should consider:


  • preparing policies around the use of work technology outside of agreed working hours
  • monitoring employees' work activity outside of agreed working hours
  • encouraging managers to respect employees' boundaries
  • providing training for managers to ensure they don't take action against employees who are exercising their new rights
  • training employees about the new right and what their employer is doing about it;
  • organising feedback mechanisms for employees who feel the need to work outside of agreed working hours
  • encouraging all employees to schedule any emails and tasks to be delivered during agreed working hours; and
  • organising training that highlights the mental health benefits of disconnecting from work


An IR expert says there is “no time to delay” for those needing to prepare before key Loopholes Bill measures take effect. At the same time, employer peak bodies claim new rights or union delegates have “huge implications” for how businesses engage with workers.


Among measures passed in the Albanese government’s slimmed-down Closing Loopholes Bill, legislation to boost delegates’ rights and enable unions to apply for regulated labour-hire arrangements will commence the day after it receives royal assent.


Employers’ obligations to pay a regulated labour-hire worker at the “protected rate of pay” will not apply until at least November 1st this year.


Measures to criminalise intentional wage and superannuation theft will meanwhile take effect on the later of January 2025, or when Workplace Relations Minister Tony Burke introduces a voluntary small business wage compliance code to reduce the likelihood that those employers will face criminal prosecution.


New provisions for intractable bargaining workplace determinations have taken effect after the Closing Loopholes No 2 Act this week received Royal Assent, while other key provisions, such as the right to disconnect and the new definition of casual employment, are set to begin in late August.


The new casual employment definition also applies in six months.