Closing Loopholes Act has commenced – what’s changed?

Some changes took effect from 15 December 2023 and others will come into operation at various times in 2024 and 2025.

Changes from 15 December 2023

Small business redundancy exemption

There are new redundancy payment rules for businesses that downsize to become a small business employer during bankruptcy or liquidation. Under the Fair Work Act 2009 (Cth) (FW Act), a small business employer is one that employs fewer than 15 employees.

Previously, the obligation on employers to pay redundancy pay under the National Employment Standards (NES) was assessed immediately before the employee’s termination or when they were given notice of the termination (whichever is earlier). If at that time, an employer had less than 15 employees, there was no obligation to pay the statutory redundancy amount.

The new requirement for small business employers to pay redundancy only applies to employees of employers that are bankrupt or in liquidation due to insolvency. It does not affect ongoing, solvent businesses. If a small business is a partnership, each of the partners need to be bankrupt or in liquidation (as the case may be) for this carve-out to apply.

The change means that the statutory redundancy exemption for small business employers does not apply in these circumstances:

  • at the time the employee’s employment terminates, the employer is a small business employer; and
  • the employer is bankrupt or in liquidation; and
  • the employer is a small business because the employment of one or more employees was terminated; and
  • the terminations occurred within a six month ‘look back’ period due to the insolvency of the employer.

Regulated labour hire arrangement jurisdiction

Previously, a labour hire worker and a directly engaged employee performing the same work for the same host employer may have terms and conditions of employment set by different workplace instruments under the FW Act.

The changes permit ‘regulated labour hire arrangement orders’ to be made which ensure that both labour hire workers and directly engaged employees doing the same “kind of work” are paid at least the same amount as provided by the host employer’s enterprise agreement. This regime has been described by the Government as “same job, same pay.”

A regulated labour hire arrangement order will require the labour hire employer to pay its employees no less than the ‘protected rate of pay’.

Parties can lodge applications for regulated labour hire arrangements from 15 December 2023, but the employers’ obligation to pay a regulated labour hire worker at the ‘protected rate of pay’ will not apply until at least 1 November 2024.

If the Fair Work Commission (FWC) is satisfied that the host is a small business, it will not have the power to make a regulated labour hire arrangement order.

Workplace delegates’ rights provisions

The changes provide specific rights and protections for workplace delegates to represent the industrial interests of union members and potential members, including in disputes with their employer. Workplace delegates are employees who are appointed or elected as representatives in the workplace under their union’s rules.

Workplace delegates will be given reasonable access to communicate with current and potential union members about matters of industrial concern and access to workplace facilities. There will also be a new general protection for workplace delegates in carrying out their role, including preventing an employer from unreasonably refusing to deal with them, misleading them, or hindering or obstructing the exercise of their rights as delegates.

Workplace delegates will be entitled to paid time off work to attend workplace delegate training unless they are employed in a small business.

The FWC is required to vary modern awards to include a delegates’ rights term by 30 June 2024.

Family and domestic violence protections

Family and domestic violence is now a protected attribute within the FW Act’s anti-discrimination provisions. The changes mean that:

  • discriminatory terms in modern awards and enterprise agreements are prohibited;
  • employers cannot take adverse action against a current or prospective employee, including dismissal, because the person is experiencing family and domestic violence;
  • the FWC, when performing its functions or exercising powers, must take into account the need to respect and value the diversity of the workforce by helping to prevent and eliminate discrimination on the basis of family and domestic violence.

The protection does not apply to perpetrators of family and domestic violence.

Changes taking effect in 2024

From 1 July 2024, the FWC will be required to issue determinations varying modern awards to include a delegates’ rights term.

A delegates’ rights term must be included in a workplace determination made on or after 1 July 2024 and in an enterprise agreement that is approved by or voted on or after 1 July 2024.

From 1 November 2024, any regulated labour hire arrangement orders issued by the FWC will commence operation.

2025 changes

Criminalising wage theft

From 1 January 2025 or the day after the Minister declares a Voluntary Small Business Wage Compliance Code (whichever is later), employers who intentionally underpay wages and superannuation could face fines up to $7.8 million and 10 years in jail.

The Voluntary Small Business Wage Compliance Code must be created and declared by the Minister before the wage theft offence provisions can commence.

The offence will apply to intentional failures to pay employees in full, on or before, the date the payment is due. This applies to amounts required to be paid to employees under the FW Act, a modern award, workplace determination, Fair Work Commission order or transitional instrument.

Other changes: Superannuation is an entitlement under the National Employment Standards

From 1 January 2024, superannuation is an entitlement under the NES. The NES entitlement to superannuation aligns with superannuation legislation, so if an employer complies with their obligations under the superannuation guarantee they will meet their NES obligations.

The inclusion of superannuation as an NES entitlement means that employees can commence proceedings against their employer to recover any unpaid superannuation. An updated Fair Work Information Statement is available.