Jacqui Lambie Network dissenting report
1.1The Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 (the Bill) was introduced to the Australian Parliament last year after much consultation with business, unions, government agencies, industry representatives, and the community more broadly. The Bill, in its original form, was well over 300 pages long, with an explanatory memorandum of over 500 pages.
1.2Employment law is a very contentious and technical area. To get across all 900 odd pages of this Bill with just two advisors was a tall ask. To understand the Bill, the Jacqui Lambie Network (JLN) sought expertise and guidance from a significant number of individuals and organisations. My hardworking staff and I facilitated dozens of meetings with government, business, industry groups, unions, individuals, and other stakeholders.
1.3The JLN thanks all those we met for their time and guidance on this matter.
1.4Through these consultations, the JLN quickly identified elements of the Bill that were non-contentious and could be passed with the support of a majority of the Senate.
1.5With Senator David Pocock, the JLN sought to split the Bill ensuring that those non-contentious elements relating to PTSD, silicosis, family violence, and small business insolvency. The JLN thanks the Coalition and Senate crossbench for their support to split these items from the main Bill.
1.6In December last year the government finally agreed to split the bill while adding wage theft, industrial manslaughter, and labour hire to Fair Work Legislation Amendment (Closing Loopholes No. 1) Bill 2023. With the support of the Senate, this Bill made its way through the parliament and became law.
1.7The JLN thanks the government for agreeing to pass the non-contentious elements of the main Bill.
1.8The JLN, through this process, committed to engaging with the remainder of the Bill in good faith and spent the summer recess deeply scrutinising the Bill, meeting with stakeholders from across the employment law spectrum, and attending hearings of the Senate Inquiry into the Bill.
1.9The JLN thanks the hard-working Senate committee secretariat and staff for their efforts with this inquiry.
1.10The JLN has significant concerns about the following Parts in Schedule 1 of the Bill:
Part 1 (Casual Employees);
Part 7 (Workplace Delegates’ Rights);
Part 10 (Exemption Certificates for Suspected Underpayment);
Part 11 (Penalties for Civil Remedy Provisions);
Part 15 (Definition of Employment); and
Part 16 (Provisions Relating to Regulated Workers).
1.11The JLN is concerned that this Bill, if passed into legislation in its current form, will have significant economic consequences for businesses and employers. It has the capacity to contribute to cost of living pressures, harm businesses by increasing red tape, create confusion and complexity, discourage innovation, create barriers for employers seeking to hire staff, and drive-up costs. The JLN is especially concerned by the impact the Bill will have on small businesses.
1.12The JLN is also concerned that the Bill lacks sufficient detail regarding ‘employee-like’ definitions and the scope of union delegate rights (including right of entry). Equally concerning is the lack of clarity around the definition of employment, including terms such as ‘real substance’, ‘practical reality’, and ‘true nature’. By not defining these terms, or clarifying the scope of union delegate rights, the government is deferring the contextual meaning of these terms to the courts. This creates uncertainty and confusion for business when engaging new and managing current employees.
1.13The JLN will continue working with the government and relevant organisations in good faith to ensure workplace laws continue to protect the best interests of both employees and employers across Australia.
1.14Part 1 of Schedule 1 creates a new definition of ‘casual employee’ and updates the framework for casual conversion to part-time or full-time employment status.
1.15In its current form, the Fair Work Act 2009 contains a clear, simple and effective definition of casual employment and conversion process.
1.16Under the proposed changes, employers will not be able to refuse an employee’s request to convert employment status even when it is foreseeable that an employee’s position will cease to exist, or hours of work will be different due to changing business demands. This change has the capacity to damage businesses by increasing the frequency of workplace disputes.
1.17Additionally, the Bill requires the employer to provide a response to the employee’s casual conversion request within 21 days which may be unreasonable for many businesses.
1.18The JLN harbours significant concern for small business as Part 1 of the Bill adds greater red tape to an already heavy administrative load.
1.19Part 7 of Schedule 1 introduces new rights for workplace delegates. Part 10 of Schedule 1 amends the right of entry provisions to enable union delegates to apply for an exemption certificate to waive the usual 24 hours’ notice period required to enter a workplace to investigate suspected contraventions involving underpayment of wages or other monetary entitlements.
1.20The Bill lacks important detail including the definition of key terms around workplace delegates’ rights. For example, the appointment of workplace delegates does not have a legislative procedure or formality, meaning there are no limits as to how many delegates can be in any one workplace. Additionally, the scope of the proposed delegates’ rights is undefined and could include a range of activities that may not serve a legitimate purpose. These changes could undermine an employer’s ability to manage employees and impede legitimate management activities in the workplace.
1.21The proposed changes to workplace delegates’ rights and exemption certificates for suspected underpayments do not serve a policy agenda outside expanding the power and influence of unions.
1.22Power of entry should only be granted to law enforcement organisations. The JLN is against providing unwarranted powers to union representatives that should only be reserved for law enforcement officers.
1.23The exemption certificates will be applied for and issued on an ex-parte basis without any capacity for the employer to object or provide submissions to the Fair Work Commission. The process of providing exemption certificates raises serious questions about fundamental principles of natural justice and procedural fairness.
1.24The Bill does not provide a definition or guidance about what constitutes suspected underpayment. For example, it is not clear whether a simple error in one pay period will be sufficient to provide an exemption certificate or whether suspected underpayment must occur over a defined period of time. Consequently, all business will be subject to the right of entry demands on mere suspicions of underpayment and could face serious civil penalties should they get it wrong.
1.25The JLN is concerned that right of entry provisions may be subject to misuse such as bullying and harassment behaviour, or protection rackets if the power is granted without sufficient safeguards against unlawful conduct.
1.26The JLN is also concerned about how personal and private business information would be handled and protected by union delegates.
1.27A more balanced approach would be to provide more resources to regulators, such as the Fair Work Ombudsman, to investigate instances of suspected underpayments, rather than providing union representatives with police like powers to enter workplaces.
1.28Part 11 of Schedule 1 increases maximum civil penalty provisions that apply to contraventions of wage exploitation provisions by up to ten times the amount in the current framework.
1.29Under the new measures, an individual could face a new maximum penalty of $93,000 (increased from $18,780) for an ordinary contravention, and $939,000 (increased from $187,800) for a serious contravention. A body corporate could face five times the amount and up to $4,695,000.
1.30The JLN is of the view that improving compliance can only be achieved my making laws simple, clear, and easy to understand. Under these measures, the government is attempting to significantly increase civil penalty provisions at the same time as adding more layers to an already complex framework of employment relations law.
1.31Additionally, the existing civil penalty provisions are sufficient and achieve the same purpose. Since 2017, the maximum penalty provisions have increased on two separate occasions which raises concerns as to the necessity of the new provisions.
1.32The changes to civil penalty provisions represents an overreach for what sometimes is a short term administrative or diagnostic error. Under the new provisions, many small businesses risk losing their business under the weight of significant penalties. To reduce unintended consequences, the proposed penalties should be considered alongside the capacity of businesses to pay and based on direct reference to the company’s turnover.
1.33Part 15 of Schedule 1 provides new definitions of employee and employer which will be determined by reference to the ‘real substance, practical reality and true nature’ of the relationship between parties. Under the new measures, the definition of casual employee is over three pages with at least twelve different criteria. This criteria is non-exhaustive which creates uncertainty, confusion, and legal risk for employers seeking to engage casual workers and contractors.
1.34The Bill challenges the principle of freedom of contract where parties can freely and independently enter into contracts that are mutually beneficial. The JLN does not support these changes as they allow for matters outside of the contract to determine the legal relationship between parties which nullifies the existence of a legal binding contract.
1.35The JLN believes that terms of a contract should not be overridden by abstract and imprecise set of indicia that will be used to determine the employment status of a worker.
1.36Part 16 of Schedule 1 enables the Fair Work Commission to introduce minimum standard orders to provide independent contractors with greater workplace protections.
1.37The JLN has the following major concerns with the provisions relating to regulated workers:
repeating the same mistakes as the Road Safety Remuneration Tribunal (RSRT); and
ensuring the viability and competitiveness of owner drivers within the road transport industry.
1.38On the face of it, the Bill looks to be re-establishing the RSRT. The RSRT harmed owner drivers by ordering conditions that owner drivers were unable to meet which threatened their livelihoods.
1.39As currently proposed, the Road Transport Advisory Group are not specifically required to engage and consult with owner drivers, of which there are approximately 67,000 across Australia. This effectively excludes owner drivers from decisions relating to their industry and risks repeating the mistakes of the RSRT.
1.40In short, the above measures largely favour fleet-based organisations that do not use owner drivers and will be damaging to Australian businesses and consumers.
1.41The proposed changes to the casual workforce, workplace delegates’ rights, and right of entry for union representatives are especially concerning. The JLN maintains significant concern for small businesses and owner drivers in the transport industry should this Bill pass in its current form.
1.42This Bill challenges the status quo. The JLN acknowledges that some change to the employment landscape is necessary, but further scrutiny and investigation from industry stakeholders, government, and the public at large is key to getting this right.
Senator Jacqui Lambie
Participating Member
Jacqui Lambie Network
Senator for Tasmania
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