Industrial relations changes under the new Labor government: What can employers expect?

Following the recent Federal election, the new Labor government under Prime Minister Anthony Albanese is expected to introduce a raft of changes to workplace laws in Australia. Going into the election, Labor’s industrial relations policy focused on job security, targeting casual employment, labour-hire and gig work, and other forms of insecure work.

This article examines these anticipated changes in more detail focusing on the legislative amendments to the Fair Work Act 2009 (Cth) (Fair Work Act) that can be expected under the government-elect in the near future.

What changes to the Fair Work Act are expected?

The package of measures proposed by the new government will likely include amendments to the Fair Work Act that will:

• change the definition of casual employment;
• limit the use of fixed-term contracts;
• enshrine ‘secure work’ as an object of the Fair Work Act;
• extend the powers of the Fair Work Commission (Commission) to set minimum working conditions and entitlements to gig work and other ‘employment-like’ forms of work;
• enshrine the so-called principle of ‘same job, same pay’;
• automatically terminate ‘zombie’ enterprise agreements;
• introduce criminal offences for wage theft; and
• include a right to superannuation in the National Employment Standards (NES).

What will these changes mean for businesses?

Changes to enterprise bargaining

The new government has signposted plans to legislate an automatic termination date for ‘zombie’ enterprise agreements that predate the Fair Work Act. Under these agreements, base rates of pay must increase in line with the equivalent modern award, but other entitlements do not necessarily keep step accordingly, meaning covered employees may receive significantly lower entitlements overall.

Employers operating under such agreements will need to either bargain for new agreements or revert to modern award coverage, with potentially significant wage costs impacts involved in either scenario. Further, the Commission has signalled that ‘the clock is essentially ticking’ on older post-Fair Work Act agreements that provide significantly lower overall entitlements compared to the relevant award.[1]

More avenues to permanent employment

The government has said the amended definition of casual employment will revert to the common law test of whether there is ‘an absence of a firm advance commitment as to the duration of the employee’s employment or the days or hours the employees will work’. It has said that this will represent a ‘fair, objective test’, although no precise formulation for the new definition has yet been advanced.

The current definition in the Fair Work Act gives primacy to the rights and obligations agreed in the employment contract when determining whether an employee is a casual. The change may reopen the door to claims that a casual employee who works consistent hours on a regular roster is owed entitlements as a permanent employee, such as paid annual and personal leave.

The government also intends to limit the use of fixed term contracts, which it says represent another form of insecure work despite having legitimate commercial purposes. These arrangements will be limited to a maximum of two consecutive contracts for the same role or a maximum overall duration capped at 24 months, after which employees will likely be entitled to claim ongoing permanent employment.

Extended Commission powers in relation to modern awards and enterprise agreements

The inclusion of ‘secure work’ as an objective of the Fair Work Act will oblige the Commission to consider this aspect of employment when exercising its powers to determine national and modern award minimum wages, set or vary employment conditions modern awards, and approve enterprise agreements.

Extending the Commission’s powers to gig workers and other ‘employee-like workers’ will enable the Commission to set minimum standards for these kinds of workers, including for wages, hours of work and breaks, allowances, and overtime. These powers may also extend to independent contractor relationships, with potentially far-reaching consequences for many businesses.

More penalties and claims in relation to wage entitlements

The government intends to legislatively enshrine the ‘principle of same job, same pay,’ requiring labour-hire workers or independent contractors to be paid the same as permanent employees performing the same work within a workplace or business. The proposed amendments may give those kinds of workers a new avenue for making wage claims as well as potentially imposing penalties for businesses.

The introduction of criminal offences for wage theft in the Fair Work Act will make employers liable to heavy penalties for underpayments that are wilful or deliberate, or dishonest or reckless. The government has said that the new offences will not weaken those already existing under State laws.

The inclusion of superannuation entitlements in the NES will allow workers to claim unpaid superannuation amounts directly through the Commission and the Fair Work Ombudsman, rather than having to pursue such entitlements through the Australian Taxation Office.

What other developments are expected?

In the leadup to the election and in its time in opposition, the Labor government has signposted further IR changes in addition to those discussed above, including:

• introducing a Secure Australian Jobs Code to provide guidelines relating to employment conditions for taxpayer expenditure through government contracts;
• ensuring that the government is a model employer in relation to secure employment;
• consulting on portable entitlement schemes for employees in insecure work;
• implementing the recommendations of the Respect @ Work report; and
• abolishing the Registered Organisations Commission and the Australian Building and Construction Commission.

The nature and impacts of these measures will unfold over time during the new government’s term.  Some will have further significant impacts on businesses in the retail and fast-food industries, especially the implementation of the Respect @ Work recommendations.

Takeaways

While not an election centrepiece as in the past, this bundle of measures will have significant impacts on the industrial relations landscape and employers are urged to consider the implications for their businesses straight away. Those operating under old enterprise agreements or employing substantial casual or labour-hire workforces should start planning for further changes in this space.

If you require assistance in respect of any of the matters raised above, please contact the NRA Legal team on 1800 572 679.

[1] Empire Holdings (QLD) Pty Ltd T/A Empire Hotel and Cloudland [2022] FWCA 62; Application by Henry Thom [2022] FWCA 1543.