Asia-Pacific employment law bulletin 2024

Australia

2023 saw significant employment and labour law reforms in Australia, with more to come in the year ahead. 

Since being elected in 2022, the federal Labor Government has introduced various tranches of amendments to Australia’s Fair Work Act 2009 (Cth) and other employment laws relating to sexual harassment and discrimination, parental leave and work health and safety.

The initial reforms, passed in December 2022, introduced restrictions on the use of fixed-term contracts, created new avenues for multi-employer bargaining and imposed obligations on employers to take proactive steps to address psycho-social risks and eliminate sexual harassment and discrimination in their workplace (read more here). These reforms came into effect progressively throughout 2023, and, as a result, we are now seeing employers grappling with their impact as the first test-cases play out before the courts and our employment tribunal. 

In December 2023, the Government passed Part One of a further tranche of legislation titled the ‘Closing Loopholes Bill’. Part two of the Closing Loopholes Bill remains due for the Senate’s consideration early this year. The ‘Closing Loopholes’ reforms: create a criminal offence of wage theft; seek to regulate different forms of work such as casual employment, labour hire, independent contractors and workers in the gig economy and road transport industry; and increase the power of unions and the rights of their delegates in the workplace.  The complexity, volume and potential impact of some of these more recent changes has created a challenging and uncertain operating environment for employers across all sectors of the economy.

In addition to major legislative reform, 2023 saw continuing commercial challenges for employers including rising interest rates, continued labour shortages and increased labour costs, leading to an uptake in workforce reductions and other cost-cutting measures.

Restrictions on fixed-term contracts

New restrictions on the use of fixed-term (and maximum-term) contracts came into effect on 6 December 2023. These include limiting the use of fixed-term contracts to a period of two years and prohibiting the renewal of these types of contracts more than once, with some limited exceptions.  Failure to comply with these obligations may result in the automatic conversion of employees from fixed-term contracts to permanent contracts in certain circumstances, and the imposition of civil penalties.

‘Same Job, Same Pay’ – Labour hire reform

One of the most substantial changes passed in Part One of the Closing Loopholes Bill is the introduction of a new regime that will facilitate statutory orders that will require workers employed through labour hire companies to receive the same pay (including penalty rates, allowances and incentives) as workers employed directly by host employers.  Although large employers in the resources and aviation sectors are the primary targets of the reform, the new regulatory regime will potentially have significant consequences for all employers who engage indirect labour sources.

Although the payment obligations under the new regime will not take effect until November 2024, anti-avoidance provisions apply retrospectively to 4 September 2023.

Payroll compliance and wage theft

Payroll compliance continued to be a challenging area for employers, with the issue receiving considerable focus from the Federal regulator, class action law firms and unions. The Closing Loopholes Bill introduced a new federal criminal offence for ‘wage theft’ where an employer’s conduct in underpaying an employee is intentional.  Penalties for non-compliance with wage theft laws reflect the criminal nature of the offence: for corporations, fines of up to three times the underpayment amount or AUD 7.825 million (approx. USD 5.148 million), whichever is greater, and for individuals, 10 years’ imprisonment and/or three times the underpayment amount or AUD 1.565 million (approx. USD 1.030 million).

Although the new wage theft laws will not apply until 2025, we can expect to see employers take action during 2024 to mitigate any outstanding risks. The issue of historical compliance will also remain a significant issue in corporate transactions, with payroll due diligence and warranty and indemnity insurance taking on increasing importance in this context.

Psycho-social hazards and sexual harassment 

Employers’ obligations to remove or mitigate risks for workers and others related to psychological health, has gained increased focus. Many jurisdictions in Australia have adopted model work health and safety regulations seeking to actively address psycho-social risks.

The obligation on employers to address psycho-social risk in the workplace has been complemented by a ‘positive duty’ to prevent sexual harassment. Employers have a positive duty to take reasonable and proportionate measures to eliminate, as far as possible, sexual harassment, sex discrimination, victimisation and conduct creating a hostile work environment on the ground of sex. 

The Australian Human Rights Commission’s (AHRC) wide-ranging powers to investigate and enforce compliance with the positive duty commenced on 12 December 2023. The AHRC is now empowered to conduct inquiries, issue compliance notices, compel the production of documents, enter enforceable undertakings and apply to the federal courts for orders where it reasonably suspects an organisation is not complying with its positive duty. Over the course of 2024, we can expect there to be increased regulatory scrutiny from the AHRC and safety regulators of the steps employers are taking to proactively control known risks to the health and safety of employees, including psycho-social risks caused by sexual harassment, and to meet the ‘positive duty’.

Looking ahead

Employers should be conscious both of the significant changes that have recently been made to Australian employment and labour law and of the prospect that change will continue.

In particular, the further reforms in Part Two of the Closing Loopholes Bill which were passed in early February 2024, have significant consequences for employers’. In particular:

• Changes to the definition of casual employment place the focus on the practical reality of the relationship rather than the contractual terms and introduce an additional right for casual employees to seek conversion to permanent employment.
• A new definition of the ordinary meaning of ‘employee’ is now included, as distinct from an independent contractor, with a return to a multi-factor test where the totality of the relationship is relevant, effectively overriding two significant High Court decisions which required the characterisation of an employment relationship to be determined solely by reference to the terms of the written contract.
• Specific regulation of the transport industry and gig economy, has now been introduced, including new definitions of ‘employee-like worker’, ‘digital platform operator’ and ‘regulated road transport contractors’, and empowering Australia’s employment tribunal to set statutory minimum standards (for example, a minimum wage) for workers who fall within those categories.
• A right to disconnect – an employee can refuse to monitor, read or respond to contact from an employer or third party unless the employee’s refusal is unreasonable. Any dispute between employer and employee about the application of these provisions can be referred to the Fair Work Commission.

There are also significantly increased civil penalties for non-compliance with certain provisions of the Fair Work Act 2009.

Corrs Chambers Westgarth: Paul Burns, Shea Wilding, and Tara O'Brien