Closing Loopholes for Small Business

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 amends the Fair Work Act 2009 (the Act) to provide a range of measures that apply to businesses of all sizes. However, the amendments will apply differently to small businesses.

Amended Casual Employment

In order to request a change in employment status from casual to permanent, employees in small businesses must have completed 12 months of service. In larger businesses, the requirement is 6 months of service before an employee can notify their employer of a change in status. This means that they no longer meet the definition of a casual employee and can seek permanent work. It’s important to note that this notification can only be made after the specified time period has been completed.

The process to change status is entirely employee-driven and an employer’s obligation to respond will only arise if the employee provides a notification.

Small businesses (fewer than 15 employees), will continue to be exempt from the requirement to offer casual conversion to their employees.

Closing the labour-hire loophole

The measures regarding closing the labour-hire loophole won’t apply where the host is a small business employer (fewer than 15 employees).

Where the Fair Work Commission is satisfied the host is a small business employer, it will not have the power to make an order switching on entitlements and obligations under this measure.

Criminalising Wage Theft

The new rules will make it a crime to intentionally underpay employees. Honest mistakes won’t land you in legal trouble. Small businesses can get some relief in two ways:

  1. Voluntary Small Business Wage Compliance Code: Small businesses that may have accidentally underpaid their workers won’t face criminal charges if they follow a new code. This code will be created by the government in collaboration with employer and employee groups.
  2. Cooperation Agreements: If someone, like an employer, confesses to conduct that could be wage theft, the Fair Work Ombudsman might agree not to pursue criminal charges. They’ll look at various factors before deciding.

Civil Penalties

The most significant fines for breaking the rules are getting bigger, and recklessness can now be considered a serious violation. The court still has the power to lessen the penalties based on the circumstances, such as the business’s size and the amount underpaid.

Sham Contracting

Employers accused of wrongly classifying employees as independent contractors must now prove they genuinely believed they were doing the right thing. Courts will consider factors like the size and nature of the employer’s business when determining if this belief was reasonable.

References: Department of Employment and Workplace Relations Factsheet

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