What the Closing Loopholes Bill means for business owners

The changes to legislation will affect businesses of all shapes and sizes. Here’s what leaders should be wary of.

In the wake of the Federal Parliament’s recent passage of part one of the Closing Loopholes Bill – and with part two set to come early next year – Ben Thompson, co-founder and chief executive of Employment Hero, shared his thoughts on what business leaders should be thinking about.

Despite this first part of the industrial relations reform being dubbed less contentious than the remaining portion and therefore ripe for early passage, its impacts will likely be wide-ranging. This was the subject of HR Leader’s recent article breaking down the bill and the consequent debate across industry, unions, and experts.

“As 2024 approaches, employers should consider assessing the impact of the new laws on their businesses,” said Mr Thompson.

Specifically, in relation to part one of the bill, employers should pay mind to the following reforms:

1. Wage theft criminalisation

Wage theft, which is currently treated only as a civil offence, will now attract criminal penalties of up to 10 years in cases when the theft is intentional. Wage theft can take many forms, far beyond failing to pay award-level wages. Consider the recent wage theft class action filed against KFC for failing to offer paid breaks for thousands of staff.

Wage theft includes the following:

• Failing to pay superannuation.
• Failing to pay overtime.
• Misclassifying workers as independent contractors.
• Not paying for trial or training periods.
• Not paying personal, annual, or paid leave.

The list is extensive and goes far beyond those listed above. At any rate, increased attention is being given to wage theft in its many forms. And threatened with harsher penalties for non-compliance, employers should ensure their approach to pay is up to scratch.

“For SMEs, the best way to boost compliance and take the guesswork out of payroll is to use automated payroll software,” said Mr Thompson. “In addition, good payroll management practices also include accurate record keeping, regular audits, and ensuring that payroll systems are up to date with the latest legal requirements.”

2. Worker protections

Under the bill, broader protections will be afforded to employees who are subjected to family and domestic violence. This will be added as a protected characteristic under the general provisions of the Fair Work Act, explained Mr Thompson, meaning an individual worker cannot be discriminated against on this basis. In addition, broader rights will be granted to workplace union delegates, including paid training leave.

Mr Thompson said the reforms signal an appetite for greater worker protections and more stringent employer responsibilities. This is further evidenced by the stricter “same job, same pay” requirements for labour hire workers.

“SMEs should particularly note these changes, as they could have significant operational impacts, especially in terms of labour hire arrangements and union interactions,” stressed Mr Thompson. “Staying informed and preparing for these changes is crucial.”

Other changes to be considered by business leaders include:

• Tighter regulations around redundancy pay in insolvency situations.
• Greater union access to workplaces.

As the reforms are rolled out in the coming years, employers should practice “proactive adaptation and should prioritise employee welfare in response to evolving legal landscapes,” said Mr Thompson.

“This includes evaluating the effects on current and future enterprise bargaining and their response to any Fair Work Commission applications for ‘same job, same pay’ orders.”