The Australian government’s latest Closing Loopholes Bill has now passed both Houses of Parliament and received Royal Assent.
This means that the new law has come into effect. Some of the changes start immediately, while some commence later in the year or next year.
The law’s full name is a bit of a mouthful: the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023.
This new tranche of changes amends a lot of the current law – and people in our industry should be alive to how the changes could affect them.
Here are some of the key changes that truckies should know.
New definition of employment
This is probably one of the most important changes in the new law. A new definition of “employee” will be inserted into the Fair Work Act 2009.
Since forever, the definition of employee has been left to the common law. In other words, there was no specific definition enshrined in legislation.
But now, the meaning of employee and employer under the new definition is to be determined by so-called “ascertaining the real substance, practical reality and true nature of the relationship” between the parties.
This is really important for the transport industry, because we engage a lot of independent contractors (subbies and owner-drivers) to perform work for us.
Now, I’m all for treating people fairly. Anybody who knows me tells me I go above and beyond to treat my owner-drivers fairly.
But this change troubles me.
Even if we engage somebody completely legitimately as an independent contractor (a truckie who runs their own business, who provides their own truck, has their own insurance, etc.) – there is a risk that they can ‘become’ an employee depending on how the relationship with that truckie evolves over time.
Transport is a dynamic industry. Things evolve. Circumstances change. Relationships develop. There is no single relationship with a truckie I know that’s stayed exactly the same over a long period of time.
Which is why this new change troubles me. What if the truckie wants to remain a contractor, but they unknowingly to both of us become an employee?
Will we suddenly be hit with massive underpayment claims for leave, superannuation and other benefits?
There is an ability for an individual or employee to “opt-out” of being classified as an employee, but the individual must earn more than the contractor high income threshold – the amount of that threshold is not yet decided.
If we’ve engaged a truckie for 5-plus years, how much of the past do we need to study in order to determine the ‘true nature’ of the relationship? It is unclear for the principal contractor, and it is unclear for the driver.
There is just too much uncertainty, which nobody likes when they’re running a business. In the High Court’s own words in Personnel Contracting, “such a test is apt to generate considerable uncertainty, both for parties and for the courts”.
This change becomes effective on August 26, 2024.
Casual employment
This is another one of the new law’s major changes. The existing definition of ‘casual employee’ has been replaced.
Currently, a person is a casual employee if:
• An offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person;
• The person accepts the offer on that basis; and
• The person is an employee as a result of that acceptance.
I think this is a simple, clear and reasonable definition.
The trucking industry relies heavily on these types of employees.
Many truckies prefer the flexibility that casual employment brings, and many companies offer casual employment to new employees especially when they are trialling them out to see if they are a good fit for their business.
When hiring casuals, both the employee and the employer like to agree with certainty at the outset as to what their engagement is going to be and look like.
Employees and employers sign a contract, we commence work, the employee understands that there is no firm advance commitment, they know that they are a casual – and we move on.
So, what’s the main change?
The new definition will say that employees are casuals only if:
• There isn’t a firm advance commitment to continuing and indefinite work, “factoring in the real substance, practical reality and true nature of the employment relationship”.
• The employee is entitled to be paid a casual loading or a specific pay rate for casuals.
Sounds like a rehash of the new statutory definition for employee.
This is troublesome for me – mainly because, once again, the text in bold creates a degree of uncertainty that nobody can get behind.
Employers will need to assess the “totality” of the relationship having regard to not only the contract we sign with employees, but also other factors such as how the contract is performed in practice. For many years before 2022, this is how the law used to operate.
I’m no solicitor, but this is really problematic. My reading of this is that employees can effectively ‘start off’ as casuals – but there is a risk that they ‘become’ permanent employees depending on how the relationship evolves in practice.
Once they become permanent, it triggers the obligation to pay things like annual leave, sick leave and other entitlements casuals don’t normally get. Employers can thus be hit with a massive financial surprise, especially if the relationship with their casual evolves over time in ways they do not expect.
I’m all for treating people fairly and with respect, but this change will plague our industry with a cloud of uncertainty that our industry does not need, nor does it deserve. Again, this change becomes effective on August 26.
Independent contractors
This is another considerable change that truckies, especially our independent contractors, need to know about.
The Fair Work Commission (FWC) – Australia’s industrial relations tribunal – is now going to have the power to deal with disputes about unfair terms in a contract which a contractor is a party to. (However, it will only apply to contractors who earn less than the contractor high income threshold – which hasn’t been set yet).
It seems that, at least in NSW, this will somehow operate alongside the protections for owner-drivers that exist in Chapter 6 of the Industrial Relations Act 1996 (NSW).
This change becomes effective on August 26.
Jurisdiction over road transport industry
The law has now given power to the FWC to set minimum standards orders and guidelines for independent contractors in the road transport industry.
The commission will also be able to deal with disputes regarding unfair terminations of service contracts, and unions will be allowed to make collective agreements with road transport companies.
Contractors can also apply to the commission if they think a term in their contract is unfair. They’ll also be a new ‘transport advisory group’ established to give advice to the FWC on matters relating to our industry.
This change sounds eerily like the establishment of the Road Safety Remuneration Tribunal (RSRT), the ill-fated ‘wage safety tribunal’ that was abolished in 2016.
I voiced these concerns in an article late last year and my concerns remain. I wonder whether we are marching into the same kind of firestorm.
New protection for gig economy workers
While this isn’t immediately relevant to my industry, unless you are accepting loads through digital platforms, I thought it be worth mentioning here.
The new law introduces protection for so-called “employee like workers”. These are contractors who perform work through digital platforms and who have low bargaining power.
They pretty much have hardly any say on how much they get paid or how they perform their work.
The FWC will now be given the power to set standards for these workers by providing minimum standards orders and guidelines. They’ll also be given jurisdiction to deal with disputes if they are unfairly deactivated from the platform.
To my knowledge, this is the first-time laws like this have ever been created here in Australia. It really underscores just how significant these changes are.
An uncertain future
I think the main message we need to understand from these new laws is that transport faces an uncertain future.
This legislation will introduce changes that are brand new, unpredictable and untested. Now more than ever, it is very important for transport operators and companies to ensure that they have their ‘legal’ ducks in a row and make sure they are prepared for the changes when they come into effect. We won’t get it right the first time around, but we need to be ready.
Because whether or not we like the new changes to the law, they will become our reality very shortly.
- Ryan Howison is the managing director of DSE Transport.