A wave of reform: Industrial relations 2024 recap

There have been important changes to a number of key areas. For instance, rules for labour hire workers, new discrimination protections, casual employment, the right to disconnect, change to the definition of employment and ‘employer’ and ‘employee’, independent contractors, sham contracting, civil penalties for wage underpayments and criminalisation of intentional wage underpayments, and more.

According to Professor Shae McCrystal, Professor of Labour Law at the University of Sydney Law School, “in terms of waves of Industrial Relations legislation, this is probably the biggest wave [of reform] we’ve had since the Fair Work Act was enacted in 2009. There have been legislative changes to the Fair Work Act in its life, but nothing that matches the last three years,” she says.

McCrystal has been researching, teaching and studying Labour Law for close to three decades and says for the first time, there has been guidance, under the Fair Work Act on how workers are categorised. “It’s not quite a definition of employee, but it is presumptions and guidance around how you construe an employment contract, and that has never been the case before in the Federal Act and that was a direct response to the High Court decision in Jamsek (ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2) and Personnel Contracting (Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1), which had significantly shifted the common law backwards …,” she says.

McCrystal says that another significant change is regulated labour hire, same job, same pay provisions. “…[I]f you’ve got an employer who has an enterprise agreement in place, if they’re bringing in labour hire workers, the union would be able to get an order that those labour hire workers be paid at the site rate that exists at the business place,” she says.

McCrystal points out that this provision has only just taken effect, but it has already created a “massive shadow effect.”. She explains that it has made it less attractive for businesses to use labour hire staff and “… for some workers that’s had a massive and immediate increase to their take home pay.”

In terms of the speed or the effect of the reforms, Luis Izzo from Australian Business Lawyers & Advisors says that “some elements of the reforms that we have seen … in the last 18 months … seemed to have had quite an immediate effect whereas others might not have much relevance or penetration at all.” “You’ve got two extremes. On the one hand, if you look at the government’s multi-bargaining reforms … that was heavily resisted during the policy formation stage … but it really hasn’t come to fruition. … On the other hand, you have the labour hire arrangement orders so the ability for unions to ensure that labour hire employees are getting paid the same amount as the host, that has landed very quickly …,” he says.

Another change is the introduction of the right to disconnect laws and while there has been a lot of attention surrounding the law and how it will work in practice, Izzo does not believe that it will have a significant impact on workplaces. “…[A]t the end of the day, it’s not a prohibition on employers contacting employees out of hours or sending emails … it pertains to the fact that employees have a right to ignore these types of communications ‘til they get back to work,” he says.

While it is too early for there to be any cases testing the right to disconnect laws, Izzo says that “we’re quite confident that [the] Fair Work Commission [is going to] take a very sensible approach to any disputes in this space.”

Izzo points out the limitations on fixed term contracts are now in place and whether it has achieved its intended impact, he believes the answer is yes as “a lot of employers are now reviewing how they contract with employees.

“…[T[here’s a lot of medical research, scientific research and charitable organisations that require grant funding to engage people in particular roles and the prohibitions on fixed term contracting have now caused those particular types of bodies a lot of difficulty and exposes them to the risk of redundancy payments and other liabilities they didn’t previously have. So, there’s still teething issues in the fixed term contracting space …,” he says.

Another significant change is the criminalisation of intentional wage underpayments which will come into effect from 1 January 2025. Izzo points out “the wage theft laws are the first laws in the employment space, if you put aside work, health and safety … that give criminal enforcement sanction to what has traditionally been a civil area.

“It is new ground for employment law and it does mean that people could go to prison for intentionally not providing people with the right wages and that’s why we are seeing an increased level of focus on this at board level …,” he says.

Izzo explains the “maximum [penalty] is ten years imprisonment and maximum fine of $7.8 million for a company, $1.5 million for individuals or three times the amount of the underpayment for companies if the underpayment is quite large,” he says. “…[T]he penalties are much bigger than what we’ve ever seen in the employment space.”

2024 recap and predictions for 2025?

2024 has been a big year for industrial reform and further changes are expected well into 2025.

“There’s been an incredibly large amount of policy work being done by the Commission as well this year. You have landmark gender under valuation proceedings that have been running all year to increase rates of pay in a number of industries … the Commission’s initiated proceedings to review working from home provisions and awards and whether they’re sufficient. … all of these policy-based reform proceedings are on top of what the parties bring so it’s almost been an unprecedented year of industrial activity in the Fair Work Commission,” he says.

As for what 2025 will bring, Izzo believes that the level of activity will continue to increase. He believes that legislative reform is needed to define independent contractors to ensure certainty for businesses. He also believes that further reform is required in relation to arbitration of intractable bargaining.

While changes are expected in 2025, Izzo points out that there will be a federal election next year. “If there’s a change of government that might have some impact. We’re yet to see the policy platforms from either party to ascertain what impact that might have on what we’ve seen this year. But that’ll no doubt be one of the external events that might impact all of what we are talking about,” he says.

Reflecting on the changes that have come into effect in 2024, Izzo says that “I think if this year was an unprecedented year of industrial activity. My prediction is next year we’ll just build on that.”