The Fair Work Ombudsman has urged both employers and employees to educate themselves on the new Closing Loopholes workplace laws and make sure they are compliant.
Most changes to the Closing Loopholes laws took effect on 15 December 2023, while others will take effect between now and 2025.
Fair Work Ombudsman Anna Booth reminded that there were important changes to the Fair Work Act that have been made or will be made by the laws, including the creation of a criminal offence for intentional underpayments.
“There can be significant penalties where the laws are not followed – including jail time for the new criminal offence – but we want employers to get it right in the first place and are here to help with free information and advice to ensure they do,” Booth said.
One of the changes that will take effect by 1 January 2025 is the provision that intentional underpayments of wages by employers will be a criminal offence. As such, employers will be committing an offence if they owe money to an employee under the Fair Work Act or an industrial instrument (such as an Award or an enterprise agreement), and intentionally engage in conduct that results in a failure to pay on or before the money is due, including failure to make required superannuation contributions.
A Voluntary Small Business Wage Compliance Code will be established before the changes take effect, and compliance with this Code means a small business won’t be prosecuted if they underpay their employees.
Companies prosecuted face penalties three times the amount of the underpayment, if a court can determine it, or $7.825 million, whichever is greater. If the court can’t determine the underpayment, the maximum penalty is $7.825 million. Individuals can be imprisoned for up to 10 years; be fined either three times the amount of the underpayment, if the court can determine it, or up to $1.565 million, whichever is greater; or be both fined and imprisoned.
Once the offence takes effect in 2025, the Fair Work Ombudsman will initiate investigations on suspected criminal underpayment offences.
Another change, which took effect on 15 December 2023, means that employees, unions and host employers can apply to the Fair Work Commission for a regulated labour-hire arrangement order. When such an order is in effect, employers will be required to pay labour-hire employees the same as employees who are employed directly by the host employer.
Under an order, they must be paid at least what they would receive under a host employer’s enterprise agreement, a workplace determination, an equivalent public sector determination and other prescribed instruments made under Commonwealth, State and Territory Laws. Any orders made by the FWC under these rules won’t come into effect before 1 November 2024.
Furthermore, the FWC cannot make an order if it’s not fair and reasonable. Some exclusions may also apply, such as to host employers who are small-business employers. The FWC can hear disputes about an order that can’t be resolved within the workplace.
Also effective from 15 December 2023, employers can no longer discriminate by taking adverse action against employees because they have been subjected to family and domestic violence. Awards and enterprise agreements must also not include terms that discriminate against an employee because they’re experiencing (or have experienced) family and domestic violence.