When the federal government introduced its Closing Loopholes Bill to parliament on Monday afternoon, the pushback was immediate and vehement.
The proposed legislation, a 284-page document accompanied by an 521-page explanatory memorandum, contains significant changes to the Fair Work Act that experts say would have created an entirely new class of workers and added red tape to gig economy platforms.
The bill proposed changing the definition of casual employment, creating minimum standards for “employee-like” (gig economy) workers and truck drivers and criminalising wage theft. It also advanced giving labour hire workers the same pay rates as employees hired by the same companies, tightening rules to protect sham contracting, and enhancing powers for the Fair Work Commission to administer the new laws.
The industrial overhaul – slated to add $900 million to the annual wage bill of gig economy workers – was also going to mean consumers forked out more for their food delivery, Employment and Workplace Relations Minister Tony Burke conceded.
But before the week was over, the legislation was shelved until next year. A Senate inquiry into the bill was launched, and on Thursday, opposition employment spokeswoman Michaelia Cash was successful in her motion to delay the inquiry’s reporting date from late October to early February, helped by crossbenchers including independent senator David Pocock and Tasmania’s Jacqui Lambie.
Cash accused Burke of trying to “ram this bill through the parliament”. Business groups also welcomed the delay, arguing more time was needed to work through the hundreds of pages of legislation that they argued was too broad, too heavy-handed and would engulf businesses in more complex regulation.
“The case has simply not been made for these unworkable proposals, which will be highly disruptive and have an impact right across the economy,” Business Council chief executive Jennifer Westacott said.
Ai Group chief Innes Willox criticised the draft bill as convoluted and containing “fatal flaws”. “The proposals will not create a single job, do nothing to boost productivity, and will stifle innovation and create insecure work for tens of thousands of Australians who are currently comfortable with their employment arrangements,” he said.
Australian Retail Association boss Paul Zahra described the bill’s delay as a “saving grace”, and said that in its current form the bill would not provide benefits to productivity, job creation or workforce participation.
“We need to be extremely careful with any policy changes that could potentially drive price increases or result in added complexity for businesses – many of whom already struggle to comprehend the existing regulatory framework,” Zahra said.
Burke, who slammed the Coalition and crossbenchers for voting to delay pay rises, has said that the proposed laws would give gig workers a “ramp” to workplace rights.
“If you are an employee, you have a whole series of rights. If you’re not an employee, all of those rights – all of them – fall off a cliff. What we want to do is turn that cliff into a ramp,” Burke told the National Press Club last week.
But lawyers and academic experts in this area are concerned the legislation will effectively create an entirely new class of workers.
Industrial relations lawyer Katie Sweatman, from workplace law firm Kingston Reid, described the proposed legislation as “very paternalistic in a lot of ways”.
“For a bill that’s been framed as closing loopholes, it creates a lot.”Kingston Reid lawyer Katie Sweatman
“For a bill that’s been framed as closing loopholes, it creates a lot,” she said. In her view, a crucial issue was that the legislation tried to “shoehorn” traditional working arrangements into gig economy work, which might limit how flexibly people can work.
“The whole innovation around gig work has come about because people wanted to do work in a really different way,” Sweatman said. “But trying to force a system of regulation which feels very much like an award system for gig work is going to be a really uncomfortable fit.”
University of Sydney senior lecturer Dr Alex Veen considers the legislation a step in the right direction in protecting gig workers who are relatively vulnerable in the labour market, but said the government had taken a “prescriptive” and “interventionist” approach.
“I do query whether they could’ve gone about it in a more streamlined manner,” Veen said, adding that the proposed bill refers to industry codes that don’t yet exist and gives the Fair Work Commission more regulatory powers.
“It’s not really encouraging the sectors to resolve their own issues, and for workers and platforms to engage in dialogue.
“There are quite a [few] known unknowns at this stage as to how this will be interpreted, because of missing bits of information.”
Who wears the costs?
One thing is clear: if passed in its current form, the proposed laws would be expensive – and it’s businesses and ultimately consumers who will have to pay for it. Business groups have pointed out that Burke himself admitted as much before the legislation was even released.
“Underpaying people is cheaper … slavery is probably cheaper too. There is some modest pass through here. We are talking about some of the lowest-paid people in Australia,” Burke said last week.
“If that means there’s a tiny bit extra you pay when your pizza arrives to your door, and they’re more likely to be safe on the roads getting there, then I reckon it’s a pretty small price to pay.”
The government forecasts that a business would pay initial and ongoing compliance costs of around $6000 annually. But Sweatman estimates these costs will be much steeper in practice.
“It’s not just the actual immediate labour cost. It is the cost and the resources around how to reconfigure actual algorithms to administer work, record how work’s been performed and do the remuneration for that work. The costs associated with actually achieving compliance will be very significant,” she said.
For some businesses, it could mean the end of the line. “I think we will see platforms fold, potentially, particularly the small ones because consumers will only pay so much more to make the ethical decision to support working conditions,” Sweatman said.
Delivery and gig work platforms have spent all week attempting to decipher the proposed laws. Digital platforms including Uber, DoorDash, Menulog and Amazon, and support worker booking platform Mable said they would not provide comment as they were still reviewing hundreds of pages of legislation.
Burke is now being urged to consider industry feedback and revise the bill before the Senate inquiry committee issues its report on February 1.
Airtasker chief executive Tim Fung, whose company would not be directly affected by the Closing Loopholes Bill – as individuals who choose to perform tasks through the platform are not considered “employee-like” – said he was empathetic to Burke for trying to create laws to protect workers. But Fung said the draft laws had created “a lot of friction” in the small business community.
“Certainly, if I was in the shoes of the government trying to get this legislation through, I would certainly be considering that feedback because it does feel like that pushback has resulted in … this delay,” Fung said.
“I think that is a really, really tricky balancing act to be able to protect workers’ improved conditions, without placing unnecessary burden on Australian platforms.”
Burke did not respond to questions on whether he would consider revising the legislation.
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