Does closing the loopholes matter?

Feb 16, 2024
Vector of a multiethnic group of diverse people standing together. Image:iStock/Feodora Chiosea

Three big things have happened with the passage of the second half of the ‘Closing Loopholes’ Bill through Federal Parliament on Monday.

One is world leading, one is not far from it, and one is playing catch up with the rest of the world. A fourth big thing happened a couple of months ago, with passage of the first half of the Bill.

Gig work, owner-drivers and the definition of employee

The world-leading change was in the treatment of gig economy workers, covering road transport owner-drivers and digital platform workers.

People in many countries have grappled with the dangers of heavy vehicle transport and the effects that low pay for truck drivers have on increasing road deaths. This happens because of the incentives lowpay creates for drivers to speed, overload, cut corners and drive too long without breaks, in order to get a chance to earn enough income for a decent living.

Korea tried this reform a few years ago. Driven by the union, it was supported by some trucking firms, but a conservative government let the legislation lapse last year.

Unions and local authorities in the Netherlands, British Columbia and elsewhere have tried various experiments aimed at dealing with the issue.

New South Wales, however, has had a system in place for four decades, leading to demonstrable reductions in road deaths. It’s the inspiration for the provisions in the Loopholes Bill. Action in this area, pushed by the union, has the support of several major trucking associations, clients and even gig firms, even though they differ on the detail in the Bill.

The Bill enables the Fair Work Commission to set minimum standards and manage dispute settlement procedures, not only for road transport owner-drivers, but also digital platform workers used by firms like Uber, Deliveroo, Mable and Doordash. It must follow requirements about objectives and procedures. The frameworks differ for road transport workers and digital platform workers but are broadly similar.

Unions, courts and legislatures in other countries have sometimes tried to reclassify these workers as employees, with mixed success and effects. The Loopholes Bill doesn’t try this. It allows for regulation regardless of workers’ employee status.

It’s now up to the Fair Work Commission to decide how to manage this, within the constraints set by the Bill.

Those constraints have been amended, but not fundamentally, by the Senate. For example, livestock transport has been excluded from the road transport changes. Yet there is a shortage of truck drivers, so if movements in pay rates there do not match those for other types of truck drivers, farmers will not have enough people to drive their livestock.  In the long run, that exclusion will be seen as an anomaly.

Another part of the Bill changes the definition of ‘employee’ as opposed to ‘contractor’, but this will not affect most gig workers, and only brings the law on that back to what it was like before some unusually restrictive decisions by the High Court a couple of years ago.

Right to disconnect

The establishment of a right to disconnect is more newsworthy internationally, as it affects a larger group of workers.

The right to disconnect is not quite on the cutting edge of reform (France introduced in in 2017, followed by several other countries) but Australia’s approach is ahead of many. It reflects the influence of good research and, frankly, the work of Senator Barbara Pocock. It was not in the original Loopholes legislation.

Under the Bill, employees have a right not to be contacted by the employer (or a client) out of work hours, with exceptions such as where they are paid to be on-call, their job description requires it, it’s an emergency or it involves ‘changes to conditions of work (such as the location or hours)’. If the employee thinks the employer is unreasonably contacting them, and an internal complaint doesn’t resolve the matter, they can take it to the Fair Work Commission, which can issue an order to stop unreasonable out-of-hours contact.

Other countries are likely to follow suit, given global concern about trends in work-life interference, and the potential of new technologies to allow employers to intrude further into employees’ home life. Opposition leader Peter Dutton has pledged to repeal this change, but as the reform appears overwhelmingly popular, he might find that difficult.


The casual reforms are not so much cutting edge, as they still leave Australia behind the handling of annual and sick leave that other countries have.

Casual employment is essentially a ruse that enables employers to avoid responsibility for annual leave and sick leave (as well as things like redundancy pay entitlements) if they define the job a certain way and pay a casual loading (which many, illegally, don’t pay anyway).

Despite the rhetoric, most casuals are not in short-term jobs with unpredictable hours. Still, because they are called ‘casual’, presently well over a fifth of Australian employees have no access to annual or sick leave — a coverage considerably less comprehensive than most advanced industrialised countries, other than the USA.

The Closing Loopholes reforms create a clearer definition of ‘casual’ that focuses more on the ‘real substantive, practical reality and true nature of the employment relationship’. This will reduce some of the misuse of this form of employment.

They also create a pathway whereby a ‘casual’ who has been in the job for 6 months (or 12 months for a small business) can opt to become a ‘permanent’ worker. There are various provision that allow the employer to refuse if certain criteria are not met, for example if the working hours are inherently unpredictable and irregular.

The changes might not have a huge take-up, depending on how the courts interpret the provisions. Moreover, many casuals, whose pay is low to begin with, will need to prioritise the loading for financial reasons, regardless of the benefits of being a permanent worker.

Others will be wary of doing something that may antagonise their employer. After all, casuals have less bargaining power than most other workers. If they don’t get the loading they probably have even less power.

A better approach would be for every worker, except those with genuinely irregular and unpredictable work, to have leave entitlements, and decent wages, and for the casual loading to be phased out over a long period, replaced by an unpredictability loading. But that would require a consensus of the parties over time, for which I would not hold my breath waiting. This reform may help Australia catch up to other countries, but not fully.

So, the broad approach taken here is a second-best option, but superior to what existed previously.

What matters most?

The problem for casuals, workers being chased by their boss after work, or gig workers is that it’s one thing to have rights enshrined in law, it’s another thing to have the ability to enforce them.

It needs a certain confidence in your own power to do that — and confidence that the boss won’t just let you go instead. That means having either the labour market power from being in a skilled occupation in short supply — in which case, some protections might not be so critical anyway — or the collective power from being in a union, which has the resources and expertise to challenge employer misbehaviour.

In that light, probably the most important change is one that sneaked through amidst the first part of the Closing Loopholes Bill (now Act), two months ago. That contained a number of increased rights for union delegates in workplaces, changes unmentioned in the main announcements by the Minister or the crossbench politicians, and so missed by the media.

These include requirements that employers not refuse to deal with delegates, nor mislead nor obstruct them, nor prevent them from communicating with or seeing members, and require that awards and enterprise agreements contain delegates’ rights provisions.

Depending on how well unions can develop and organise delegates in response to those changes, they could create real increases in workplace power for union members. These would in turn boost their confidence in enforcing the rights that the law theoretically provides, thereby increasing the incentive for workers to join unions.

This part of the reforms might end up being more effectual than many of the provisions that employer organisations put substantial resources into campaigning vigorously, and sometimes pointlessly, about. They may yet be the most important legacy of the passage of the Closing Loopholes legislation.

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