New protections are needed to account for the emergence of the gig economy and the rise of labour hire operators, says an Australian academic in Industrial Relations who has given evidence to the Senate Inquiry into the Closing Loopholes Bill.

“The Closing Loopholes Bill will help address wide cracks in Australia’s regulatory framework, which have undermined its effectiveness and led to problems of inequality, insecure work and staff shortages,” said University of Sydney’s Associate Professor Chris F Wright.

The Closing Loopholes Bill will amend the Fair Work Act 2009 to introduce some of Labor’s remaining pre-election promises, as well as other matters discussed and agreed at the Jobs and Skills Summit held last year.

Unions, led by the Australian Council of Trade Unions have united in a campaign to close loopholes in the Fair Work Act that undermine pay and conditions for Australian workers.

The Closing Loopholes legislation contains four main elements:

• making wage theft a crime;
• introducing minimum standards for gig workers;
• closing the loophole used to undercut the pay and conditions of labour hire workers; and
• properly defining casual work so casuals are not exploited.

The Closing Loopholes Bill has been referred to the Senate Education and Employment Legislation Committee which has held public hearings and is due to report its findings by 1 February 2024.

Associate Professor Wright’s research specialises in industrial relations and labour market regulation, with a particular focus on national industrial relations systems worldwide.

He appeared before the Senate Education and Employment Legislation Committee to discuss his submission, which focuses on provisions relating to wage theft, platform or ‘gig’ work, and labour hire.

Key features of the contemporary labour market, such as the gig economy and the rise of labour hire operators, were not envisaged when enterprise bargaining was first introduced in the early 1990s, Associate Professor Wright said.

“Back then, wage theft was not the major problem it is today. The emergence of these changes threatens the integrity of Australia’s system of employment regulation if not addressed,” he said.

As the structure of business and the labour market evolves, it is necessary for the regulatory framework to evolve with it, argued Associate Professor Wright in his submission to the Senate Education and Employment Legislation Committee Inquiry.

Claims the Bill will hurt productivity and innovation generally lack supporting evidence, according to Associate Professor Wright.

“The research evidence suggests the Closing Loopholes Bill’s provisions have the potential to replace poor-quality jobs with good-quality jobs, and to reduce the scope for businesses to compete by undercutting rather than by being more productive and innovative.”

Associate Professor Wright believes regulatory reform is necessary to address the most urgent problems of the Australian labour market: making insecure work more secure, addressing the scourge of wage theft, and restoring integrity to the bargaining system and, by extension, to the competitive playing field and social safety net.

“Achieving these outcomes is integral for Australia’s continued and future prosperity rather than engaging in a futile race to the bottom that Australia can never win,” he said.

Read Associate Professor Chris F Wright’s submission in full.

The key reforms proposed by the Closing Loopholes Bill include:

• replacing the existing definition of ‘casual employee’ and introducing a new employee choice pathway for eligible employees to change to permanent employment if they wish to do so;
• ‘same job same pay’ – granting the Fair Work Commission (FWC) the power to make orders protecting bargained wages in enterprise agreements from being undercut by the use of labour hire workers who are paid less than those minimum rates;
• increasing the maximum penalties for underpayments by amending the civil penalties and serious civil contravention frameworks, and adjusting the threshold for what will constitute a serious contravention;
• introducing a new criminal offence for wage theft, which applies to intentional conduct;
• reversing the impact of recent High Court decisions narrowing the meaning of employee by defining the meanings of ‘employee’ and ‘employer’ for the purposes of the Act which require a consideration of the “real substance, practical reality and true nature’ of the relationship”;
• allowing the FWC to set fair minimum standards for ‘employee-like’ workers, including those working in the gig economy and the road transport industry;
• allowing the FWC to deal with disputes about unfair terms in services contracts to which an independent contractor is a party; and
• introducing a new offence of industrial manslaughter in the Work Health and Safety Act 2011 (Cth).

Chris Wright is Associate Professor of Work and Organisational Studies at the University of Sydney Business School. His research specialises in industrial relations and labour market regulation, with a particular focus on national industrial relations systems worldwide.