Announcement date
4 September 2023
Link to announcement
Announcement
Problem being addressed
As part of its Secure Australian Jobs Plan, the Australian Government made an election commitment to empower the Fair Work Commission to set minimum standards for ‘employee-like’ workers, including those in the ‘gig’ economy. The Government further committed, as outcomes of the Jobs and Skills Summit 2022, to consider allowing the Fair Work Commission to set minimum standards to ensure the road transport industry is safe, sustainable and viable, as well as to amend laws to allow workers to challenge unfair contracts.
There are five reviews relevant to these commitments which identify an overarching problem of independent contractors having inadequate access to workplace protections and entitlements. Broadly, this problem has three components: lack of minimum standards for digital platform workers, lack of minimum standards for independent contractors in the road transport industry and barriers for independent contractors to dispute unfair contracts.
Proposal
The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 seeks to implement the Government’s election and Jobs and Skills Summit commitments by amending the Fair Work Act to empower the Fair Work Commission to set minimum standards for classes of employee-like workers and certain workers in the road transport industry. The Fair Work Commission would also be able to resolve disputes about unfair contract terms for independent contractors earning under a high-income threshold.
Assessed IA outcome
Impact Analysis Equivalent
Assessment comments
Consistent with the Government's Impact Analysis (IA) requirements, the Department of Employment and Workplace Relations has certified the following reviews as meeting the requirements of an IA:
- The Victorian Government’s report of its Inquiry into the Victorian On-Demand Workforce (2020)
- The Productivity Commission’s report of the 5-year Productivity Inquiry Volume 7: A more productive labour market (2022)
- The Senate Select Committee on Job Security’s First interim report: on-demand platform work in Australia (2021)
- The Senate Rural and Regional Affairs and Transport References Committee inquiry into the importance of a viable, safe sustainable and efficient road transport industry’s report Without Trucks Australia Stops: the development of a viable, safe, sustainable and efficient road transport industry (2021)
- The Select Committee on the impact of technological and other change on the future of work and workers in New South Wales’s First report – The gig economy (2022).
The Office of Impact Analysis (OIA) does not assess the quality of reviews and IA equivalent documents used in lieu of an IA. Impact Analysis Equivalents are assessed by OIA for relevance to the recommended option(s) and for the coverage of the 7 Impact Analysis questions conducted. The OIA assessed that the options analysed in the certified reviews are sufficiently relevant to the regulatory proposal. The Impact Analysis Equivalent contains additional analysis prepared by the Department of Employment and Workplace Relations to address IA questions three to seven (inclusive).
Regulatory Burden
The Department of Employment and Workplace Relations estimates an increase in regulatory costs for digital platforms of up to $10,080.70 per business, for road transport businesses of up to $6,125.00 per business + $258.80 per worker, or $235.58 per business for other businesses who need to assess compliance with the interpretive principle applying to the meaning of ‘employee’ and ‘employment’, all averaged over 10 years. These costs can be broken down as follows:
- Digital platform businesses will have a business cost of up to $10,080.70 per business, which includes compliance costs related to Fair Work Commission Minimum Standards Orders (once made), unfair deactivation protections and the interpretive principle (if relevant).
- Road transport businesses will have a business cost of up to $6,125.00 per business + $258.80 per worker, which includes compliance costs related to Fair Work Commission Minimum Standards Orders (once made), unfair termination protections and the interpretive principle (if relevant).
- All other businesses who need to assess compliance with the interpretive principle (i.e. because they engage workers on the fringes between employment and independent contracting), will have an increase in regulatory costs of $235.58 per business.
Regulatory costs have been estimated on a per business and per worker basis due to data limitations, but will only be relevant for those that are affected by this proposal.
In addition to regulatory costs, the department has estimated a wage cost of $407.7m as an annual average cost over 10 years, reflecting potential increases in wages payable to employee-like digital platform workers and road transport workers, based on scenarios of minimum standards orders that the Fair Work Commission may make.