Closing Loopholes Act has commenced – what’s changed?

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Posted February 13, 2024

Some changes took effect from 15 December 2023 and others are operative at various times in 2024 and 2025.

Ai Group, on behalf of HABA, continues to be heavily engaged in consultation with the Government over the development of the legislation.

Changes from 15 December 2023

Small business redundancy exemption

There are new redundancy payment rules for businesses that downsize to become a small business employer during bankruptcy or liquidation. Under the Fair Work Act 2009 (Cth) (FW Act), a small business employer is one that employs fewer than 15 employees.

Previously, the obligation on employers to pay redundancy pay under the National Employment Standards (NES) was assessed immediately before the employee’s termination or when they were given notice of the termination (whichever is earlier). If at that time, an employer had less than 15 employees, there was no obligation to pay the statutory redundancy amount.

The new requirement for small business employers to pay redundancy only applies to employers that are bankrupt or in liquidation due to insolvency. It does not affect ongoing, solvent businesses. If a small business is a partnership, each of the partners need to be bankrupt or in liquidation (as the case may be) for this carve-out to apply.

The change means that the statutory redundancy exemption for small business employers does not apply in these circumstances:

• at the time the employee’s employment terminates, the employer is a small business employer; and
• the employer is bankrupt or in liquidation; and
• the employer is a small business because the employment of one or more employees was terminated; and
• the terminations occurred within a six month ‘look back’ period due to the insolvency of the employer.

Family and domestic violence protections

Family and domestic violence is now a protected attribute within the FW Act’s anti-discrimination provisions. The changes mean that:

• discriminatory terms in modern awards and enterprise agreements are prohibited;
• employers cannot take adverse action against a current or prospective employee, including dismissal, because the person is experiencing family and domestic violence;
• the FWC, when performing its functions or exercising powers, must take into account the need to respect and value the diversity of the workforce by helping to prevent and eliminate discrimination on the basis of family and domestic violence.

The protection does not apply to perpetrators of family and domestic violence.

Changes taking effect in 2024

From 1 July 2024, the FWC will be required to vary modern awards to include a term that provides new rights and protections for workplace delegates. A workplace delegate is an employee who has been elected in accordance with their union’s rules to represent employees who are members of that union. We will provide you with more information about this in the following months. If you have any questions about union rights, please call the HABA Advice Line.

2025 changes

Criminalising wage theft

From 1 January 2025 or the day after the Minister declares a Voluntary Small Business Wage Compliance Code (whichever is later), employers who intentionally underpay wages and superannuation could face fines up to $7.8 million and 10 years in jail.

The Voluntary Small Business Wage Compliance Code must be created and declared by the Minister before the wage theft offence provisions can commence.

The offence will apply to intentional failures to pay employees in full, on or before, the date the payment is due. This applies to amounts required to be paid to employees under the FW Act, a modern award, workplace determination, Fair Work Commission order or transitional instrument.

Other changes: Superannuation is an entitlement under the National Employment Standards

From 1 January 2024, superannuation is an entitlement under the NES. The NES entitlement to superannuation aligns with superannuation legislation, so if an employer complies with their obligations under the superannuation guarantee they will meet their NES obligations.

The inclusion of superannuation as an NES entitlement means that employees can commence proceedings against their employer to recover any unpaid superannuation. An updated Fair Work Information Statement is available.

More information
HABA members can call the HABA Advice Line on 02 9221 9911 for further advice regarding the Closing Loopholes Act.