AgriThinking | 2023 employment wrap up for agribusiness

Industrial relations and employment regulation have been in the spotlight again this year, with the Federal Government’s next tranche of IR reforms in the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Cth) (Closing Loopholes Bill) being divided into two last week with parts of it already passing parliament, and a host of changes taking effect in the last 12 months under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Secure Jobs Act).

2024 is set to be another big year for workplace relations reform, with the remainder of the Closing Loopholes Bill still subject to a committee inquiry set to report back to the Senate in February.

With the Government’s reform agenda in full swing, in this Agrithinking, we bring together some of the current key employment law topics relevant across Australia’s food and agriculture sector now.

Limitations on the use of fixed term contracts

• As of 6 December 2023, limitations on fixed term contract use are now in force, along with associated civil remedies and anti-avoidance provisions.
• The changes restrict an employer from engaging employees on fixed term contracts in certain circumstances (prohibited contracts), subject to some exceptions. At a high level, the limitations apply where a fixed term contract:
  • is for a period of more than two years, or
  • could be extended or renewed for an aggregate period exceeding two years,
  • is consecutive, and where the employee is required to perform the same, or substantially similar, work they were performing under the previous contract.
• If an employer does enter into a prohibited contract, its end date will be invalid, with the remaining provisions of the contract will otherwise continue to apply (as though the employment is permanent in nature).
• The policy rationale behind the changes is that the ongoing use of this form of engagement by some employers is another form of ‘insecure work’. That being said, fixed term contracts are still recognised as serving a legitimate purpose in certain situations and accordingly, some exceptions apply. These include, but are not limited to, where:
  • the employee is engaged to perform only a distinct and identifiable task involving specialised skills, or in relation to a training arrangement (e.g. apprentice or trainee)
  • the employee is engaged to undertake work during a peak demand period (e.g. fruit picking), or another employee’s temporary absence (e.g. parental leave)
  • a modern award covering the employee permits the fixed term
  • the employee is earning more than the high-income threshold in the year the contract is entered into (note this threshold changes each year).
• The new regime and its exceptions will be key for food and agriculture businesses to become familiar with, particularly given the peak and seasonal periods which feature across the industry and the specialised or unskilled work performed for limited periods or purposes.
• Next steps: As a priority, agribusinesses should identify and assess any current use of fixed term contracts, determine whether any exceptions apply to permit future use of fixed term contracts (including renewals or consecutive contracts), and consider which employment arrangements will need to be transitioned to be ongoing.

Changes to casual employment

• A range of changes to casual employment are set to commence on 1 July 2024 if the second part of the Closing Loopholes Bill is passed into law. These changes include a new ‘casual employee’ definition which will consider the totality of the employment relationship, and a new pathway to move from casual to permanent employment.
• The new definition of ‘casual employee’ will draw on core elements of the meaning of casual employment in the High Court decision WorkPac Pty Ltd v Rossato[2021] HCA 23. Under the proposed definition:
  • an employee will be a ‘casual employee’ if both of the following conditions are met:
    • the employment relationship is characterised by an absence of a firm advancement commitment to continuing and indefinite work, and
    • the employee would be entitled to a casual loading, or a specific rate of pay for casual employees under the terms of a fair work instrument or employment contract if the employee were a casual employee, and
  • the requirement for ‘continuing and indefinite work’ to be according to an agreed pattern of work will be removed.
• Casual conversion changes are also on the cards. Processes will be introduced to supplement some of the existing provisions enabling casual-to-permanent conversion in certain circumstances. In a nutshell, under the changes an eligible casual employee will be able to initiate a change to full time or part time employment if the employee:
  • believes they are no longer a casual employee at the point in time when they make the notification to their employer, and
  • wants to change their employment status to full time or part time employment.
• Next steps: Given the extent to which casual employees are engaged across the food and agriculture sector, we recommend businesses diarise an early 2024 audit of casual engagement practices and review casual employee contracts to ensure these arrangements align with the legislative changes (in final form), and stay tuned for further updates as the legislation makes its way through parliament.

Minimum standards for gig economy workers

• The second part of the Closing Loopholes Bill proposes creating a set of minimum standards for certain ‘gig economy’ workers who do not benefit from minimum entitlements under the NES, have low bargaining power, are not comparatively well paid, and have a low degree of authority over their work. If passed into law, the changes are set to commence on 1 July 2024.
• If the changes are passed, the Fair Work Commission will be able to set fair minimum terms and conditions for ‘employee like workers’ who work through a digital labour platform, including regulated road transport contractors. The minimum terms and conditions may cover a wide range of matters, such as payment terms, deductions, record-keeping, insurance and consultation.
• These changes are designed to balance a drive for minimum entitlements for this type of worker with the inherent flexibility of the gig economy, and are particularly relevant to agribusinesses engaging road transport workers (who, for example, transport livestock, dairy products and wholesale meat) and businesses contracting ‘employee-like’ delivery riders.
• Next steps: Heading into 2024, agribusinesses should keep a close eye on the proposed gig economy changes, review the state of current arrangements for ‘employee like workers’, and consider their readiness to adapt to any minimum terms and conditions set by the Fair Work Commission in future.

If you would like to discuss any of these issues further, please get in touch with Ruth Rosedale or any of the contacts below.