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Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 - Initial Scrutiny [2023] AUSStaCSBSD 204 (8 November 2023)


Fair Work Legislation Amendment (Closing Loopholes) Bill 2023[2]

Purpose
The bill seeks to make numerous amendments to the Fair Work Act 2009 including:
• by replacing the existing definition of 'casual employee' introducing a new employee choice pathway for eligible employees to change to permanent employment;
• introducing a new criminal offence of wage theft; and
• allowing the Fair Work Commission to set minimum standards orders for employee-like workers including in the gig economy.
Portfolio
Employment and Workplace Relations
Introduced
House of Representatives on 4 September 2023
Bill status
Before the House of Representatives

Exemption from disallowance[3]

1.2 The bill provides that a number of determinations made by the Fair Work Commission (FWC) are legislative instruments which are exempt from disallowance. These are detailed below:

• Schedule 1, item 61, proposed subsection 202(7) - a determination made by the Fair Work Commission (FWC) of the model flexibility term for enterprise agreements made under proposed subsection 202(5);

• Schedule 1, item 62, proposed subsection 205(6) - a determination made by the FWC of the model consultation term for enterprise agreements made under proposed subsection 205(3);

• Schedule 1, item 64, proposed subsection 737(3) - a determination made by the FWC of a model term for dealing with disputes for enterprise agreements made under proposed subsection 737(1);

• Schedule 1, item 70, proposed subsection 768BK(4) – a determination made by the FWC of a model term for settling disputes about matters arising under a copied State instrument for a transferring employee made under proposed subsection 768BK(1A); and

• Schedule 1, item 308, proposed section 101 - determinations made by the FWC under new subsections 202(5), 205(3), 737(1) or 768BK(1A) prior to the commencement of part 5 of schedule 1 to the bill.

1.3 Disallowance is the primary means by which the Parliament exercises control over the legislative power that it has delegated to the executive. Exempting an instrument from disallowance therefore has significant implications for parliamentary scrutiny. In June 2021, the Senate acknowledged these implications and resolved that delegated legislation should be subject to disallowance unless exceptional circumstances can be shown which would justify an exemption. In addition, the Senate resolved that any claim that circumstances justify such an exemption will be subject to rigorous scrutiny, with the expectation that the claim will only be justified in rare cases.[4]

1.4 The Senate's resolution is consistent with concerns about the inappropriate exemption of delegated legislation from disallowance expressed by this committee in its recent review of the Biosecurity Act 2015,[5] and by the Senate Standing Committee for the Scrutiny of Delegated Legislation in its inquiry into the exemption of delegated legislation from parliamentary oversight.[6]

1.5 In light of these comments and the resolution of the Senate, the committee expects that any exemption of delegated legislation from the usual disallowance process should be fully justified in the explanatory memorandum. This justification should include an explanation of the exceptional circumstances that are said to justify the exemption and how they apply to the circumstances of the provision in question.

1.6 In relation to proposed subsection 202(7), the explanatory memorandum states:

As Australia's workplace relations tribunal, the FWC has expert and technical knowledge of contemporary workplace relations and operates independently of political processes. The determination would be required to be made following consideration of submissions by the public, thereby mandating public participation in the process. The model term would play a limited role in creating rights or obligations in circumstances where an enterprise agreement does not contain a compliant flexibility term.

Ensuring the model term is not disallowable would also avoid the risk of the model term being disallowed after an enterprise agreement has proceeded to a vote by employees on the basis that the model term determined by the FWC would be included. Were this to occur, questions as to genuine agreement may arise on the basis that an important term of the agreement would not be included. This situation may also cause commercial uncertainty and frustrate bargaining processes.[7]

1.7 A similar justification is provided in the explanatory memorandum for each of the other specified exemptions from disallowance. In relation to proposed section 101, the explanatory memorandum further explains that:

This exemption from disallowance is appropriate to avoid the commercial uncertainty, and potential impact on bargaining and enterprise agreement approval processes, that would arise if FWC model terms were disallowed in circumstances where no such terms were prescribed by the FW Regulations.[8]

1.8 Noting the expectation that exemption from disallowance is only appropriate in rare cases, the committee remains concerned that the bill facilitates the making of several instruments which will be exempt from parliamentary disallowance. While the explanatory memorandum has provided some justification for these exemptions which may indicate exceptional circumstances apply, it is the view of the committee that these arguments have not been sufficiently made out.

1.9 The committee therefore requests the minister's advice as to the appropriateness and necessity of the exemptions from disallowance for legislative instruments made under proposed subsections 202(5), 205(3), 737(1) and 768BK(1A).

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Retrospective application[9]

1.10 Item 73 of part 6 of schedule 1 to the bill seeks to insert part 2-7A into the Fair Work Act 2009 (FW Act). Part 6 of schedule 1 to the bill would commence on the day after the Act receives Royal Assent.

1.11 Proposed part 2-7A would provide for orders to be made regulating various labour hire arrangements. This part also provides for anti-avoidance provisions which attract civil penalties up to 600 penalty units.[10]

1.12 In relation to the anti-avoidance provisions, the explanatory memorandum states:

The anti-avoidance provisions would apply retrospectively, with application from the date the Bill is introduced in the Parliament. This means penalties may apply in relation to conduct engaged in before the Bill commences. This is reasonable and proportionate to prevent businesses from taking steps to avoid obligations under new Part 2-7A. before the Bill commences. Parties will be on notice about their obligations as the legislation will be publicly available when it is introduced. [11]

1.13 The committee has long-standing scrutiny concerns about provisions which apply retrospectively. Such provisions challenge the basic rule of law principle that the law should be capable of being known in advance. Underlying this principle is the importance of enabling people to rely on the law at the time of a relevant action or decision and protecting those affected by government decisions from arbitrary decision-making. These concerns will be particularly heightened if the legislation will, or might, have a detrimental effect on individuals.

1.14 Generally, where proposed legislation will have a retrospective effect, the committee expects the explanatory materials to set out the reasons why retrospectivity is sought, whether any persons are likely to be adversely affected and, if so, the extent to which their interests are likely to be affected. If an individual's interests will, or may, be affected by the retrospective application of a provision, the explanatory memorandum should set out the exceptional circumstances that nevertheless justify the use of retrospectivity.

1.15 The committee is concerned that the explanatory memorandum fails to consider whether any persons are likely to be adversely affected by the retrospective commencement of proposed part 2-7A and, if so, the extent to which their interests are likely to be affected. These concerns are heightened given the substantial civil penalties relevant to the anti-avoidance provisions. From a scrutiny perspective, the committee does not consider that the information provided in the explanatory memorandum addresses in sufficient detail the retrospective application of part 6 of Schedule 1 to the bill.

1.16 The committee requests the minister's detailed advice regarding why it is necessary and appropriate for the anti-avoidance provisions in proposed part 2-7A in schedule 1 to the bill to apply retrospectively.

1.17 The committee's consideration of this matter would be assisted if the advice contained information regarding whether there will be a detrimental effect for any individuals, and if so the extent of that detriment and the number of individuals.

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Significant penalties
Strict liability offence
Absolute liability offence[12]

1.18 Schedule 1, item 220, proposed subsection 327A(1) prescribes that an employer commits an offence if:

• they are required to pay an amount to, or on behalf of, or for the benefit of, an employee under the FW Act, fair work instruments, or transitional instrument (proposed paragraph 327A(1)(a)); and

• the amount is not a superannuation contribution or an amount covered by subsection 327A(2) (327A(1)(b)); and

• the employer engages in conduct (proposed paragraph 327(1)(c)) which results in a failure to pay the required amount on or before the day it is due for payment (proposed paragraph 327(1)(d)).

1.19 Proposed subsection 327A(3) prescribes the fault element of absolute liability applies to paragraphs 327(1)(a) and (b). Proposed subsection 327A(5) prescribes a criminal penalty of up to 10 years imprisonment.

1.20 In relation to the imposition of absolute liability, the explanatory memorandum states:

Absolute liability applies to the physical elements in proposed paragraphs (1)(a) and (b) because in most applicable instances the person concerned will not possess any fault element concerning these physical elements, and accordingly the offence would become almost unenforceable if the prosecution were obliged to demonstrate fault. Further, the person's degree of culpability under this offence is not materially affected by absence of the subject fault. (The fault element for paragraphs (1)(c) and (d) is intention, which requires the prosecution to prove that the required conduct was intention, and that there was a resulting intention to fail to pay the required amount, or underpay.) The defence of mistake of fact should not be available to the defendant for paragraphs (1)(a) and (1)(b) and accordingly absolute liability, and not strict liability, is the appropriate application.[13]

1.21 In relation to the penalty amount, the explanatory memorandum states:

New subsection 327A(5) sets out the maximum penalty for an offence against the new offence provision for wage theft, which may include a term of imprisonment of up to 10 years, in addition to a fine of up to the specified amount, set out in the provision. The Guide to Framing Commonwealth Offences was applied in determining to criminalise the requisite conduct, and set the maximum penalty for an offence. In setting the maximum term of imprisonment for an offence, regard was had to offences of a similar nature, particularly offences of theft and fraud under the general law (for example, the offence of general dishonesty in section 135.1 of the Criminal Code, among others).[14]

1.22 Schedule 4, item 1, proposed subsection 30A(1) inserts a new offence into the Work Health and Safety Act 2011 (WHS Act) which provides that a person commits an offence if:

• the person is conducting a business or undertaking, or is an officer of a person conducting a business or undertaking (30A(1)(a)); and

• the person has a health and safety duty (30A(1)(b); and

• the person intentionally engages in conduct (30A(1)(c)); and

• the conduct breaches the health and safety duty (30A(1)(d)); and

• the conduct causes the death of an individual (30A(1)(e)); and

• the person was reckless, or negligent, as to whether the conduct would cause the death of an individual (30A(1)(f)).

1.23 The explanatory memorandum notes that due to the operation of subsection 12F(2) of the Work Health and Safety Act 2011 (WHS Act), strict liability applies to the elements of the offence set out in proposed paragraphs 30A(1)(a),(b) and (d). The offence carries a penalty of up to 25 years imprisonment, or, for a body corporate, $18,000,000.

1.24 In addition, the committee notes that the effect of part 6 of schedule 4 to the bill is to increase penalties for all Commonwealth work health and safety (WHS) offences. The explanatory memorandum explains that this includes a 'general 39.03 per cent increase in monetary penalties' which 'represents the average increase in penalty units for non-WHS offences across all jurisdictions since 2011'.[15]

1.25 In relation to the imposition of strict liability the explanatory memorandum states:

Strict liability is appropriate for this element as the element is analogous to a jurisdictional element – that is, the element does not go to the substance of the offence. New paragraph 30A(1)(a) would ensure the offence only captures those within the Commonwealth's WHS jurisdiction.

...

As with paragraph 30A(1)(a), this element is analogous to a jurisdictional element as it does not go to the substance of the offence, but ensures the offence only captures those subject to the Commonwealth's WHS jurisdiction.

...

New paragraph 30A(1)(d) would require the conduct to have breached the health and safety duty. Due to the operation of subsection 12F(2) of the WHS Act, strict liability applies to this element. While breach of duty is central to the offence, it would not be appropriate to apply a fault element to this element. Most offences in the WHS Act, including the Category 2 and Category 3 offences are strict liability.

Including strict liability as a feature of offences was carefully considered when the WHS Act was first introduced as the presumption of innocence can be seen to be impinged by removing the requirement for the prosecution to prove fault in relation to one or more physical elements of an offence. WHS offences arise in a regulatory context where, for reasons such as public safety, and the public interest in ensuring that regulatory schemes are observed, the sanction of criminal penalties is justified. The offences also arise in a context where a defendant can reasonably be expected, because of their professional involvement, to know what the requirements of the law are, and the mental, or fault, element can be justifiably excluded. The rationale is that people who owe WHS duties such as employers, persons in control of aspects of work, and designers and manufacturers of work structures and products, as opposed to members of the general public, can be expected to be aware of their duties and obligations to workers and the wider public. The industrial manslaughter offence would apply to PCBUs, and 'officers' (the most senior persons in an organisation).[16]

1.26 In relation to the penalty in proposed subsection 12F(2), the explanatory memorandum states:

New subsection 30A(1) would prescribe the penalties for an industrial manslaughter offence. The new penalties are a maximum of 25 years imprisonment for individuals and a fine of $18 million for bodies corporate or the Commonwealth. The maximum penalty for individuals found guilty of industrial manslaughter (25 years' imprisonment) reflects manslaughter penalties in the Criminal Code. This is consistent with the Guide which states that where an offence is comparable to an offence in the Criminal Code, the penalty under the Criminal Code should be adopted.

The maximum monetary penalty of $18 million reflects the seriousness of the offence and is consistent with the penalty for industrial manslaughter in the model Act. This penalty provides a clear and effective punishment that acts as a deterrent against breaching WHS duties.[17]

1.27 In relation to the increase in penalties across the Commonwealth WHS offences, the explanatory memorandum states:

The significant increase to penalties for the Category 1 offence in this Part exceeds the similar increase in the recent amendments to the model Act. The decision to depart from the model Act was made to ensure the coherence of the Commonwealth WHS offence penalty scheme. Workplace fatalities could be prosecuted as either an industrial manslaughter offence or a Category 1 offence. Adopting the model penalty for Category 1 would conflict with the principle set out in the Guide which holds that a penalty should be consistent with penalties of a similar kind or of a similar seriousness.[18]

1.28 Under general principles of the common law, fault is required to be proven before a person can be found guilty of a criminal offence. This ensures that criminal liability is imposed only on persons who are sufficiently aware of what they are doing and the consequences it may have. When a bill states that an offence is one of strict or absolute liability, this removes the requirement for the prosecution to prove the defendant's fault. In such cases, an offence will be made out if it can be proven that the defendant engaged in certain conduct, without the prosecution having to prove that the defendant had the intention to engage in the relevant conduct or was reckless or negligent while doing so.

1.29 As the imposition of strict or absolute liability undermines fundamental common law principles, the committee expects the explanatory memorandum to provide a clear justification for any imposition of strict or absolute liability, including outlining whether the approach is consistent with the Guide to Framing Commonwealth Offences.[19]

1.30 The committee therefore requests the minister's advice as to:

why it is necessary and appropriate to impose absolute liability on the offence of wage theft in proposed subsection 327A(1) of the Fair Work Act 2009 noting that the offence carries a criminal penalty of up to 10 years imprisonment; and

why it is necessary and appropriate to impose strict liability on the offence of industrial manslaughter in proposed subsection 30A(1) of the Work Health and Safety Act 2011 noting that the offence carries a criminal penalty of up to 25 years imprisonment.

The committee's consideration of this information would be assisted if the response made reference to the Attorney-General's Department’s Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers.

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Abrogation of privilege against self-incrimination[20]

1.31 Section 713 of the FW Act abrogates the privilege against self-incrimination by providing that a person is not excused from giving information, producing a record or document, or answering a question, under paragraph 709(d) or subsection 712(1), or under a Fair Work Ombudsman (FWO) notice, on the grounds that to do so might tend to incriminate the person or otherwise expose the person to a penalty or other liability. Subsections 713(2) and (3), and section 713A, provide for circumstances in which use and derivate use immunity apply.

1.32 Item 228 of schedule 1 to the bill seeks to add proposed subsection 713(4) to the FW Act. This would remove the use immunity provided for in subsections 713(2) and (3) of the FW Act in relation to an employee record that is made under section 535 (proposed paragraph 713(3)(a)), or a copy of a pay slip created in relation to an employee (proposed paragraph 713(4)(b)). Item 230 would insert proposed subsection 713A(2) into the FW Act with the effect of removing derivative use immunity for the same documents.

1.33 In this regard, the explanatory memorandum states:

These items would create an exception to the immunities conferred by these sections, in relation to:

• an employee record in relation to an employee that is made under section 535; or

• a copy of a pay slip created in relation to an employee. Pay slips are required to be issued to employees under section 536.

The rationale is that employee records that are required to be kept under the FW Act, section 535, or copies of payslips that are required to be issued under the FW Act, section 536, should be able to be tendered as evidence before a court, including criminal proceedings. In other words, the regulator should not be prevented from tendering evidence of employee records or pay slips against an individual, just because they were produced by notice or other coercive process. Further, as the regulator will be undertaking criminal investigations, and these records will be central to being able to prove the offence, providing immunity would mean the regulator is unable to properly discharge their function in respect of criminal underpayments.[21]

1.34 The committee considers that the privilege against self-incrimination is an important right under the common law and any abrogation of that right represents a significant loss to personal liberty. In this instance, the committee notes the narrow scope of evidence that is excluded from the existing use and derivative use immunities in the FW Act.

1.35 In light of the above, the committee requests the minister's advice as to why it is necessary and appropriate for proposed subsection 713(4) to remove use immunity, and for proposed subsection 713A(2) to remove derivate use immunity, in relation to employee pay slips and records.

1.36 The committee’s consideration of this information would be assisted if the response made reference to the Attorney-General's Department’s Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers.

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Incorporation of external materials as existing from time to time[22]

1.37 Schedule 1, item 248, proposed subsection 15S(2) provides that regulations prescribing the meaning of the road transport industry may prescribe an industry by applying, adopting or incorporating any matter contained in a modern award as in force or existing from time to time.

1.38 The explanatory memorandum provides no explanation as to why it would be necessary for the material to apply as in force or existing from time to time.

1.39 Generally, the committee will have scrutiny concerns where provisions in a bill allow the incorporation of legislative provisions by reference to other documents because such an approach:

• raises the prospect of changes being made to the law in the absence of parliamentary scrutiny, (for example, where an external document is incorporated as in force 'from time to time' this would mean that any future changes to that document would operate to change the law without any involvement from Parliament);

• can create uncertainty in the law; and

• means that those obliged to obey the law may have inadequate access to its terms (in particular, the committee will be concerned where relevant information, including standards, accounting principles or industry databases, is not publicly available or is available only if a fee is paid).

1.40 As a matter of general principle, any member of the public should be able to freely and readily access the terms of the law. Therefore, the committee's consistent scrutiny view is that where material is incorporated by reference into the law, it should be freely and readily available to all those who may be interested.

1.41 Noting the above comments, the committee requests the minister's advice as to:

the type of documents that it is envisaged may be applied, adopted or incorporated by reference under proposed subsection 15S(2);

whether these documents will be made freely available to all persons interested in the law; and

why it is necessary to apply the documents as in force or existing from time to time, rather than when the instrument is first made.

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Availability of merits review[23]

1.42 Schedule 1, item 249, proposed section 536JY provides that the FWC may make a minimum standards order for employee-like workers performing digital platform work or for regulated road transport contractors. Minimum standards orders may determine the standards and conditions in relation to, for example, payment terms, working hours, and insurance, as set out in proposed subsection 536KL of the bill.

1.43 Proposed subsection 536LA(1) provides that regulations may make provisions for internal merits review by the FWC of decisions to make or vary minimum standards orders. Proposed subsection 536LA(4) sets out matters that the regulations could prescribe, including, for example, application circumstances, who is eligible for review, time frames, and enforcement of decisions.

1.44 The committee considers that, generally, administrative decisions that will, or are likely to, affect the interests of a person should be subject to independent merits review unless a sound justification is provided by reference to the Administrative Review Council's guidance document, What decisions should be subject to merits review?[24]

1.45 In relation to merits review, the explanatory memorandum explains:

The purpose of this section would be to provide for a mechanism, subject to regulations being made, to allow for the internal review of a FWC decision to make or vary an RTMSO [road transport minimum standards order] in certain circumstances. This would reflect the fact that RTMSOs when made by the FWC are binding on the parties, and can only be varied or revoked by application consistent with the requirements of Part 3A-2. The alternative would be to apply to a court for injunctive relief, which would be unnecessarily confrontational and potentially longer and more expensive.

Taking a future-focused approach, there may be circumstances where a particular party considers that the FWC has erred in its decision-making and, subject to the parameters set by regulation, apply for a reconsideration, confirmation, revocation, variation or set aside/substitution of a decision before it comes into, or soon after comes into, force.

As this is a novel jurisdiction and there is no precedent for internal review for the decisions of an Expert Panel or Full Bench under the FW Act, it is to be determined whether internal review is necessary, and if so, what shape it should take. Enabling regulations to provide for this would mean that any internal review mechanism, if established, would be fit for purpose and responsive to emerging issues.[25]

1.46 Minimum standards orders made by the FWC appear to be decisions of a type which will, or are likely to, affect individual interests. The committee therefore welcomes the consideration provided to prescribing internal merits review of minimum standards orders made by the FWC. However, noting the explanation provided in the explanatory memorandum, it seems clear to the committee that it is envisaged that internal merits review is appropriate and necessary in this context. It is therefore unclear to the committee in what circumstances merits review may be deemed not justified, and therefore unclear why these matters could not have been provided for on the face of the bill.

1.47 In light of the above, the committee requests the minister's advice as to:

the circumstances in which internal merits review of road transport minimum standards orders may not be considered appropriate; and

whether consideration was given to the bill providing that internal merits review must be provided for these decisions.

1.48 The committee also draws this matter to the attention of the Senate Standing Committee for the Scrutiny of Delegated Legislation.

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Significant matters in delegated legislation[26]

1.49 Proposed subsection 536LJ(1) requires the minister to make a digital labour platform deactivation code by legislative instrument. Proposed subsection 536LJ(2) prescribes matters that the code must provide for, including the circumstances in which work is performed on a regular basis (proposed paragraph 536LJ(2)(a)) and the reasons for deactivation (proposed paragraph 536LJ(2)(b)). In addition, proposed subsection 536LN(1) provides that the minister may made a road transport industry termination code by legislative instrument, with proposed subsection 536LN(2) setting out the matters which must be dealt with by the code.

1.50 The committee's view is that significant matters should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. Conditions as to the 'deactivation' of employee-like digital platform workers or road transport industry workers, including valid reasons for 'deactivation', are significant matters which may affect the rights and liberties of individuals.

1.51 In this instance, the explanatory memorandum contains no justification regarding why it is necessary to allow such significant matters to be set out in delegated legislation.

1.52 In light of the above, the committee requests the minister's detailed advice as to why it is considered necessary and appropriate to leave the digital labour platform deactivation code, and the road transport industry termination code to delegated legislation, rather than primary legislation.

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Fees in delegated legislation[27]

1.53 Proposed subsection 536LV(1) provides that an application to the FWC under division 5 of part 16 of the bill must be accompanied by any fee prescribed by the regulations. Proposed subsection 536LV(2) provides that the regulations may prescribe the application fee, a method for indexation, and the circumstances in which all or part of the fee may be waived or refunded.

1.54 Proposed subsection 536NE provides that an application to the FWC under division 3 of part 16 must be accompanied by any fee prescribed by the regulations. Proposed subsection 536NE(2) provides that the regulations may prescribe the application fee, a method for indexation, and the circumstances in which all or part of the fee may be waived or refunded.

1.55 Proposed subsection 306R(1) provides that an application under proposed subsection 306P(4) (relating to an application to the FWC to resolve a workplace dispute) must be accompanied by any fee prescribed by the regulations. Proposed subsection 306(2) provides that the regulations may prescribe the application fee, a method for indexation, and the circumstances in which all or part of the fee may be waived or refunded.

1.56 In relation to the proposed sections 536NE and 536LV, the explanatory memorandum notes that '[t]he intent is that the FWC would be a low-cost jurisdiction'.[28] In relation to proposed section 306R, the explanatory memorandum notes that '[a]s a result of section 15A of the [Acts Interpretation Act 1901] AI Act, as in force on 25 June 2009 (see section 40A of the FW Act), this regulation-making power cannot be read as authorising the imposition of a tax'.[29]

1.57 The committee has longstanding scrutiny concerns regarding provisions which allow fees to be calculated within delegated legislation where the bill contains no cap on the maximum fee amount, or any information or guidance as to how the fee will be calculated. The committee expects that any proposal to include fees within delegated legislation should be justified within the explanatory materials for the bill.

1.58 There is no guidance in the bill as to how the fee amount might be determined, and no explanation has been provided as to why it is necessary to charge a fee for these applications. It is possible to: explicitly state on the face of the bill that the amount of fee be limited to cost recovery; to set a maximum limit on the fee that may be imposed; to prescribe a formula by which the fee amount is calculated; or, in the case of indexation, to include the method of calculating indexation on the face of the bill. In some legislation, a provision is included which provides that 'a fee must not be such as to amount to taxation'.

1.59 Further, the Office of Parliamentary Council Drafting Direction 3.6 states that:

AGS has advised that it is inherent in the concept of a 'fee' that the liability does not amount to taxation. However, it is quite common to put such a provision in anyway to avoid confusion and to emphasise the point that we are dealing with fees and not taxes. AGS has expressed the view that such a provision is useful as it may warn administrators that there is some limit on the level and type of fee which may be imposed.[30]

1.60 While the committee notes that the setting of the level of fees is often left to delegated legislation, the committee requests the minister's advice as to whether consideration has been given to providing greater legislative guidance as to how the fee amount (and the method of indexation, if any) is to be determined for fees prescribed as a result of proposed subsections 536LV(1), 536NE(1), and 306R(1).

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Procedural fairness[31]

1.61 Proposed subsection 536MC(2) permits the FWC to make an order for costs against a representative of a person who is a party to an application for an unfair deactivation or unfair termination remedy made under proposed section 536LU. This would be for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred, either because:

• they encouraged a person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success; or

• of an unreasonable act or omission by the representative in connection with the conduct or continuation of the matter.

1.62 The explanatory memorandum states:

This section is designed to deter lawyers and paid agents from encouraging others to bring speculative unfair deactivation or unfair termination claims, particularly claims they know have no reasonable prospects of success, or to unreasonably encourage a party to defend a claim or make a jurisdictional argument where there is no prospect of the argument succeeding.[32]

1.63 Further, the statement of compatibility with human rights explains:

Costs could only be awarded under the new provision if a party's unreasonable act or omission relating to the conduct or continuation of the matter caused the other party to incur costs. This is targeted towards litigants who pursue or defend unfair termination or unfair deactivation claims in an unreasonable manner. This would also disincentivise a party with 'deeper pockets' from acting unreasonably to increase the other party's own costs in an attempt to discourage parties from bringing proceedings against them or encourage a party to settle on unfavourable terms. In this respect the measure will enhance the right to a fair hearing.[33]

1.64 The committee is concerned that the effect of proposed section 536MC may go beyond deterring representatives from bringing claims with no reasonable prospects of success. The threat of a costs order may have a chilling effect on representatives and affect their willingness to represent parties to such matters. In the committee's view, this would disadvantage individuals and could effectively prevent them from bringing a claim in relation to unfair deactivation or unfair termination due to a lack of knowledge as to their appeal rights and processes. The committee also considers that this could cause applicants to appear before the FWC without adequate representation, which could both disadvantage the applicant and affect the efficacy of the process.

1.65 In this instance, it is unclear to the committee why this provision is necessary. The committee notes that consideration of applications for claims of unfair deactivation or termination as provided for in proposed subsection 536LU is a new jurisdiction for the FWC. Therefore, it appears unlikely that costs orders are necessary to address an existing problem with spurious cases being brought in this context. Further, the explanatory memorandum does not provide any evidence or examples to indicate the appropriateness of these costs orders.

1.66 In light of the above, the committee requests the minister's advice as to why it is necessary and appropriate for proposed section 536MC to provide that costs orders can be made against representatives who encouraged claims for unfair deactivation or termination which had no reasonable prospects of success.


[2] This entry can be cited as: Senate Standing Committee for the Scrutiny of Bills, Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, Scrutiny Digest 13 of 2023; [2023] AUSStaCSBSD 204.

[3] Schedule 1, item 61, proposed subsection 202(7); Schedule 1, item 62, proposed subsection 205(6); Schedule 1, item 64, proposed subsection 737(3); Schedule 1, item 70, proposed subsection 768BK(4); and Schedule 1, item 308, proposed section 101. The committee draws senators' attention to these provisions pursuant to Senate standing order 24(1)(a)(iv).

[4] Senate resolution 53B. See Journals of the Senate, No. 101, 16 June 2021, pp. 3581–3582.

[5] See Chapter 4 of Senate Standing Committee for the Scrutiny of Bills, Review of exemption from disallowance provisions in the Biosecurity Act 2015: Scrutiny Digest 7 of 2021 (12 May 2021) pp. 33–44; and Scrutiny Digest 1 of 2022 (4 February 2022) pp. 76–86.

[6] Senate Standing Committee for the Scrutiny of Delegated Legislation, Inquiry into the exemption of delegated legislation from parliamentary oversight: Interim report (December 2020); and Inquiry into the exemption of delegated legislation from parliamentary oversight: Final report (March 2021).

[7] Explanatory memorandum, p. 91.

[8] Explanatory memorandum, p. 259.

[9] Schedule 1, part 6, item 73, proposed Part 2-7A. The committee draws senators' attention to this provision pursuant to Senate standing order 24(1)(a)(i).

[10] Item 74, proposed subsection 539(2).

[11] Explanatory memorandum, pp. 30–31.

[12] Schedule 1, item 220, proposed section 327A; Schedule 4, item 1, proposed section 30A. The committee draws senators' attention to this provision pursuant to Senate standing order 24(1)(a)(i).

[13] Explanatory memorandum, p. 154.

[14] Explanatory memorandum, pp. 154–155.

[15] Explanatory memorandum, p. 298.

[16] Explanatory memorandum, pp. 284–285.

[17] Explanatory memorandum, p. 286.

[18] Explanatory memorandum, p. 298.

[19] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011.

[20] Schedule 1, item 228, proposed subsection 713(4), item 229, proposed section 713A, and item 230 proposed subsection 713A(2). The committee draws senators' attention to this provision pursuant to Senate standing order 24(1)(a)(i).

[21] Explanatory memorandum, pp. 158–159.

[22] Schedule 1, item 248, proposed subsection 15S(2). The committee draws senators' attention to this provision pursuant to Senate standing order 24(1)(a)(v).

[23] Schedule 1, item 249, proposed section 536LA. The committee draws senators' attention to this provision pursuant to Senate standing order 24(1)(a)(iii).

[24] Administrative Review Council, What Decisions Should be Subject to Merits Review?

(1999)

[25] Explanatory memorandum, p. 209.

[26] Schedule 1, item, 249, proposed sections 536LJ and 536LN. The committee draws senators' attention to this provision pursuant to Senate standing order 24(1)(a)(iv).

[27] Schedule 1, item, 249, proposed section 536NE; schedule 1, item 73, proposed section 306R; schedule 1, item 249, proposed section 536LV. The committee draws senators' attention to this provision pursuant to Senate standing order 24(1)(a)(iv).

[28] Explanatory memorandum, pp. 219 and 237.

[29] Explanatory memorandum, p. 115.

[30] Office of Parliamentary Counsel, Drafting Direction 3.6, October 2012, p. 38.

[31] Schedule 1, item 249, proposed section 536MC. The committee draws senators' attention to this provision pursuant to Senate standing order 24(1)(a)(iii).

[32] Explanatory memorandum, p. 223.

[33] Explanatory memorandum, p. 29.


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