How should ECEC navigate the Closing Loopholes laws?
The Sector > Quality > Compliance > How Should ECEC Businesses Address The Fair Work Legislation Amendment (Closing Loopholes) Act 2023?

How Should ECEC Businesses Address The Fair Work Legislation Amendment (Closing Loopholes) Act 2023?

by LawPath

January 29, 2024

Early childhood education and care (ECEC) stakeholders are well aware of the Fair Work Act 2009 (Clth), but how aware are they of the recent amendments made to the Act? 


In December 2023, the Fair Work Legislation Amendment (Closing Loopholes) 2023 Act received royal assent which modified/introduced new laws regulating the rights of workers. The changes made to this act were framed around closing the loopholes that enable non-compliance with businesses and to better work health and safety in workplaces. Such reforms are still being enforced as we leave January 2024.


This article will explore the changes made to the Fair Work Act 2009 (Clth) and how ECEC businesses should navigate the introduction of the Fair Work Legislation Amendment (Closing Loopholes) 2023 Act.


The Criminalisation of Wage Theft


The biggest change introduced by the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 is the strengthening of laws regarding wage theft. As of January 1, 2025, employers who intentionally engage in underpaying their employees are subject to:


  • A maximum of ten years in prison and/or a maximum fine and/or;
  • A fine equivalent to three times the amount of the underpayments or;
  • $1,565,000 for individuals and $7,825,000 for corporations.


Honest mistakes are not within the scope of wage theft and will not lead to such fines.


It is important for ECEC employers to ensure that they do not underpay their employees as consistently doing so without knowing still leads to legal and financial repercussions for businesses.


ECEC and Underpayments


Early childhood education is an essential service to holding the economy together, especially during COVID-19, and ECEC educators are often underpaid. In December 2019, Only About Children self-reported underpayments, and in March 2021, they commenced paying back employees accumulating to more than $1.5 million. 


This change came after being aware of underpaying staff when integrating a new payroll system. 


In 2020, G8 Education self-reported underpaying employees after external lawyers conducted an audit, revealing that the underpayments had been occurring since 2014. The underpayments were primarily framed around overtime, agreed hours of work and allowances. With about 470 childcare centres within Australia, G8 demonstrates how regardless of an ECEC business operating on a large scale, the rules surrounding underpaid employees are relevant and apply to any form of underpayment.

Wage theft and ECEC businesses operate interdependently as childcare employees are underpaid. It is important to ensure that the ECEC business you work or run is compliant with their payments to avoid large legal and financial penalties. 


Stronger Discrimination Protections


The Fair Work Legislation Amendment (Closing Loopholes) 2023 Act will also commence the strengthening of discrimination within Australian businesses. As of December 15, 2023, employees who have been/are subject to family and domestic violence will be protected from employers firing or refusing to hire them, on the basis that they are victims of such violence.


The Fair Work Commission (FWC) has also ensured that any enterprise agreements or modern awards that discriminate against victims are subject to legal action. These changes coincide with the FWC introducing 10 days of paid leave for domestic and family violence victims within the Fair Work Act. 


Domestic and family violence is not exclusive to the ECEC sector, however, it is important those who work within ECEC businesses are aware of their rights, especially as organisations where stakeholders include the involvement of children and young people should be free of any concerns regarding violence. 


These changes apply to full-time and part-time workers, and casual employees will be entitled to a payment that equals the hours they were rostered to work. For those who are subject to such violence, evidence may be required to employers granting the leave, however, is ultimately up to the discretion of those allowing the leave.


It is recommended that all ECEC businesses develop a Family and Domestic Violence Leave Policy which supports employees in the event that they are a victim of violence. This also ensures a smoother process when applying for leave and providing clarity to employees. 


Changes to Redundancy Payments


As of December 15, 2023, businesses who are bankrupt or undergoing liquidation will be granted an exception to missing out on the NES entitlement to redundancy pay. Essentially, these changes mean employees of small businesses will no longer be disadvantaged if they are made redundant later than other employees during the insolvency process. 


Redundancy payments in the ECEC sector have shown to be of discourse, as in 2022, a Queensland ECEC provider had to pay back over $250 million in redundancy under payments owed to workers. Whilst this business is primarily impacted by the wage theft reforms, the changes to redundancy payment demonstrates how a smaller ECEC business is impacted by such changes. 


Strategies ECEC Businesses Should Employ When Navigating The Closing Loopholes Amendment


ECEC businesses should ensure they employ strategies to help navigate the reforms made under the Fair Work Act effectively.


Below are a few strategies recommended for ECEC employers to implement:


Review Employment Contracts


It is highly recommended that all ECEC employers review their employees’ contracts regularly. However, with the new changes being introduced via the Fair Work Legislation Amendment (Closing Loopholes) Act 2023, it is particularly important to ensure wages, overtime provisions and leave entitlements are not outdated or leading to underpayments.


Review Compliance With Policies & Legislation


ECEC businesses should ensure their policies are framed around their own values and legislation which regulates the early childhood education sector. ECEC employers could look into adopting a compliance service or legal health check up as adhering to these changes are central in avoiding legal or financial consequences.


Train Management and Staff


As ECEC businesses of all sizes often delegate tasks to different departments and individuals, ensuring all staff members have been trained and undergone a discussion regarding the new changes to the FWA should be conducted. 


In light of the Fair Work Legislation Amendment (Closing Loopholes) Act 2023, ECEC businesses must prioritise compliance and ethical practices. These reforms address critical issues such as wage theft, discrimination protections, and redundancy payments. 


To navigate these changes effectively, ECEC employers should regularly review employment contracts, ensure policy compliance, and provide training for staff. By doing so, ECEC businesses can uphold legal standards, protect their employees, and maintain a fair and ethical work environment as they adapt to the evolving regulatory landscape. 


If you find yourself or your businesses in turmoil regarding these changes, it is recommended seeking legal advice

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