'Closing Loopholes' and the re-regulation of work

A process worker in a Western Sydney distribution centre spends her shift stacking pallets alongside a colleague doing the identical job. Until November 2024, the colleague beside her — employed directly by the warehouse operator under its enterprise agreement — could be paid several dollars an hour more for exactly the same work, because she herself was supplied by a labour-hire agency on a lower rate. That gap was not an accident. In many workplaces it was a deliberate way to avoid the pay rates unions had bargained for. The federal government's "Closing Loopholes" laws set out to close it — and, in doing so, rewrote large parts of how Australians are hired, paid and classified at work.

A few hundred kilometres away, a small aged-care provider or transport operator reads the same legislation and sees something else: new bargaining obligations it did not seek, a redefinition of who counts as a casual or a contractor, and a compliance bill it must absorb without the pricing power of a large corporation. Both readings are accurate. The 2022–2024 industrial-relations overhaul is the most significant re-regulation of the Australian labour market in a generation, and its costs and benefits fall unevenly across a workforce of roughly 14.5 million employed people (ABS Labour Force, approx., 2024).

What Labor did: three Acts, one new architecture

The reforms did not arrive in a vacuum. Australian industrial relations has swung on a pendulum for three decades: the shift from centralised award-fixing to enterprise bargaining under the Hawke and Keating governments in the late 1980s and early 1990s, the Howard government's WorkChoices individual-contract regime from 2005, its wind-back under the Rudd government's Fair Work Act 2009, and now a further swing back toward collective and multi-employer mechanisms under Labor from 2022. The immediate trigger was the September 2022 Jobs and Skills Summit, a two-day tripartite gathering of unions, employer groups and government convened within months of the election, at which participants broadly agreed that wage growth had been too weak for too long and that some form of bargaining reform was needed — though employer groups and unions disagreed sharply, then and since, on how far that reform should go. The three Acts that followed were the government's answer to that disagreement, and each was negotiated line by line with Senate crossbenchers, principally the Greens and independent Senator David Pocock, to secure passage.

Labor's rewrite of the Fair Work Act came in three tranches, each passed with Greens and crossbench support after negotiation with business and unions.

The Secure Jobs, Better Pay Act 2022, Labor's first major industrial-relations bill, received royal assent in December 2022. It abolished the Australian Building and Construction Commission and the Registered Organisations Commission, two watchdogs the former Coalition government had used to police union and building-industry conduct. It banned pay-secrecy clauses, so employees can now discuss what they earn without breaching their contract. It strengthened the right to request flexible work, giving the Fair Work Commission power to arbitrate disputes if an employer refuses unreasonably. It closed off "zombie agreements" — old pre-2010 agreements that had been left running, often on conditions below the modern award, well past the date they should have been replaced. And it simplified the "better off overall test" (BOOT) the Commission applies when approving enterprise agreements, moving from a strict line-by-line comparison to a more holistic assessment — a change employers had sought for years as a handbrake on bargaining.

Its most consequential change, though, was multi-employer bargaining. Before 2022, almost all enterprise bargaining in Australia happened at the level of a single employer. The 2022 Act created two new pathways for employees at different employers to bargain together: a "supported bargaining stream" aimed at low-paid, historically hard-to-organise sectors such as aged care, disability support and early learning, where a fragmented, mostly female and part-time workforce had struggled for decades to extract pay rises from small, thinly capitalised providers; and a "single interest employer" stream, under which the Fair Work Commission can compel employers with "clearly identifiable common interests" — potentially including competitors — into the same bargaining table, subject to conditions on business size and Commission authorisation.

A year later, the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 went further. It created a new criminal offence of wage theft — intentional, not accidental, underpayment — with penalties that scale with the size of the underpayment, taking effect from 1 January 2025 alongside a Voluntary Small Business Wage Compliance Code intended to give genuine, honest small-business error a safe harbour. It introduced "same job, same pay": from 1 November 2024, a business that engages labour-hire workers to perform work already covered by its own enterprise agreement must generally pay them no less than that agreement provides, closing the arbitrage that let some employers use labour hire to undercut rates they had themselves bargained. It rewrote the legal test for who counts as a casual employee, replacing the "contract-only" test introduced in 2021 with a test focused on the real substance and practical reality of the relationship, and gave casuals a new "employee choice" pathway to notify their employer they want to move to permanent work once their pattern of work has become regular — reversing the employer-initiated, opt-out model that unions argued let employers keep long-term casuals casual indefinitely. And it created a limited "right to disconnect", letting employees refuse to monitor or respond to work contact outside their hours where that refusal is reasonable, phased in for larger employers from 26 August 2024 and for small businesses a year later.

The "contract-only" test that Labor replaced had itself only existed since 2021, when the previous Coalition government legislated a response to the High Court's decision that year in WorkPac v Rossato, which had left open the possibility that a worker's actual working pattern, not just their contract label, could determine casual status and trigger years of backdated leave entitlements. That 2021 law defined a casual purely by reference to the employment offer and its acceptance, giving employers certainty but making the "permanent casual" arrangement — regular hours, indefinite duration, casual in name only — effectively unchallengeable. Labor's 2023 change did not simply invent new complexity from nothing; it reopened a question the 2021 law had deliberately closed, and shifted the answer back toward the worker's lived pattern of work.

A further Fair Work Legislation Amendment (Closing Loopholes No. 2) Act followed in early 2024. Its centrepiece extended the Fair Work Commission's power, for the first time, into the gig economy: from 26 August 2024, the Commission has been able to set legally binding "Minimum Standards Orders" for "employee-like workers" on digital labour platforms — food-delivery riders, rideshare drivers and similar work — covering minimum pay and other conditions, alongside a parallel regime for the road transport industry. The same Act restored a multifactor, "whole of relationship" test for distinguishing employees from independent contractors, legislatively overriding the High Court's 2022 Personnel Contracting and Jamsek decisions, which had made the written contract close to determinative. To balance that change, it let contractors earning above a high-income threshold — in the order of $175,000 a year, indexed annually (approx.) — opt out of the new unfair-contract-terms jurisdiction and preserve a genuine independent-contracting arrangement.

The evidence

Start with scale. In August 2023, the Australian Bureau of Statistics counted roughly 2.6 million Australians as casual employees — people without paid annual or sick leave entitlements — a little over one in five employees (ABS, Characteristics of Employment, Aug-2023, approx.). That share has drifted down gradually since the early 2000s, when it was closer to one in four, but it remains large enough that any change to the legal test for who counts as casual touches millions of working lives. No official ABS collection counts labour-hire workers directly; industry estimates from the sector's own peak body put the on-hire workforce at somewhere in the low hundreds of thousands, concentrated in construction, mining, manufacturing, warehousing and healthcare (Recruitment, Consulting and Staffing Association industry estimates, approx.). The gig or "digital platform" workforce is harder still to pin down: a 2021–22 Senate inquiry and subsequent actuarial research put the number of Australians who had earned income from a digital platform somewhere between several hundred thousand and a little over a million, depending on how loosely "gig work" is defined and over what period (Senate Select Committee on Job Security, Final Report, 2022, approx.; Actuaries Institute research, approx.).

Set against that backdrop, the reforms rolled out on a staggered timetable, and take-up has not matched the scale of the legislative change. Multi-employer bargaining streams opened first, from late 2022 and mid-2023, but activity has been modest relative to the several thousand enterprise agreements the Fair Work Commission approves in an average year (approx.; FWC annual reports). Supported bargaining authorisations have concentrated heavily in aged care, disability and early-learning services — exactly the sectors the stream was built for — while single-interest authorisations, the stream that can pull competing employers to one table, have been used more sparingly, partly because employers can contest whether they truly share "common interests" and partly because the pathway is still new and contested. The Commission's own reporting and workplace-relations commentary have generally described multi-employer bargaining as running well below the volumes some unions initially hoped for and some business groups initially feared.

Aged care: the backdrop the supported stream builds on

The supported bargaining stream does not operate in isolation. In a separate process — a Fair Work Commission Work Value Case, not part of the Closing Loopholes Acts themselves — the Commission found in 2022 that aged-care award wages did not properly reflect the value of the work, and ordered a substantial increase, in the order of 15 per cent, phased in and funded by the Commonwealth through the aged-care subsidy system from 2023 (approx.; Fair Work Commission, Aged Care Work Value Case decision, 2022–2023). That decision lifted the award floor; supported bargaining is designed to let providers and their employees then bargain above it, sector by sector, where individual providers still cannot generate the margin to pay more on their own. The two processes are often conflated in public debate — critics and supporters alike sometimes credit or blame Closing Loopholes for a wage increase that actually came from a separate award case — and disentangling them matters for judging what the industrial-relations reforms specifically have achieved, versus what a different, pre-existing part of the system delivered.

"Same job, same pay": the compliance task

"Same job, same pay" began operating on 1 November 2024. Host businesses that engage labour-hire workers to perform work already covered by their own enterprise agreement must generally provide those workers no less than the agreement rate, subject to exemptions for genuine service contracts, small business, and a phase-in period the Commission can grant on application. Because the obligation sits with the host business, not just the labour-hire firm, it required employers across mining, manufacturing, healthcare and the public sector to audit their labour-hire arrangements through the second half of 2024 — one of the largest one-off compliance exercises the reforms produced, and one that depends on hosts obtaining pay information from labour-hire firms that, before the reform, they had no legal right to see.

Casual conversion and the "employee choice" pathway

The casual redefinition and the new "employee choice" pathway took effect on 26 August 2024, the same date the "employee-like worker" gig provisions and the restored multifactor contractor test began operating. Under employee choice, a casual whose pattern of work has become regular can notify their employer that they want to move to permanent employment; the employer can only refuse on fair and reasonable business grounds, and unresolved disputes go to the Fair Work Commission. Take-up data is still thin at time of writing — the pathway has been running less than two years — but the Commission has flagged it will report on conversion notifications and disputes as part of its standard reporting once a fuller run of data is available.

The gig economy: a new jurisdiction still being built

The Fair Work Commission's power to make Minimum Standards Orders for "employee-like workers" is a genuinely new jurisdiction, and by design it moves slowly: the Act requires consultation with platforms, workers and their representatives before any order is made. The Commission's first substantive orders for digital-platform food-delivery work began taking shape during 2025 (approx.), alongside separate road-transport standards work, but by mid-2026 the regime remains at an early stage relative to the scale of the workforce it is meant to cover. That is by design rather than delay — the government built in a deliberately consultative process rather than an immediate blanket rate — but it also means the practical wage floor for platform work has been defined case by case, order by order, rather than fixed in the Act itself.

The criminal wage-theft offence — carrying substantial fines that scale with the size of the underpayment, and up to ten years' imprisonment for the most serious individual conduct (approx.; Fair Work Legislation Amendment (Closing Loopholes) Act 2023, Explanatory Memorandum) — commenced on 1 January 2025, recently enough that no prosecution had been finally determined by the time this article was researched. It sits on top of, not instead of, the Fair Work Ombudsman's existing civil enforcement, which has recovered underpaid wages running into the hundreds of millions of dollars a year in back-pay across the economy in recent years (approx.; Fair Work Ombudsman Annual Report) — a track record the government points to as evidence that underpayment was systemic rather than isolated before the new offence existed.

How this compares abroad

Australia is not alone in wrestling with where gig and platform work sits in employment law. The United Kingdom's Supreme Court ruled in Uber BV v Aslam (2021) that Uber drivers were "workers" entitled to minimum wage and holiday pay — a narrower category than full employment but broader than pure self-employment, conceptually similar to Australia's new "employee-like worker" category, though arrived at through litigation rather than legislation. The European Union's Platform Work Directive, agreed in 2024, creates a rebuttable presumption of employment for platform workers where the platform exercises certain forms of control, shifting the burden onto platforms to prove a worker is genuinely self-employed. California took the opposite path: after courts and legislation initially pushed gig companies toward employee status, voters approved Proposition 22 in 2020, a ballot measure that entrenched app-based drivers as independent contractors with limited additional benefits, following an intense, well-funded campaign by the platforms themselves. The range of outcomes — worker status by litigation in the UK, a legislative presumption of employment in the EU, and an entrenched contractor carve-out in California — shows there is no settled international answer, and that Australia's Minimum Standards Orders approach, sitting between full employment and pure contracting, is one genuine option among several rather than an outlier.

The reforms did not invent the trade-off between flexibility and security in Australian work — they moved the line, and moved it further than many employers expected.

Where the reforms create risk

The critique does not deny the loopholes were real. It says the fixes are broader, and more rigid, than the loopholes they close, and that the cost lands disproportionately on the businesses and workers with the least capacity to absorb it.

Start with complexity. The Productivity Commission's five-yearly productivity inquiry, handed to government in 2023, flagged workplace-relations complexity — the sheer number of instruments (awards, enterprise agreements, minimum standards orders, now road-transport standards) an employer must navigate — as a standing drag on the economy's ability to move labour to its most productive use (Productivity Commission, 5-year Productivity Inquiry, 2023). Multi-employer bargaining adds another layer: a single-interest authorisation can, in principle, draw a business into bargaining alongside competitors it did not choose, over terms shaped as much by the weakest firm in the room as the strongest. Employer groups — the Australian Chamber of Commerce and Industry, the Australian Industry Group, the Council of Small Business Organisations Australia — argued through the bills' passage that this weakens the core discipline of enterprise bargaining: that pay rises are tied to a specific employer's own productivity and capacity to pay, not to an industry-wide outcome set in a room that includes firms with very different economics.

The labour-hire compliance burden

"Same job, same pay" illustrates the same tension at the level of a single business. It is aimed squarely at deliberate rate arbitrage, and the government built in exemptions for genuine service contracts and small business. But the obligation to identify the "appropriate" host rate, calculate it correctly, and defend that calculation if challenged sits with businesses that, in many cases, had no visibility of what a labour-hire firm paid its own employees before the reform forced disclosure. Mining and resources employers — some of the heaviest legitimate users of labour hire, for seasonal peaks, specialist skills and remote-site rostering — warned during consultation that the compliance and legal-risk cost of the new regime would make labour hire a less attractive way to manage exactly that kind of legitimate workforce flexibility, pushing some of it either onto direct payrolls at higher fixed cost, or out of the workforce altogether.

The small-business exemptions built into several of these measures rely on the Fair Work Act's existing small-business definition — fewer than 15 employees, counted using a method that includes some regular casual staff — a threshold that has applied to unfair-dismissal law for over a decade and that the reforms simply extended to new obligations rather than inventing from scratch. That continuity cuts against any claim the reforms are wholly novel. But it also means a business hovering near the 15-employee line now has more reasons than before to think carefully about how it counts its own headcount, since crossing the threshold can trigger several new obligations at once.

Uncertainty as a cost: the casual redefinition

The casual redefinition and "employee choice" pathway raise a narrower but sharper version of the same problem: uncertainty. The old "contract-only" test, for all its flaws, gave employers a bright line — what the contract said, said. The new "real substance of the relationship" test asks employers to make an ongoing, evolving judgement about whether a casual's actual working pattern has become regular enough to trigger a right to convert — a judgement that can change month to month, and that, if an employer gets it wrong, exposes the business to a Fair Work Commission dispute. For a small hospitality or retail business rostering casuals around fluctuating demand — the textbook case for genuine, valued casual flexibility on both sides — that ongoing uncertainty is itself a cost, even before any conversion actually happens.

Casual employment exists, in part, because employers and many workers value it: award casual loading rates are typically around 25 per cent above the equivalent permanent hourly rate, compensating casuals for the absence of paid leave and job security (approx.; modern award rates, Fair Work Commission). For a worker who prefers the loading and the flexibility — a student, a second income earner, someone between other commitments — the employee choice pathway is opt-in, not compulsory conversion, and early indications suggest many casuals continue to choose the loading over permanency. The risk is not that every casual converts. It is that ongoing classification uncertainty raises the administrative and legal cost of offering casual work at all, even to the workers who would choose to remain casual if simply asked.

The gig economy's flexibility trade-off

The gig-economy provisions carry the starkest version of the trade-off, because the platforms' own commercial model depends on the flexibility the minimum-standards regime is designed to constrain. Uber, DoorDash and similar platforms argued during consultation that legally binding minimum pay and conditions, applied to a workforce that logs on and off at will, would force them to ration available work — tighter matching of supply to demand, fewer riders and drivers active at once — to keep the economics viable, a trade-off that shows up as reduced work availability for the very riders and drivers who value the option to log on whenever they choose, rather than as extra income for them. Whether that plays out as feared depends heavily on how the Commission calibrates the actual Minimum Standards Orders, which is precisely why the slow, case-by-case rollout matters: the regime's real-world effect on gig-worker flexibility is still not fully known, because most of its substantive content was, at time of writing, only recently finalised or still in train.

What employers report

Survey evidence from employer groups should be read as advocacy as much as data — associations that opposed parts of the bills also commissioned the surveys reporting the biggest concerns — but the direction has been consistent. Members surveyed by groups including the Australian Chamber of Commerce and Industry and the Council of Small Business Organisations Australia have repeatedly reported rising perceived compliance costs and, in some surveys, reduced hiring intentions specifically attributed to industrial-relations uncertainty since 2023 (approx.; ACCI and COSBOA member surveys, various, 2023–2025). Independent monitoring is thinner: neither the ABS nor the Fair Work Commission runs a standing survey designed to isolate the reforms' net effect on hiring from the many other things moving the labour market at the same time — interest-rate settings, population growth, and the broader post-pandemic normalisation of hours worked. That absence of a clean, independent before-and-after measure is itself part of the critique: several years after the first Act passed, the debate over whether the reforms are suppressing hiring still rests more on employer sentiment and case-by-case example than on a settled body of labour-market data.

A wage floor set by legislation still has to be paid for out of something a business actually produces — and that is where the argument returns to productivity.

Underneath all of this sits a harder empirical question: does any of it lift real wages on a sustainable footing? Multi-employer bargaining and same job, same pay both raise the wage floor for some workers by administrative and legal means, not by lifting the output per worker that, in a market economy, ultimately funds a pay rise without it simply being passed through into prices. The Reserve Bank and Treasury have both, in various public statements across this period, pointed to weak productivity growth as the binding constraint on how much real wages can rise without adding to inflation. A re-regulation that raises the cost or the legal risk of hiring — without a matching lift in output — narrows rather than widens the room for the wage gains it seeks to deliver, and does so most for the more marginal, entry-level, casual and gig workers whose engagement is most sensitive to hiring cost.

What the reforms got right

Credit is due on several specific points. The supported bargaining stream targets a genuine structural problem: aged care, disability support and early learning are dominated by a highly feminised, part-time and casualised workforce spread across thousands of small, low-margin providers — a market structure that had left wages in those sectors persistently low relative to the skill and responsibility the work involves, largely because no individual provider or worker had much bargaining leverage alone. Whatever view one takes of multi-employer bargaining generally, the case for a supported pathway in exactly these sectors — where government is also, as the dominant funder through the NDIS and aged-care subsidies, effectively setting the ceiling on what providers can pay — is a defensible and relatively narrow use of the tool.

The criminalisation of wage theft is aimed, by its own drafting, at intentional conduct, not honest payroll error, and it arrived after a string of high-profile underpayment scandals across hospitality, retail and franchise businesses that had eroded public confidence that civil penalties alone were sufficient deterrent for employers who did the sums and decided underpayment was cheaper than compliance. Pairing the new offence with a Voluntary Small Business Wage Compliance Code — a safe harbour for businesses that follow it in good faith — is a genuine attempt to separate deliberate theft from honest error, and most employer groups did not oppose the principle even where they contested the detail.

The gig-economy provisions, similarly, respond to an actual and long-standing gap: before these reforms, a rider injured on a platform-assigned delivery, or a driver whose account was deactivated without appeal, had essentially no minimum-standards recourse, because the law simply had no category for someone economically dependent on a platform but not, on the old tests, its employee. Creating that category — even if its content is still being defined order by order — closes a real gap in the safety net rather than inventing one.

And the legislation is more consultative and better exempted than its critics sometimes allow. Small-business carve-outs, a genuine-service-contract exemption for same job, same pay, a high-income opt-out for contractors, and a phased, evidence-gathering approach to the gig minimum standards rather than an immediate blanket rate all show a government that built in mechanisms to limit the reach of the changes to the loopholes it was actually targeting — even if business groups argue those mechanisms do not go far enough, and even if the resulting patchwork of exemptions is itself part of the complexity critics point to.

There is also a process case for the reforms, separate from their content: they followed a genuine, publicised tripartite negotiation at the Jobs and Skills Summit, and the government used its Senate crossbench dependency to accept amendments rather than force through an unamended package. Small-business exemptions, phased timetables and the contractor high-income opt-out all originated as concessions during that process, not as afterthoughts bolted on later. Whatever view one takes of the final settings, the legislative process itself was closer to consensus-seeking than to a majority government imposing its first-preference model unchanged.