Fair Work Legislation Amendment (Closing Loopholes) Act 2023 Explained

The Fair Work landscape has shifted significantly over 2023-2025. If you run a business in Australia, you’ve likely heard about the “Closing Loopholes” reforms - a package designed to lift wages compliance, tighten labour hire arrangements, support vulnerable workers and modernise how we define and protect work.

In this guide, we’ll unpack what the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (and related 2024 changes) actually does, which parts affect small and medium businesses most, when key provisions start, and the practical steps you can take now.

Our aim is to keep this clear and actionable, so you can get on with running your team confidently and compliantly.

What Is The “Closing Loopholes” Act?

“Closing Loopholes” is a set of changes to the Fair Work Act 2009 that rolled out in two tranches - the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 and a subsequent 2024 Act. Together, they target gaps that allowed underpayment or avoidance of minimum standards, and they introduce new protections for workers in non‑traditional arrangements.

At a high level, the reforms:

• Give the Fair Work Commission (FWC) new powers to ensure labour hire workers receive at least the same pay as directly employed workers doing the same job (“same job, same pay” orders).
• Criminalise intentional wage theft at the federal level (with a new set of penalties and a “cooperation” pathway to encourage rectification).
• Clarify and update who is an employee vs contractor, and create minimum standards pathways for certain “employee‑like” workers (e.g. some gig platforms) and road transport workers (primarily introduced in the 2024 tranche, but closely tied to the 2023 reforms).
• Improve protections for casuals, including a new pathway to convert to ongoing employment and a clearer definition of “casual employment”.
• Strengthen union delegate rights and right of entry settings for suspected underpayments.
• Fix the “small business redundancy” gap in insolvency situations and expand anti‑discrimination protections.

A number of these changes started in late 2023, while others commence across 2024 and 2025. The staggered timing is important for planning and compliance.

When Do The Changes Start?

The reforms commenced in stages. The key dates most employers ask about are:

• Late 2023: FWC powers for “same job, same pay” orders became available (applications from December 2023) with transitional arrangements for existing enterprise agreements and labour hire contracts.
• 2024: A range of measures took effect through 2024, including strengthened union delegate rights, changes impacting redundancy entitlements in insolvency scenarios, and the new contractor/employee tests and “employee‑like” settings starting later in the year (as part of the broader Closing Loopholes package).
• 1 January 2025: Federal criminal wage theft provisions commence. Employers who proactively identify and rectify underpayments can access a “cooperation” mechanism designed to encourage early compliance and remediation.

Because commencement is staggered and some measures require fresh FWC applications or updated contracts, it’s smart to get ahead of the curve and plan your rollout rather than waiting for a deadline to hit.

What Are The Key Changes For Employers?

1) “Same Job, Same Pay” For Labour Hire Arrangements

The FWC can now make “regulated labour hire arrangement” orders requiring labour hire providers to pay workers at least what they would get under the host’s enterprise agreement or other applicable instrument, when they are performing the same duties at the host site.

What this means for you:

• If you engage labour hire, budget on parity pay unless your engagement is genuinely for a different purpose (e.g. short‑term specialist work or training scenarios that are exempt or fall outside scope).
• Review enterprise agreements and site rates you’ve negotiated for your direct workforce - these may drive the floor for labour hire rates moving forward.
• Expect to answer FWC questions about the nature of the work and the comparators if an order is sought.

Operationally, this change aims to stop undercutting via third‑party engagement and support a level playing field between in‑house and labour hire workers. If you use on‑hire labour frequently, plan contract and budget updates now, and consider a structured rostering and onboarding process to maintain compliance.

2) Criminal Wage Theft (From 1 January 2025)

Deliberate, intentional underpayment of employee entitlements will be a federal criminal offence. The regime targets conduct where the employer knows (or is reckless to the fact) that employees are entitled to a certain amount and pays less.

Key points:

• Penalties are significant, including potential imprisonment and substantial fines for companies and officers in the most serious cases.
• A “cooperation” pathway is designed to encourage employers who identify underpayments to disclose, calculate, and rectify them promptly (with the help of the Fair Work Ombudsman).
• Good record‑keeping, timely remediation and clear set‑off clauses (where appropriate) reduce risk - but set‑off only works if drafted and applied correctly.

Now is the time to audit your industrial instruments, payroll classifications and allowances. If you don’t already issue written agreements, moving staff onto a clear, compliant Employment Contract is a practical first step.

3) Casual Employment: Definition And Conversion Pathway

The reforms update how “casual employment” is defined and introduce a new pathway for eligible casuals to convert to ongoing employment. The focus is on the real substance of the relationship over time, including patterns of work and mutual expectation of continuing employment.

What to do:

• Make sure your Employment Contract for casuals clearly identifies the casual loading and genuine absence of a firm advance commitment to continuing work.
• Monitor rostering patterns - if someone is working regular, ongoing hours over time, it may trigger a conversion pathway to permanent status.
• Keep written records of offers, responses and any reasonable business grounds for not converting (where applicable).

Getting your casual terms and internal processes right now will make compliance much easier as these provisions mature.

4) Employee vs Contractor And “Employee‑Like” Workers

The broader Closing Loopholes package realigns the employee vs contractor test with a stronger focus on the practical reality of the relationship (multi‑factor assessment), rather than only the written terms. It also creates a pathway for the FWC to set minimum standards for certain “employee‑like” workers (for example, some digital platform workers) and for road transport workers.

For businesses that rely on contractors or platforms, practical tips include:

• Review contractor arrangements for control, integration, exclusivity requirements and equipment ownership - these factors matter in a multi‑factor test.
• Make sure you have a genuine services arrangement for contractors (not simply a re‑labelled employment relationship) and keep it under periodic review.
• Watch for FWC standard‑setting in sectors like road transport that may lift minimum safety nets regardless of employment status.

If you’re unsure whether a worker is truly a contractor, it’s safer to treat them as an employee while you seek advice. Getting this wrong can expose you to back‑pay, superannuation and tax liabilities, as well as penalties.

5) Union Delegates’ Rights And Underpayment Right Of Entry

Union delegates in the workplace have strengthened rights, including reasonable access to communicate with members and represent them, and to paid time for training in certain circumstances. There are also changes that make it easier to investigate suspected underpayments via the right of entry framework (subject to permits and statutory safeguards).

Build these expectations into your HR practices and ensure managers understand how to respond to delegate requests and any right of entry notices professionally and lawfully.

6) Redundancy And Insolvency Fix

The “small business redundancy” loophole is addressed so that employees of a larger employer don’t lose redundancy entitlements simply because headcount fell below 15 due to insolvency. If your business is in distress, get early advice - redundancy, notice and consultation obligations still apply and are closely scrutinised during restructures.

To estimate entitlements, you can use Sprintlaw’s redundancy calculator, and if you’re planning changes consider getting tailored redundancy advice before announcing a restructure.

7) Anti‑Discrimination And Protections

Closing Loopholes expands protected attributes (including protections relating to family and domestic violence) and strengthens protections against adverse action. Build this into your policies, training and investigations processes. A clear, accessible staff policy suite and well‑drafted contracts help you set expectations and respond consistently.

How Does This Affect Your Employment Contracts And Policies?

With wide‑ranging changes, the safest approach is to refresh contracts and workplace documents so they reflect the new legal environment and reduce ambiguity. In practice, that means:

• Issuing modern, tailored Employment Contracts to permanent staff that correctly identify coverage (award or agreement), classification, set‑off mechanics (if used), overtime arrangements, notice and termination procedures, confidentiality and IP clauses, and updated restraint and outside work clauses where relevant.
• Providing a separate Employment Contract for casuals that clearly sets out casual loading, rostering flexibility and the absence of a firm advance commitment, while also explaining the conversion process required by law.
• Embedding lawful set‑off wording and overtime rules that align with the applicable award to minimise underpayment risk - this article on set‑off clauses in employment contracts explains how this works if you pay an “all‑in” salary.
• Updating your staff handbook and policies to reflect delegate rights, discrimination protections, complaint handling and investigation processes, and rostering/overtime management routines. If you haven’t formalised your policy suite, Sprintlaw’s Staff Handbook Package is a good foundation.

It’s also worth revisiting how you manage outside work, conflicts and second jobs. Clear wording, consistent procedures and reasonable consent processes reduce disputes and help you manage secondary employment risks.

Practical Steps To Get Compliant (And Stay That Way)

Step 1: Map Your Workforce And Engagement Models

List your workforce by type: full‑time, part‑time, casual, fixed‑term, contractors, labour hire, platform/gig, and any road transport engagements. Note the industrial instrument each group is under (award, enterprise agreement, or award‑free executives).

This “who does what” snapshot helps you prioritise which areas are most impacted by Closing Loopholes (for example, labour hire and casuals) and where your immediate updates are.

Step 2: Review Labour Hire And On‑Hire Spend

Identify roles where labour hire staff are doing the same work as direct employees covered by an enterprise agreement. Budget for parity and plan contract updates with providers. Where you genuinely need external specialists, document the basis clearly to reduce the risk of an FWC order.

If your industry also requires licensing, keep an eye on state obligations like labour hire licensing in NSW and Victoria, which sit alongside the federal parity regime.

Step 3: Audit Pay, Rostering And Record‑Keeping

Wage theft provisions make accurate payroll and records a business‑critical risk control. Double‑check:

• Award coverage and correct classification for each role.
• Roster patterns against maximum weekly hours and safe scheduling (see our guide to maximum hours per week).
• How you manage overtime, time in lieu and breaks (and that your system captures them reliably).
• Whether your contracts include clean set‑off wording where you pay above the minimums.

If you discover issues, correct them early, document the remediation and keep a clear paper trail. This will matter under the cooperation pathway from 2025.

Step 4: Refresh Contracts And Policies

Bring everyone onto current contracts and align your policy suite with the new requirements. If you don’t have the capacity to redraft everything in one go, prioritise the groups most affected - casuals, any on‑hire cohort, and award‑covered staff where you pay rolled‑up salaries.

If you’re planning a restructure or role changes, review termination, consultation and notice settings now to avoid scrambling later. For performance and dismissal decisions, it’s worth revisiting the key factors that the FWC looks at in unfair dismissal cases - this overview of section 387 of the Fair Work Act is a useful refresher for managers.

Step 5: Train Your Managers

Most non‑compliance starts with day‑to‑day decisions on rosters, breaks, overtime approvals, classification and dealing with concerns. A short training session can cover:

• How to approve overtime and manage breaks correctly.
• When to escalate suspected underpayments and how remediation works.
• Responding to union delegate requests and right of entry professionally.
• Casual conversion triggers and how to handle the process.

Training plus accessible reference documents (policies, checklists) keeps everyone on the same page and reduces accidental breaches.

Step 6: Put A Review Cadence In Place

Industrial instruments change, awards are updated, and FWC decisions can shift how rules are applied. Schedule a periodic review (for example, every 6-12 months) of contracts, policies, classification and payroll settings, so your compliance program stays current without a last‑minute scramble.

Common Questions About Closing Loopholes

Do I Have To Apply For A “Same Job, Same Pay” Order?

No. Orders are made by the FWC on application (often by an affected party or union). However, if you use labour hire, you should assess whether parity will apply and proactively cost it into your engagements. Waiting for an order can create budget shocks and friction with providers.

Will Wage Theft Laws Hit Honest Mistakes?

The criminal offence targets intentional conduct. That said, repeated or reckless underpayments can be risky. Honest mistakes should be corrected promptly with proper calculations, back‑pay and superannuation. Good systems, audits and up‑to‑date contracts are your best defence.

We Use Contractors. Do We Need To Change Anything?

Possibly. If the practical reality looks like employment (control, integration, regular hours, exclusivity), you may need to reclassify or change how you engage. Keep a close eye on any new FWC standards that apply to “employee‑like” workers in your industry, and consider moving key people onto an Employment Contract to reduce risk.

What If I Need To Change Hours Or Roles To Stay Compliant?

That’s common. You can make changes, but do so lawfully - check the relevant award or agreement, consult affected employees properly, and provide appropriate notice. It may also mean updating contracts; this guide to changing employment contracts outlines the steps and risks to watch.

Key Takeaways

• Closing Loopholes is a staged set of Fair Work reforms that tighten labour hire parity, criminalise intentional wage theft and modernise protections for casuals, contractors and “employee‑like” workers.
• “Same job, same pay” orders lift labour hire costs to at least the host’s rates for comparable work - plan contract and budget changes now if you use on‑hire labour.
• Criminal wage theft starts 1 January 2025. Strong payroll systems, clean contracts, audits and prompt remediation of underpayments are essential.
• Casual employment gets a clearer definition and conversion pathway - align your casual terms, rostering and record‑keeping to avoid disputes.
• Refresh your contracts and policies to reflect the new settings, including delegate rights, discrimination protections and clear overtime/set‑off terms.
• Train managers and set a regular review cadence so compliance becomes part of your normal operations, not a one‑off project.

If you’d like a consultation on how Closing Loopholes affects your business and to update your employment documents, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.