Contractors of all types will be captured by proposed labour hire changes under the ‘Closing Loopholes’ Bill, according to Australian Resources & Energy Employer Association.

AREEA chief executive officer Steve Knott said that despite public assurances made by Employment and Workplace Relations Minister Tony Burke, the proposed labour hire provisions did not provide a true exemption for genuine service contractors.

“Rather, applications could be made against service contractors and the business would be subjected to a reverse onus of proof to convince the Fair Work Commission (FWC) that they are providing a service, not labour hire, and it would not be ‘fair and reasonable’ to make an order capturing their service arrangements,” he said.

“Under such a model, specialist contractors will have no certainty that they would avoid being unjustly pulled into a complex and costly IR administrative process, and they would be unable to tender for work with any certainty the rates they quote will be the rates incurred and passed on to clients.”

AREEA is calling for the Bill to be withdrawn – and stands with other major employer groups including ACCI, BCA, Ai Group, Master Builders and the Minerals Council of Australia in opposing it.

Mr Knott said Closing Loopholes contained the most significant changes to Australia’s employment regulation since the Fair Work Act took effect in 2009 with little understanding or regard to its negative consequences.

“If the Albanese Government does not listen to employer groups and the Bill is passed into law, the resources and energy industry will pay a heavy cost – with operations likely to close, jobs lost, regional communities adversely hit and state and federal tax and royalty revenues forgone,” he said.

AREEA’s arguments include that labour hire businesses will be killed off by absurd red tape and administrative burden.

“Even if the regulation was to apply strictly to labour hire and not contractors, there are many unresolved issues with the proposed new obligations on labour hire firms that would at the very least disincentivise use of their services and at worst send many bankrupt,” Mr Knott said.

“The Bill would require labour hire employers to pay out leave (including long service leave) and redundancy entitlements at clients’ rates of pay and give labour hire workers incentives, bonuses and other enterprise-specific payments provided to direct employees of the host business.

“These expectations are unreasonable and will devastate competitive and flexible labour hire services that the resources sector, and many other industries, rely upon to be productive and competitive.”

The Federal Government describes the new legislation as being about closing the loopholes that undercut pay and conditions for workers.

The four major elements of the Closing Loopholes Bill are:

• Criminalising wage theft
• Introducing minimum standards for workers in the gig economy
• Closing the forced permanent casual worker loophole
• Closing the labour hire loophole.

Mr Burke said the labour hire loophole was where an employer and employees had agreed in an enterprise agreement to a particular rate of pay for particular work – but then the employer brought in different workers through labour hire to undercut that rate of pay because the were technically employed by a different employer.