Employers should take note of the new Closing the Loopholes legislation because it could have a big impact on how they manage their contractors and gig workers.

Performance Advantage HR Director, Suzanne Diprose, outlines below the three top reasons why you need to be up to date on these recent changes to employment laws.

1. Tighter Rules for Classifying Workers

This new law makes it harder for companies to classify workers as independent contractors when they really function like employees. Misclassifying workers can allow companies to bypass certain obligations like paying benefits, overtime, and minimum wage. The new rules make it more likely that workers will need to be treated as employees.

Why it matters: If workers are misclassified, employers could face fines, back pay, and legal challenges. Penalties are up to $469.5K for businesses. Contractors can also face significant fines.

2. Higher Costs if Contractors are Reclassified

Businesses that rely on contractors to save on costs might see expenses rise if those workers have to be reclassified as employees. Employees come with extra costs like payroll taxes, health benefits, and paid time off that contractors typically don’t receive.

Why it matters: Employers will need to rethink their budgeting and workforce strategies if they have to shift contractors to employee status.

3. Avoiding Legal and Compliance Risks

If a company doesn’t comply with the new rules, they could face penalties. It’s important for employers to review their current setup to make sure all workers are classified properly, so they don’t end up in legal trouble.

Why it matters: It’s a good idea for businesses to consult with HR experts to ensure they’re following the new rules and avoid costly litigation and fines.

In short, the Closing the Loopholes legislation means businesses will need to be more careful about how they use independent contractors.

By undertaking a contractor agreement audit and staying on top of these changes and ensuring compliance, employers can avoid risks and fines, and ensure their workers are treated fairly.

Ask Suzanne for more information, attend a briefing or have her check your current contractor arrangement to ensure you are compliant and not at risk.

Call Suzanne on 0408 897 079 or email on suzanne@performanceadvantage.com.au