Closing Loopholes – How the Fair Work Amendments Affect Labour Hire 

Written by Sarah Alsarrage

On 14 December 2023, the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 came into effect, amending the Fair Work Act 2009. A key focus of the reforms is labour hire, with new “same job, same pay” provisions now under the jurisdiction of the Fair Work Commission (FWC). 

Understanding labour hire 

Labour hire, sometimes referred to as on-hire or agency work, involves a business engaging a provider to supply workers rather than hiring them directly. 

For example, a food packaging company experiencing high but seasonal demand may engage an agency to supply extra workers during that period. This is not to get confused with an employee and employer relationship. The agency is responsible for employing and paying those workers, while the host company directs their day-to-day duties and pays the agency for the service.  

 This three-way relationship allows businesses flexibility in managing workload, while the agency carries the employment obligations such as payroll, superannuation and tax. 

Key changes under Closing Loopholes 

Before the new legislation, labour hire workers could be paid less than directly employed staff at the same workplace, even when performing the same tasks. This raised some concerns over fairness in the workplace.  

The Closing Loopholes Act addresses this by introducing Regulated Labour Hire Arrangement Orders, commonly referred to as “same job, same pay” orders. These ensure labour hire employees receive at least the same pay as directly employed workers performing equivalent duties at the host business. 

Applications for these orders can be made to the FWC by employees, unions or host businesses. The FWC must make an order where: 

1. A business is supplying, or will supply, employees to a host; 

2. The host is not a small business employer; and 

3. The host’s industrial instrument (award or enterprise agreement) would have applied if the workers were directly employed. 

The FWC is not required to make an order if the arrangement is primarily for the provision of a service (rather than labour), or if an order would not be fair and reasonable in the circumstances. 

What this means going forward 

The reforms mark a significant step towards greater fairness in Australia’s labour market. By embedding the principle of “same job, same pay” into workplace law, the Act reduces wage disparities and strengthens protections for labour hire workers. 

For businesses, this means reviewing current labour hire arrangements to ensure compliance with the new requirements. By doing so, hosts and providers can foster more equitable, transparent and sustainable working relationships that support both operational flexibility and employee rights.