The government has released its final report on the Closing Loopholes Reforms Review (the “Review”), a mandatory assessment of the changes introduced by the 2023 and 2024 reforms to the Fair Work Act 2009 (Cth) (the “Closing Loopholes Reforms”), and the domestic violence leave amendments to the National Employment Standards.

The Review makes 51 recommendations, giving employers a clearer sense of how the reforms are playing out in practice and if further change is likely.

By way of background, the Closing Loopholes Reforms were rolled out in two stages and introduced a broad range of changes, including:

• the criminalisation of wage theft;
• workplace delegates’ rights;
• a new statutory definition of employee;
• minimum standards for employee-like workers;
• the unfair contracts jurisdiction and the right to disconnect; and
• the intractable bargaining provisions.

The Review’s overarching finding is that the reforms have largely achieved their intended purpose of enhancing employee and worker protections. At the same time, it acknowledges employer concerns about added complexity, higher compliance costs and increased exposure arising from stronger penalties.

The Review also provides data not previously available, including the number of criminal wage theft investigations currently underway. This data offers useful insight into how the reforms are functioning in practice.

Four areas stand out as particularly relevant to employers: wage theft enforcement, employment status, intractable bargaining and domestic violence leave.

Wage theft prosecutions: not a default enforcement mechanism

The reforms criminalising wage theft remain at an early stage, having only been introduced from 1 January 2025. There have been no prosecutions to date, though the Fair Work Ombudsman (“FWO”) has considered 42 matters for potential criminal investigation, with five ongoing investigations and a further 12 matters under assessment to consider progression to criminal investigation.

The Review recommends the development of payroll compliance tools, annual FWO reporting on wage theft activity and clearer guidance for employers on distinguishing between inadvertent errors and reckless or knowing contraventions.

The number of investigations also shows a measured approach being taken by the FWO with criminal investigations being reserved for serious underpayment situations and not being used as a default enforcement tool.

Definition of employee: consistency across other areas

On the definition of “employee”, the Review recognises the uncertainty created by the “multifactorial test”. In accordance with this test, an employee’s employment status is determined by looking at the real substance and practical reality of how the arrangement operates in practice. However, the Review confirms this ongoing, substance-over-form assessment reflects the deliberate policy intent behind the reforms.

The Review recommends extending the same definition across taxation, superannuation, workers’ compensation and long service leave for consistency, along with a FWO-prepared checklist to assist employers in determining employee or contractor classification.

Intractable bargaining: introducing further guardrails

The intractable bargaining provisions were introduced in the Closing Loopholes Reforms to allow the Fair Work Commission to make binding decisions in protracted bargaining disputes. The Review specifically considered the restriction preventing the Fair Work Commission (“FWC”) from determining a non-wage term that is less favourable to employees than the equivalent term in an existing enterprise agreement.

Most employer groups called for the abolition of the “no less favourable” test, but the Review found the term was operating as intended. It nonetheless recommended introducing a legislated set of guardrails that the FWC must consider before making an intractable bargaining declaration.

Domestic violence leave: improving protections for employees

The Review found that usage of domestic violence leave remains lower than expected, attributing this to stigma, low awareness, privacy concerns and evidentiary burdens. It recommended broadening eligibility and simplifying evidentiary requirements to make clear the types of evidence an employee can provide to support a request for this leave.

Key themes and what’s next

A few consistent themes emerge across the Review: the need for clearer guidance and practical tools for employers, and the need for further reporting and statutory clarification in several areas.

The government has not yet formally responded to the Review. However, even if the 51 recommendations were implemented, employers should not expect a full-scale overhaul. The more likely outcome is a series of targeted tweaks and minor amendments to how the Closing Loopholes Reforms operate in practice