Greatest Good January 2024 Regulatory Update

Mandatory climate–related financial disclosures

Treasury has released its final consultation on the implementation of mandatory climate-related financial disclosures in Australia. The consultation includes a policy position statement, policy impact analysis, exposure draft legislation and exposure draft explanatory memorandum.

The proposals largely follow previous proposals, but responds to the feedback received from all previous consultations, while also clarifying various issues. As a result of scope changes announced during the consultation period, the policy impact analysis includes Treasury estimates that 1,800 entities will be captured through the new requirements, with significant initial transaction costs.

Entities which lodge financial reports under Chapter 2M of the Corporations Act will be required to lodge financial reports. A phased-in approach will be used and subject to size thresholds as below:

The sustainability report will not form part of the statutory financial report. So while directors will be required to make the climate statement declaration proposed in the draft legislation, it will not be subject to the “true and fair” declaration by directors. There is also no requirement for certification by the CEO or CFO.

All reports four years commencing prior to 1 July 2030 will be required to be reviewed by the entity’s auditors. However, the draft legislation limits the review to reporting of Scope 1 and Scope 2 emissions only, with a phased scope review extending from 1 July 2030 where reports must be fully audited.

Consultation closed on 9 February 2024.

Closing Loopholes workplace laws

From 15 December 2023, employees, unions and host employers can apply to the Fair Work Commission (FW C) for a regulated labour hire arrangement order. When such an order becomes effective, employees will be required to pay labour hire employees the same rates as employees who are employed directly by the host employer. Labour hire employees must be paid at least what they would have received under a host employer enterprise agreement, workplace determination, equivalent public sector determination and other relevant prescribed instruments made under Commonwealth, State and Territory Laws. Any orders made by the FWC under these rules will not become effective before 1 November 2024.

Also effective from 15 December 2023, employers cannot discriminate by taking adverse action against employees because they have been subjected to family and domestic violence. Awards and enterprise agreements must not include terms that discriminate against an employee because they are experiencing (or have experienced) family and domestic violence.

New Laws under the Fair Work Act commenced in mid-December, making it a criminal offence for intentional underpayments of staff. Lawyers may commit an offence if they owe money to an employee either under the Fair Work Act or an award or enterprise agreement (including superannuation contributions), if they intentionally gauge in conduct that results in the failure to pay on or before the payment is due.

A Voluntary Small Business Wage Compliance Code will be established in compliance with this code means a small business won’t be prosecuted if they underpay their employees.

As previously advised, companies that are prosecuted face penalties of three times the amount of the underpayment, the court can determine it, or $7.825 million, whichever is greater. If the court can’t determine the underpayment, the maximum penalty is $7.825 million. Further, individuals can be imprisoned for up to 10 years, be find either three times the amount of the underpayment, if the court determined it, or up to $1.565 million, whichever is greater. They can be both fined and imprisoned.

NSW industrial manslaughter laws to be introduced

The NSW Government intends to introduce industrial manslaughter legislation into parliament in the first half of 2024.

SafeWork NSW will begin an extensive consultation with key stakeholders, including WHS experts, business groups, legal stakeholders and families of people who have been killed at work.

Whilst any new legislation won’t change the nature of any safety duties current owed by employers, it is expected that significant penalties will apply after a workplace death, to emphasis the requirement to take a approach to fulfilling these duties.

Regulation of AI

The Australian Government released its Interim Response to the 2023 “Safe and Responsible AI in Australia” Consultation. It concludes that:
• Australia’s existing laws do not adequately address the risks presented by AI
• the Government will seek to regulate AI (rather than relying solely upon voluntary commitments)
• the Government have not yet decided whether it will regulate via amendments to existing laws or an alternative approach: this will be determined following further consultation
• the Government will take a risk based, technology neutral approach to regulating AI

No further details have been provided at this stage.

Australian Law Reform Commission

The Australian Law Reform Commission’s (ALRC) final report, Confronting Complexity; Reforming Corporations and Financial Services Legislation has been tabled in Federal Parliament. The report is a result of an inquiry into simplifying both corporations and financial services laws following the Royal Commission into the Conduct in the Banking, Superannuation and Financial Services Industry.

The ALRC has found that current legislation is difficult to navigate, costly and unnecessarily difficult to enforce. It has made 58 recommendations to simplify the law including a redesigned legislative framework for the financial services. This includes consolidated rule books, simplified definitions of financial products and financial services and clearer offence and penalty provisions

Disclaimer: This does not purport to be comprehensive or to render legal advice. You should not act based on any information contained in this publication without first obtaining specific professional advice. Consult your legal advisor to determine if this applies to you.