Key Changes from 26 August 2024
The Fair Work Legislation Amendment (Closing Loopholes Bill No. 2) Act 2024 passed both houses of Parliament as of February 2024. Since then, a number of changes have already come into effect, with the remaining changes slated to commence later this month and in 2025.
Our friends at CIRCLE Recruitment & HR, IR & HR consultants, have prepared a detailed overview of some of the most significant changes to employment laws starting from 26 August 2024, along with the key takeaways you need to be aware of:
1. The Right to Disconnect
Starting from 26 August 2024 (26 August 2025 for businesses with less than 15 employees), employees will have the right to disconnect outside of their working hours, allowing them to ignore or refuse contact from their employer or third parties (clients, customers, etc).
Key Takeaways:
The right does not prevent an employer or a third party from attempting to initiate contact, but it allows the employee to ignore the contact. In other words, an employer won’t be in trouble for the mere fact of calling an employee after hours, but the right applies if the employer takes adverse action against the employee for their decision to reasonably ignore the call.
The right does not apply if the refusal is unreasonable. Factors considered when determining whether an employee’s refusal is unreasonable can include: the reason for contact, the nature of the role and employee responsibility, whether the employee is compensated for work after hours, family and other personal circumstances, etc.
If adverse action is taken against an employee who reasonably applied their right to disconnect, the employee can lodge a general protections claim with the Fair Work Commission.
It is a good time for businesses to review internal policies and practices regarding employee contact outside working hours, to educate their managers on the new right, and to assess which roles are more likely to be contacted outside working hours. Consider whether such contact could be reasonably refused and implement necessary changes in internal policies and contracts of employment accordingly.
2. Changes in Casual Employment
As of 26 August 2024, the Fair Work Act (‘FWA’) will include a new definition of casual employee, by which employees can only be classified as casual if:
a. the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work, and
b. the employee would be entitled to a casual loading or specific casual rate of pay under an award, Enterprise Bargaining Agreement (EBA), or contract.
Key Takeaways:
To determine the absence of firm commitment, the FWA will require consideration of ‘the real substance, practical reality, and true nature of the employment relationship.’ This means that the nature of the relationship will prevail over the written terms in the contract of employment.
The FWA will also include several factors to assist in determining whether there is an absence of firm commitment, such as: the employee’s ability to accept or reject work, whether there is a regular pattern of work, the likelihood of future work being available, etc.
If an employer misclassifies a casual employee on commencement, the employee will not be considered casual and the employer can face civil penalties, as well as back-payment obligations.
The current Casual Conversion process will be replaced by a new ‘Employee Choice’ process by which employers will no longer have an obligation to proactively offer conversion to regular casuals. Instead, casual employees who have been employed for at least 6 months (or 12 months for small businesses) and believe they no longer meet the new casual employment definition can initiate the process by giving written notification to their employer. – New consultation obligations and procedural requirements will apply for employers when responding to such notifications.
Employers will need to provide the Casual Employment Information Statement (CEIS) at different stages during the employee’s tenure, including: commencement, after 6 months, after 12 months, and every 12 months thereafter. For businesses with fewer than 15 employees, this requirement applies only at commencement and after 12 months.
In preparation for these changes, businesses should review internal recruitment practices to ensure that all casuals hired on or after 26 August 2024 meet the new definition. It is also advisable to train managers and administrative staff on the new Employee Choice process and the new obligations regarding the delivery of the CEIS to ensure that deadlines are not missed.
3. Employee vs. Contractor - New Definition of Employee
As of 26 August 2024, the FWA will include a new definition of employment stating that ‘the ordinary meaning of employment is to be determined by ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person.’
Key Takeaways:
The new definition essentially means that determining whether someone is an employee or a contractor will no longer rely solely on the terms of the written contract but will consider the totality of the relationship, including but not limited to how the contract is performed in practice.
This will revert to utilising the ‘multi-factorial’ test, which requires an assessment of various factors to determine the totality of the relationship.
Contractors who earn more than the Contractor High Income Threshold will be able to ‘opt out’ of applying the new definition through a notification process.
Contractors (who earn below the threshold) will be able to apply to the Fair Work Commission for dispute resolution in relation to unfair terms in a services contract to which they are a party. The dispute must be about a term in the contract that, if the relationship were an employment relationship, would be a workplace relations matter.
New frameworks will be set up to protect independent contractors in the gig economy, meaning those workers performing work on digital labour platforms (employee-like workers) and those working in the road transport industry.
It is recommended that employers with contractors integrated into their business, or who are planning to bring contractors on board, run a multi-factorial test to determine the relationship and ascertain whether they are true contractors or employees.
By staying informed and proactively adapting to these changes, you can ensure compliance and smooth transitions. We encourage you to review and update internal policies and practices, train your management teams, and seek guidance where necessary. For more detailed insights and personalised support, reach out to CIRCLE Recruitment & HR.
If you have any further questions or require any more information please do not hesitate to contact your Client Manager or one of the Sullivan Dewing team.
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