The Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 (Cth) (the Act) introduced a suite of significant workplace reforms when it was passed earlier this year. Several of these reforms are scheduled to take effect on 26 August 2024, with some changes for small business employers starting on 26 August 2025. This update briefly summarises these reforms and serves as a reminder for employers to prepare for the upcoming changes. You can read our earlier article for more information.
Right to Disconnect
The Act introduces a right for employees to refuse to read, respond or monitor communication from employers or third parties outside their paid working hours unless that refusal is unreasonable. The change starts on 26 August 2024 for non-small business employers and 26 August 2025 for small business employers. Additionally, the new right will be a ‘workplace right’ for the purpose of the Act’s general protections regime, meaning an employer must not take ‘adverse action’ against an employee for exercising their right to disconnect.
Employers may take several steps to prepare for this new workplace entitlement, including, but not limited to, the following:
- Training managers on the new right to disconnect and highlighting the risk in taking adverse action against an employee for exercising that right;
- Consulting with employees about whether they feel comfortable being reached outside of work hours and being clear when their working hours are;
- Updating employment contracts and/or internal policies to reflect any requirement for employees to be contactable outside of work hours and determine whether an employee’s remuneration package includes compensation for work involved in responding to out of hours communications; and
- Implementing measures to reflect expectations around out-of-hours contact. For example, adding a disclaimer to email signatures stating that a response is not expected until the employee next commences work.
Casual Employment Changes
The Act introduces two key changes regarding casual employment.
New casual employee definition
From 26 August 2024, an employee will be a ‘casual employee’ where:
- the relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
- the employee is entitled to a casual loading or rate of pay for casual employees under a fair work instrument or contract of employment.
This reform signals a move away from an employee’s casual status being assessed based on the contract only, to being assessed having regard to what happens in ‘practical reality.’
Casual Conversion
The Act also removes the existing casual conversion provisions in favour of an “employee choice” framework. Under this new approach, casual employees can initiate the conversion process themselves by providing their employer with a written notification, so long as they meet the eligibility requirements under the Act.1 Employers must respond in writing within 21 days of receiving the request and set out whether they accept or deny the conversion.
Transitional arrangements mean the application of the new laws will be phased as follows:
- For employment relationships entered into after 26 August 2024, the new laws will apply from that date, irrespective if the employer is a small or non-small business;
- For employment relationships entered into before 26 August 2024, the new laws will apply from 26 February 2025 for non-small business employers; and
- For employment relationships entered into before 26 August 2024, the new laws will apply from 26 August 2025 for small business employers.
The definition of employment has changed
The Act contains a new definition of ‘employee’ and ‘employer’ which will require a multiple factor assessment to determine if a person is an independent contractor or employee. The emphasis is now on the ‘totality of the relationship’ which is determined by examining the ‘real substance, practical reality, and true nature of the relationship.’
This legislative change will only be relevant for determining entitlements under the Act. Whether a person is an ‘employee’ for the purposes of taxation, superannuation and workers compensation will continue to be determined by other tests. The provisions containing this new definition commence on 26 August 2024.
There are other changes set to commence on 26 August 2024 which may impact some employers. These include laws about unfair contract terms, workplace delegates rights, road transport regulation and regulating employee-like workers.
Still to Come
The Act has also introduced a new federal criminal offence in relation to certain types of intentional underpayments. The offence will commence on 1 January 2025, or an earlier date as declared by the Minister.
An employer will commit an offence if they intentionally engage in conduct that results in a failure to pay the required amount to an employee on or before the day when the required amount is due to be paid. This offence applies only to entitlements under the Fair Work Act 2009 (Cth) or relevant fair work instruments, such as modern awards or enterprise agreements, and does not extend to contractual entitlements. There are also specific types of payments to which the new criminal offences do not apply.2
The Act includes ‘safe harbour’ provisions allowing the Fair Work Ombudsman (FWO) to enter into a written ‘cooperation agreement’ with an employer who has self-reported. However, The FWO ultimately retains discretion over whether to approve such an agreement.
Under a cooperation agreement, the FWO will not refer the disclosed conduct to the Director of Public Prosecutions (DPP) or the Australian Federal Police (AFP) for prosecution. However, this does not prevent an FWO inspector from initiating or continuing civil proceedings related to the conduct.
The wage theft offence will carry a maximum penalty of:
- For an individual: 10 years imprisonment, and/or a maximum fine of the greater of three times the amount of the underpayment, if the court can determine that amount, or 5000 penalty units; and
- For a body corporate: the greater of three times the amount of the underpayment, if the court can determine that amount, or 25,000 penalty units.
How we can help
Our Workplace Relations team can provide you with practical advice and guidance on how to navigate these upcoming changes to ensure you are meeting your obligations under the new laws. We can provide assistance drafting changes to policies and employment contracts to reflect your organisations expectations of afterhours contact, as well as reviewing casual, fixed-term and independent contractor working arrangements to ensure they are engaged lawfully.
Contact us
Please contact us for more detailed and tailored help.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.
1 Fair Work Act 2009 (Cth) s 66AAB.
2 These include superannuation fund contributions, long service leave payments, paid leave for being a victim of crime and paid leave for jury service or emergency service leave.