The Government has now passed the rest of its Fair Work Act amendments, including the controversial “right to disconnect”.
This article summarises the most recent changes that will affect all employers, and the changes from late 2023 that are rolling out in 2024 and beyond.
Is there Really a Right to disconnect?
Effective: 6 months after royal assent (18 months for small businesses)
Employees will have a workplace right to refuse to monitor, read or respond to an employer (or a third party – such as a client or contractor) outside their working hours, unless the refusal is unreasonable.
The type of contact and who initiates it is not limited – so any contact from a manager, supervisor or colleague could be ignored if the contact is unreasonable.
The legislation specifies matters that may be taken into account in determining whether the refusual is unreasonable (without limiting those matters):
- The reason for the contact;
- How the contact is made, and the level of disruption caused;
- The extent to which the employee is compensated to remain available;
- The nature of the employee’s role and their level of responsibility; and
- The employee’s personal circumstances, including family and carer’s responsibilities.
Because this is a workplace right, employers cannot take adverse action against an employee because they have reasonably refused to monitor, read or respond to contact. For example, it will be unlawful (and penalties will apply) if an employer decides not to promote an employee who has exercised this right, or to reduce their shifts.
If there is a dispute about whether the contact is unreasonable, the employer and an employee must attempt to resolve the dispute through discussions, failing which they can apply to the Fair Work Commission (FWC).
How the FWC and Courts will interpret whether contact is “unreasonable” having regard to the factors outlined above remains to be seen, but the employment contract and workplace policy will certainly play a role.
Take action
For employers who need employees to respond to contact outside working hours, consider:
- The extent of out-of-hours contact required when you enter into or renew your employment contracts and create or update positions.
- Updating your contracts. Where out-of-hours contact is required, expressly provide for this in the employment contract. Include some detail about why and how that may occur (without limiting the type of contact). This should be more than “you may be required to work reasonable additional hours” which deals with a separate provision of the Fair Work Act.
- Update your position descriptions. These may not be as persuasive as an employment contract, but you are less likely to require the employee’s agreement to the change (assuming it does not form part of the employment contract, and this is permissible under the terms of the contract).
- Consider allocating a part of the employee’s remuneration to the requirement to be contactable out of hours, and note that in the employment contract.
Managers and supervisors should be trained in this new workplace right, and the consequences of its breach.
Independent Contractor or Employee?
Effective: 6 months after royal assent, or by earlier proclamation
In 2022, the High Court determined that it was the terms of the contract that mattered in determining whether an individual was an employee or independent contractor. If the terms were clear, and the contract wasn’t a sham, it didn’t matter what happened in practice after the contract was signed.
The Fair Work Act has now been amended in response to these decisions to return the consideration to the practical reality of the relationship between the parties. The contract remains relevant, but also how the contract is performed in practice.
This is a return to the “multi-factor” test that looks at many factors in the contract and in practice to determine the level of control exercised over a worker and whether they work in their own business (a contractor) rather than for a business (an employee).
Factors include things like how and when they perform the work, whether they supply their own tools or equipment, whether they wear the company’s uniforms, whether they are free to work for other businesses, etc.
Employers must be mindful of the level of control they exercise over independent contractors in practice, to manage the risk of deemed employment, regardless of what the contract says.
Independent contractors who earn above a threshold (yet to be announced) can opt out of the employee definition under the Fair Work Act, but can also revoke that to opt back in.
Take action
Employers should ensure their independent contractor agreements are drafted/updated to reflect a true independent contractor relationship AND that these terms are adhered to in practice.
New definition of casual employee
Effective: 6 months after royal assent
There is a new definition of “casual employee” that clarifies that an employee is a casual employee if:
- the employment relationship is characterised by an absence of a “firm advance commitment to continuing and indefinite work”; and
- the employee would be entitled to a casual loading/specific rate of pay for casual employees (under a Modern Award, enterprise agreement or employment contract).
New criteria have been introduced for the purposes of determining (a) above. These are indicative – the satisfaction of one or more of the criteria will not automatically deem a casual employment relationship, but will be persuasive for the FWC and Courts:
- whether the employer can elect to offer, or not offer, work and whether an employee can elect to accept or reject work (and whether this occurs in practice);
- whether it is reasonably likely that there will be future availability of continuing work of the kind usually performed by the employee;
- whether there are permanent employees performing the same kind of work that is usually performed by the employee; and
- whether there is a regular pattern of work for the employee – noting that this alone may not indicate a firm advance commitment to continuing and indefinite work.
Take action
Employers should ensure:
- their casual employment contracts are drafted/updated to reflect this definition of casual employment;
- the contracts are adhered to in practice; and
- they do not fall into a pattern that gives rise to a mutual understanding or expectation that creates a firm advance commitment to continuing and indefinite work.
For example – if the work is ongoing, and there’s no real risk work will not be available in the foreseeable future, it may not be a casual employment relationship.
Casual conversion & information statement
Effective: 6 months after royal assent
There is one avenue for casual employees to convert to permanent employment, which must be initiated by the employee.
Casual employees will be eligible to request conversion after 6 months (12 months for small businesses) and the employer can refuse a request on fair and reasonable operational grounds. The FWC can deal with casual conversion disputes.
Separate to the right of casual converstion, employers must also issue the Casual Information Statement to all casual employees more often: before or at the time they commence their engagement, after 6 months (excluding small businesses) and after 12 months.
Take action
Employers must be sure to diarise and deliver the casual information statement to eligible employees.
“Same job same pay” provisions for labour hire
Commenced 15 December 2023
The FWC can issue what is known as a regulated labour hire arrangement order (RLHAO), requiring employers who:
- are covered by an enterprise agreement; and
- have 15 employees or more,
to pay labour hire workers the same rates they would be entitled to under their enterprise agreement, as if they were directly employed.
RLHAOs are not an automatic process and can only be sought by application from labour hire workers, union representatives or host employers – see further information in our earlier article.
A RLHAO will also not apply to agreements concerning the provision of a “service”. This means it will generally not apply to a subcontractor’s workers, provided the principal is not exercising control over those employees. Once made, a RLHAO will not apply to labour hire workers engaged for a period of less than 3 months – but that period can be shortened or extended upon an application to the FWC.
Although applications for a RLHAO can be made to the FWC now, if an order is made it will not come into force until 1 November 2024.
Take action
Consider whether an RLHAO could apply to your business and, if so, consider pricing that into your tenders and contracts.
General Protections for Workplace Delegates
Commenced 15 December 2023
These amendments give union delegates new workplace rights under the Fair Work Act and allow them to sue an employer for breaching those rights.
Under these provisions, an employer must not unreasonably fail or refuse to deal with the delegate.
It will also amount to a breach if the employer has knowingly or recklessly made a false or misleading representation to the delegate, or unreasonably obstructed the delegate’s right to:
- communicate with members and eligible workers regarding industrial interests;
- access the workplace and its facilities to represent members’ and eligible workers’ interests; and
- access the workplace’s training sessions as a delegate (small businesses excepted).
Delegates’ Rights under Modern Awards and Enterprise Agreements
Commencing 1 July 2024
By 30 June 2024, the FWC must finalise its wording for a new provision which will enshrine the delegates’ rights (outlined above) in all modern awards. Once the provision has been finalised by the FWC, it is due to take effect from 1 July 2024.
All enterprise agreements entered after this time must also include a provision concerning the delegates’ rights, on terms that are at least as favourable as what is provided under the relevant modern award. The FWC may note the absence or unfavourability of a “Delegates’ Rights provision” when considering whether to approve an enterprise agreement.
General Protections for Subjection to Family and Domestic Violence
Commenced 15 December 2023
The new laws afford new protections for employees currently or previously subjected to family and domestic violence (FDV), by:
- prohibiting the creation or enforcement of terms under modern awards and enterprise agreements that discriminate based on FDV or in relation to FDV;
- allowing the FWC to consider subjection to FDV when performing its functions or exercising its powers; and
- making subjection to FDV a “protected attribute”, meaning an employer cannot treat an employee adversely because they have been subjected to FDV.
Federal wage and superannuation theft laws
Commencing 1 January 2025
A new criminal provision will address intentional wage and superannuation theft by employers. This will attract severe penalties, including 10 years imprisonment, and fines up to three times the underpayment amount plus a maximum of $1,565,000 for individuals, or $7,825,000 for companies.
Because these are criminal provisions relating to theft, a successful prosecution would require proof beyond a reasonable doubt that an employer intended not to pay its employees properly.
Small Business Redundancy Exemption
Commenced 15 December 2023
Small businesses (less than 15 employees) generally do not have to pay redundancy pay to employees.
Under the new law, employers who only qualify as a small business (less than 15 employees) because they have downsized due to insolvency, will not be entitled to rely on this exemption.
However, “residual employees” who assist with winding up the business can still lose their entitlement to redundancy pay.
Other changes
There are other changes that relate to:
- workplace determinations (which the FWC can issue if all else fails in enterprise agreement negotiations);
- right of entry for underpayments – allowing unions easier access to workplaces;
- the FWC’s power to set minimum standards for road transport industry; and
- gig economy workers.
If you require any further information about these changes, or advice on how to implement any of the changes outlined in this article, please get in touch with our employment law team.
