Employment Law
Closing Loopholes Bill
When the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 receives Royal Assent, the bill will bring into effect major changes including the ‘right to disconnect’, a new definition of employment and changes to casual employment.
1. The right to disconnect.
While there has been much discussion about the effect the new right will have on workplaces, the legal ramifications once the right is introduced are unlikely to match the panic.
The final version that passed appears to strike a balance between the competing interests of employee work-life balance and employers having the ability to continue to reasonably contact employees outside working hours.
From August 2024, all employees will have the right to refuse to monitor, read or respond to contact from their employer or other third parties such as clients and customers, outside of their working hours, unless the refusal is unreasonable.
Whether a refusal is unreasonable is determined on consideration of several factors set out in the legislation, including the reason for the contact and how it was made; the level of disruption it causes; whether the employee is paid to be on call; the nature of their role and level of responsibility; and their personal circumstances.
It seems likely that the right to disconnect will affect some industries more than others, and some employees within businesses differently to others. For example, for a well-paid senior manager in a global professional services business, refusing contact may be unreasonable. However, for a lower paid labourer in the construction industry, it may not be unreasonable to exercise their right to disconnect.
One area employers might want to review in anticipation of these changes is the accuracy of their position descriptions, ensuring that they clearly outline the level of responsibility and nature of a role where after-hours contact is going to be required.
2. New definition of employment.
New definitions of ‘employee’ and ‘employer’ have also been inserted into the FW Act. An employment relationship will be identified by “ascertaining the real substance, practical reality and true nature” of the parties’ relationship.
These changes are in direct response to the decisions of the High Court of Australia in CFMMEU v Personnel Contracting Pty Ltd and ZG Operations Pty Ltd v Jamsek in 2022, which gave primacy to the terms of the contract in determining whether an employment relationship existed. In effect, the changes turn back the clock and reinstate the ‘multi-factorial’ approach to be used in determining whether or not an employment relationship exists.
The practical effect of the changes is that it is likely to be much more difficult to categorise with confidence a worker as a contractor, creating uncertainty for businesses and other organisations which have traditionally relied on non-employee workers. Industries such as construction, transport and IT may be particularly affected by these changes.
3. New definition of casual employees
The bill also amends the definition of a casual employee. An employee will be a casual employee only 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.
Whether there is an absence of a firm advance commitment, will be based on several factors including:
- the real substance, practical reality and true nature of the employment relationship; and
- a mutual understanding or expectation that there will be an absence of indefinite and continuing work, and on the basis that a firm advance commitment can be in the form of the contract of employment.
Again, the changes replace the previous definition of casual employment introduced by the previous Coalition federal government that prioritised the existence of a written contract specifying the casual nature of the engagement in line with the 2021 High Court decision in WorkPac v Rossato. The Bill reverts the test to focus on the post-contractual conduct of the parties, with the terms of any written contract being just one factor to be considered among many.
4. Casual employees – changes to conversion rules.
Casual employees who have completed six months’ employment (or, in the case of small businesses, 12 months employment), can request conversion if they believe, having regard to their working arrangements and the new definition of casual employment, they no longer satisfy the definition of a casual employee. Employers can decline that request on the basis that there are fair and reasonable operational grounds not to offer conversion, among other reasons. The employer must respond within 21 days of the request.
These changes mean casual conversion is now an employee-led right, removing the burden from employers to periodically consider whether employees are entitled to be offered conversion.
In the event of disputes about casual conversion that are not resolved within the workplace, the changes made by the bill mean the FWC will have the power to arbitrate to resolve the disputes if other methods, such as conciliation or mediation, have been unsuccessful.
5. What next for employers?
- Review job position descriptions for accuracy to ensure that they clearly convey the nature and activity of out-of-hours work.
- Review all contractor agreements to ensure clarity between staff engaged as “contractors” and those engaged as “employees”.
- Review all casual employee contracts to ensure they comply with the revised definition, and respond to all requests from employees to convert from casual to permanent employment.
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Julian Roffe
Practice Manager
Ezra Legal
