Closing Loopholes: What's changed in August 2024?

What you need to know about Fair Work Amendment (Closing Loopholes No.2) Bill 2023.

Many of you may already know that the Fair Work Amendment (Closing Loopholes No.2) Bill 2023 (the Bill) was passed by both houses of the Federal Government in February and came into effect this week. This bill introduces significant changes to the Fair Work Act 2009 (the Act), which is being implemented gradually.

Starting from August 26th, the key changes include:

• updates to the definition of casual employment, 
• the introduction of the right to disconnect, 
• and a new method for determining employment relationships

We’ve included what you need to know below.

Definition of Casual Employment

The Bill revises the definition of casual employees in the Act, effective as of this week. A casual employee is defined as:

1. An employee with no firm advance commitment to continuing and indefinite work, and
2. An employee who is entitled to a casual loading or a rate of pay specified for casuals.
   

The term "firm advance commitment" will be evaluated based on the relationship's real substance, practical reality, and true nature, considering factors such as work patterns and the ability to accept or decline work offers.

Casual employees will also have the right to request conversion to permanent employment after six months. However, for small business employers, this right will begin on February 26, 2025, allowing casual employees to request conversion after 12 months of employment. 

This change eliminates the previous requirement for employers to offer conversion under specific circumstances, now requiring employees to demonstrate ongoing employment that justifies the request.

Right to Disconnect

The widely discussed "right to disconnect" will take effect on August 26 (for small business employers, it will take effect on August 26, 2025). Under this provision, employees can refuse to monitor, read, or respond to contact from employers or third parties outside of their working hours unless such refusal is deemed unreasonable.

Brent Ferguson, Head of National Workplace Relations policy for employer Body Ai Group explained the new laws won't bring an end to late-night calls. "This isn't a prohibition on an employer contacting or attempting to contact an employee," he said.

"It's a new right for an employee to refuse that contact, to refuse to monitor their emails, or to refuse to take a telephone call from their employer, if it's outside of their working hours."

While the details are still being worked out, one thing is clear: today workers at businesses with more than 15 employees get the right to disconnect. Employees of smaller businesses will be able to disconnect after work on August 22, 2025.

If your clients are concerned about this, the intent is not to make it ‘illegal’ for employers to send messages or emails after hours, but to allow workers the right to respond or not, depending on their situation.

To find out more on the right to disconnect, you can view Oncore’s article here.

Employment Relationship Determination

The new section 15AA of the Act, effective from this week, requires that the ordinary meanings of ‘employee’ and ‘employer’ be determined by considering the ‘real substance, practical reality, and true nature’ of the relationship. This involves evaluating the ‘totality of the relationship,’ including how the contract is practically performed.

This section overrides the recent High Court of Australia decisions in CFMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2, which determined independent contractor relationships based solely on the agreement terms. The new provision reinstates the multi-factorial test used before these decisions.

As a result, it is crucial that independent contractor agreements accurately reflect the nature of the agreement between the contractor and principal. 

It is also advisable to review whether any contractors are effectively acting as employees. Otherwise, there is a risk that a contractor could be reclassified as an employee, potentially claiming employee entitlements.

How Can You Prepare?

We encourage you to be aware of the changes and their implications for both your team and your clients. Consider the intent of the legislation; and how it might be practically applied in future. Continue keeping yourself informed with cases and rulings against the new legislation, and further movements that may continue to shape this landscape.

Oncore has been consulting with a variety of external advisors; and will provide additional resources and information in due course.