‘Closing Loopholes’ changes to the Fair Work Act are set to take effect on 26 August 2024, and employers need to understand how they might affect their businesses.
New definition of employment
There will be a new section 15AA of the Act, as follows:
Whether an individual is an employee, or whether a person is an employer of an individual, is to be determined by ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person.
Moving forward, the Act requires the parties to consider the totality of their relationship. This includes the terms of the contract governing the relationship, and other factors, such as how the work is performed in practice.
Casual employment changes
From 26 August, an employee will be casual if:
- the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work;* and
- they are entitled to a casual loading or a specific rate of pay for casual employees.
*The “absence of a firm advance commitment to continuing and indefinite work” is determined by factors including:
- the real substance, practical reality and true nature of the employment relationship
- any employment contract
- the mutual understanding or expectation between the parties (which can be inferred from conduct or from how a contract is performed)
- the employer’s ability to elect to offer work or not, and the employee’s ability to accept or reject work
- whether there are full and/or part time employees doing the same kind of work, and
- whether there is a regular pattern of work for the employee.
The ‘Casual Conversion’ process has also changed:
- Previously, the employer was required to offer a permanent position to eligible casual employees. With the changes, it will be up to the employee to make the request.
- An employee can provide written notice of their intention to become a permanent employee if:
- they believe they are no longer casual
- they have been employed with the employer for at least 6 months (or at least 12 months for a small business employer), and
- casual conversion is not the subject of an ongoing dispute or recent request.
- The employer must provide a written response within 21 days, either accepting the request or providing acceptable grounds to reject the request.
The right to disconnect
Employees will be able to reasonably refuse to monitor, read or respond to contact (or attempted contact) from their employer or a relevant third party in relation to work, and the contact occurs outside their working hours.
Whether the employee’s refusal is ‘reasonable’ will depend on factors including:
- the reason for the contact
- how the contact is made and the level of disruption to the employee
- the extent of the employee’s compensation for work outside ordinary hours
- the nature of the employee’s role and responsibility, and
- the employee’s personal circumstances.
This does not stop employers and colleagues from contacting (or attempting to contact) an employee outside of their normal working hours. However, that employee can refuse to monitor or respond, when it is reasonable to do so.
**This right comes into effect for large business employers on 26 August 2024, and for small business employers on 26 August 2025.
Next steps
In anticipation of these changes, we recommend employers:
- Review their employment agreements to:
- They cover the totality of the employment relationship, and
- Consider if any of their employees meet the definition of a ‘causal’.
- Examine employees’ ordinary hours of work (and after-hours contact) to ensure they will not be affected by the new ‘right to disconnect’.
- Consult with all employees on any queries regarding the upcoming changes.
If you have any questions or concerns on the changes, please contact us to discuss how we can assist you and your business.
