Are You Ready for the Workplace Reform Changes Effective August 26, 2024?

Earlier this year, we communicated the details and implications of the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024, including a timeline for the implementation of key changes. As the second wave of workplace reforms is set to take effect later this month, we would like to remind you of the upcoming changes. For small businesses, these reforms will be implemented in August next year.

Please review the summary below to ensure you are prepared for the second wave of reforms.

Right to Disconnect

An employee may refuse to monitor, read or respond to contact, or attempted contact from:

• an employer outside of the employee’s working hours, unless the refusal is unreasonable; and/ or
• a third party (e.g. customer or client) if the contact or attempted contact relates to their work and outside the employee’s working hours, unless the refusal is unreasonable.

What is deemed as ‘unreasonable’? This depends upon:

• the reason for the contact or attempted contact;
• how the contact or attempted contact is made and the level of disruption the contact or attempted contact causes the employee;
• the extent to which the employee is compensated to remain available to perform work during the period in which contact was made or attempted or for additional working hours outside of the employee’s ordinary hours of work;
• the nature of the employee’s role and the level of the employee’s responsibility;
• the employee’s personal circumstances (including family or caring responsibilities).

All Awards will also be required to include a right to disconnect clause.

New Definition of Employment/ Independent Contractor

The definition of employment is to be determined by ascertaining the “real substance, practical reality and true nature of the relationship,” by having regard to:

• the totality of the relationship; and
• not only the terms of the contract governing the relationship, but other factors relating to the totality of the relationship including how the contract is performed in practice.

This definition marks a return to the multifactorial approach with all of its uncertainty and potential retrospective operation for independent contractors deemed to be employees, with back payment claims for employee entitlements such as annual leave and sick leave and minimum wage rates.

New Independent Contractor definition

It is important to note that sham contracting is a civil penalty offence and there is now a narrower defence based on “reasonableness”.

Independent contractors earning less than the “contractor high income threshold” (not yet defined but expected to exceed $167,500 per annum), can now apply to the Fair Worker Commission (FWC) if subject to Unfair Contract terms.

New opt-out notice provision for Independent Contractors

For Independent Contractors whose earnings exceed the “contractor high income threshold” a principal may give a notice of election to opt out of the new statutory definition, that deems an Independent Contractor to be an employee under that definition.

The Independent Contractor has the option to opt out of the new definition within 21 days after the giving of the notice or at any time after the commencement of the section.

Recommendations for business

• Issue the opt out notice to preserve an independent contractor relationship where earnings are in excess of the contractor high income threshold but only if likely the business will be deemed to be an employer.
• Proceed cautiously for contractors where earnings are below the contractor high income threshold.

New definition of casual employment

Commencing 26 August 2024, an employee is a casual employee only if:

• the employment relationship is characterised by an absence of a firm advance commitment to continuing indefinite work; and
• the employee would be entitled to a casual loading or a specific rate of pay for casual employees under an Award, enterprise agreement or the contract of employment.

Whether the employment relationship is characterised by “an absence of a firm advance commitment to continuing indefinite work” is to be assessed on the basis of:

• the real substance, practical reality and true nature of the relationship; and
• that a firm advance commitment can be in the form of a contract of employment or in addition to the terms of that contract, in the form of a mutual understanding or expectation between the employer and employee not rising to the level of a term of a contract (but may be inferred from the conduct of the employer and employee after entering into the contract of employment or from how the contract is performed); and
• having regard to, but not limited to the following considerations (which may indicate the presence [rather than the absence] of such a commitment):
  1. there is an inability of the employer to elect to offer or not offer, work;
  2. there is an inability of the employee to elect to accept or reject work (whether this occurs in practice);
  3. having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of that kind usually performed by the employee;
  4. there are permanent employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee; and
  5. there is a regular pattern of work for the employee, but this does not of itself indicate a firm advance commitment to continuing and indefinite work. That is, an employee that has a regular pattern of work may still be a casual employee if there is no firm advance commitment to continuing and indefinite work.

For the avoidance of doubt:

• all of the above considerations must be considered, and no single consideration is determinative. Not all considerations necessarily need to be satisfied for an employee to be considered other than a casual employee; and
• a pattern of work is regular even if it is not absolutely uniform and includes some fluctuation or variation over time (including for reasonable absences, such as for illness, injury and recreation).

Whether these provisions will operate as they are intended is unclear, as they are likely to make it very risky to employ “regular” casuals, particularly for small businesses taking on casual employees.

New casual conversion rights

The onus will now be on the employee (rather than the employer) to initiate and make a request to change their employment status where:

• the casual employee has been employed for at least 6 months (or 12 months for a small business employer); and
• the employee believes the employment relationship is no longer that of a casual employee having regard to the criteria set out above.

The employer can refuse an employee’s request for conversion on a broader “fair and reasonable operational grounds” including:

• substantial changes would be required to the way to work in the employer’s enterprise is organised;
• there would be significant impacts on the operation of the employer’s enterprise;
• substantial changes to the employer’s terms and conditions would be reasonably necessary to ensure that the employer does not contravene a term of an Award that would apply to the employee as a permanent employee.

The employer must respond within 21 days and consult with the employee prior to rejection. The employee may refer any dispute to the FWC for arbitration.

New casual requirements to be aware of

• Employers will be required to provide Fair Work Casual Information Statement to casual employees upon the commencement of employment, and also after six months (excluding small business employers) and 12 months, and every 12 month after that (excluding small business employers).
• New sham casual contracting prohibition as a civil penalty provision.

New minimum standards for Gig economy workers and contractors in the road transport industry

• Commencing 26 August 2024, the FWC will have power to make minimum standard orders for “employee like” workers performing services via digital platform, and contractors in the road transport industry.
• These standards could relate to payment terms, deductions, working time and insurance, but not overtime or penalty rates, rostering or minimum engagement terms.
• A new process for unfair termination or unfair deactivation dispute resolution process will also be introduced.

4Sight Risk Partners encourages you to seek professional advice to ensure that you comply with this legislation and avoid unnecessary fines and penalties. 

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4Sight Risk Partners delivers value to our clients by securing benefits through the expert management of risks. With over 75 years of global risk and business expertise, our proprietary IQ-ARTA Framework provides qualified risk profiles and quantified risks, empowering clients to make confident, informed decisions. Leveraging a global network—including subject matter experts and leading insurers like Lloyd’s of London—we deliver tailored, practical solutions to tackle diverse challenges across industries.

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We welcome your call to discuss how we can help drive your success.

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