Upcoming Fair Work Changes: What Employers Need to Know Before 26 August 2024

On 26 August 2024, significant changes under the Fair Work Legislation Amendment (Closing Loopholes Number 2) Act 2024 (Act) will come into effect.

These changes will impact how employers manage their workforce, with new obligations and considerations.

This article will highlight some of the key changes that employers need to be aware of.

1. New definition of employer

One of the most significant changes is the new Section 15AA, which will provide guidance on an employee and employer.

Background

Historically, an employee was defined as someone engaged under a personal contract of service, while a contractor operated under a contract for service, which could be personal or impersonal.

Until the 2022 High Court decisions of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel) (Labour hire employee case) and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (Jamsek) (Truck drivers’ case), the test applied was the multifactorial test. Essentially this looked at the totality of the relationship such as control, leave arrangements, etc.

Since these Decisions, the emphasis moved to the totality or primacy of the contract and specifically its terms.

What are the new changes?

However, the new Section 15AA introduces aspects of the pre-2022 approach. Under the new legislative provisions, the following will apply:

• It is necessary to ascertain real substance, practical reality and true nature of the relationship between the putative employer and employee
• To do that, it is necessary to consider the totality of the relationship
• in considering the totality of the relationship regard must be had not only to the contract but also to other factors, including but not limited to how the contract is performed in practice

Will this apply to all employers?

No. It will only apply to national system employers. It will not apply to definition of employer/employee at common law or in other legislation such as the Superannuation Guarantee (Administration) Act 1992 or the various Workcover regimes.

These changes commence on 26 August 2024.

2. Right to Disconnect

Much has been said and written about the new Right to Disconnect (RTD) laws that have now been inserted into the Fair Work Act 2009 (Cth) (FW Act) – see Sections 333M and 333N inserted by the Closing Loopholes Act (No 2).

In short, the RTD now entitles employees to refuse to monitor, read or respond to contact or attempted contact from their employer or even a client or any other third party in what is deemed not to be their ordinary working hours unless it is determined that the refusal is unreasonable.

On what grounds can an employee’s RTD be deemed unreasonable?

The following factors must be considered and taken into account in determining if the refusal is unreasonable:

• The reason for the contact or attempted contact
• The extent to which the employee is compensated to still remain at work and available for work when contact is made outside of what would have been their ordinary hours
• How the contact or attempted contact is made and the level of disruption the contact or the attempted contact causes the employee
• The nature and requirements of the employee’s role and taking into account their level of responsibility
• The personal and family responsibilities of the employee themselves.

Practical implications of the changes?

From a practical perspective, these changes should not and will almost certainly not affect employees who are salaried or annualised salaried employees such as Executives, Managers and Senior Professionals as the laws assume that these employees have an expectation that they will regularly be expected to work “out of hours”.

What happens if there is a dispute between employer and employee?

The requirement of the new law is that at first instance, the parties must attempt to resolve this at the local or workplace level and avoid an immediate escalation to the Fair Work Commission.

If both parties are still unable to resolve the dispute, then either party can apply for a “stop order” at the Commission. In short, this process will be similar to the stop bullying orders that the Commission can issue and would most likely include the following:

• An order that prevents the employee from unreasonably refusing to monitor, read or respond to contact or attempted contact
• An order that prevents the employer from taking or considering taking of disciplinary or performance management conduct against the employee for refusing contact or attempted contact
• An order that prevents the employer from requiring and requesting that the employee read, monitor and respond to contact or attempted contact.

When does the new RTD law take effect?

Employees will be able to exercise this right effective from 26 August 2024.

However, small business employer (those with less than 15 staff) will be exempt from the operation of this legislative provision until 26 August 2025.

As the 26 August 2024 deadline approaches, it's crucial for employers to familiarise themselves with these significant changes under the Fair Work Legislation Amendment (Closing Loopholes Number 2) Act 2024. Proactively understanding and implementing these new obligations will help ensure compliance and avoid potential disputes. Employers should review their current practices and seek legal advice if necessary to navigate these changes effectively.

If you’re unsure how these changes will affect your business or need guidance on ensuring compliance, don’t wait—reach out to our Employment Law team today. Contact us for a consultation to protect your business and stay ahead of the curve with the new Fair Work legislation.