Over the course of 2024, several amendments contained in the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill (2023) (Bill) will come into effect. So that you can be aware of the changes and adapt accordingly, please see the timeline of key dates below.
27 February
Increased civil penalties and sham contracting defence
From 27 February 2024, courts will begin to roll out an increase in the maximum civil penalties for companies (not small businesses). This includes an increase in the maximum civil penalty for failing to comply with a compliance notice, a new threshold for what constitutes a serious contravention and a change to the threshold for the defence against sham contracting. Further, penalties for underpayment are set to commence on 1 January 2025 or the day after the Voluntary Business Wage Compliance Code is declared, whichever is sooner.
1 July
Exemption certificates for entry to investigate suspected underpayment
Currently, union officials need to give 24 hours’ notice before being able to enter a premises to investigate wage underpayments. From 1 July 2024, subject to holding a permit and meeting other requirements, union officials will have a right of entry to workplaces to investigate contraventions. Where the Fair Work Commission (FWC) is satisfied that advanced notice of entry may compromise the investigation, entry permit-holders can be granted an exemption certificate which waives the requirement to provide 24 hours’ notice to workplaces. Further protections from improper behaviour by employers and occupiers will also be granted to entry permit-holders.
26 August
Right to disconnect
Starting from August 26, 2024 (or August 26, 2025, for small businesses), employees will gain the right to disconnect from work-related communication outside of work hours, with certain exemptions. They can reasonably refuse to respond to employer or third-party contacts, with the fairness of refusal assessed based on several factors such as the reason for contact and the employee’s role and personal circumstances. The FWC will arbitrate disputes and may issue stop orders against employees or employers behaving unreasonably. It should be noted that employers are not prohibited from contacting their employees out of hours. Instead, an employer cannot discipline an employee for refusing to connect outside working hours, so long as this is not unreasonable.
To prepare for this change, we suggest you review your employment contracts and position descriptions, specifically those pertaining to salary, remuneration and duties, as well as any policies or procedures you currently have in place regarding employees being contactable outside normal working hours.
Definition of ‘casual employee’ and casual conversion rights
The new amendments include changes to who is defined as a casual employee to help employees enjoy job security and paid leave entitlements.
Under the new definition, an employee will only be a casual employee where:
- The relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
- The employee is entitled to a casual loading or rate of pay for casual employees under a Fair Work instrument or contract of employment.
Casual employees can now request conversion to permanent employment after six (6) months with an employer (twelve (12) in a small business) but are not mandated to make this request.
Definition of ‘employee’ and ’employer’
The definitions of ‘employee’ and ’employer’ are set to include an interpretive principle to assess ‘the real substance, practical reality, and true nature and totality of the relationship’ between the parties. Assessment of the employment relationship will now go beyond the contractual rights and obligations of the parties.
The Bill is designed to reinstate the ‘multi-factorial’ test previously applied by courts and tribunals to determine if a worker is an employee or independent contractor. The ‘multi-factorial’ test considers several ‘indicia’ including both the conduct of the parties and the terms of any written contract to resolve the ‘substance and reality’ or ‘totality’ of the relationship.
The purpose of these changes is to discourage businesses from attempting to avoid a relationship of employment via carefully drafted contracts. Therefore, we recommend you review all employment contracts to substantiate the true nature of your employment relationships.
Minimum standards for ‘employee-like workers’
Provisions for ‘employee-like workers’ are set to come into effect, giving power to the FWC to set minimum standards for workers who perform work for, or via, a digital labour platform. ‘Employee-like workers’ may include workers from a range of sectors such as gig economy workers like Uber drivers, disability support workers on Mable or delivery riders for Menulog. By setting a minimum standard, the FWC will have the authority to enforce a range of thresholds including insurance, deductions, payment terms, penalty rates and superannuation. The Bill will also provide for consent-based collective agreements frameworks and access to dispute resolution for unfair deactivation from a digital labour platform.
These changes are intended to improve the protection of these workers and oblige platforms to take more responsibility.
Disputes between contractors and principals about unfair contract terms
The FWC intends to establish a new flexible, low-cost and informal jurisdiction to resolve disputes about unfair contract terms between contractors (below the high-income threshold) and principals. A contractor will be able to challenge unfair terms in a services contract by applying to the FWC.
Key takeaways
Should you have any questions about your obligations under the changes outlined in this timeline, please do not hesitate to contact Daniel Morgan (daniel@morganenglish.com.au) and the experienced Workplace team at M+E today.
