The Right to Disconnect and Other Important Developments for Employers

Recently, the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act was enacted as part of the Federal Government’s ongoing reform of the Australian workplace relations system. The most highly publicised change introduced by the new legislation is the right of employees to disconnect from work outside of their working hours. However, the legislation introduces a number of other important changes of which employers should be aware.

Key Changes

The key changes introduced by the new legislation are as follows:

• Right to Disconnect: Employees will have the right to refuse to monitor, read or respond to contact from their employer and third parties about work outside of their working hours, unless the refusal is unreasonable. A number of factors will need to be taken into account when considering whether a refusal is unreasonable, including the nature of the employee’s role and level of responsibility, the employee’s personal circumstances, and the extent to which the employee is compensated for working additional hours. It will be unlawful for an employer to take adverse action against an employee for exercising the right to disconnect. Any disputes about the operation of the right to disconnect may be referred to the Fair Work Commission.
• Casual Employment: A new definition of casual employment will be introduced based on the practical reality of the employment relationship rather than the terms of any written employment contract. Further, new casual conversion laws will be introduced such that casuals will be able to give their employer a written notification advising that they consider they are no longer employed on a casual basis and should instead be employed on a permanent basis. Employers must follow a specific process to respond to such notifications, and may only refuse the notification on certain grounds, including there are fair and reasonable operational grounds for not accepting it. In addition, employers other than small business employers will be required to provide a Casual Employment Information Statement to all casual employees at commencement of employment as well as 6 and 12 months after commencement, and every 12 months thereafter.
• Independent Contractors: The test for determining whether a particular worker is an employee or contractor at law will need to be determined based on a multi-factor test. This effectively reverses the approach taken by the High Court of Australia in 2022. Under the multi-factor test, an assessment must be made based on the totality of the relationship between the parties having regard to a range of factors, including the degree of control the business has over the worker. Interestingly, workers whose earnings exceed the contractor high income threshold will be able to choose to opt out of the new test.
• Right of Entry: Union officials will be able to apply to the Fair Work Commission for an exemption certificate to waive the requirement for 24 hours’ notice for entry into a worksite where there is a suspected contravention of the Fair Work Act. The exemption certificate will only be granted if the Fair Work Commission is satisfied that the suspected contravention involves the underpayment of wages or other employee entitlements and that advance notice would hinder an effective investigation into the suspected contravention.
• ‘Gig Economy’ Workers and Road Transport Contractors: ‘Gig economy’ workers and road transport contractor workers will be able to apply to the Fair Work Commission for orders in relation to minimum standards associated with their work, including rates of pay, penalty rates, insurance, superannuation and deactivation.

Implications for Employers

The above changes will commence from 26 August 2024, except the new right of entry laws which will commence from 1 July 2024. Further, the new right to disconnect will apply a year later (i.e. from 26 August 2025) for employees of small business employers.

There are a number of measures employers may take to prepare for the new laws. In particular, employers that require any of their employees to be contactable outside of their official work hours should consider reviewing their employment documentation to ensure they may lawfully continue this practice. For example, employers may wish to make it clear in their employment contracts that the amount of remuneration being paid is intended to compensate the employee for working outside of hours. Further, employers with casuals and/or contractors should start reviewing those arrangements to ensure they will continue to be considered lawful under the new laws. Likewise, employers with casuals may develop a process for responding to casual conversion notifications and for issuing the Casual Employment Information Statement at regular intervals in accordance with the new laws.