Impending changes to the Fair Work jurisdiction you definitely need to know

By Nadia Maynard

There are further changes that have been introduced as a result of the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024. The Closing Loopholes No.2 passed Parliament on 12 February 2024 and received Royal Assent on 26 February 2024.

This article will:

1. summarise the changes that are due to commence on 26 August 2024 that have been introduced by the Closing Loopholes No.2.
2. explain the amendments that pertain to the right to disconnect, casual employment and conversion, the definition of employment, the regulated workers (road transport and digital labour/gig economy) and unfair contract jurisdiction.

Summary of changes

Right to disconnect

These changes commence on 26 August 2024 for non-small business employers.

These changes commence on 26 August 2025 for small business employers (employers who have less than 15 employees at a particular time).

Employees will have a new right to disconnect outside of work hours. This means that employees have a legal right to refuse to monitor, read or respond to contact from an employer or third party unless the refusal is unreasonable.

There are several considerations that come into play when determining whether an employee’s refusal is unreasonable:

1. the reason for the contact;
2. whether the employee is compensated for:
   1. being available in the period when contact is made or attempted;
   1. working additional hours outside their ordinary hours of work.
3. the nature of the employee’s role and level of responsibility;
4. the employee’s personal circumstances i.e. family or caring responsibilities.

Employees and/or employers may seek orders from the Fair Work Commission (the Commission) to assist them in resolving disputes in relation to the right to disconnect. The right to disconnect will now be a workplace right under general protection laws.

Casual employment and conversion

Casual employment

These changes commence on 26 August 2024.

The definition of a ‘casual employee’ has changed under the Fair Work Act 2009 (Cth) (Fair Work Act). The new definition of a ‘casual employee’ includes:

1. no firm advance commitment has been given to the employee to continuing and indefinite work, taking into account several factors, including the real substance, practical reality and true nature of the employment relationship; and
2. the employee is entitled to receive a casual loading or specific casual pay rate.

To determine whether there is a firm advance commitment to continuing and indefinite work, consideration must be given to following factors:

1. the employer is able to offer work to the employee;
2. the employee has a right to accept or reject the work;
3. there is a high probability that there will be future work available to the employer’s business, based on the nature of the business;
4. there are full-time or part-time employees performing the same kind of work in the employer’s business as the work the employee usually performs; or
5. the employee has a regular pattern of work.

Casual conversion

The Closing Loopholes No. 2 introduces a new pathway for casual conversion to permanent employment. Under the new pathway, employees now have a choice as to whether they wish to notify their employer about changing to permanent employment.

Employees will have the choice to notify their employer of their intention to convert from casual to permanent employment, if:

1. the employee has been employed for at least 6 months (or 12 months if working for a small-business employer);
2. the employee believes they no longer meet the criteria of the new casual employee definition;
3. the employee is not engaged in an ongoing dispute with their employer about casual conversion; or
4. in the previous six months, the following events have not occurred:
   1. employer has refused the employee’s previous notification; and
   1. the employee and employer have resolved a dispute regarding casual conversion. 

Where an employee has made a notification, the employer must consult with the employee and respond within 21 days of receiving an employee’s notification. The employer must respond either by accepting the conversion of employment or refusing the change.

An employer has the right to refuse the casual conversion if any of the following apply:

1. the employee still meets the definition of a casual;
2. the employer believes there are fair and reasonable operational grounds for not accepting the employee’s notification for change which includes:
   1. if substantial changes would be required to the way in which work in the employer’s business is organised;
   1. there would be significant impacts on the operation of the employer’s business; or
   1. substantial changes to the employee’s employment conditions would be reasonably necessary to ensure the employer doesn’t break any rules (such as in an award or agreement) that would apply to the employee.
3. accepting the change means the employer isn’t complying with a recruitment or selection process required by law.

If any disputes in relation to casual conversion arise, the dispute can be dealt with via the Commission. The parties must attempt to resolve the dispute internally within the workplace before issuing a claim in the Commission.

Casual Employee Information Sheet

Employers are now required to provide a Casual Employment Information Sheet (CEIS) before, or as soon as possible after, the start of the employee’s employment. All non-small business employers must provide a CEIS every six months from when the employee commenced employment. Small business employers must continue to provide a CEIS to existing employees every twelve months.

Definition of employment

These changes will commence on 26 August 2024.

The new “ordinary meaning” definition of employee and employer will be included in section 15AA of the Fair Work Act. The meaning of an employee and employer will be determined by assessing the “real substance, practical reality and true nature of the working relationship, by considering the ‘totality’ of the relationship”. This means consideration must be given to the terms of the contract and how the contract is performed in practice.

This amendment supersedes and replaces the High Court decisions of CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 whereby consideration was given to the terms of the written contract to establish whether an individual was a contractor or employee at law.

The intention of the new legislative change is to return to the multi-factorial assessment that was applied by courts and tribunals in the past to assist them in determining whether an individual was a contractor or employee.

Opting out of s15AAA

Workers who meet and exceed the “high-income” threshold may choose to opt out of the employer/employee definition. This means that the worker elects to be considered an independent contractor rather than being governed by the employee/employer definition.  A worker may choose to go down this pathway when the principal or contractor is of the view that the worker may be in an employment relationship because of the new definition of employee/employer.

The process of a worker ‘opting out’ involves issuing an opt out notice. A worker has the right to withdraw the opt out notice at any time.  

Regulated Workers (Road transport and digital labour/gig economy)

These changes will commence on 26 August 2024.

The amendments to the Fair Work Act relate to the road transport industry and the gig economy.

The amendments introduced in the Fair Work Act relate to the road transport industry and the gig economy. The Commission will have the power to determine minimum standards for employee-like workers or regulated road transport contractors through a ‘Minimum Standards Order’ (MSO). 

Employee-like-workers are individuals who meet two or more of the following criteria:

1. low bargaining power;
2. low authority over the performance of work; or
3. remunerated at or below the rate of employees performing comparable work.

The Commission will have the power to determine any of the following MSOs:

1. payment terms;
2. deductions;
3. record-keeping;
4. cost-recovery; or
5. insurance.

On the other hand, the Commission cannot order any of the following MSOs:

1. overtime rates;
2. rostering arrangements;
3. terms that would change the form of engagement;
4. status of workers covered by the standard order.

Unfair deactivation

Employee-like workers who have undertaken work on a digital labour platform on a regular basis for a period of at least six months through a services contract will have a right to issue an ‘unfair deactivation’ claim at the Commission in circumstances where an individual has been ‘unfairly deactivated’.

An individual meets the ‘unfairly deactivated’ provisions if the following occurs:

1. the individual has been deactivated from a digital labour platform i.e. access has either been modified, suspended or terminated;
2. the deactivation was unfair; and
3. the deactivation is not consistent with the Code (the Code is yet to be published by the Minister but will address the following factors: circumstances in which work is performed on a regular basis, what amounts to a valid reason, factors to be communicated in relation to deactivations, internal processes and how data should be dealt with by workers).

The Commission will have the power to reactivate the individual’s access if an individual is successful in their ‘unfair deactivation’ claim.  The Commission will not have the power to make compensation orders, but is able to make orders to restore lost pay if appropriate.

Collective agreements

Organisations which represent employee-like-workers now have the opportunity to make collective agreements with digital labour platforms. The collective agreements will incorporate terms and conditions which are more favourable than those provided under the MSO.

Unfair contract jurisdiction

These changes commence on 26 August 2024.

The Commission has introduced an unfair contracts jurisdiction.  This new jurisdiction allows independent contractors to issue an application at the Commission where a dispute exists between the independent contractor and principal in relation to the services contract.

Independent contractors who earn below the ‘high income threshold’ have access to this jurisdiction.  

When determining whether a services contract is unfair, the Commission will have regard to the following:

1. the bargaining power of the parties;
2. whether a significant imbalance between the rights and obligations of the parties exists within the services contract;
3. whether the term which is in dispute is reasonably necessary to protect the legitimate interests of a party to the services contract;
4. whether the term imposes a harsh, unjust, or unreasonable requirement on a party;
5. whether the services contract as a whole provides for total remuneration for undertaking work that is less than that of comparable employees or independent contractors; and
6. any other factors the Commission deems fit. 

If the Commission makes a finding that a term within the services contract is unfair, it has the power to:

1. amend the terms of the services contract; and
2. ‘set aside’, part of, or the entirety of the services contract.

What does this mean for employees and/or employers?

The Fair Work Act has changed significantly and continues to evolve. It is essential that you keep up to date with the amendments and ensure compliance with the law.

If you require any legal advice in relation to these changes, please contact Holdstock Law.