Further changes to Employment Law

As employers are aware the Labor Government has made several amendments to the Fair Work Act which require employers to be aware of the potential changes which could affect their business. These amendments have been made in two tranches, being the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 which received Royal Assent on 14 December 2023 and the  Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 which received Royal Assent on 26 February 2024. 

Previous changes

The following amendments to the Fair Work Act have already commenced. 

Labour Hire Changes

Employees, Unions and host employers can apply to the Fair Work Commission for a regulated labour hire arrangement order. This amendment has been commonly referred to as the ‘same job, same pay’ amendment. This change will most commonly be used by employees and unions to prevent employers from engaging labour hire workers to undercut the employees that would or could otherwise perform the work. 

The Fair Work Commission has the power make an order that the labour hire workers are to be paid no less than they would receive if they were directly employed by the host employer and paid in accordance with the applicable award, enterprise agreement or employment instrument. 

Union Right of Entry Permits

The requirement for officials assisting a state or territory work health and safety representative to hold an entry permit under the Fair Work Act has been removed and officials can enter the workplace when assisting a WHS representative on request under a state or territory WHS law.

Workplace Delegates

A workplace delegate is an employee:

1. Appointed or elected under the rules of an employee organisation; and
2. Who represent members of the organisation in the workplace.

The changes mean that delegates are entitled to:

1. represent the industrial interests of members and potential members of the employee organisation (including in disputes with their employer)
2. reasonable communication with members and potential members about their industrial interests
3. reasonable access to the workplace and its facilities to represent those industrial interests.

Enterprise Bargaining

Multiple franchisees of the same franchisor (or related bodies corporate of the same franchisor) may now bargain together for a single enterprise agreement if they carry on similar business activities under the same franchise. 

Changes taking effect 26 August 2024

Right to Disconnect

Perhaps the most publicised amendment to the Fair Work Act is the new right to disconnect. The right to disconnect enables eligible employees to refuse contact outside their working hours, unless the refusal is unreasonable. 

When considering whether the employee’s refusal for contact is unreasonable, a court will consider:

• the reason for the contact;
• whether the employee is compensated or paid extra for:
  • being available to be contacted to perform work within a specific period, or
  • working additional hours outside their ordinary hours of work.
• the nature of the employee’s role and level of responsibility.
• the employee’s personal circumstances, including family or caring responsibilities.

All awards will be amended to contain the right to disconnect amendment by 26 August 2024. 

Any disputes about an employee’s right to disconnect should be initially discussed between the employee and the employer. If the dispute cannot be resolved, either party may apply to the Fair Work Commission to deal with the dispute. The Commission has the power to:

1. Make a stop order;
2. Deal with the dispute in other ways (such as holding a conciliation); or
3. Do both of the above. 

The right to disconnect is also covered by the general protection laws. This means that employers cannot treat the employee adversely because they have exercised their right to disconnect. 

The right to disconnect does not take affect on small businesses (that is businesses with less than 15 employees) until 26 August 2025. 

Changes to Casual Employment

Currently section 15A of the Fair Work Act 2009 (Cth) defines a casual employee where an offer of employment is made by the employer to the person on the basis that the employer makes no firm advance commitment to continuing and indefinite work with an agreed pattern of work for the person and the employee accepts the offer on that basis.

The new amendment revises the definition for a casual employee to be where there is no firm advance commitment to continuing and indefinite work. This definition will consider a number of factors, including the real substance, practical reality, and true nature of the employment relationship, and if the employee is entitled to receive casual loading or a specific casual pay rate.

There are further amendments the changes to casual conversion. Casual employees will be able to notify their employer of their intention to change to permanent employment if the employee has been employed for at least 6 months (or 12 months if working for a small business employer) and believes they no longer meet the requirements of the new casual employee definition.

Employees can not notify their employer of their intention to change to permanent employment if they: 

1. are currently engaged in an ongoing dispute with their employer about casual conversion, or 
2. in the last 6 months their employer refused a previous notification or they’ve resolved a dispute with their employer about casual conversion.

If an employer receives a request for casual conversion, the employer must consult with the employee. Following the consultation, if the request has not been resolved the employee is required to give written notice to the employer and the employer will either accept of refuse the request in writing within 21 days. 

Definition of Employment

A new definition of employment is to be inserted in the Fair Work Act where the following factors will be considered to determine whether a worker is an employee or an independent contractor:

• The real substance, practical reality and true nature of the working relationship. This also applies when determining whether a person is an employer or a principal for outworkers.
• All parts of the working relationship between the parties. This includes the terms of the contract and how the contract is performed in practice. This is a change from the existing test, which focuses mainly on the terms of a contract.

This definition will not affect the meaning of employee and employer in other existing laws such as tax, superannuation and workers compensation. 

Unfair Contract Terms

Contractors will be able to apply to the Fair Work Commission if they think their services contract contains an unfair contract term. The Commission will be able to:

• determine whether a term of a services contract is an unfair contract term, taking into account a range of factors
• make an order to set aside, amend or vary all or part of the contract if a services contract contains one or more unfair contract terms.

Contractors earning over the contractor high income threshold (currently $175,000) can’t apply for an unfair contract remedy with the Commission.

Employee Like Workers 

The Fair Work Commission will now have powers covering independent contractors who perform digital platform work in the gig economy. An employee will an employee like worker if they satisfy 2 or more of the following:

• low-bargaining power in negotiations in relation to their contract
• payment at or below the pay rate of an employee performing similar work
• low authority over performance of work
• any other characteristic prescribed by regulations.

The Fair Work Commission can now set the minimum standards for workers concerning payment terms, deductions, working time, record-keeping, insurance, consultation, representation, delegates’ rights and cost recovery and other matters.

Further Changes Criminalising Intentional Wage Underpayments  – 1 January 2025

Intentional underpayments of wages will now become a criminal offence. Employers will commit an offence if:

• they’re required to pay an amount to an employee (such as wages), or on behalf of or for the benefit of an employee (such as superannuation) under the Fair Work Act, or an industrial instrument
• they intentionally engage in conduct that results in their failure to pay those amounts to or for the employee on or before the day they’re due to be paid.

This provision does not apply to underpayments in respect of:

• superannuation contributions.
• payment for taking long service leave payments.
• payment for taking leave connected with being the victim of a crime.
• payment for taking jury duty leave or for emergency services duties.

These amendments have been inserted to take effect in circumstances where an employer is aware of the wages that are to be paid to an employee and either refuses to or devises a system to ensure that the employee is not paid what they are otherwise entitled to. 

Penalties

The following penalties will apply to non-small business employers:

• maximum of 10 years in prison
• if the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $1.565 million, or
• if the court can’t determine the underpayment, $1.565 million.