Closing Loopholes: What’s changing in August 2024?

As many readers will be aware, the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 (the Bill) passed through both houses of the Federal Parliament in February 2024, bringing with it significant amendments to the Fair Work Act 2009 (the Act) which are gradually taking effect.

The key changes coming into effect from August 2024 include revisions to the definition of casual employment, the introduction of the right to disconnect, and a new approach to determining employment relationships.

Definition of casual employment

The Bill introduces a revised definition of casual employees in the Act, effective from 26 August 2024. A casual employee is one who meets both of the following requirements:

• the employee has no firm advance commitment to continuing and indefinite work; and
• the employee is entitled to a casual loading or rate of pay specified for casuals.

A ‘firm advance commitment’ will require consideration of the ‘real substance, practical reality and true nature’ of the relationship, considering factors such as work patterns and the ability to accept or decline work offers.

Casual employees will also be entitled to request conversion from casual to permanent employment after six months. However, for small business employers, this right will commence from 26 February 2025, allowing casual employees to request conversion after 12 months of employment. This change removes the previous requirement for employers to offer conversion under specific circumstances, meaning that employees must demonstrate ongoing employment that justifies the request.

Right to disconnect

In accordance with the highly publicised ‘right to disconnect’, which will take effect on 26 August 2024 (except in the case of small business employers for whom the provisions will only take effect from 26 August 2025), an employee can refuse to monitor, read or respond to contact, or attempted contact from an employer or third party outside of the employee’s working hours unless the refusal is unreasonable.

For further details, please refer to our article on the right to disconnect here.

Employment relationship determination

The new section 15AA of the Act will also take effect from 26 August 2024. This section requires the ordinary meanings of ‘employee’ and ‘employer’ be determined by reference to the ‘real substance, practical reality and true nature’ of the relationship. The ‘totality of the relationship’, including how the contract is performed in practice, must be considered when ascertaining the real substance, practical reality and true nature of a relationship.

This overrides the recent decisions of the High Court of Australia in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2, in which the High Court held that an independent contractor relationship is to be determined based on the terms of the agreement between the contractor and the principal, and returns us to the multi-factorial test which applied before those decisions.

Accordingly, it remains crucial that independent contractor agreements both accurately reflect the nature of the agreement between contractor and principal. It is also prudent to take the opportunity to review whether any contractors are in fact acting more like employees. Otherwise, there is a risk that a contractor will be found to be an employee who will then claim employee entitlements.

Take home messages

Employers should familiarise themselves with the above changes to assess how the workplace, procedures and people will be impacted, and take steps now ahead of the introduction of these new provisions later this month.

As always, any documentation engaging employees needs to be carefully drafted to ensure that rights and obligations are clearly and accurately set out.

For more specific information or advice on any of the material contained in this article please contact Lincoln Smith on +61 8 8210 1203 or lsmith@normans.com.au, Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au, or Annabelle Narayan on +61 8 8210 1292 or anarayan@normans.com.au.