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Changes to workplace laws from the Closing Loopholes Act – Part 2

27 February 2024

Both houses of Parliament have passed the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023.

The bill makes changes to the Fair Work Act 2009, Fair Work (Registered Organisations) Act 2009, the Independent Contractors Act 2006 and the Coal Mining Industry (Long Service Leave) Administration Act 1992.

The bill received royal assent on 26 February 2024. Some changes will apply from the day following royal assent, others will apply six months from the day following royal assent. 

Changes from the day following royal assent

Changes to penalties for underpayment and wage theft – Some provisions that attract civil penalties (fines) in relation to underpayments and wage theft will increase fivefold from 60 to 300 penalty units.

Changes to dealings with independent contractors – These include changes to provisions around the misrepresentation of employment as independent contracting, the ability of independent contractors to take disputes over unfair contract terms to the Fair Work Commission and the ability of high income contractors to opt out of the employee/employer definition.

Under these changes:

  • Where an employer makes a representation to an employee or potential employee that a contract of employment is a contract for services, that employer will need to prove that at the time the representation was made they reasonably believed the contract was a contract for services.
  • Independent contractors earning below the yet to be specified ‘contractor high income threshold’ will be able to have a dispute regarding potentially unfair contract terms dealt with in the Fair Work Commission rather than in the Federal Court. Independent contractors earning above the ‘contractor high income threshold’ will still need to peruse claims in the Federal Court.
  • The definition of employee for the purposes of the Fair Work Act 2009 will be amended six months following royal assent, (discussed further below). Contractors earning over the contractor high income threshold will be able to opt-out of this definition if they do so within six months of the royal assent being granted through a notification scheme. The contractor may later revoke the notice where they opt out of the definition.

Changes to intractable bargaining declarations – Where negotiations for certain enterprise agreements have passed the nine-month mark and the Fair Work Commission is satisfied there is no reasonable prospect of the parties reaching agreement, the Commission may grant an application from a bargaining representative for an intractable bargaining declaration (IBD).

Once made, the Fair Work Commission may grant the parties time to make a last attempt to reach agreement, otherwise at the end of those negotiations the Commission will be required to make an intractable bargaining determination. After including provisions already agreed between the parties the Fair Work Commission will resolve the dispute by mediation.

Agreements reached at the time the IBD is made will not be allowed to be ‘unagreed’ by the parties. In making the determination the Fair Work Commission must ensure that any term created to resolve the dispute is no less favourable to employees or unions that the existing agreement.

Six months from the day following royal assent

Introduction of the right to disconnect – Employees will gain the right, subject to the general protections provisions, to reasonably refuse to monitor, read or respond to contact or attempts to contact from their employer, or third parties such as customers and clients outside of their working hours.

The reasonableness of the refusal must consider, but will not be limited to, the following factors:

  • the reason for the (attempted) contact,
  • how the (attempted) contact is made and the level of disruption this causes the employee,
  • the extent to which the employee is compensated (including non-monetary compensation) to remain available to be contacted or perform work outside ordinary working hours, or for working additional hours,
  • the nature of the employee's role and level of responsibility, and
  • the personal circumstances, such as family or caring responsibilities of the employee.

Disputes relating to the reasonableness of the right being exercised must be attempted to be resolved at workplace level. Where this is unsuccessful, either party may apply to the Fair Work Commission to make orders to deal with the dispute, with penalties for non-compliance with an order available.

All modern awards will be required to include a right to disconnect clause. Enterprise agreements that already contain right to disconnect clauses will continue to apply if they are more favourable to the employee than those that will be introduced to the Fair Work Act 2009.

Small business employers, those with under 15 employees, will have an additional 12 months, so 18 months in total, before the right to disconnect comes into effect.

New definition of employee under the Fair Work Act – The meaning of employer and employee for the purposes of the Fair Work Act 2009 will be determined on a case-by-case basis. In making this determination, the totality and true nature of the relationship between the parties will be assessed. This will include consideration of the terms of any contract and how the contract is performed in practice.

As noted above, independent contractors will be able to opt out of this definition if they do so before it comes into force.

Changes to casual employment – These changes include the introduction of a new definition of casual employee, changes to the right to casual conversion and a requirement to provide Casual Employment Information Sheets.

Under the new definition of casual employee, casual employment will be where:

  • there is an absence of firm advance commitment to continuing and indefinite work, and
  • the employee is entitled to a casual loading or specific rate of pay for casual employees under either a fair work instrument (such as a modern award, or enterprise agreement) or contract.

Factors that must be considered when determining the presence of a firm advance commitment are like those to determine the totality and true nature of the contract in the definition of employee above. This may also impact employees who are engaged for an identifiable period longer than a shift.

Under the changes to the right to casual conversion, the current requirements relating to casual conversion will stop operating and a new system will be implemented. Under the new system, the onus will be placed on the employee to request a change in status when certain thresholds are met, (including that the employee has been employed for at least six months, and for small business employers with under 15 employees, 12 months) and the employee will need to show their position has already become an ongoing position.

The grounds on which the employer may refuse conversion will also be broadened to include ‘fair and reasonable operational grounds’ – for example, where acceptance of the request would require substantial changes to the way in which work is organised in the business.

The right to casual conversion and associated actions (such as the time for the employer to respond) will come under the general protections provisions of the Fair Work Act 2009.

Casual Employment Information Sheets will need to be provided at regular intervals in addition to when a casual employee starts their employment. These information sheets will need to be provided after the employee completes six months of work and then after the employee completes each 12 months of work. Small business employers will not need to provide the information sheet at six months.

Other changes introduced by the bill

The bill introduces other changes which may be less likely to impact not-for profit organisations.

These changes include:

Protections for ‘gig-economy’ workers – From six months following royal assent, the Fair Work Commission will gain powers to impose employee-like minimum standards and consider cases where temporary deactivation from a digital labour platform (such as Uber) would be unfair.

Multiple franchisees from the same franchisor will be able to choose to make or replace single -interest employer (multi-enterprise) agreements – From the day following royal assent, multiple franchisees of the same franchisor will have the choice of making either a single enterprise, or single interest employer agreement (where a number of employers agree to have a single enterprise agreement that covers their respective employees). Employers covered by a single interest employer agreement will be able to replace it, even during its nominal term, with a new single enterprise agreement provided their employees are better off than they would have been under the single interest employer agreement.

Read our summary of changes to workplace laws from the Closing Loopholes Act – Part 1.

The content on this webpage was last updated in February 2024 and is not legal advice. See full disclaimer and copyright notice.