On 12 February 2024, the Fair Work Legislation Amendment (Closing Loopholes No 2) Act 2023 (Closing Loopholes No 2) was passed by the House of Representatives (accepting Senate amendments made last Thursday) meaning that the second wave of the Federal Government IR law reform package will be introduced once royal assent has been given.

Along with the previous amendments the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 was introduced on 14 December 2023, this legislation makes further changes to the Fair Work Act 2009 (Cth) (Act).

Several changes were moved by the Greens and independent senators and accepted by the Government resulting in a political compromise to secure the passage of the new laws through Parliament. 

The key points passed by the Senate now include:

  • Right to disconnect – the introduction of a statutory ‘workplace right’ for employees to disconnect;
  • Higher civil penalties;
  • Union right of entry provisions extended (application to waive 24-hour notice of entry to the workplace)
  • The commencement of intractable bargaining rules which prevent employee conditions from being less favourable in a bargaining determination;
  • Casual conversion process amendments.

 Road Transport Industry Amendments:

  • The details of the new Fair Work Commission (FWC) powers to make road transport contractual chain orders being included in the Act (rather than in regulation as previously proposed).

Digital Platform Work and Gig Economy Workers:

  • Permitting high income earning contractors to ‘opt out’ of having the new statutory definition of employment apply to their arrangements, such that the status of their relationship will continue to be determined by the common law test that has emerged from recent High Court decisions.

This newsletter will not cover the Road Transport Industry or Digital Platform Work and Gig Economy workers amendments.

Right to Disconnect[changes effective 6 months after the Amending Act receives Royal Assent]:

The amendments to the Act provide employees with a “right to disconnect”. This is a significant development in Australian labour law and has the potential to impact current working arrangements, approaches to flexibility, and communications with employees.

The right to disconnect (with some reasonableness limitations) will reside with the employee, and an employee may choose whether to monitor or not any after-hours contact received and take action to exercise their right to disconnect, with the risk of significant penalties if an employer then does so. 

An employee may refuse to monitor, read, or respond to contact, or attempted contact, outside of the employee’s working hours, from:

  • Their employer; or
  • A third party if the contact or attempted contact relates to their work, unless that refusal is unreasonable.

What is Unreasonable?
In determining whether a refusal is unreasonable, the following factors must be considered:

  • The reason for the contact or attempted contact;
  • How the contact or attempted contact is made and the level of disruption it causes the employee;
  • The extent to which the employee is compensated (monetary or non-monetary) to remain available and for working additional hours outside of the employee’s ordinary hours of work;
  • The nature of the employee’s role and the employee’s level of responsibility; and
  • The employee’s personal circumstances (including family or caring responsibilities).

The right to disconnect will be a workplace right. An employer will be prohibited under the general protections provisions in the Act from taking adverse action against an employee because the employee has exercised that right.

If there is a dispute between an employer and employee whether a refusal is unreasonable, then the parties must first try to resolve matters at the workplace level. If the matter is not resolved, either party can apply to the FWC to make orders to stop refusing contact or to stop taking certain actions.

FWC may issue an order:
If an application is made to the FWC and it is satisfied that either or both of the following apply:

  • An employee has unreasonably refused to monitor, read or respond to contact or attempted contact and there is a risk the employee will continue to do so; or
  • An employee’s refusal to monitor, read or respond to contact or attempted contact is not unreasonable and there is a risk that the employer will take disciplinary or other action against the employee because of it or continue to require the employee to monitor, read or respond despite the employee’s prior refusal,

Then the FWC may make an order (as applicable):

  • To prevent the employee from continuing to unreasonably refuse to monitor, read or respond to contact or attempted contact;
  • To prevent the employer from taking the action; or
  • To prevent the employer from continuing to require the employee to monitor, read or respond to contact or attempted contact.

Where an order is made, any breach of that order can result in a civil penalty. For small businesses, these provisions won’t apply until 12 months after commencement.

Higher Civil Penalties[changes commence on different dates subject to the type of contravention]
The amendments to the Act will:

  • Increase civil penalties that apply to contraventions (including serious contraventions) of certain provisions including those related to wage exploitation (x 5 times);
  • Increase the civil pecuniary penalty for failure to comply with a compliance notice (increased to be consistent with other penalties (x 10 times);
  • Enable the maximum penalty for a contravention to be determined multiplied by 3 times the value of the underpayment (if relevant) in certain circumstances; and
  • amend the scheme for ‘serious contraventions’ so that it applies to knowing and reckless contraventions of the relevant provisions.

Different penalty arrangements will apply to small business employers in some circumstances.

Union right of entry access to workplace:
A new provision will allow unions to obtain an exemption certificate from the FWC to waive the minimum 24 hours’ notice requirement for exercising right of entry (to an employer’s workplace) if they reasonably suspect a member of their organisation has been or is being underpaid wages or other monetary entitlements.

The FWC must be satisfied (before issuing a certificate) that advance notice of entry into a workplace would hinder an effective investigation into suspected underpayments.

Changes to bargaining determination rules:
The amendments will fine-tune the sweeping changes introduced last year by the Secure Jobs, Better Pay legislation to enterprise bargaining arrangements. The FWC cannot make a term in an intractable bargaining workplace determination less favourable to each employee and employee organisation than a term in the existing enterprise agreement. The FWC will determine model terms for enterprise agreements, allowing multiple franchisees to bargain together for a single enterprise agreement and providing for single interest employer agreements to be replaced by single enterprise agreements.

Casuals [changes effective 6 months after the Amending Act receives Royal Assent]

A new definition of “casual employee” will be introduced into the Act based on the meaning of casual employment as it was understood before the High Court of Australia decision in WorkPac Pty Ltd v Rossato [2021] HCA 23.

An employee will be a “casual employee” if both of the following conditions are met:

  • The employment relationship is characterised by an absence of a firm advancement commitment to continuing and indefinite work; and
  • The employee would be entitled to a casual loading, or a specific rate of pay for casual employees under the terms of a fair work instrument or employment contract if the employee were a casual employee.

A regular pattern of work performed by a casual employee does not of itself indicate a firm advance commitment to continuing and indefinite work. To clarify, a casual employee who has a regular pattern of work may still be a casual employee if there is no firm advance commitment to continuing and indefinite work.

In assessing whether an employee is a “casual employee”, the following matters need to be considered:

  • The issue will be assessed based on the real substance, practical reality, and true nature of the employment relationship – the totality of the relationship and not just the contractual terms;
  • A firm advance commitment may be in the form of a mutually agreed term in an employment contract, or a mutual understanding or expectation between an employer and employee; and
  • Other potential indicators must be considered (but no one factor is determinative and not all factors need to be satisfied), such as whether:
    • There is an inability of the employer to elect to offer work and/or an inability of the employee to elect to accept or reject work;
    • It is reasonably likely that continuing work will be available in the future;
    • There are existing full-time or part-time employees performing the same kind of work; and
    • There is a regular pattern of work for the employee.

The focus is on the totality of the employment relationship. A regular pattern of work of itself will not automatically imply that the employee is casual, or not engaged in casual employment. The assessment should consider the real substance, practical reality, and true nature of the employment relationship, and not any single factor considered in isolation.

There is an exception – limited to only academic staff or teachers in higher education institutions (who are covered by one of two specified modern awards) to prevent a casual employee from being engaged on a fixed term contract.

Casual Conversion:
The existing residual right of an employee to request a casual conversion from their employer in the Act will be removed. 

The removal of this existing right should simplify matters for employers and remove any potential for inconsistency or duplication.

An eligible casual employee will be able to initiate a change to full-time or part-time employment if the employee:

  • Believes they are no longer a casual employee at the point in time when they make the notification to their employer;
  • Meets the minimum employment period – 12 months if employed by a small business employer; otherwise 6 months;
  • Is not currently engaged in a dispute over their status, or had certain notification or dispute resolution events occur within the preceding 6 months; and
  • Wants to change their employment status to full-time or part-time employment.

There will be no requirement for an employee to issue a notification if they do not want to change their employment status. Employees will have complete choices about whether or not to do so.

An employee will only be able to make such a notification once every 6 months.

Employer Response:
Where an employee makes a notification, an employer must respond in writing within 21 days. Employers are required to consult with an employee concerning the notification.

If the employer accepts the notification, they must state:

  • That they accept the notification;
  • Whether the employee is changing to full-time or part-time employment;
  • The employee’s hours of work after the change takes effect; and
  • The day that the change will take effect.

If the employer does not accept the notification, they must state:

  • That they do not accept the notification on one or more stipulated grounds (see below); and
  • Reasons (previously proposed to be detailed reasons) for their decision.

Can an employer refuse?
An employer may refuse a notification on the following grounds:

  • The employer believes the employee is still correctly classified as a casual employee;
  • There are fair and reasonable operational grounds for not accepting the notification; or
  • A change of employment status to full-time or part-time employment would not comply with a recruitment or selection process required by a Federal or State / Territory law.

There will be “fair and reasonable operational grounds” for refusing a notification where:

  • Substantial changes would be required to the way in which work in the employer’s business is organised;
  • There would be significant impacts on the operation of the employer’s business; and/or
  • It would be reasonably necessary to make substantial changes to the employee’s terms and conditions to ensure the employer does not contravene a term of a modern award/enterprise agreement that would apply to the employee as a full-time employee or part-time employee (as the case may be).

There are also protections against the intentional misuse of casual employment, including dismissing an employee in order to re-engage them as a casual employee and knowingly making false statements to engage a person as a casual employee.

Other Changes:

  • Dispute Resolution Procedures

There will also be new dispute resolution procedures and new civil remedy provisions to protect against conduct designed to result in the misclassification of casual employees.

An employer and employee must first attempt to resolve a dispute at the workplace level, by discussion between the parties.  If the dispute is not resolved, then employer or employee may refer the dispute to the FWC.  The FWC would be required to first deal a dispute with it by means other than arbitration in the first instance (such as by mediation, conciliation, making a recommendation or expressing an opinion), but if the dispute remains unresolved, the FWC would then be able to deal with the dispute by arbitration.

  • Casual Employee Information Statement

Casual Employee Information Statement (CEIS) will be required to be provided to an employee, at the commencement of their employment and after 12 months service. 

  • Workplace Delegates

Workplace delegates [changes effective on proclamation, but no later than 6 months after the Amending Act receives Royal Assent]

In addition to the existing protections against adverse action for employees who become officers or members of a union (as a result of their membership), protections for freedom of association and involvement in lawful industrial activities, a new general protection for workplace delegates will be included.  An employer will be prohibited from:

  • Unreasonably failing or refusing to deal with a workplace delegate;
  • Knowingly or recklessly making a false or misleading representation to a workplace delegate; or
  • Unreasonably hindering, obstructing, or preventing the exercise of the rights of a workplace delegate.

As with existing provisions, the burden for establishing that the conduct of an employer is not unreasonable is on the employer. Despite these changes, employers will still be able to undertake reasonable management action, carried out lawfully.

We now await confirmation when this Act has received royal assent which means these changes will commence application accordingly. 

Jobs Australia (JA) will continue to monitor these significant Workplace Relations changes throughout 2024 and Members may contact our WR team if there are any questions about the impacts of these changes at 1800 331 915 or WR-DL@ja.com.au.

Best Regards,
The Jobs Australia Team