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Important Changes to Look Out for in the Closing Loopholes Bill

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Following the passing of the Closing Loopholes Bill 2023 and Closing Loopholes No. 2 Bill 2023 (together, ‘the Bills’), there are many changes that will affect employers.

This article provides a summary of the key changes from the Bills.

New Definition of Casual Employment

(A new definition of casual employment will take effect from 26 August 2024)

Following the High Court’s landmark decision in WorkPac Pty Ltd v Rossato [2021] HCA 23 (see analysis of that decision in our previous article here), casual employment can be established by the written terms of the employment agreement without having regard to the post-contractual conduct of the parties.

The Closing Loopholes No.2 Bill will reverse the decision of the High Court in Rossato by introducing a statutory test for establishing casual employment:

  • on the basis of real substance, practical reality and true nature of the employment relationship; and
  • on the basis that a firm advance commitment can be in the form of the contract of employment or, irrespective of the terms of that contract, in the form of a mutual understanding or expectation between the employer and employee not rising to the level of a term of that contract (or to a variation of any such term); and
  • having regard to, but not limited to, the following considerations (which indicate the presence, rather than an absence, of such a commitment):
    • whether there is an inability of the employer to elect to offer work or an inability of the employee to elect to accept or reject work (and whether this occurs in practice);
    • whether, having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee;
    • whether there are full-time employees or part-time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee;
    • whether there is a regular pattern of work for the employee.

Offer for casual conversion

(New casual conversion laws will take effect from 26 August 2024)

Casual employees will be given the legal right issue a “casual conversion notice” to their employers to seek conversion to permanent employment where:

  • having regard to the new statutory definition of casual employment and the employee’s current employment relationship with the employer, the employee believes that the employee is no longer a casual employee;
  • the employee has been employed for a minimum of 12 months for a small business employer, or a minimum of 6 months for a non-small business employer; and
  • the employee does not have a dispute with the employer, or had a dispute with the employer in the past 6 months, relating to casual conversion (i.e. the employee can issue a casual conversion notice every 6 months).

An employer must provide a written response to the casual conversion notice within 21 days, and may only refuse the conversion request if:

  • the employer believes the employee is correctly classified as a casual employee;
  • there are fair and reasonable operational grounds for not accepting the request; or
  • a change of employment status to full time or part time would not comply with a recruitment or selection process required by federal or state law.

The Fair Work Commission will have new powers to arbitrate on matters relating to casual conversion when the dispute cannot be resolved between the employer and employee.

This new ability by employees will replace the current obligations placed on employers to offer permanent employment to casual employees (more information on current casual conversion obligations can be found in our previous article here).

Right to disconnect

(New “right to disconnect” laws will take effect from 26 August 2024 for non-small business employers, or 26 August 2025 for small business employers)

Employees may refuse to monitor, read or respond to contact (or attempted contact) from an employer or a third party (in relation to their employment) outside of an employee’s working hours unless the refusal is unreasonable.

This new right to disconnect will be a workplace right for the purposes of the general protections laws.

When determining whether a refusal is unreasonable the following must be considered:

  • The reason for the contact or attempted contact;
  • How the contact or attempted contact is made and the level of disruption caused;
  • The extent of which the employee is compensated;
  • 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).

Where a dispute in relation to an employee’s refusal to be contacted arises, it must first be attempted to be resolved at the workplace, after which either party can make an application to the FWC seeking either (a) an order to stop refusing contact or (b) an order preventing the employer from taking certain actions against an employee (which can include disciplinary action).

Small business redundancy

(This change to small business redundancy pay obligations took effect from 15 December 2023)

The exclusion of small business employers from having to pay redundancy pay under the National Employment Standards will not apply if the:

(a) the employer is bankrupt or in liquidation; and
(b) the employer is a small business employer because it terminated the employment of one or more employees; and
(c) those terminations were within 6 months of the employer becoming bankrupt or going into liquidation.

Workplace delegates’ rights

(This change to workplace delegates’ rights took effect from 15 December 2023)

Workplace delegates will be given additional protections under the Fair Work Act 2009, including that an employer of a workplace delegate must not:

(a) unreasonably fail or refuse to deal with the workplace delegate; or
(b) knowingly or recklessly make a false or misleading representation to the workplace delegate; or
(c) unreasonably hinder, obstruct or prevent the exercise of the rights of the workplace delegate under the Fair Work Act 2009 or a fair work instrument.

Additionally, from 1 July 2024, all modern awards and newly approved enterprise agreements must include a model clause for ‘workplace delegates’ reflecting the abovementioned protections. The model clause will be prepared by the Fair Work Commission in the coming months.

Exemption certificates for organisations to enter site to investigate suspected underpayment contraventions

(This change takes effect from 1 July 2024)

The Fair Work Commission will have the power to issue an exemption certificate to an organisation (and thereby enabling the organisation to enter a workplace to investigate a suspected contravention without issuing a right of entry notice with 24 hours’ notice) if:

(a) the FWC reasonably believes that advance notice of the entry given by an entry notice might result in the destruction, concealment or alteration of relevant evidence; or
(b) the FWC is satisfied that the suspected contravention, or contraventions, involve the underpayment of wages, or other monetary entitlements, of a member of the organisation whose industrial interests the organisation is entitled to represent and who performs work on the premises.

Wage theft

(New Federal wage theft laws take effect from 1 January 2025)

Underpayment of wages and superannuation could lead to a maximum term of 10 years’ imprisonment under the Federal wage theft laws.

Criminal prosecutions can only be commenced by the Director of Public Prosecutions or the Australian Federal Police.

Existing State-based wage theft laws in Victoria and Queensland will likely be repealed after the first (and only) wage theft prosecution in Victoria had collapsed in spectacular fashion after a constitutional challenge was mounted by the prosecuted employer in the case (see Wage Inspectorate Victoria v Rehmat & Mehar Pty Ltd trading as The Macedon Lounge).

Contractor versus Employee

(A new definition of an “employee” will take effect from 26 August 2024)

A new section 15AA will be inserted into the Fair Work Act 2009 to effectively reverse the decision of the High Court in the cases of ZG Operations Australia Pty Ltd v Jamsek [2022] and CFMMEU v Personnel Contracting Pty Ltd [2022]. (See analysis of those decisions in our previous article here)

Section 15AA provides that:

  1. For the purposes of the Fair Work Act 2009, whether an individual is an employee of a person within the ordinary meaning of that expression, or whether a person is an employer of an individual within the ordinary meaning of that expression is to be determined by ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person.
  2. For the purposes of ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person:
    • a. The totality of the relationship between the individual and the person must be considered; and
    • b. In considering the totality of the relationship between the individual and the person, regard must be had not only to the terms of the contract governing the relationship, but also to other factors relating to the totality of the relationship including, but not limited to, how the contract is performed in practice.

New rights and protections for gig economy workers

(These gig-economy worker laws will take effect on 26 August 2024)

The Fair Work Act 2009 will define a new category of ‘employee-like’ workers which will affect workers who work under a ‘digital labour platform’.

The introduction of this category of worker will enable the Fair Work Commission to introduce minimum standards for employees in the gig economy.

Additionally, these workers are set to be provided with protections from being ‘unfairly deactivated’ from the digital labour platform industry. This application will, in effect, be similar to unfair dismissal protection for employees.

Additional Changes

In addition to the above changes, the Bills have introduced a number of additional changes including:

  • Enabling multiple franchisees of the same franchise system to access the single enterprise stream for enterprise agreement making (where previously franchisees could only bargain together with a single interest employer authorisation process)
  • Requiring that intractable bargaining workplace determinations cannot result in employees being provided a term that is less favourable than a term existing in an enterprise agreement
  • Individuals subject to family and domestic violence have been provided greater protections by introducing family and domestic violence as a protected attribute
  • The Fair Work Commission will have the power make a labour hire order (see our previous article on ‘same job, same pay’ here)
  • Penalties for civil remedies provision will be increased by between 5 and 10 times

If you have any questions in relation to this article or employment practices in general, please contact the MST LawyersEmployment Law team on +61 3 8540 0200 or email workplace@mst.com.au.

i Fair Work Legislation Amendment (Closing Loopholes) Bill 2023
ii Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023