Closing Loopholes on right to disconnect, casuals and contractors

Right to disconnect

Employees now have a workplace right to refuse to monitor, read or respond to contact (or attempted contact) from an employer (or third party) outside their working hours unless the refusal is unreasonable.

The Fair Work Commission (FWC) now has a disputes jurisdiction which includes the power to make orders that:

• stop an employee from unreasonably refusing to respond to contact or attempted contact from the employer; and
• stop an employer from requiring an employee to respond to contact or attempted contact, or from taking disciplinary or other action against the employee.

Breaches can result in civil remedies of up to A$18,780 per breach for individuals and A$93,900 per breach for corporations.

The right to disconnect is now a workplace right for the purposes of the general protections provisions in the Act and the right has also been included in all modern awards.

• Review employment contracts and policies for employees required to respond to work related contact outside working hours.
• Implement training for employees and particularly managers about appropriately managing the right to disconnect, including any disciplinary action.

New definition: While the test for casual employment still requires an absence of a ‘firm advance commitment to continuing and indefinite work’, it now also requires an entitlement to casual loading or casual rate of pay. The terms of the written contract will not be solely determinative of the nature of the relationship with the real substance, practical reality and true nature of the employment relationship, and mutual expectations also being relevant considerations.

Casual conversion: Casual employees will be able to request to convert to permanent employment after six months of service. There is no single factor that is determinative of whether there is a ‘firm advance commitment to ongoing, indefinite work’. Although, it is important to note that a casual employee having a regular pattern of work does not itself confirm an advance commitment to continuing and indefinite work. The earliest that casual employees can access this new conversion pathway is 26 February 2025. This means that the existing conversion pathway will remain open to existing casual employees who achieve 12 months of service between now and 26 February 2025. 

Misrepresentation: Employers are now prohibited from misleading an individual into entering a casual employment contract and dismissing an employee to re-engage them as a casual employee. 

Casual Employment Information Statement (CEIS): Employers must provide casual employees with the CEIS on engagement, after six months and after each 12 months of employment.

• Amend casual employment contracts to ensure they satisfy the new test for casual employment.
• Prepare management guidelines for employing new casual employees having regard to the new test.
• Audit existing casual arrangements to determine who may be eligible for casual conversion.
• Review HR policies and procedures that refer to a casual conversion pathway.
• Assess when casual employees will be entitled to receive the CEIS.

New definition of employer and employee

New definition: Independent contractor relationships are determined by reference to the ‘real substance, practical reality and true nature of the relationship’ between the parties. The ‘multi-factorial’ test will be applied to assess work relationships, rather than solely assessing the terms of the contract.

Contractor High Income Threshold: The Contractor High Income Threshold is $175,000 (as at 1 July 2024). Independent contractors that earn above this amount can opt out of the new definition and continue under the approach in Personnel Contracting and Jamsek.

• Review contractor agreements to ensure that independent contractors are categorised properly.
• Inform independent contractors earning over the Contractor High Income Threshold they can opt out of the new definition.

Unfair contracts

The FWC can amend, vary or set aside services contracts that include one or more unfair contract terms (which in an employment relationship would relate to workplace relations). In determining a services contract is unfair, the FWC will consider factors including the bargaining power, imbalance of rights, whether a term is reasonably necessary to protect the legitimate interests of a party and whether a term imposes a harsh, unjust or unreasonable requirement.

• Review and consider relevant independent contractor agreements against the factors the FWC can consider in determining whether a term of a services contract is unfair.

Regulated workers

The FWC can make minimum standards orders for regulated road transport contractors and “employee-like” workers. Employee-like workers are those performing digital platform work under a services contract and who have low bargaining power, low authority over the performance of work and/or receive remuneration at or below the rate of employees performing comparable work.

There is a new:

• unfair termination regime for road-transport workers; and

• unfair deactivation regime for digital platform workers. 

• Review whether your business may be covered by these changes.
• Consider how your terms and conditions of engagement compare to those applying to employees doing similar work.