Are you ready for the changes effective from 26 August 2024

The upcoming changes to employment laws take effect from 26 August 2024 and will affect businesses and workers across Australia. These changes are part of the Closing Loopholes Bill No. 2, aimed at tightening regulations and ensuring fairer treatment in the workplace. 

Here’s a summary of what’s changing and how it might impact you:

1. CRIMINALISATION OF INDUSTRIAL MANSLAUGHTER

The law will now criminalise industrial manslaughter across Australia, with penalties of up to $18 million for companies and 25 years imprisonment for individuals. This harmonisation aims to hold businesses more accountable for safety failures leading to death.

What to do?

•    Review and update safety policies.

•    Ensure leadership is fully aware of their WHS responsibilities.

•    Conduct regular training and risk assessments.

2. NEW DEFINITION OF CASUAL EMPLOYMENT

From now on, someone is only considered a casual employee if there’s no firm commitment to ongoing work (having regard to the true and practical nature of the relationship) and if they are entitled to receive casual pay rates (including loading).

This means, you can no longer rely on what the contract alone says.

What to do:

•    You’ll need to regularly check that casual roles truly meet this new definition.

•    Casual work arrangements should be reviewed periodically to ensure compliance.

3. SIMPLIFIED CASUALS CONVERSION PROCESS 

Casual workers can now request a switch from casual to permanent employment after six months (12 months for small businesses) by notifying the employer that they believe their employment status is no longer casual (under the above definition). Although the conversion process is now employee led (instead of employer led as was previously the case), this does not mean that employers cannot refuse this request. In saying that, employers can only refuse if they have solid, justifiable reasons.

What to do:

•    Be prepared to handle conversion requests and ensure that refusals are based on valid grounds.

4. CLARIFIED DEFINITIONS OF EMPLOYERS AND EMPLOYEES

The new laws shift the focus to the real nature of work relationships when determining if someone is an employee or an independent contractor, making it harder to rely solely on what’s in the contract.

This means that contracts alone can’t be used to define work relationships.

What to do:

•    Review current contracts and assess each new employment relationship. 

•    Update recruitment and contracting policies; 

•    Train relevant staff such as managers, HR people, and those involved with hiring and drafting contracts.

•    Consider which individuals are independent contractors or employees having regard to the differences in their contracts and the reality of the relationship.

•    Identify highly paid independent contractors ($175,000 and above) and consider whether those contractors could use the opt out mechanism.

5. RIGHT TO DISCONNECT

Employees will have the right to to refuse to monitor, read or respond to contact outside of working hours (including from customers or clients) unless the refusal is ‘reasonable’. This is designed to improve work-life balance and reduce burnout.

What to do:

•    Review the new model term in the Award.

•    Consider on call, overtime, or standby payments in compensation for connecting with staff after hours, if applicable.

•    Update policies, position descriptions, job adverts contracts etc to account for this right.

•    Train managers on how to respect employees’ off-hours and what constitutes ‘reasonable’ refusal of contact.

•    Know your employees’ ordinary hours of work.

For more information on the right to disconnect, the Fair Work Commission have published on their website the following resources:

•    a short animation about the right to disconnect; and

•    a downloadable Fact Sheet about the right to disconnect.

6. NEW RULES ON UNFAIR CONTRACT TERMS

Independent contractors earning below $175,000 per annum can now challenge unfair contract terms through the Fair Work Commission. As a result employers can expect an increase in disputes over contract terms.

What to do:

•    Review and update contract templates to ensure they are fair.

7. CONTRACTOR HIGH INCOME THRESHOLD

In addition to the above changes, the Fair Work Regulations 2009 have now also been amended to included the ‘Contractor High Income Threshold’.

The Contractor High Income Threshold has been set at $175,000, and has a range of applications as a result of the Closing Loopholes changes, relevantly including:

•    A worker must be earning less than the Contractor High Income Threshold to make an application for an unfair termination of a services contract.

•    A worker must be earning less than the Contractor High Income Threshold to make an application relating to an unfair contract term.

•    A worker must be earning more than the Contractor High Income Threshold to ‘opt out’ of the new definition of ‘employee’.