The second part of the government’s Closing the Loopholes Bill was passed last week bringing in the latest significant tranche of industrial reforms to the Fair Work Act (the Act) and related legislation.
Here are some key changes you need to know
- Right to Disconnect
The National Employment Standards will now include a right for employees to refuse to take unreasonable work calls or emails outside their normal working hours. Employees are also able to apply to the Fair Work Commission (FWC) to resolve a dispute about unreasonable out of hours contact if their complaint cannot be resolved internally.
- Changing casual employment
The definition of casual employment is now determined by a lengthy list of factors to determine whether there is a firm advance commitment to continuing or indefinite work.
Businesses will no longer be required to offer conversion for casuals but employees can request conversion every six months. Employers can refuse a request for conversion on fair and reasonable operational grounds. The FWC can resolve disputes about conversion to permanent employment.
- Definition of employment
For the first time, the Act will include a definition of employment. Whether a worker is an employee or independent contractor will be determined by looking at the ‘totality of the relationship’ including post contractual conduct. This definition winds back recent High Court decisions which determined that the most important factor will be the contractual terms between the parties. Many lawyers believe this change is likely to increase uncertainty for businesses who regularly engage contractors, and expose them to penalties for sham contracting.
- Changes to independent contracting and sham contracting
The FWC will have jurisdiction to determine unfair contract terms and resolve disputes in relation to independent contractor agreements. Eligibility is limited to independent contractors earning below the high-income threshold (currently $167,500).
There are increased penalties for sham contracting and the defence to ‘sham contracting’ has been made more difficult to establish. To defend a sham contracting claim, businesses will now have to prove their belief that the relationship was contractor/principal was objectively reasonable.
- Regulation of ‘employee-like’ workers in the gig economy
Workers in the gig economy will be able to apply to the FWC for orders for minimum standards relating to a range of matters such as pay, penalties, superannuation and insurance. These reforms are limited to digital platform employees who have low bargaining power, low authority over their work or receive pay at or below the rate of comparable employees.
- Road transport industry reform
The FWC will be empowered to set minimum standards for the road transport industry including rates of pay for owner-drivers engaged as independent contractors. An expert panel consisting of a majority of owner-drivers will be established to advise the FWC on road transport minimum standards.
- Increased rights and protections for union delegates
Part 1 of the Bill contained significant rights for union delegates including a right for union officials to enter workplaces to investigate potential breaches of the Act with 24-hours’ notice. Part 2 expands on this by permitting union officials to apply to waive the 24-hour notice period to enter workplaces if the FWC is satisfied that suspected contravention of the Act includes underpayment of wages of union members.
- Intractable bargaining declarations
In 2022, the FWC was given the power to arbitrate disputes where parties could not agree on terms of an enterprise agreement (an intractable bargaining declaration). Late last year, the government agreed to an amendment to that provision, providing that the FWC could only make a declaration if the terms of the arbitrated outcome were “not less favourable” to each employee and union covered by an existing enterprise agreement.” This is one of the more controversial amendments as it likely to significantly reduce the power of employers during negotiations for a new enterprise agreement.
For more information on changes related to the Closing the Loopholes Bill and how they may impact you, please contact Coleman Greig’s Employment Law specialists.
