‘Closing the Loopholes’ – more legislation passed

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

The more contentious of the two bills which aim to close the 'loopholes' that undermine pay and working conditions has been passed by the Federal Government. The Bill proposes to implement substantial changes to workplace laws. It has received significant criticism by business groups regarding its complexity and potential consequences on productivity.

Employers should be aware of the key changes soon to be implemented, including:

• Right to Disconnect: following in the footsteps of a number of European countries, the Bill introduces a legislative ‘right to disconnect’ allowing employees to refuse to read or respond to contact from an employer outside of an employee’s working hours, unless the refusal is unreasonable.
  

• Casual Rights: the Bill introduces a revised definition of ‘casual employee’, which reflects the previous common law approach. While the current approach involves relying solely on an employee’s initial offer of employment to determine the employee’s casual status, the proposed definition will allow consideration of the practical reality of the employment relationship.
  

• Casual Conversion: the Bill introduces a new legislative pathway for causal employees to change their employment status if they have worked for 6 months (or 12 months for a small business employer) under the NES. This will be in addition to the existing casual conversation pathway in the FW Act, which require non-small business employer to consider requests for casual conversion.
  

• Contractor/Employee definition: the Bill introduces interpretive principles to be applied when determining the meaning of ‘employee’ and ‘employer’, focused on the ‘totality’ of the relationship. This change is intended to overcome recent High Court decisions which held the question of whether a relationship is one of employment should be answered solely by reference to the terms of the contract.
  

• Gig Workers (or ‘employee-like’ workers): The Bill empowers the FWC to set minimum standards for employee-like workers (independent contractors who have low-bargaining power, low authority over the performance of work and/or are remuneration at or below a comparable market rate) performing digital platform work. Minimum standards will take the form of either mandatory Minimum Standards Orders or non-binding Minimum Standards Guidelines.
  

• Increasing Civil Penalties: The Bill increases the maximum civil penalties for standard civil breaches and serious contraventions of civil remedy provisions in the FW Act. The Bill also lowers the threshold for what constitute a serious contravention, from the current ‘knowingly and systematically’ to a ‘knowingly’ or ‘recklessly’ standard. 
  

• Sham contracting: the Bill amends the current defence for employers that misrepresent employment as an independent contracting arrangement (‘sham contracting’) from a test of recklessness to one of reasonableness. In its current form, an employer will avoid liability for misrepresenting employment as an independent contracting arrangement if they did not know and were not reckless in coming to that conclusion. Under the new Bill, an employer must show they reasonably believed the contract of employment was instead a contract of services in order to rely on the defence.

In light of these upcoming changes, we recommend you review your template employment agreements and current employee management practices/procedures to ensure compliance.