‘Closing the Loopholes’? More contentious Workplace Law changes

Kieran BowdenBusiness Process, Business Structures

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As trusted advisors to businesses, we at 542 Partners closely collaborate with legal experts like Nick Noonan from Henry William Lawyers. Nick recently shared his insights on the implications of the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023. Here’s what he has to say about the recent changes:

On 12 February 2024, the Federal Government passed the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023, with the stated aim of closing the ‘loopholes’ said to undermine pay and working conditions for Australian employees.

The Bill has been criticised by business and employer groups about its complexity and potential adverse consequences on productivity. 

Although the Bill includes a range of other changes, some of the more controversial include: 

  • 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 further revised definition of ‘casual employee’.  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 (and alternative) legislative pathway for casual employees to apply to convert to permanent if they have worked for more than 6 months (or 12 months for a small business employer). 
  • Contractor/Employee definition: the Bill introduces new statutory definitions of employee and employer (to distinguish from independent contractors), which focus on the ‘totality’ of the employment relationship. This change is intended to overcome recent High Court decisions which held the question of whether a person is an employee or contractor should be answered solely by reference to the terms of the contract.
  • Gig Workers (or ‘employee-like’ workers): The Bill empowers the Fair Work Commission 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 remunerated at or below a comparable market rate) performing ‘digital platform’ work.  Essentially giving rise to the creation of a third category of worker, between employees and contractors. 
  • Increasing Civil Penalties: The Bill increases the maximum civil penalties for standard civil breaches and serious contraventions of civil remedy provisions in the Act. The Bill also lowers the threshold for what constitutes 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. 

Given the complexity associated with these changes, we recommend you undertake a review of your existing staffing framework with employment law experts.

To delve deeper into these crucial updates, click here to register for the Henry William Lawyers Employment Law Briefing lunch, hosted by Nick himself. The team will be discussing the newest legal updates, covering ‘Closing the Loopholes’ amendments affecting key areas like the ‘right to disconnect’, wage theft, casual employment and contractors.