Over the past year, the Closing Loopholes Legislation has brought about some of the most significant changes to employment and industrial laws in Australia in decades. These sweeping reforms address fundamental aspects of the employer-employee relationship and could substantially impact workforce arrangements, costs and strategic planning for many organisations.
This reform program includes several changes that have received significant media coverage including the introduction of family and domestic violence protections in late 2023, changes to the definition of employment, changes to casual employment and the pathways available to transition to full-time and part-time employment, and the right to disconnect, which came into effect August 2024.
Definition of Employee and Employer
These amendments introduce an interpretive principle for determining whether an individual is an ‘employee’ (as compared to an independent contractor), or a person is an ‘employer’ (as compared to a principal) for the purposes of the Fair Work Act 2009.
The changes in relation to this consideration, means there is a fairer test applied to determine this, and that the practical reality of the working relationship will be considered, as well as the written terms of any contract governing that relationship.
The Right to Disconnect
The ‘right to disconnect’ has now taken effect for most employees, noting that for employees of small businesses (businesses with less than 15 employees), this will take effect on 26th August 2025. The new regulation stipulates that employees are entitled to decline contact from their employer outside of working hours, provided their refusal is not deemed unreasonable. This ‘right to disconnect’ is a recognised workplace right, meaning employees should not face any negative consequences or adverse actions for refusing to take work-related calls or respond to work-related emails during their unpaid personal time, unless the refusal is considered unreasonable.
This shift in policy underscores a major shift in work-life boundaries and places new responsibilities on organisations to manage employee contact effectively.
What is ‘unreasonable’ I hear you ask? There are some circumstances where an employee’s refusal to monitor, read or respond to contact will be unreasonable. If the contact or attempted contact is required by law, it would be considered unreasonable for the employee to refuse. If the contact or attempted contact is not required by law, certain matters must be considered when deciding whether the employee’s refusal is unreasonable. These include
When will an employee’s refusal be unreasonable
An employee’s refusal to monitor, read or respond to contact or attempted contact will be unreasonable if the contact or attempted contact is required by law.
If the contact or attempted contact is not required by law, considerations to determine whether the employee’s refusal is unreasonable would include understanding the reason for the contact and how it was made, particularly considering how much disruption it causes for the employee. Whether the employee receives any compensation within their employment contract to be available to work when the contact is made, or to work outside their ordinary hours. The role held by the employee and their level of responsibility, along with the employee’s personal circumstances including family or caring responsibilities.
There is an exemption from the right to disconnect from contact that is required under a law of the Commonwealth, State or Territory (e.g. some emergency services).
Tips for discussing Workplace Changes
Open and regular communication is key to maintaining a work environment where everyone has a clear understanding of the expectations surrounding any new policies or legislative requirements. This can also help prevent any potential workplace issues emerging.
Managers need to understand the workplace changes that will affect their employees and any of the practices currently in place. Organisations have an obligation to ensure changes are discussed, understood, and contextualised for their own environment. Whether you are a large organisation with your own HR department, or a smaller organisation with less formal support structures in place, the requirements and your liability remain the same.
Those with casual staff as part of their operating structure need to be on the front foot when it comes to the casual conversion pathway. This update has added further changes to the requirements for permanent transition options and it is important that when making workforce resource decisions you are aware of future obligations in relation to the workforce mix you are opting for.
If you currently engage independent contractors and you are not across the changes to the workforce definitions specifically regarding what constitutes an employee vs an independent contractor, it is important that you revisit this and ensure you are meeting your obligations under the Fair Work Act.
The right to disconnect is something that all non-small businesses need to be across. Organisations need to ensure they are training managers in relation to the obligations under the right to disconnect, and the importance of ensuring regular and open communication with team members about deadlines, workload expectations and working arrangements.
This should also involve reviewing employment contracts and policies to ensure they clearly outline expected working hours and the possibility of out-of-hours work. It’s important to discuss and set expectations around out-of-hours contact in a way that suits both the workplace and the employee’s role as both are responsible for ensuring an understanding when it comes to these changed regulations. Ideally, these conversations should take place before any out-of-hours contact occurs.
Important points to cover during these conversations might include:
- When someone might be expected to monitor, read or respond to contact
Different roles within your organisation will have potentially different obligations when it comes to this so its important that you have thought about this in relation to roles and the responsibilities of these roles. A technical systems manager might need to take a call about a critical outage however they would not necessarily need to monitor emails. Your role as managers is to think through what this means for the roles you are leading, then discuss and document these requirements.
- Pay and conditions that may relate to out of hours contract
It is important to check the relevant award, enterprise agreement or employment contract for any entitlements that may apply.
- Review cycle
This discussion should be had formally, potentially conducted at the annual review process conducted within your organisation. Additionally, when employees shift into new roles this should be discussed to ensure understanding.
- Internal policies, procedures and documentation
You should review your existing internal policies, procedures and documentation to ensure it includes any expectations regarding out of hours contact. This would include position descriptions.
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