The passage of both the Closing Loopholes Act 2023 and the Closing Loopholes (No.2) Act 2024  have seen a flurry of legislative changes that will impact on the Australian industrial relations landscape. The 26 August 2024 is a critical date with the introduction of several significant changes.  In addition to introducing new minimum standards and protections for 'gig' economy workers plus additional rights for workplace delegates, the Act introduces critical changes relating to both casual employees and independent contractors.  Furthermore, it will also see the introduction of a new 'Right to Disconnect' provision. 

What will change? 

Regarding casual employees, the Act will see the definition of casual employment shift for new employees.  In essence, no longer will the principal reliance be based on the status of the employee's contract as confirmed in the Rossato case; but will also incorporate the "real substance, practical reality, and true nature of the employment relationship".  This will include the communication with the employee prior to engagement, particularly relating to the regularity of hours to be performed plus the period of the engagement. 

So, what does this mean in reality? Employers will no longer be able to simply rely on the employment contract to argue an employee is a casual. As a result, new employees may need to be engaged differently from 26 August 2024. 

Further to the changes for casual employment, the definition of independent contractors will also be varied.  No longer relying on the superiority of the contract applying to the relationship as confirmed in the Personnel Contracting and Jamsek cases; the relationship will similarly be determined by the "real substance, practical reality, and true nature of the employment relationship".  This means that factors such as the nature of the work, autonomy, payment of remuneration, tax arrangements, control, hours of work, financial risk and the provision of work equipment will all be potentially considered.  

An employer can write to "eligible" independent contractors seeking to authorise the continuation of their current engagement, regardless of the nature of their employment. However, the independent contractor must meet an income threshold and agree to this arrangement in writing. Furthermore, the independent contractor can rescind this agreement at any point. The government has not yet provided information on what this income threshold for eligibility will be. It is essential to note that if an independent contractor earns less than the threshold, a business will need to reassess the employment relationship based on the new laws. The intent of this threshold is to protect lower income workers, often those participating in the gig economy. Higher income earners like engineering, technology and medical professionals will most likely be able to continue as independent contractors. 

The other change which will impact Australian workplaces is the new "Right to Disconnect".  Under these new provisions, eligible employees will have a new ‘right to disconnect’ from undertaking work activities outside of their usual business hours. In short, an employee can refuse to monitor, read or respond to contact from an employer or a third party after work.  An employee can continue to be contacted out of hours if it is deemed 'reasonable" in the circumstances. Reasonableness will consider factors such as the reason for the contact, whether the employee is compensated for out of work activities, the nature of the employee’s role and level of responsibility and the employee’s personal circumstances, including family or caring responsibilities. 

Are you prepared? 

Australian businesses need to be working through the impact of this legislation in their own organisation and preparing for the implementation of these changes. 

With respect to both the engagement of casual employees and independent contractors, consider: 

• What has been the historical method of engagement in your business?  
• Are casuals guaranteed both hours of work and tenure of service? 
• When engaging independent contractors, do they work autonomously and bear risk for the provision of services?  
• In terms of written contracts, do they clearly outline the true nature of the engagement?  
• Do they need to be updated for new staff? 

With respect to the new right to disconnect, consider: 

• What type of contact occurs with staff outside of working hours?  
• What types of engagement are deemed "essential v unnecessary"?  
• What contact are your staff receiving from colleagues and clients out of hours?  
• Do your employment contracts require variations?  Are your staff adequately remunerated for afterhours engagement?  
• Do you need to confirm with your staff in writing these arrangements prior to 26 August? 

Employers should be considering the answers to these questions in readiness for the application of the new legislation. Bayside Group will work with our clients to manage the impact of this legislation and help to navigate any required changes in engaging new employees after 26th August. 

Our Workplace Relations team can assist you with these issues across your workforce. We work with organisations to ensure compliance, provide training, and review policies and procedures. To learn more, see our Workplace Relations Resources or contact Nick Wakeling today on 03 9864 6000.