Over the past few weeks, we’ve had the opportunity to engage with many of our clients in 1on1 education sessions to discuss the significant changes introduced under the Fair Work Act. These updates are bringing new rights and responsibilities for both employers and employees, and naturally, many questions have arisen around how these changes will impact day-to-day operations.
We’ve compiled a list of our clients frequently asked questions that address key aspects of the new regulations, including the changes to contractor classifications, casual employee definitions
and everyone’s favourite topic – the right to disconnect!
FAQ: Independent Contractor Changes:
What is the new definition of employment in the Fair Work Act?
A new definition has been introduced to clarify whether a worker is an employee or an independent contractor.
The definition focuses on the “real substance, practical reality, and true nature of the relationship” between the parties rather than relying solely on written contract terms.
How is this change different from previous classifications of contractors?
Previously, classification relied primarily on contract terms and conditions. The new definition requires a broader assessment of how contractors are treated in practice, beyond what is outlined in the contract.
Who does the new definition of employment apply to?
The new definition generally doesn’t apply to state referred national system businesses (state referred businesses) or workers of these businesses. It also doesn’t affect the meaning of ’employee’ and ’employer’ in other laws like tax, superannuation, and workers compensation.
What is the ‘whole of relationship test’?
Effective from 26 August 2024, the whole of relationship test is a new method for determining if a worker is a contractor or employee. It examines the full context of the working relationship.
What is the ‘start of relationship test’?
Used by state-referred businesses, this test assesses factors at the beginning of the working relationship to determine classification.
What factors are considered in both contractor tests?
Some of the key things looked at include:
- Control over how work is done
- Provision of tools and equipment
- Responsibility for risks and costs
- Ability to hire others
- Duration of the work
What is the contractor high income threshold?
Contractors earning over $175,000 annually are considered high income earners. These individuals can ‘opt out’ of the whole relationship test by notifying their employer.
What are the changes to sham contracting?
The defence to sham contracting claims has shifted from a ‘recklessness’ test to a ‘reasonableness’ test. Employers must now prove they reasonably believed the worker was a contractor at the time of representation.
Who are regulated workers, and what protections do they have?
Regulated workers are contractors in specific industries, such as digital labour platforms and road transport, who are subject to additional rules and protections under the new category introduced on 26 August 2024.
FAQ: Casual Employee Changes
What is the new definition of a casual employee?
Under the new definition, a person is considered a casual employee if, when they start employment:
- There is no firm advance commitment to ongoing work, based on various factors.
- They are entitled to a casual loading or specific casual pay rate under an award, agreement, or contract.
Does this definition apply to casuals employed before 26 August 2024?
Yes, employees classified as casual before this date will remain casual under the new definition unless they transition to permanent employment through a conversion process or a Fair Work Commission order.
What is a “firm advance commitment”?
A firm advance commitment refers to the employer’s expectation of ongoing work. It is assessed based on factors like:
- Whether the employer offers or doesn’t offer work.
- Whether the employee can accept or reject work.
- The likelihood of future work based on the nature of the business.
- The presence of full-time or part-time employees doing similar work.
- A regular work pattern does not alone indicate a firm commitment to ongoing work.
What if a casual employee wants to move to permanent employment?
From 26 August 2024, a new pathway will allow eligible casual employees to transition to full-time or part-time (permanent) employment. This will replace the existing casual conversion rules.
What are sham arrangements, and what are the new rules?
Sham arrangements occur when employers misrepresent employment to avoid paying entitlements. From 26 August 2024, it will be illegal to:
- Convince a full-time or part-time employee to switch to casual employment by providing false information.
- Dismiss an employee to rehire them as a casual for the same or mostly the same work.
What are the penalties for sham arrangements?
Penalties for sham arrangements are:
- Up to $93,900 for individuals.
- Up to $469,500 for businesses.
FAQ: Right to Disconnect
What is the “right to disconnect”?
The right to disconnect allows employees to refuse contact outside of their working hours. Employees can decline to monitor, read, or respond to communication from their employer or a third party unless it would be unreasonable to refuse.
When does this new right come into effect?
- Non-small business employers: 26 August 2024.
- Small business employers: 26 August 2025.
Can employees refuse all contact outside of work hours?
Employees generally have the right to refuse work-related contact outside their regular working hours, but this refusal may not always be considered reasonable. Several factors are taken into account when determining if refusal is justified, such as:
- Reason for the contact: If the contact is urgent or related to a critical issue, refusal might be considered unreasonable.
- Disruption to the employee: The level of inconvenience or disruption caused by the contact is considered. For example, a phone call in the middle of the night may be more disruptive than a quick email.
- Compensation: If the employee is paid extra for being available outside of regular hours or for working additional hours, it may be unreasonable for them to refuse contact.
- Employee’s role and responsibility: Higher-level roles, such as management or leadership positions, may involve more after-hours responsibilities, making refusal less reasonable.
- Personal circumstances: An employee’s family or caring responsibilities will also be considered. If contact would interfere with these obligations, refusal may be more justified.
- Legal requirements: If the contact is required by law, it is unreasonable for the employee to refuse to respond.
In summary, employees can refuse after-hours contact, but there are situations where it could be considered unreasonable, especially if the contact is urgent, compensated, or part of the employee’s job responsibilities.
Are there any exceptions to the right to disconnect?
Yes. If the contact is legally required, the employee cannot refuse to respond, monitor, or read the communication.
Will awards include the right to disconnect?
Yes, by 26 August 2024, all modern awards will include terms explaining how the right to disconnect applies to different industries and occupations.
What should I do if there is a dispute about the right to disconnect?
Disputes should first be addressed at the workplace level. If unresolved, either the employee or employer can take the issue to the Fair Work Commission. The Commission can:
- Issue a stop order.
- Hold a conference to resolve the dispute.
- Handle the dispute in other ways.
Still have a question? Just give us a call!
