Amended Closing Loopholes No. 2 Bill 2023 passes the Senate: What you need to know
The final suite of anticipated employment law reform has now passed Australia’s Parliament. The changes impact all businesses in Australia and fundamentally affect key aspects of Australian employment law. We have set out a summary of the key changes below:
- Employee v Independent Contractor
A definition of “employee” has been inserted into the Fair Work Act 2009 (Cth). Under the new definition, whether an individual is an “employee” is to be determined based on the totality of the relationship, including what occurs in practice. As a result of these changes, businesses cannot solely rely on the contractual terms in place as being determinative of whether a worker is an employee or independent contractor. This aligns with the position in other jurisdictions such as the United Kingdom.
It will also be harder for businesses to defend against a potential misrepresentation claim (known as a “sham contracting” claim) as an employer must now demonstrate, in defending against such a claim, that it “reasonably believed” that the engagement was for an independent contractor relationship.
Other changes impacting independent contractor relationships generally have also been introduced.
- Casual employment changes
A new definition of casual employment will now apply. The new definition provides that whether an employee is a casual will depend on the practical reality of the engagement, and how the engagement evolves, rather than being determined based on the contractual terms. Further, the current requirement for employers to offer conversion to permanent employment has been replaced with a new single pathway for conversion by employee choice.
- Right to disconnect
Employees will now have the right to refuse to monitor, read or respond to contact, or attempted contact, from their employer outside of their working hours unless such refusal would be unreasonable. What is unreasonable depends on a range of factors such as the employee’s compensation, their role, and personal circumstances. Employees will be permitted to apply to the Fair Work Commission for a “stop” order in the event of a dispute between the employer and employee regarding any refusal by the employee to respond.
- Increased civil penalties
Civil penalties for various contraventions, such as those relating to contravening national employment standards, modern awards, enterprise agreements, minimum wage orders etc., have been materially increased such that the maximum penalty that can be imposed is now up to AUD469,500 (for a body corporate) or up to AUD4,695,000 (for a body corporate) for ‘serious contraventions’.
The majority of the changes, once passed, will come into effect by 1 July 2024 with some of these changes, such as increases to civil penalties, commencing immediately on the day that the Act, introducing these changes, receives royal assent.
DLA Piper will be publishing more detailed updates on this legislation, including the above changes. Do not hesitate to reach out to the team if you would like to discuss.
