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!
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:
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.
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:
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:
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:
What are the penalties for sham arrangements?
Penalties for sham arrangements are:
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?
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:
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:
Still have a question? Just give us a call!
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