With many parts of the Federal Government’s “Closing Loopholes” legislation coming into effect this financial year, it is important to be aware of the obligations you have as an employer.
The new “Right to Disconnect” rule was introduced for employees from 26 August 2024, applying if a business has 15 or more employees. For employers with less than 15 employees, the Right to Disconnect will take effect on 26 August 2025.
What is the “Right to Disconnect?”
The Fair Work Act 2009 (Cth) (“the Act”) will now give employees a positive right to refuse to monitor, read or respond to contact, or attempted contact, from their employer, or third parties related to work, if that contact is outside of the employee’s working hours, unless the refusal is found to be unreasonable.
What does this amendment mean for your business?
The “Right to Disconnect” will impact the way that your business communicates with its employees outside of work hours. Employees will be potentially able to make a General Protections claim if they are of the view that there has been an adverse action taken against them by their employer because of their “Right to Disconnect”.
When will a “Right to Disconnect” be unreasonable?
An employee’s ‘Right to Disconnect’ will be unreasonable if the contact or attempted contact is required by law. If there is no requirement at law for communication, the following factors are to be considered when deciding whether the employee’s disconnection is ‘unreasonable’:
- The reason for the contact or attempted contact,
- How the contact is made and the level of disruption the contact or attempted contact causes the employee,
- The extent to which the employee is compensated to remain available to perform work outside of their ordinary hours of work,
- The period in which the contact or attempted contact is made or is compensated for working additional hours outside of the employee’s ordinary hours of work,
- The nature of the employee’s role and the employee’s level of responsibility, and
- The employee’s personal circumstances, including family or caring responsibilities.
What are your obligations as an employer?
There is no prohibition on employers contacting their employees outside of hours of work, the right is on the employee to elect to ignore or not respond to the contact, outside of their work hours unless the refusal is found to be unreasonable. This right extends to contact from a third party if the contact, or attempted contact, relates to the employee and their work.
We recommend businesses create a specific policy detailing the manner in which they will communicate with their employees outside of work hours. This policy should be drafted by a specialist Employment Lawyer to ensure it appropriately addresses the legislative requirements.
Changes to casual employment
Rules about casual employment have changed, including how casual work is defined, pathways to permanent employment, and employee and employer responsibilities.
Definition of Casual Employee
A new definition of “casual employee” was introduced to the Fair Work Act. Under this definition, a person employed from 26 August 2024 will be casual employee if, when they start employment:
- The employment relationship has no firm advance commitment to ongoing work, taking into account a number of factors, and
- They’re entitled to a casual loading or specific casual pay rate under an award, registered agreement, or employment contract.
Employees classified as casual who were with their employer before 26 August 2024 will stay casual under the new definition unless they move to permanent employment.
Pathway to permanent employment
Casuals will have a new pathway to full-time or part-time (permanent) employment under the National Employment Standards. The ‘employee choice pathway’ will allow eligible casuals to notify their employer in writing of their intention to change to permanent employment. An employer can only refuse the notice for certain reasons. These rules replace the current rules for changing to permanent employment.
A casual will be able to provide written notice to their employer to change to permanent employment under the employee choice pathway if they:
- Have been employed for at least 6 months (12 months if employed by a small business)
- Believe they no longer meet the requirements of the casual employee definition.
Independent contractor changes
A new definition of employment has been added to the Fair Work Act to help determine the meaning of ‘employee’ and ‘employer’. This is used by some businesses to work out whether a worker is an independent contractor (contractor) or an employee.
To work out if someone is a contractor or an employee, the following must be considered:
- The real substance, practical reality and true nature of the working relationship
- All parts of the working relationship between the parties. This includes the terms of the contract and how the contract is performed in practice.
Applying the new definition may:
- Mean that some working relationships are characterised differently
- Result in different rights and obligations for people affected.
The whole of relationship test
There is a different method of checking if a worker is a contractor or an employee, using the new definition of employment that applies from 26 August 2024. This new method is known as the whole of relationship test (note that this test does not apply to sole traders or partnerships who have employees).
The whole of relationship test determines if a worker is a contractor or an employee by considering the real substance, practical reality and true nature of the relationship.
If there is an employment relationship, the worker is an employee of the business. When considering the real substance, practical reality and true nature of the relationship, there are several factors to consider. These include:
- The amount of control over how work is performed
- Financial responsibility and risk
- Who supplies the tools and equipment
- Ability to delegate or subcontract work
- Hours of work
- Expectation of work continuing.
Contact our KMT advisers if you need tax assistance.
About our advisers:
Michael Fox has been dedicated to his clients’ success, devising comprehensive wealth strategies for personal and business growth for over four decades. With extensive expertise in business governance and family business succession, Michael specialises in empowering emerging businesses and family enterprises by fostering renewal, enhancing value, and smoothing transitions to the next generation. Please do not hesitate to reach out if you need assistance.
Chrisanthe Lekatis is renowned for her expertise in management accounting, virtual CFO services, and top-tier business advice. She empowers management with tailored strategies for success, streamlining processes to achieve efficient and cost-effective outcomes. Her commitment to building trust and lasting relationships goes beyond professional excellence; it’s a personal ethos. By actively listening and understanding her clients’ businesses and goals, Chrisanthe thrives on collaborative efforts to navigate challenges and collectively achieve their aspirations. Please do not hesitate to reach out if you need assistance.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.
