The Fair Work Legislation Amendment (Closing Loopholes No 2) Bill 2024 (Loopholes 2 Bill) was passed by parliament on 12 February 2024. The Loopholes 2 Bill makes significant amendments to the Fair Work Act 2009 (Cth) (Act). These amendments are designed to provide greater protections to employees and other ’employee like’ workers.
A version of the Loopholes 2 Bill was introduced into parliament in September 2023 (see our previous insight) but was later split into two parts, with less controversial aspects being passed late in 2023.
The major changes now introduced by the Loopholes 2 Bill include:
Casual employment
- introducing changes to the definition of casual employment in section 15A of the Act, to require consideration of whether there is a ‘firm advance commitment to continuing and indefinite work’ based on an assessment of the entire substance and practical reality of the relationship, to determine if it is truly casual. This contrasts with the current definition in the Act which defines casual employment only with reference to the contract of employment and the intention of the parties at the time the contract was entered into, with no inference to be drawn from the way the parties conducted the relationship after the contract was entered into;
- providing rights to casual conversion after six months, rather than the current 12 months, for casual employees employed in businesses that are not small businesses. However, the obligation on employers to offer casual conversion will be repealed and replaced with a streamlined system whereby employees initiate requests for casual conversion. The Fair Work Commission (FWC) will have power to arbitrate disputes about casual conversion;
- introducing civil penalties for employers who:
- terminate the employment of an ongoing employee in order to engage them as a casual to perform the same or substantially the same work; or
- knowingly make false statements in order to persuade an ongoing employee to enter into a casual employment contract to perform the same or substantially the same work;
Right to disconnect
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- providing a right for employees to disconnect from work-related communications with the employer or third parties outside of working hours, unless the refusal to engage with those communications is unreasonable;
- giving the FWC power to deal with disputes about whether an employee’s refusal to communicate outside of work hours is reasonable, including power to make orders to stop an employee refusing contact or stop an employer taking certain actions;
Gig economy and transport workers
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- giving the FWC power to:
- make orders setting minimum standards for certain employee-like workers engaged via digital labour platforms or in road transport, but not standards relating to rostering, overtime or primarily commercial matters that do not affect the terms and conditions of engagement;
- approve collective agreements for such workers;
- make orders regarding unfair contract terms; and
- deal with unfair deactivation or termination claims, in line with codes to be developed.
Contractor relationships
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- introducing a test for determining whether an individual is an employee based on the real substance, practical reality and true nature of the relationship, having reference to the totality of the relationship. This is intended to reverse decisions of the High Court in 2022, which gave primacy to written contractual terms in determining whether a relationship was one of employee or contractor;
Enterprise agreements
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- expanding which unrelated employers can make a multi-enterprise agreement, including franchisees;
- allowing a single employer enterprise agreement to replace a multi-employer agreement during its nominal term, in certain circumstances; and
Delegate’s rights
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- introducing rights and protections for workplace union delegates, including rights to reasonable communication with members and potential members, access to the workplace and facilities and training during work hours.
Employers will need to consider and (as far as possible) plan for the extent to which these changes will impact their workforce. Businesses with a large casualised or contracted workforce will be particularly affected.
For more information, contact our Employment, Workplace Relations and Safety team.