Employment changes from 26 August 2024: The right to disconnect, casual employment & independent contractors

Three significant changes have come to employment law from 26 August 2024 which have the potential to affect all businesses in the Hair and Beauty Industry. We summarise these below, in brief, to ensure you are aware of your changing obligations, but you will find an expanded explanation of these changes in the following pages that contain all key details on what to expect and how to prepare for these in your business.

What are the key changes that my business needs to be aware of?

• Right to disconnect

• A new “right to disconnect” is being introduced for employees from 26 August 2024 where they are employed in a business with 15 or more employees
• The right to disconnect is being introduced on 26 August 2025 for employees in businesses with less than 15 employees
• The new right gives an employee a right to refuse to respond to contact from their employer, outside of work hours, unless the contact is deemed to be reasonable

• Casual employees

• A new definition of casual employment will be included in the Fair Work Act which moves away from the terms of the employment contract being the decisive factor, and rather focuses on the employment relationship viewed as a whole
• The existing process for casual conversion to permanent employment is being scrapped - replaced with a process that puts the onus on employees to request conversion
• There will be a ban on dismissing a permanent employee to engage them as a casual employee
• The Fair Work Information Statement will now need to be issued at multiple times during employment, not just at the start

• Independent contractors

• There will be a new employee v contractor test which (like the changes for casuals) will no longer focus solely on the terms of the written contractor agreement, but rather will look at the relationship as a whole

Looking at these changes in detail

• Right to disconnect

The new right to disconnect will be expressed in the Fair Work Act 2009 as follows:

333M Employee right to disconnect

(1) An employee may refuse to monitor, read or respond to contact, or attempted contact, from an employer outside of the employee’s working hours unless the refusal is unreasonable.

(2) An employee may refuse to monitor, read or respond to contact, or attempted contact, from a third party if the contact or attempted contact relates to their work and is outside of the employee’s working hours unless the refusal is unreasonable.

Who can employees refuse contact from?

The first thing to note is the provision gives an employee a right to refuse to respond to contact from their employer (manager / colleagues, etc) and also from third parties connected to their employment (clients / customers / prospective customers).

As explained later in this factsheet, this is not an absolute right, but rather a right to refuse to respond to contact, where that refusal would be reasonable.

What does refusing contact mean?

Refusing contact obviously means refusing to answer phone calls, text messages, emails or other forms of messaging (Slack, MS Teams, etc).

It is also important to note that the right to disconnect gives an employee a right to refuse to monitor for contact, not just to refuse to answer. This could mean that an employee could say that, for example, they will be turning their phone off or leaving their laptop at work.

When does the right to disconnect apply?

The legislation is concerned with giving an employee a right to refuse to respond to contact “outside of the employee’s working hours”. The term “working hours” is not defined in the legislation, but it is reasonably clear that the right is about giving employees’ protections from contact once their working day / shift has finished.

The right to disconnect does not mean that employees cannot be required to work extra hours outside of their ordinary hours (ie overtime), such as when an employee is required to stay back late at work to finish an urgent project. There are already protections from employees from working excessive hours which mean that an employee can only be required to work overtime where this is reasonable.

The right to disconnect is all about protections from employees being contacted once their working hours have finished - whatever time that may be.

It would also seem that the right to disconnect applies during periods of leave given these would presumably also be “outside of the employee’s working hours”.

Will I commit an offence if I send a message to an employee outside of their working hours?

No.

The legislation operates so that an employee has a right to refuse to respond to contact from their employer outside of their working hours, but there is nothing in the legislation that says an employer cannot try and communicate with an employee outside of working hours, it is just that an employee has a right to ignore this.

There is nothing wrong with an employer sending a message or trying to call an employee at any time so long as the employee has a choice whether or not to respond.

It is only where an employee is required to respond to that contact, or subject to adverse consequences for failing to do so, and the requirement to respond was unreasonable, that an employer will have committed an offence. We explain this more fully below.

What is a reasonable / unreasonable refusal to respond to contact?

As noted above, the legislation says that an employee may refuse to respond to contact unless that refusal is unreasonable. Or looking at it the other way around, an employee may only refuse to respond to contact where to do so will be reasonable.

This also obviously applies to refusing to monitor for contact too (ie it needs to be a reasonable refusal).

The key question, therefore, is what is a reasonable or unreasonable refusal to respond to contact?

Helpfully the new legislation sets out a non-exhaustive list of five matters that must be taken into account when considering reasonableness, which we set out with our commentary below.

#1 The reason for the contact or attempted contact

Clearly the more urgent or business critical the need for the contact, the more likely it will be to be unreasonable to refuse contact.

#2 How the contact or attempted contact is made and the level of disruption the contact or attempted contact causes the employee

An email to an employee just after they have finished work is likely to be more reasonable than a phone call in the middle of the night.

#3 The extent to which the employee is compensated: (i) to remain available to perform work during the period in which the contact or attempted contact is made; or (ii) for working additional hours outside of the employee’s ordinary hours of work

If the business is able to allocate some sort of extra payment for the employee being “on call” or for work performed outside of their normal working hours, then it will be more reasonable to require them to be contactable.

Similarly, if an employee’s salary is expressed to include consideration of an amount of out of hours contact, this will support the view that this contact is reasonable.

Businesses should be aware that some modern awards already include requirements for employers to pay “on-call’ allowances or for work performed after an employee’s normal hours have finished.

As explained further below, the Fair Work Commission is required to update all modern awards by 26 August 2024 to include clauses dealing with the right to disconnect, which might well include extra obligations to compensate employees regarding out of hours contact.

#4 The nature of the employee’s role and the employee’s level of responsibility

For some roles it will always be the case that a degree of out of hours contact is necessary to be able to perform the role, eg a manager who is responsible for rostering and has to deal with situations such as an employee calling in sick the night before their shift, and then needs to ring around to find a replacement.

It would seem that, generally speaking, the more senior the employee is, the easier it would be to justify that some out of hours contact is required of the role, particularly to deal with emergencies and other unexpected events in the business.

#5 The employee’s personal circumstances (including family or caring responsibilities)

The reasonableness of any out of hours contact will be impacted by the employee’s personal circumstances. The most obvious example of this will be where this negatively impacts an employee’s caring responsibilities.

For example, it will be less likely to require an employee to be contactable in a period where the employer knows they are looking after their children than in a period where they are not.

As noted below, modern awards are also being updated to state that where the award provides for an on-call or stand-by allowance, or has provisions relating to emergency roster changes or employee’s being recalled to work, an employer will not breach the right to disconnect provisions when contacting employees outside of work hours in accordance with those clauses (see further below).

We have set out our top tips for ensuring contact is reasonable at the end of this factsheet.

Updates to modern awards

The Fair Work Commission must include a “right to disconnect” clause in all modern awards by 26 August 2024.

The new clauses have been published in draft and are unlikely to change significantly.

In essence the new clauses will have the effect of prescribing certain circumstances where contact by the employer outside of work hours will not breach the right to disconnect. The Hair and Beauty Industry Award is likely to be updated from 26 August 2024 to state that an employer will not breach the right to disconnect where it attempts to contact an employee to make an emergency change of roster on less than 48 hours notice as already provided for in clause 15.2 of the Award.

Other awards will state that the right to disconnect will not be breached when an employee is contacted, or required to monitor for contact, when the employee is in receipt of an “on-call” allowance. However, the Hair and Beauty Award does not contain a provision dealing with on-call allowances. That is not to say that an employer could not choose to implement an on-call allowance as an over–award payment to compensate employees for having to be available for out of hours contact (see further below).

Disputes about the right to disconnect

The legislation sets out a specific mechanism for dealing with disputes about the right to disconnect and whether refusing contact is reasonable or unreasonable.

Employers and employees are required to first “attempt to resolve the dispute at the workplace level by discussions between the parties”.

If this is not successful either the employee or the employer may apply to the Fair Work Commission.

The Commission is empowered to make orders to prevent an employee from continuing to unreasonably to monitor for or respond to contact or to prevent an employer from continuing to require an employee to monitor for or respond to contact. The Commission is also able to order an employer to cease taking disciplinary action against an employee for refusing contact.

The types of order the Commission can make are wide-ranging, except that the legislation specifically prevents the Commission from issuing a financial penalty (although an employer or employee could be subject to a financial penalty for breaching any order the Commission makes).

The legislation also makes it clear that the right to disconnect is a workplace right, meaning that it is protected by the general protections provisions of the Fair Work Act. This means that employers can be subject to (uncapped) penalties for taking adverse action (such as disciplining or dismissing) an employee because they have exercised the workplace right, or to prevent them from exercising the right.

For example, it would seem that an employee would have a general protections claim if an employee was disciplined/dismissed for refusing contact where that refusal was reasonable (that being the essence of the right to disconnect).

Extreme care will therefore have to be exercised by employers when taking action in respect of an employee who refuses contact outside of their normal working hours.

Top tips for compliance

• If you are in a business where you require some degree of out of hours contact with employees then you need to be thinking about the steps you need to take now to ensure that this runs as smoothly as possible and in particular that you do not get push back that this contact is unreasonable.
  
  
• We consider that one of the most important things to do is to make sure that employees understand the expectation on them about what out of hours contact is expected.
  
  
• For example, you might say that all employees will be required to respond to out of hours contact in an emergency, but if such an emergency arises, your policy will be that you send an SMS or call the employee on their personal mobile phone. However, you might say that employees are not required to generally monitor their emails outside of work hours unless they are directed to by SMS or phone call.
  
  
• All of this should be set out in a Right to Disconnect Policy (a template policy is available to all our clients). You should be as specific as possible about what situations an employee is required to monitor for contact and to respond to it.

• Ideally employees should be consulted about the policy before it is finalised.
  
  
• We also recommend that employees’ employment contracts refer to the fact that some out of hours contact will be required (ideally with specific examples). If an employee has been told in advance of starting employment what out of hours contact is required, and they have accepted the employment on that basis (by signing the contract), it is going to be difficult for them to then argue that the contact is unreasonable. A template right to disconnect contract clause is available to all our clients.
  
  
• The second thing, which the legislation really emphasises, is that a requirement to respond to out of hours contact is more likely to be reasonable where the employee is compensated for this. Think about whether you can you implement any sort of extra payment (eg an on-call allowance, even if this isn’t mentioned in your award) or provide time off in lieu when an employee has to respond to contact out of hours or is required to be monitor for communication.
  
  
• If you have senior employees who are paid a high salary it would be advisable that their employment contract specifically refers to the fact that the salary has been set at that level in consideration of a reasonable amount of out of hours contact being required. As above, our clients can access template clauses for this purpose.
  
  
• In your day-to-day communications with employees, it will be important to be clear about what sort of our of hours communications you require responses to. Business owners may be used to working all the hours under a sun and sending emails in the middle of the night - but are you expecting a response at that time?
  
  
• Many messaging systems such as Slack and many email systems allow you to draft messages and then schedule for them to be sent out a later time.
  
  
• Some people opt for email signatures which say something along the lines of “I tend to work flexible hours and send messages at all times of the day and night, I do not expect you to respond to my messages outside of your normal working hours”

• Changes to casual employment

New definition of casual employee

A risk that always exists when engaging someone as a casual employee is that they will later be found, in reality, to be a permanent employee. Get this wrong and there is a risk that the employee could then be entitled to backdated payments for permanent entitlements such as paid leave, notice of termination, redundancy pay, etc.

Prior to 26 August 2024 the definition of casual employment in section 15A of the Fair Work Act 2009 is as follows:

(1) A person is a casual employee of an employer if:

 (a) an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and

 (b) the person accepts the offer on that basis; and

 (c) the person is an employee as a result of that acceptance.

 

The hallmarks of a true casual employee are therefore all about there not being a commitment from either the employer or employee to ongoing work which is subject to an agreed pattern.

Under this provision, this test is determined by looking at the terms of the offer of employment and the acceptance of this offer, ie the terms of the employment contract, when the employment first commences.

From 26 August 2024 the relevant test of whether there is “an absence of a firm advance commitment to continuing and indefinite work” will instead be assessed by looking at the “real substance, practical reality and true nature of the employment relationship” and not just the terms of the employment contract. Post-contract conduct will also therefore be relevant.

The legislation also specifically refers to the fact that the true nature of the employment may arise “in the form of a mutual understanding or expectation between the employer and employee not rising to the level of a term of that contract” and that “a mutual understanding

or expectation may be inferred from conduct of the employer and employee after entering into the contract of employment or from how the contract is performed”. 

So even though the written contract might say there is no commitment to ongoing work, if the actual understanding between the employer and employee is different, this might be enough to unpick the casual nature of the arrangement.

The Fair Work Act will also provide that the assessment of whether there is an absence of a firm advance commitment to continuing and indefinite work must have regard to the following factors:

(i) whether there is an inability of the employer to elect to offer, or not offer, work or an inability of the employee to elect to accept or reject work (and whether this occurs in practice);

(ii) whether, having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee;

(iii) whether there are full-time employees or part-time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee;

(iv) whether there is a regular pattern of work for the employee.

Importantly, so long as the employee is properly classified as a casual employee at the start of their employment (bearing in mind all of the above factors) they will not “morph” into a permanent employee because they end up working regular hours, etc.

Rather, employees initially engaged as casual employees will have a right to elect to convert to permanent employment if they consider in the future they no longer meet the definition of casual employee (as explained further below).

If they do not make this election, they will remain a casual employee indefinitely.

This is good news for employers in the sense that if they get things right at the start, they don’t need to worry about a casual employee somehow transforming into a permanent employee without their knowledge.

A new process for “casual conversion” to permanent employment

The pre-26 August 2024 position whereby non-small business employers have a positive obligation to offer casual employees conversion to permanent employment after they have been employed for 12 months (so long as the last 6 months they have been working regular hours) is being scrapped.

Rather, employees in a non-small business (15 or more employees) will have a right to elect to convert to permanent employment after 6 months employment (or after 12 months employment in a small business), if they no longer consider that they meet the definition of casual employee.

The election must be in writing and can be made at any time after the employee has the requisite length of service (although not more than once in a 6 month period).

Once the employer receives the written election they must follow the following process:

• They must first consult with the employee about the notification (also see fourth dot point below)
• Then, within 21 days of receiving the notification, they must respond in writing to the employee and state whether or not they accept the notification
• If the employer accepts the notification the response must state:
  • whether the employee is changing to full-time employment or part-time employment;
  • the employee’s hours of work after the change takes effect;
  • the day the employee’s change to full-time employment or part-time employment takes effect
• The above matters must have also been discussed with the employee as part of the consultation process
• If the employer does not accept the notification they must state in writing the reasons for this which can only be on one the following grounds:
  • the employer still considers the employee meets the definition of casual employee; or
  • there are “fair and reasonable operational grounds for not
  • accepting the notification”; or
  • (largely only relevant for public sector employers) accepting the notification would result in the employer not complying with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory

The legislation provides a non-exhaustive list of what would be considered “fair and reasonable operational grounds for not accepting the notification”. These are:

substantial changes would be required to the way in which work in the employer’s enterprise is organised;

there would be significant impacts on the operation of the employer’s enterprise;

substantial changes to the employee’s terms and conditions would be reasonably necessary to ensure the employer does not contravene a term of a fair work instrument (such as a modern award) that would apply to the employee as a full-time employee or part-time employee (as the case may be). For example, the minimum engagement for a casual employee was 1 hour per shift, but for part-time employees it is 3 hours, etc.

If there is a dispute between the employee and the employer about whether or not to accept the notification to convert, or the terms on which the employee will convert (eg their hours, etc), then the parties are required to try and resolve the matter between themselves in the first instance.

If this is unsuccessful either party may apply to the Fair Work Commission to resolve the dispute.

Many have seen these provisions as positive for employers as they remove the positive obligation to offer conversion to casual employees - if a casual employee does not request to convert, then they will remain a casual indefinitely.

How do the new casual conversion provisions operate for existing casual employees?

For any casual employees employed on or after 26 August 2024 the new provisions will apply straight away, for any existing casual employees who were employed prior to these dates the previous casual conversion provisions will continue to apply for 6 months for employers with 15 or more employees, or 12 months for employers with fewer than 15 employees.

The net effect of this means that if a casual employee who was employed before 26 August 2024 reaches their 12 month anniversary at any date prior to 26 February 2025, an employer with 15 or more employees will have to proactively offer them conversion to permanent employment in accordance with the old rules, unless one of the allowable exceptions applies. A summary of the old rules can be found here: https://www.employmentinnovations.com/blog/new-casual-employment-obligations-in-2021/

More onerous rules about providing the Casual Employment Information Statement

The new legislation provides a new obligation to supply copies of the Casual Employment Information Statement Statement to employees on an ongoing basis, rather than just at the start of employment.

From 26 August 2024 employers who are not a small business (15 or more employees) must:

• Give a casual employee a copy of the Statement before, or as soon as practicable after, the employee starts employment
• Then give them a copy again as soon as practicable after the employee has been employed for a period of 6 months beginning the day the employment started
• Then again as soon as practicable after the employee has been employed by the employer for a period of 12 months beginning the day the employment
• And then again at the end of every subsequent period of 12 months for which the employee is employed by the employer

For small businesses (less than 15 employees), they must:

• Give a casual employee a copy of the Statement before, or as soon as practicable after, the employee starts employment
• Then again as soon as practicable after the employee has been employed by the employer for a period of 12 months beginning the day the employment
• But not again after that!

New offence for dismissing a permanent employee and re-engaging them as a casual

From 26 August 2024 employers can be subject to a financial penalty if they dismiss, or threaten to dismiss, a permanent employee in order to engage them as a casual employee to do the same or substantially similar work (including, for example, dismissal by way of redundancy).

A related offence is also created for making knowingly false statements in order to influence an employee to enter into a casual employment contract, to perform the same or substantially similar work that they did as a permanent employee.

Top tips for employers

• Make sure your template employment contracts are updated to refer to the new definition of casual employee
• Check you understand your rights and obligations regarding casual conversion - our team can help with any questions
• Ensure you are providing a Casual Employment Information Statement at the start of the employment and at the other points during the employment relationship you are required to
• Don’t re-engage permanent employees in casual roles where they will be performing the same work, even in a redundancy situation

• Independent contractors

A new test for determining if someone is a contractor or an employee

A new definition of “employee” will be inserted into section 15AA of the Fair Work Act 2009 which will be relevant to determining whether someone is a true independent contractor or an employee.

This is an important question as employees are entitled to many more protections under the law than contractors (minimum wages, notice of termination, paid leave, etc), and contractors are generally responsible for their own tax affairs. Getting the classification wrong can have serious consequences: businesses can be heavily fined for misclassifying someone as a contactor when they should be an employee (“sham contracting”) as well as having to backpay employment-related entitlements.

From 26 August 2024 the legislation states that in making the assessment of whether someone is a contractor or an employee “the real substance, practical reality and true nature of the relationship” must be considered, and is therefore designed to reverse the position established by the High Court’s 2020 Personnel Contracting and Jamsek rulings, which said that employee/contractor status must be determined only by looking at the terms of the contract under which the worker is engaged.

As is the case prior to the 26 August 2024 amendments, whether someone can legitimately be engaged as an independent contractor as opposed to as an employee isn’t something that the business and worker can just agree between themselves. The question of whether someone is a contractor or employee must be assessed by looking at a number of factors including how much control does the business have over the worker, is the worker paid when they achieve a particular result v being paid for their time, is the worker responsible for supplying their own equipment and does the worker have the right to delegate work to others, etc.

Going forward, rather than making this assessment just by looking at the terms of the written contract between the parties, instead the whole relationship will need to be considered (including how the parties behave in practice, “outside” of the contract).

Arguably this will mean more uncertainty for businesses as the question of whether someone has been properly engaged as a contractor can’t be solved for by a well-drafted contract, there will always be a risk that a worker is deemed to be an employee at a later date, due to them behaving in an employee-like manner after the contract has been formed.

Need further guidance?

If you need any assistance understanding these changes, or your obligations as an employer, ABIC Clinic Members can reach out to the ABIC HR advisory team for further guidance or contact an ABIC Facilitators on 1800MYABIC (1800 692 242).