You may be aware that a number of significant changes have recently been made to the Fair Work Act 2009 (Cth) ("the Act") with a number of those changes becoming effective as of Monday 26 August 2024.
At a high level, this article focuses on the changes to the definitions of "employment" and "casual employee," the casual conversion process, and changes in respect to independent contractors.
There was also an important changing providing a "right to disconnect," which was the subject of a further article.
Definition of Employment
After the confusion that was caused by the 2022 High Court cases in respect to determining whether a worker was an employee or independent contractor, the definitions of employer and employee have been amended so that this determination is made by "ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person."
In determining the real substance of the relationship between the parties, the "totality of the relationship" is considered, which includes considering the terms of the relevant contract, and other factors, including how the contract is performed in practice.
The above definitions are a return to how the employee v contractor question was determined prior to the 2022 High Court cases.
Casual Employees and Casual Conversion
Further to the above, section 15A of the Act provides a new definition of a "casual employee," being that there is "no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person" and the person "will be entitled to a casual loading or a specific rate of pay for casual employees."
There has also been an amendment to the "casual conversion" process whereby the onus is now on the employee to decide if they wish to convert from a casual to a permanent employee. Specifically, if a casual employee has been employed for 6 months, or for 12 months with a small business employer, the casual employee can provide a written notice to their employer that they wish to convert to permanent employment.
The employer needs to provide a written response to the casual conversion request within 21 days, and can only deny the request on certain grounds eg the employer cannot operationally support the request.
It is important to note that the casual employees will remain as a casual employee until either the employer accepts the request to make the casual employee a permanent employee, or there is an order made by the Fair Work Commission ("FWC").
Lastly, there is also an updated Casual Information Statement that needs to be provided any new casual employees, and any ongoing casual employees after 6 months of employment (or after 12 months of employment for small business employers), and after every 12 month period thereafter.
Unfair Contracts Jurisdiction
Another amendment is that contractors that earn income less than the "high income threshold" will be able to apply to the FWC to seek dispute resolution in respect to unfair terms in services contracts, with this jurisdiction to be flexible and informal, similar to when initial claims are made for unfair dismissal and bullying.
Next Steps
- Review your current contracts to ensure that they are compliant with the new changes;
- Update your policies and procedures to take into account the new policies;
- Conduct internal training to educate your staff regarding their obligations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.