The closing loopholes reforms are part of a number of workplace relations changes which have been implemented to amend the Fair Work Act 2009 (Cth) (“FW Act”). The reforms include some notable changes which will affect many employers, including, the right to disconnect, giving rights to a new category of “employee-like” workers and redefining casual employment.  

Many of the closing loopholes reforms commenced on 26 August 2024.

So, what are the changes? 

Right to disconnect 

Australian employees now have a “right to disconnect” under the FW Act. The reform has attracted significant attention and Australia is one of the first countries to introduce this right outside of Europe. This new right gives employees the ability to refuse to monitor, read or respond to contact from a manager or a third party relating to work, outside of their normal working hours, provided the employee’s refusal is not unreasonable.  

Whether an employee’s refusal is unreasonable will depend on the circumstances. Disputes between employers and employees can be dealt with by the Fair Work Commission (“FWC”) after an attempt to resolve the dispute at the workplace level.  

The new right applies to all employees covered by the FW Act from 26 August (except employees in small businesses who have an additional 12 months before the right to disconnect commences).  

If you missed our recent webinar on the right to disconnect, you can purchase the recording here. 

Employment status 

The FW Act now includes a definition of employer and employee. The purpose of these definitions is to reverse the decisions of the High Court of Australia in the Jamsek and Personnel Contracting cases (you can read our summary of these cases here). The definitions will allow the FWC to determine whether a person is an employee or independent contractor with a focus on defining the employment relationship by looking at the totality of how the relationship operates in practice.  

Where an independent contractor earns over the contractor high income threshold (which has been set at $175,000 and will be adjusted annually on 1 July) they can issue an “opt out” notice so that the definition does not apply. In practice this means that a person can continue operating as an independent contractor even if the new definition may classify them as an employee. 

Changes for casuals 

The closing loopholes reforms also introduce a new definition of “casual employee” in the FW Act. The definition provides that an employee is a casual employee if the employment relationship is characterised by an absence of a firm commitment in advance to continuing and indefinite work, and, the employee is entitled to a casual loading or a specific rate of pay for casual employees. 

In determining whether the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work, the real substance, practical reality and true nature of the employment relationship is the focus.  

The process for casual employees converting their employment to permanent has also changed, with the obligation to initiate the casual conversion process shifting to the employee. This process is now known as the Employee Choice Pathway. The FWC has been given new powers to arbitrate where there is a dispute about the conversion of a casual employee’s employment.  

The reforms also require that employers provide casual employees with a Casual Employment Information Statement (“Statement”) before the casual employment relationship commences, and additionally after six and 12 months of employment. The Statement must then be provided annually after each 12 month period. Small businesses are only required to provide the Statement on commencement and after 12 months of employment.  

“Employee-like” workers 

The closing loopholes reforms give rights to a group of workers who have not been covered by the FW Act previously. The FWC can now make binding minimum standards orders and non-binding guidelines for work performed by “employee-like” or digital platform workers (“Regulated Workers”) and workers in the road transport industry. Orders may include terms in relation to payment, deductions, record-keeping, insurance, consultation, representation, delegates’ rights and cost recovery.  

The FWC will also be able to make collective agreements which set out minimum terms and conditions for contractors covered by the agreement.  

Regulated Workers and road transport workers will also be able to bring a claim for unfair deactivation or unfair termination. The new entitlement operates in a similar way to the unfair dismissal regime available to employees. 

Unfair contract disputes 

Eligible independent contractors will now be able to apply to the FWC to dispute the terms of their contract they consider to be unfair. Contractors earning below the contractor high income threshold will be able to make an application to the FWC in relation to unfair terms that relate to “workplace relations matters”. If the FWC determines that a term of the contract is unfair, the FWC can set aside, amend, or vary all, or part, of the contract.  

You can read our analysis of the new unfair contract disputes regime here.

Harri Deacon, Graduate Associate