In this Circular, we explain recent changes to the law that came into effect on 26 August 2024, including a new definition of casuals and independent contractors; the right to disconnect from work, and we outline the type of compliance required.
Casual Employees
A new definition of a “casual employee” now applies. A person is a casual if there is no firm advanced commitment to ongoing work and if he/she is entitled to causal loading, regardless of the written terms of the contract. As such, the totality of the relationship will be assessed to determine the status, rather than the contract alone.
Factors that can be considered include:
- work availability: whether the employer can offer or withhold work and if this is occurring;
- acceptance and rejection: whether the employee can accept or reject work and if this is happening;
- future work likelihood: whether future work of the kind usually performed by the employee is reasonably expected, based on the nature of the business;
- similar employment: presence of full-time or part-time employees doing the same kind of work;
- pattern of work: The employee’s work pattern, even if it changes due to absences.
Casuals employed prior to this date will remain casual unless they move to permanent employment either through a conversion process or accepting alternative employment offered by their employer.
Casual employment information statement
All employers must continue to provide their employees with a Casual Employment Information Statement (CEIS), in addition to the Fair Work Information Statement, at the commencement of employment.
Additionally, small business employers (less than 15 employees) must also provide a CEIS to casual employees after 12 months of employment. For non-small businesses (15 or more employees), a CEIS must also be provided after 6 and 12 months of employment and then after every 12 months of employment.
The CEIS contains information about the new definition of casual employees; how casual employment can be amended, including when an employee can notify their employer to change to permanent employment; the reason why an employer may not accept an employee’s notice; and the role of the Fair Work Commission in dealing with disputes.
Employers must ensure that the latest version of the CEIS is provided to their casual employees. The CEIS is available on the ClinLegal portal, and we recommend you diarise the applicable 6 months and anniversary dates to avoid accidentally forgetting to comply.
Contractors
Most Practices will understand the considerable time and effort required to draft contracts and SFA agreements to ensure that they correctly reflect an employment or contractor relationship.
The Fair Work Act has reintroduced a multifactorial approach for classifying the employment relationship. Prior to 26 August 2024 the “start of relationship test” applied where the terms of the contract as agreed were used to define the relationship. Now, the following criteria will be considered when determining whether a worker is an independent contractor or an employee:
- the real substance, practical reality and true nature of the working relationship;
- all parts of the working relationship between the parties.
This new approach looks at the whole relationship between the parties, including the terms of the contract and how the contract is executed in practice, rather than just focusing on the terms of the written agreement. As a result, the “whole relationship test” now applies.
Employee relationships generally attract more workplace entitlements, as well as potential additional taxes, than contractor relationships. This means increased costs and risks, highlighting the importance of correctly classifying the relationships.
As a result of these changes, we recommend Practices reassess and take fresh legal advice on their contracts and SFAs to identify and address any risk.
Importantly, following these changes, a new exception applies that allows contractors earning more than the high-income contractor threshold, currently $175,000 annually, to “opt-out” of being considered an employee by Fair Work, by written notification to the employer. Further details on this new provision are yet to emerge, and we will provide further updates in due course. However, as tax and superannuation are dealt with under different legislation, rather than the Fair Work Act, they may still apply.
Right to disconnect
Employees now have the right to disconnect outside work hours unless that refusal is deemed unreasonable. This means that employees can refuse to monitor, read, or respond to an employer or a third party.
Several factors will be considered in determining whether the employee’s refusal is reasonable. This includes, but is not limited to:
- the reason for contact;
- how the contact is made and whether it is disruptive to the employee;
- the nature of the employee’s role and level of responsibility;
- whether the employee is compensated or paid extra for being available/contacted, working additional hours;
- the employee’s personal circumstances, including whether they have family or caring responsibilities.
If the parties disagree about whether the right to disconnect is reasonable, the dispute must be resolved at the workplace level to begin with. If this is not possible, the employee can apply to the Fair Work Commission to make a stop order or hold a conference to mediate the dispute.
The right to disconnect will be implemented in modern awards and recognised as a general protection under the Fair Work Act. This rule comes in a year later on 26 August 2025 for small businesses. Please note that clause 23(d) of the Health Professionals and Support Services Award already includes an on-call allowance for employees who are required to respond to employers outside of ordinary work time.
We recommend clients clarify expectations on contact outside of work time by workplace policy and/or in the contract itself.
We are available to ClinLegal members to audit and assess your agreements and operations to maximise compliance. Please contact us at [email protected] at first instance to arrange a meeting time with us.
Hugh Oxborough
Workplace Relations Advisor
Yasmine Healy
Head of Legal Services
This Circular is produced for guidance purposes only and is not a substitute for legal advice. Legal advice should be sought for individual circumstances. For tailored advice for your Practice, please contact us at [email protected]