Recent developments in employment law

The latest issues, decisions and proposed changes impacting business and workplace risk 6 min read

Upcoming Fair Work Act changes in August 2024

By Veronica Siow, Alana Perna, Olivia Tregambe

From 26 August 2024

The following amendments will take effect in the Fair Work Act 2009 (Cth):

• A 'right to disconnect', whereby an employee may refuse to respond to contact (or attempted contact) from their employer or others outside of the employee's working hours unless the refusal is unreasonable.
• A new definition of 'employee' and 'employer' which is to be determined by 'the real substance, practical reality and true nature of the employment relationship', taking into account a range of factors.
• Changes to the new definition of employment will also have a range of implications for independent contractors (and the new opt-out mechanism), as well as the classification of casual employees (including a new 'employee choice process', which will replace the existing casual conversion process).
• New minimum standards and protections for 'employee-like' digital platform workers in the gig economy.

For more information on the above amendments, see Closing Loopholes (No 2) Bill passes both houses of Parliament.

As a reminder, the following changes came into effect on 1 July 2024:

• National minimum wage increased to $915.90 (or $24.10 per hour) for a full-time employee working an average of 38 hours per week.
• Award minimum wage increased by 3.75%.
• Superannuation guarantee rate increased to 11.5%.
• High income threshold increased to $175,000 (excluding superannuation).

Draft right to disconnect term in modern awards

By Tegan Ayling and Jessica Hodgson

Things for employers to consider

The Fair Work Commission (Commission) has published a draft right to disconnect term to be included in modern awards. You can read the Commission's statement and the draft term here.

Key takeaways

• From 26 August 2024, in addition to the statutory right under the Fair Work Act 2009 (Cth), all modern awards will include a right to disconnect.
• In preparing for the new right to disconnect in the Fair Work Act, employers should also consider:
  • the out-of-hours contact that is likely to occur with award-covered employees in their workforce; and
  • the applicable modern awards and how particular provisions in those awards will interact with the right to disconnect,¹ including by ensuring that any out-of-hours contact contemplated by an award complies with notification and other requirements.

Background

As part of the Closing Loopholes² reforms, all modern awards are to be varied to include the new right to disconnect. You can read our earlier Insight on the right to disconnect for further background.

Following consultation, on 11 July 2024 the Commission published a draft right to disconnect term. The draft term prohibits an employer from directly or indirectly preventing an employee from exercising their right to disconnect under the Fair Work Act. However, it clarifies that an employer will not be prevented from requiring an employee to monitor, read or respond to contact, or attempted contact, outside of working hours in certain circumstances contemplated by the award—eg contacting an employee in line with the usual arrangement for notifying them that they are required to work while being paid a stand-by allowance.

How and why contact is made, the extent to which the employee is compensated and the nature of the employee's role and level of responsibility are some of the factors relevant to whether an employee's refusal to be contacted out-of-hours is reasonable under the Fair Work Act. Particular award provisions will likely dictate the weight of some of those factors, eg those that contemplate out-of-hours contact and award classifications that determine managerial or supervisory responsibilities.

Next steps

Consistent with the right to disconnect under the Fair Work Act, the modern award term will take effect for most employers from 26 August 2024. For small business employers, it will take effect on 26 August 2025. Employers should be considering how this will impact their award-covered workforces now. The Commission's guidelines about the operation of the right to disconnect will be published at some stage after 26 August 2024.

Potential changes to junior rates of pay

By Veronica Siow, Lawrence Mai

Focus on retail workers under specific modern awards

The Shop, Distributive and Allied Employees' Association (SDA) has lodged an application in the Fair Work Commission (FWC) to vary the junior rates of pay for retail workers under specific modern awards.

Background

The SDA's application seeks to vary the existing rates of pay for juniors who are covered by the General Retail Industry Award 2020, Fast Food Industry Award 2020 and Pharmacy Industry Award 2020.

The proposed variations to the above modern awards primarily involve:

• applying a broad increase to the junior rates of pay across all age brackets; and
• combining the age brackets of 18 to 20 (or 21 for the Fast Food Industry Award 2020) into one single rate of pay.

Grounds for SDA's application

The SDA's application relies upon three main arguments:

• work value reasons
• modern award objectives
• minimum wage objectives.

In respect of the 'work value reasons', the SDA's application considered the nature of the work, level of skill and responsibility involved, and the conditions under which work is being performed by juniors in the retail industry.

Next steps

The SDA has indicated to the Commission that it intends to lodge over 40 statements from individuals covered by the modern awards in question, including three additional statements from experts during the next four months. Any party opposing the application will also be given an equivalent period of time to lodge their outline of submissions and evidence in response.

We will be monitoring this case closely and will provide further updates in due course.

Victorian Parliament inquiry into workplace surveillance laws

By Sayomi Ariyawansa and Anouscha Green

A good time to examine your workplace surveillance policies and processes

The Victorian Parliamentary inquiry into workplace surveillance is examining matters such as the effectiveness of current privacy and workplace laws when it comes to employee workplace surveillance, and best practice workplace surveillance regulation and privacy protections from other jurisdictions.

While the Surveillance Devices Act 1999 (Vic) (SD Act) regulates the use of listening devices, cameras and other tracking devices, and contains prohibitions that specifically apply to employers, this legislation was developed well before the widespread use of the internet. It is widely acknowledged that the current legislative framework may fall short in addressing the challenges presented by the digital transformation of the workplace, including data security risks and the increasing use of artificial intelligence.

Submissions to this inquiry have now closed, with public hearings to commence before the Legislative Assembly Economy and Infrastructure Committee reports back to Parliament in May 2025.

How will this affect you?

The Committee may make recommendations that lead to a reform of existing laws concerning workplace surveillance and worker privacy. This may include recommendations in relation to:

• Enacting dedicated workplace surveillance laws in Victoria.
• Workplace surveillance practices and handling of associated data.
• Minimising the impact of workplace surveillance on employees and their families.
• Data protection and the security of private and sensitive information.
• The role of new technologies in surveillance, such as artificial intelligence.

Looking forward

Employers should monitor the progress of the inquiry. They should also take the opportunity to examine their current workplace surveillance policies and processes, and how employee data and privacy is currently protected. In anticipation of likely changes to the existing legislative framework, it will be important for employers to have a strong understanding of their current practices.

Back to the future on independent contractor arrangements

By Andrew Wydmanski, Laney Facchinetti

Worker's status determined by both contract and actual engagement

As reported in our February Insight, from 26 August 2024 the categorisation of a worker as an 'employee' or 'independent contractor' will revert from a mostly contractual question to a more holistic assessment of the overall relationship.

Key takeaways

• From 26 August 2024 onwards, whether a person is an 'employee'—as opposed to an 'independent contractor'—will depend on the 'real substance, practical reality and true nature of the relationship' between the parties.
• The totality of the relationship between the parties must be considered when determining whether an individual is an employee. This includes the day-to-day facts after the contract has been made.
• The new approach is more expansive than the test outlined by the High Court in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2, where a contract's terms could fully determine if the relationship was employee-employer or independent contractor-principal. It is a return to the pre-2022 multi-factorial approach.

What should businesses do?

The new definitions in the Fair Work Act 2009 (Cth) for 'employee' and 'employer' mean a worker who the law currently considers an independent contractor may soon be an employee.

Businesses should not rely on the contract alone to determine if a worker is an employee or a contractor for the purposes of entitlements under the Fair Work Act 2009 (Cth).

It is important to ensure that work done by an independent contractor is performed in a manner consistent with an independent contractor arrangement. This includes:

• the degree of control over how the worker performs their work;
• whether the worker can work for others;
• whether the worker can subcontract the performance of the work
• the degree to which the worker is held out as being part of the business; and
• whether the work performed by the worker is integral to the core business.

Opt out

Workers whose earnings exceed the 'contractor high income threshold' (which has not yet been set) can be given a written notice allowing them to opt out of the new definition of 'employee' and to stay independent contractors.

If the contractor agrees to opt out of the new definition, the nature of the relationship between the parties is determined only by reference to the written contract. This can provide an additional level of certainty to both parties as to the nature of the working relationship, although note that the worker can revoke their agreement and revert to being an employee.

However, businesses must still ensure that contractors who have opted out are not employees on a contractual analysis anyway.

In Aspire 2 Life Pty Ltd v Jessica Tidmarsh [2024] FWCFB 289, the Fair Work Commission held that a contract's provisions pointed overall to an employment relationship, despite calling the worker a 'contractor'. Under both the old and new tests, it is not enough to describe a worker as a contractor. From 26 August 2024, both the contract and the actual engagement must reflect an independent contractor arrangement.

Fair Work Commission delivers first same job, same pay order

By Veronica Siow, Anthony Hallal, Matt Stark

Potential implications for employers who rely on labour hire workforces

The Fair Work Commission (FWC) recently made its first regulated labour hire arrangement order (RLHA Order) following the recent amendments to the Fair Work Act 2009 (Cth) via the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth). The decision resulted in hundreds of labour hire workers being set to receive a pay rise in line with their 'host' employer's enterprise agreement.³

Background

As reported in our previous Insights here, and here, the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) introduced a new power for the FWC to make RLHA Orders requiring labour hire employers to pay their employees no less than the full rate payable to employees of 'host' employers covered by certain industrial instruments.⁴

The Mining and Energy Union brought an application for a RLHA Order applying to Batchfire Callide Management Pty Ltd (Batchfire) as the regulated host employer, and WorkPac Pty Ltd and WorkPac Mining Pty Ltd (collectively, WorkPac) as employers in respect of employees who perform work at the Callide mine, a black coal mine operated by Batchfire.

The application sought to increase the pay rates of WorkPac employees working at the Callide mine to no less than the full rate payable to Batchfire employees' performing the same job.

The decision in Application by the Mining and Energy Union [2024] FWCFB 299

The FWC determined WorkPac employees were largely indistinguishable from Batchfire employees on the basis of several factors, including how WorkPac employees were:

• attending the same pre-start meetings daily;
• being allocated work and equipment by Batchfire in the same way as Batchfire employees;
• operating under the same Batchfire standard operating procedures and policies; and
• performing the same production work and operating the same Batchfire machines and equipment.⁵

The RLHA order provides for hundreds of WorkPac employees to receive pay rises by 1 November 2024, equal to the full rate of pay for equivalent Batchfire employees under the Callide Mine Union Enterprise Agreement 2021.

How does this affect employers?

• Host employers who rely on labour hire workforces might face increased costs if their labour hire provider were to become the subject of an RLHA Order and seek to pass on those costs.
• The earliest effective date for any RLHA Orders will be from 1 November 2024, meaning further orders such as this one can require employers to increase certain employees' pay rates by as early as 1 November 2024.