Federal Parliament recently approved the second tranche of Australian industrial relations legislative reforms with the passage of the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2023. We previously wrote about the key features of the original Bill here.  However, in December, the Closing Loopholes Bill was split into two.

The first Act covered the following:

• Same job, same pay (including equal pay to labour hire firm employees)
• Strict penalties for intentional underpayment
• Workplace rights for union delegates
• Small business redundancy exemption
• Stronger discrimination protections relating to family and domestic violence
• Introduction of a Federal Industrial manslaughter offence

This second Act incorporates reforms regarding the gig economy, the definition of employment with specific relevance to independent contracting, the “Right to Disconnect” outside of work hours and changes to casual employment.

While the media has focussed quite appropriately on the positive impact of the new “Right to Disconnect” provisions for employees, the most significant change in the new Act is the shakeup of the operation of casual employment.

By way of background, the former Morrison Government implemented a new definition for casual employment that specified that the “contract of employment” would determine the nature of the employment relationship. This definition was borne out of the High Court’s decision on this critical issue in the Rossato case.

The changes implemented by the Albanese Government removes this approach. Under the new legislative provision, the full nature of the employment relationship will need to be considered. This could include factors such as the regular pattern of employment, the pre-determined length of employment and the nature of employment of similar positions within the organisation, as well as the terms of the employment contract. As can be seen, there is a lack of clarity as to how these new provisions will be applied. In addition, the ability of casual employees to convert to permanent employment is being replaced. 

What do employers need to do?

Effective from 26th August 2024, a casual employee will be able to elect to become a permanent employee after six months of employment. However, an employer will be able to challenge this request on a range of grounds including the impracticality of changing the employee’s terms and conditions due flexibility requirements. Furthermore, the current obligations for an employer to provide casual employees with a casual conversion letter will be removed, which reduces the burden on employers.

Unfortunately, this latest Act leaves Australian businesses grappling with the uncertainty of the implications of these new reforms. How employers apply these reforms is most likely going to change over time, and this will be guided by decisions in industrial tribunals and Courts.

The Bayside Group and Acclaimed Workforce stand ready to partner with our clients to help navigate the impact of these new legislative reforms. If you would like to discuss these issues further, please do not hesitate to contact Nick Wakeling, Workplace Relations Manager on 03 9864 6000 or here.