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IR Update: Closing the Loopholes 

By Russ Baldwin

The second tranche of the Federal Government’s Closing the Loopholes (CTL) reforms have been passed by the Parliament. The changes made include the definition of casual employment, meaning of employer and employee and the introduction of the right to disconnect from work.  Employers and employees will need to adjust to the new laws (and complexities) a few of which are set out below:


Casual employment

The existing definition of casual employment in section 15A of the Fair Work Act refers to the terms of the contract and not does not rely on any subsequent conduct of the parties.  The amended definition retains the concept that a casual employee is someone who has no firm advance commitment to continuing and indefinite work, but now requires an assessment of the “real substance”, “practical reality” and “true nature” of the employment relationship.


Meaning of employee and employer

An “interpretive principle” has been inserted to the Fair Work Act to assist in determining whether a person is an employee or a contractor. The assessment will require an examination of the ‘real substance, practical reality and true nature of the working relationship, by considering the totality of the relationship’. The changes are intended to reverse recent decisions of the High Court of Australia which held the question of whether a person is a contractor or employee should be answered by reference to the terms of the

contract alone and not any multi-factorial test.


Right to disconnect

The CTL legislation will now require all modern awards to include a right to disconnect from the workplace.  Employers may only contact employees in out of work time if it is reasonable to do so, and employees can refuse to respond if reasonable to do so. The factors in assessing whether a refusal to respond is reasonable or not include the reason for the contact, how the contact is made, the extent to which the employee is compensated for responding and the nature and seniority of the role. The amendment specifically states that the right to disconnect is a workplace right therefore the adverse action protections in the Fair Work Act apply. An aggrieved employee can apply to the FWC for a stop contact order. Importantly, the FWC cannot order pecuniary penalties however, the breach of an order is a civil liability provision for which fines can apply. 


It remains to be seen how the right to disconnect jurisdiction will evolve in practice. There appears to be a fair amount of wriggle room for salaried employees who are expected (and are contracted) to work 'reasonable additional hours' including outside of ordinary hours. Based on past experience, the unavailability of pecuniary orders for applicants will likely have a prophylactic impact on the number of stop contact applications to the FWC. We shall see. As always, never boring in IR land.

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