Closing Loopholes No. 2 passes Parliament

Libby Pallot, Walter MacCallum, Anthony Massaro, Ben Tallboys, Mandi Xu, Abbey Burns, Kelly Ralph, Ashleigh Warren, Morgan Smithe, Shi Jing Wong, Harrison Gray, Emily Tang & Sarah Newman

The Labor Government’s Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 passed both Houses of Parliament on 12 February 2024 and awaits Royal Assent. This alert canvasses the key changes implemented by the Bill and when the changes come into effect. Please see our previous alert on the bill here.

Changes to casual employment

Provisions commence six months after Royal Assent.

The Bill introduces a new definition of a ‘casual employee’ in section 15A of the Fair Work Act 2009. A person will be a casual employee if their employment relationship is characterised by an absence of a firm advanced commitment to ongoing work and if the person is entitled to casual loading under their contract, or a fair work instrument. Whether there is a firm advanced commitment will depend on the employment relationship being assessed in consideration of a number of factors including the ‘real substance, practical reality and true nature’.

The Bill also changes the casual conversion process, which now centres around ‘employee choice’. The onus to initiate casual conversion will rest with the employee. Disputes about employee choice that cannot be resolved at the workplace level may be referred to the Fair Work Commission, which can arbitrate after attempting to deal with the dispute through other means. The Commission may make orders that are fair and reasonable, including that the employee remain a casual employee, or that they be treated as a part-time or full-time employee.

Under the new rules, employers will be required to give casual employees a Casual Employment Information Statement periodically and not only at the start of their employment. The Statements needs to be re-issued at the six months mark (except for small business employers), 12 months mark, and the end of any subsequent period of 12 months’ engagement.

The right to disconnect

Provisions commence six months after Royal Assent (18 months for small business employers).

The Bill inserts a new section 333M into the Act, which gives employees a right to disconnect outside of working hours.

The right to disconnect allows employees to refuse to monitor, read or respond to contact from their employer (or a work-related third party) outside of their working hours, unless the refusal is unreasonable. When assessing whether a refusal is reasonable, the following will be considered:

  • The reason for the contact;
  • How the contact is made and the level of disruption it causes the employee;
  • The extent of compensation provided to the employee to remain available to work additional hours outside of ordinary hours;
  • The nature of the employee’s role and their level of responsibility; and
  • The employee’s personal circumstances (including family or caring responsibilities).

Where disputes arise due to a refusal to respond to out-of-hours contact, and they cannot be resolved within the workplace, either party can apply to the Commission to:

  • Make an order to stop the employee unreasonably refusing contact;
  • Make an order to stop the employer from requiring the employee to monitor, read and respond to contact, or to stop the employer from taking disciplinary action against the employee; or
  • Otherwise deal with the dispute.

If an order is breached, existing civil remedies under the Act will apply. An employer may apply to the Commission for an application to be dealt with expeditiously and to be ‘struck out’ where they consider that application to be frivolous or vexatious.

Additionally, the right to disconnect will become a ‘workplace right’ under the general protections regime. This means that an employee can bring a claim if they believe their employer has taken ‘adverse action’ against them because they refused to monitor, read or respond to out-of-hours contact.

The statutory definitions of employee and employer

Provisions commence six months after Royal Assent (or earlier by proclamation).

The Bill inserts section 15AA into the Act, which clarifies that whether a person is an employee is determined by the ‘real substance, the practical reality and the true nature of the relationship’. The totality of the relationship will be considered, not just the terms of the contract.

These new provisions overturn two High Court of Australia decisions from 2022 in which it was decided that the question was to be determined based first and foremost on the terms of the written contract.

Independent contractors in gig economy and road transport industry

Provisions commence six months after Royal Assent (or earlier by proclamation).

The Bill enables the Commission to set minimum standards for “employee-like” workers performing work for a “digital labour platform” or road transport contractors. A minimum standards order may include certain terms such as in relation to payments, deductions, record-keeping, insurance, consultation and representation.

In addition, the Bill introduces protections for digital platform workers against unfair deactivation, and for road transport contractors against unfair termination. It also provides a framework to enable consent-based collective agreements for “employee-like” workers of a “digital labour platform” and road transport contractors.

While these new rules are intended to apply to businesses operating in the gig economy, there is uncertainty as to whether businesses in other industries will be captured by the definition of “digital labour platform” as it is broadly defined to include “online application, website and systems operated to arrange, allocate or facilitate the provision of labour services”.

Increased civil penalties

Provisions commence the day after Royal Assent (for the underpayment provisions, the later of 1 January 2025 or the day after the declaration of the Voluntary Small Business Wage Compliance Code)

The Bill increases civil penalties for contraventions of selected civil remedy provisions, including provisions relating to the National Employment Standards, modern awards, enterprise agreements, record-keeping and document production, sham arrangements, and infringement and compliance notices. Maximum pecuniary penalties for some contraventions by corporations will increase fivefold. These increases do not apply to small business employers.

The Bill also increases civil penalties for underpayment – in certain circumstances, the maximum penalty can be three times the value of the underpayment.

How can we help

For advice regarding how these changes may affect your business, please contact a member from our Workplace Relations, Employment and Safety team.

If you would like to stay up-to-date with Alerts and Insights from our Workplace Relations, Employment and Safety team, you can subscribe to our mailing list here.

This article was prepared with the assistance of Seasonal Clerk, Isabella Murphy.

View related insights


Difficult barriers to redeployment will not 'inoculate’ employers against unfair dismissal

21 May 2024

On Friday 5 April 2024, the Full Federal Court of Australia made it clear in an appeal from the Fair Work Commission, that an employer’s reliance on external labour, such as contractors, will be ...

CC WRES 2 May 2024 Alert

Unfair Contract Terms regime crosses over into Fair Work jurisdiction

2 May 2024

The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Closing Loopholes No. 2 Act) commenced on 27 February 2024 introducing a suite of significant workplace relations reforms. These ...

medical colleges - health alert - 360 x 240

Health Alert - Medical Colleges deal with bullying, discrimination and sexual harassment

15 Feb 2024

Much has been made in recent years of the pervasive nature of bullying, discrimination and sexual harassment (BDSH) in the medical profession, and in particular in medical training.