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HR to Go podcast episode 12: Closing the loophole – part 2 (transcript)

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Karen: Welcome to HR to Go by Effective Workplace Solutions. In this episode of HR to Go, we’ll be chatting about the second stage of the Closing the Loop Holes Legislation, and to walk us through this I have Greg Arnold, Founder and Consultant from Effective Workplace Solutions.

Karen: Welcome, Greg.

Greg: Thank you Karen, it’s great to be chatting about this topic today.

Karen: I am sure many of our listeners are aware of the significant changes we have seen in the IR landscape over the past 3 years, and the most recent of those changes was the Closing the Loop Holes legislation. Now Greg, I am aware that you have already recorded a podcast on the first tranche of changes, so today we are focusing on the second bill that was passed in Parliament in February of this year.

Greg: That’s right.

Karen: Ok, so today we are going to focus on the following topics: the Right to disconnect, Casuals, Contractors, Wage Theft, Road transport, Gig economy and Union Delegates.

So let’s dive in and have a chat about the right to disconnect. Greg, this particular change received some significant coverage in the press didn’t it?

Greg: Yes, it did Karen, and I will say, much of it was a storm in a tea cup scenario.

Under the new Right to disconnect, employees will have a legal right under the Fair Work Act 2009 (Cth) to refuse to monitor, read or respond to contact from their employer outside of their working hours unless the refusal is unreasonable.

The media speculation and hype suggested that:
• You cannot send an email or text to an employee outside of work hours
• You cannot call an employee outside of work hours
• It is a criminal offence to contact an employee outside of work hours.

However, this is not strictly true.

Rather, what the legislation provides is: A right for an employee to ‘ignore’ contact outside of their working hours in certain situations.

The right to disconnect will not apply to circumstances in which an employee’s refusal is deemed to be unreasonable, including:
• the reason for contact
• how contact is made
• the level of disruption resulting from contact
• the extent to which an employee is compensated to remain available to work during the period when contact/attempted contact is made or for working additional hours outside the employee’s ordinary hours of employment
• the nature of the employee’s role and their level of responsibility
• any relevant personal circumstances. For example, family or caring responsibilities.

And this piece of legislation commences on 26 August 2024 for most employers and 26 August 2025 for small businesses (less than 15 employees).

Karen: Right, so while the right to disconnect is aimed at promoting work-life balance, it also considers practical and situational factors.

Greg: Yes, exactly Karen.

Karen: And do you have a few tips for employers to assist with implementing this in the workplace?

Greg: Sure, my top 3 tips would be employers should consider:
• preparing a right to disconnect policy and educate their team on this topic;
• organising feedback mechanisms for employees who feel the need to work outside of agreed working hours; and
• encouraging all employees to schedule any emails and tasks to be delivered during agreed working hours.

Karen: Great tips Greg. Ok, let’s move on to the topic of Casuals.

Greg: Sure. This was an aspect of the legislation that was watched keenly as we hoped for better clarification in relation to casuals.

There has been changes to the definition of casual. The definition now reads as follows:
“The employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
the employee is entitled to a casual loading (which may arise from a fair work instrument or employment contract).”

And there are a number of factors used to classify a casual, and these include:
• a mutual understanding or expectation between the employer and employee;
• the employee's ability to accept or reject work;
• the future availability of continuing work;
• whether there are other employees performing the same work who are part-time or full-time employees; or
• a regular pattern of work
Note: it is important to get the classification of a casual correct at engagement to avoid civil penalties.
Further, if an employee is correctly engaged as a casual at the start of their employment, they remain a casual employee unless:
• they exercise ‘employee choice’ and satisfy a series of tests to change to permanent employment.
• otherwise agree to change to permanent.

Karen: Greg, you just mentioned employee choice. I guess that brings us to a discussion about the changes to casual conversion.

Greg: Sure. The existing casual conversion rules will be replaced by ‘employee choice’.

Where casual employees have the discretion to convert to permanent employment after 6 months of employment (12 months for small businesses).

The employee may issue a new notification if they would like to change to full/part time if they believe they no longer meet requirements of casual employment definition and they have been employed for a period of 6 months at the time the notification is given (or 12 months for small business employers). Employers then have 21 days to respond (accept or decline) that request.

These changes will apply from 26 August 2024 for most employers and 26 August 2025 for small businesses (less than 15 employees).

One other area I want to very briefly touch on is some changes to providing employees with the Casual Fair Work Information Statement. Employers are now required to issue the Casual Fair Work Information Statement at engagement, then at the 6-month mark, and the 12-month mark every year thereafter.

Note, small business employers are required to issue the Casual FWIS at engagement and then every 12 months thereafter.

Karen: The new legislation has certainly brought about some significant changes, especially concerning the definition and treatment of casual employees. Greg, would you have some tips for employers who are trying to navigate this area in the workplace?

Greg: Sure, I would suggest:
• Employers check their employment contracts and letters of appointments for casuals to ensure that the wording is consistent with the new definition of casual employment.
• Ensure reminders in calendars or payroll systems for the issuing of the Casual Employment Information Statement.
• Also, it is worth pointing out that employers should make sure they are using the most up-to-date Casual Employment Information Statement. This document, as well as the Fair Work Information Statement are updated regularly so I would encourage employers to regularly check the Fair Work Ombudsman website to see if it has been updated to ensure they are providing the correct document to their employees.
• And finally, where possible and where practical roster your casual employees on a genuinely casual basis rather than on a regular and systematic basis if you want to avoid claims for conversion, or indeed claims for retrospective payment for annual leave and personal leave.

Karen: Thanks Greg, and for employers wanting a more in-depth understanding of casual employment in the workplace, you can listen to our podcast ‘A Casual Conversation’ where we unpack this topic in more depth.
Ok, onto our next topic of discussion, Contractors.

Greg: Argh, yes, the Contractors v Employee is certainly a topic we spend a lot of time discussing with our clients.

Now, in terms of the changes in this space, the new legislation reverses the High Court decisions of 2022 and reinstates the previous common law test which was applied prior to these decisions.

In my opinion, this will create more uncertainty for companies when they classify workers.

Companies will need to consider a “multi-factorial test” when classifying its workers and have ongoing regard to how the contract plays out in practice. This includes considering:
• Right to subcontract
• Right to work for other companies
• Provision of tax invoices
• Provision of tools of trade
• Wearing of uniforms

Further, employment will be defined for the first time in the Fair Work Act 2009 (Cth) so that the courts must have regard to the “real substance”, “practical reality” and “true nature of the relationship” when considering whether a worker is an independent contractor or an employee.

So on that basis, I would recommend that Employers review the current use of independent contractors to assess the likelihood that contractors would be considered employees under the new definition, and ensure they review their contractor's agreements to ensure compliance.

Karen: Those are great suggestions Greg, and this really is a great opportunity for business owners to have a look at their documentation and bring it all into line with the current laws isn’t it.

Greg: Absolutely, I couldn’t agree more.

Karen: And while we are on the topic of looking a documentation and processes, the next subject for today’s discussion is Wage Theft. Are you able to unpack this for us Greg.

Greg: Sure. So this piece of legislation comes into effect on 1 January 2025 and the focus is on deliberate actions. It has been emphasised in both government communications and media reporting, these new laws will only pertain to employers who deliberately underpay their staff. That is, there is a wilful act of underpayment, not simply a mistake made by not understanding or misinterpretation of Award or Act provisions.

When it comes to these provisions a court will look at the knowledge, conduct and intention of executives of the business. They will look at whether or not they knew this was happening and did nothing to fix the issue.
The new legislation will also include provisions for the underpayment of superannuation, so not only will underpayment of super be a breach of tax laws, it will also be a breach of the Fair Work Act.

My advice is that HR operatives and Employers treat this as a warning to “double down” on compliance exercises around payroll, as the fines can be up to 7.8 million dollars and/or up to 10 years in jail.

There is another element to this legislation which allows a union to apply to the FWC for an ‘exemption certificate’ which will waive the minimum 24 hours’ notice requirement for entry into a workplace if it concerns the underpayment of wages or other monetary entitlements of its members.

The Fair Work Commission can only issue the exemption certificate if it reasonably believes that advance notice of the entry given by an entry notice would hinder an effective investigation into the suspected contravention or contraventions.

Karen: It is clear that it will be crucial for businesses to be extra diligent and proactive about compliance to avoid these hefty penalties. It will be really interesting to watch this play out in 2025.
Greg, given the potential for strong sanctions for non-compliance, what can businesses be doing right now to get ahead of this?

Greg: I think a proactive approach is the key here. Taking a proactive stance will be their shield to the recent changes. And this approach should start now.
I would suggest that employers consider undertaking a payroll review and I would suggest this is done by an external contractor so there is a fresh set of eyes looking at the data.
Employers, should also review employment contracts and Award provisions (if there is an applicable Award) and rectify errors now if they are discovered.

Karen: This is definitely an area that Employers and business owners should not be ignoring, and again, presents a great opportunity to review practices and improve compliance if needed. Our next area for discussion is Road Transport Authority

Greg: Ok, I provide a quick overview of this topic. The Fair Work Commission will have the power (on its own motion or an application) to set minimum standards in the road transport industry.

A minimum standards order may include any of the following matters:
• payment terms
• deductions
• record-keeping in relation to specified matters
• insurance
• consultation
• representation
• delegates’ rights, and
• cost recovery.

These changes like many of the other changes we have discussed today, will commences on the 26 August 2024.

Karen: Great, thank you, and now we move onto the Gig Economy.

I will touch on this briefly because the changes in this area are materially the same as the Road Transport changes.

Again, the Fair Work Commission is empowered to set binding minimum standards for ‘employee-like” workers who perform digital platform work. That is, Uber or Uber Eats. The standards will be similar to an Award.

A minimum standards order may include any of the following matters:
• payment terms
• deductions
• record-keeping in relation to specified matters
• insurance
• consultation
• representation
• delegates’ rights, and
• cost recovery.

And again, this commences on 26 August 2024.

Karen: Great, thank you. Well this then brings us to a discussion about the enhanced rights for workplace union delegates.

Greg: Yes, there have certainly been some changes here. As a result of these changes, from 1 July 2024, all modern awards, and new enterprise agreements are to include a term relating to the rights of workplace delegates.

Under the new laws, a workplace delegate will have the right to:
• represent the industrial interests of members
• reasonable communication with members
• reasonable access to the workplace and workplace facilities
• reasonable access to paid time delegate training (does not apply to small business)

And further, the Fair Work Act will be amended to provide specific protections for workplace delegates. Under the changes, an employer would be prohibited from:
• unreasonably failing or refusing to deal with a workplace delegate;
• knowingly or recklessly making a false or misleading misrepresentation to a workplace delegate; and
• unreasonably hindering, obstructing or preventing the exercise of rights of a workplace delegate.

These changes are designed to strengthen the role and protection of workplace delegates.

Karen: Greg, thank you so much for your insight into this area and all the topics we have spoken about today.
And that wraps up our discussion on the 'Closing the Loopholes' bill changes. We've covered a lot of ground today, from the new focus on deliberate underpayment of wages and superannuation, to the enhanced rights and protections for workplace delegates, and the upcoming minimum standards for the road transport industry.

These changes are significant and signal a clear message from the government: compliance and fair treatment of employees are paramount. It's essential for businesses to stay informed and proactive in adapting to these new regulations to avoid hefty penalties and ensure a fair and compliant workplace.

If you’re an employer or HR professional, now is the time to review your policies, update your training, and double-check your payroll systems.

Be sure to subscribe and stay tuned for more updates on how these and other legislative changes might affect you and your workplace. If you have any questions or topics you’d like us to cover in future episodes, drop us a message via email or on our social media channels.

Thank you for listening to another episode of HR to Go. If your business is based in Australia and you would like HR or employment law advice, visit our website

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