February 21, 2024

The Closing Loopholes Bill 2 has passed: Here’s what it means for you

Employees have gained the ‘right to disconnect’ and casual and gig workers look to have won new protections, under changes that will be introduced by the Closing Loopholes Bill (No 2).

The Bill, which passed through the Senate on 8 February, also provides a new legislative definition for ‘employee’, and gives unions the right to enter a workplace within 24 hours where they reasonably believe a worker is being underpaid.

While the Bill will return to the House of Representatives for approval, it seems likely to become law given Labor’s majority.

With that in mind, we look at some of the key changes Closing Loopholes 2 will bring to your workplace.

1. The right to disconnect

Perhaps the most headline-worthy reform the Bill will introduce is the ‘right to disconnect’, which will be enshrined in the Fair Work Act’s General Protections provisions. This new rule allows employees to refuse to respond to – or even monitor their email and phone calls – outside of working hours, unless it’s unreasonable to do so. They can also ignore attempts from a client or customer to get in touch.

Whether or not an employer’s attempts to contact an employee outside of hours is reasonable or unreasonable will depend on several factors, including:

  • Why and how the employee is being contacted (it shouldn’t be too disruptive)
  • Whether the employee is properly compensated for working outside normal hours
  • The employee’s role and responsibilities, and
  • Their personal circumstances (i.e. whether they have family or other responsibilities outside of work).

While the Bill says that any breach should first be dealt with at the workplace level, the right to disconnect’s status as a General Protection means that an employee could potentially bring an adverse action claim in the Fair Work Commission. They can also bring a claim asking for a ‘stop’ order against an employer contravening this right.

2. New definition of ‘employee’

One of the biggest issues in employment law over the past decade has been determining a worker’s true status – including whether someone is truly an employee or contractor. The Closing Loopholes Bill No 2 looks to overcome this by introducing new definitions of employee and employer into the Fair Work Act.

The definitions say that the “real substance, practical reality and true nature of the relationship” must now be considered – putting to rest recent High Court decisions that gave primacy to the employment contract.

That said, contractors who earn over a ‘high income’ threshold ($167,500) can opt out of the test. Conversely, contractors who earn under the same threshold will be able to bring an unfair contracts claim in the FWC, something that currently must be done formally in court.

3. Casual workers

A new definition of ‘casual worker’ will also be included, under which an employee will only be deemed casual if they’re entitled to a casual loading and the employer makes no ‘firm advance commitment’ to continuing, indefinite work.

Again, the Bill says that whether or not an employer makes a ‘firm advance commitment’ can only be answered by examining the practical reality, real substance and true nature of the relationship.

The Bill also introduces new ‘casual conversion’ provisions, which will place the onus on employees to request becoming a permanent member of staff. Once the employee has hit certain milestones, including working for six (or sometimes 12) months, an employer can refuse only in particular circumstances, including on ‘fair and reasonable operational grounds’.

4. Intractable bargaining

In 2022, the government introduced changes that gave the FWC the authority to make an ‘intractable bargaining declaration’. This effectively gave unions a mechanism for winning pay rises without having to reach an agreement with an employer.

The Bill effectively changes these provisions so that any arbitrated outcome can’t be less favourable to an employee or union covered by an existing workplace agreement.

5. Underpaying workers

Another area the Bill covers is worker underpayment – something that was already centre stage in the original Closing Loopholes Bill, which introduced a new crime for wage theft.

Under Closing Loopholes 2, the penalties for wage theft will be increased to a maximum of 10 years prison and a $7.825 million fine.

The Bill will also allow unions to apply to the FWC for exemption from the usual 24 hours’ notice to enter a workplace, if they reasonably suspect a member of their organisation is being underpaid.

6. Gig workers

Finally, the Bill introduces new minimum entitlements around pay and conditions for workers in Australia’s expanding gig economy. Perhaps the most interesting of these is the right for workers on a digital platform to apply to the FWC where they have been ‘deactivated’ or removed from an app.

These changes are being introduced to protect what the government believes are some of the most vulnerable workers in today’s economy.

 

In short…

While the Closing Loopholes Bill No 1 introduced sweeping new protections for Australia’s employees, Bill No 2 goes further still. Employers should make sure they’re across any changes and they don’t inadvertently fall foul of them.

Want more?

If you’d like to know more about how the changing trends in HR impact your business, get in touch.

say hi to our author

Merilyn founded Catalina Consultants in 2012 on the belief that all organisations, regardless of size, should have access to top quality bespoke HR services. She enjoys working closely with her clients and believes that the best results are built on relationships of rapport, trust and authenticity. Growing up, Merilyn had her sight set on stardom and dreamed of becoming an actor. She also sang and played the piano, but ended up studying accounting and HR. Whilst she hasn’t won her Grammy just yet, she still loves a good karaoke night. Merilyn loves to travel with her family, with South Africa being one of her most memorable destinations.

related articles

DON’T MISS OUT ON OUR LATEST ARTICLES

Never miss an update from the Catalina Consultants HR team.
Sign up to get our news and blogs sent straight to your inbox.