Written by Solicitor, Lucy Diggle

As the employment law landscape in Australia undergoes significant changes, it is crucial for businesses to stay both informed and compliant. Recent updates aim to clarify ambiguities in employment relationships and better reflect the practical reality of modern interactions between businesses and the workers they engage.  

These changes emphasise the importance of accurately defining the nature of work arrangements, to ensure all parties are treated fairly and transparently.  

In this blog we outline key changes brought about by the new federal employment laws which amend the Fair Work Act 2009 (Cth) including: 

–Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) 
–Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) 

Update 1: Introduction of a Criminal Offence for Intentional Wage Theft

Starting from 1 January 2025, employers who deliberately underpay their employees will face criminal charges.  

Importantly, underpayments extend beyond wages to allowances and other entitlements, including annual leave and superannuation contributions.  

The requirement that any underpayment is intentional means employers who do so by honest mistake will not be held liable. However, if an employer becomes aware of underpayment or an employee raises suspected underpayment to the employer and they continue to underpay the employee (after this discovery), this will likely constitute wage theft.  

Update 2: New Defence to Sham Contracting

The previous defence for employers involved in sham contracting (engaging individuals as contractors where they are considered employees) based on recklessness has also been replaced under the New Legislation. As of 27 February 2024, the defence for employers who are accused of sham contracting is based on reasonable belief.  

This replaces a subjective test based on an employer’s knowledge (namely, whether the employer was reckless as to whether the individual was engaged as a contractor) with an objective test (whether the employer reasonably believed the individual was engaged as a contractor. 

Update 3: Restrictions on Fixed Term Employment Contracts

Fixed term contracts made on or after 6 December 2023 are also subject to new restrictions. Under the New Legislation, a fixed term contract mustn’t exceed a 2-year term (including renewals and extensions to the contract). There are also restrictions around consecutive contracts with the legislation specifying that businesses cannot provide a worker more than 2 consecutive contracts if the services to be performed under the contract are the same or similar under each successive contract.   

There are however a number of exceptions, for certain fixed term contracts if they’re entered into on or after 6 December 2023 and before 1 November 2025. These include contracts for live performances, organised and high-performance sport and positions reliant on philanthropic funding.  

We covered these changes in our previous blog article last year, titled ‘New Rules for Fixed Term Employment Contracts’. Have a read for more information on these restrictions! 

Update 4: New Definition of ‘Casual’ Employee

Starting from 26 August 2024, an employee is considered a casual if there is no firm advance commitment to ongoing and indefinite work and they’re entitled to receive a casual loading or pay rate under a fair work instrument or contract.  

The new definition seeks to reflect the totality of the employment relationship, to be determined by reference to several indicia including: 

-Whether the employer can offer work to the employee 
-If the employee can accept or reject work 
-If there are  full or part-time employees performing the same kind of work for the employer’s business 
-Whether the employee has a regular pattern of work 

Update 5: New Rights in Casual Employee Conversions

Employers are no longer obliged to offer employees permanent full or part-time employment via initiating a casual conversion. This opportunity is now a request right of the casual employee, to raise with their employer.  

The changes reflect the realities that many casuals are casual by choice, and enjoy the freedoms of this type of employment.  

Casual employees are entitled to request the conversion if the meet the following criteria: 

-They no longer consider themselves ‘casual’ 
-They have been employed for at least 6 months (or 12 months for a small business employer) 
-There is no current or historic dispute between the casual employee and their employer about casual conversion or in the last 6 months their employer refused a previous conversion request   

Under the changes, employers can refuse a casual conversion request where:  

-The employer still meets the definition of a casual employer (see the new test above) 
-The refusal is based on fair and reasonable operational grounds (ie. to accommodate the request substantial changes would need to be made to the employers role or workplace) 
-Accepting the conversion would mean the employer could not comply with a recruitment process as required by law  

Update 6: New Test to Distinguish Employee From Contractor

New statutory guidance introduced in February has clarified what the required considerations are when determining if an individual is a contractor or employee. The guidance states that regard must be had to the totality of the relationship between the parties, rather than what is reflected in the contract. This is known as the multi-factorial approach, as it requires determination based on a number of factors, including:  

-Who controls the work performed 
-Who the financial responsibility and risk for the work lies with 
-The workers ability to subcontract or delegate the work  
-Whether there are exclusivity requirements and the worker is restrained from working for other businesses 
-The manner of remuneration, including whether it is based on hours worked or performance of a specific task 

The guidance comes after determinations made by the high court in two 2022 cases: Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2. In each case, the High Court determined that where a contract exists the employer/worker relationship should be determined by reference to the contract, with the multifactorial approach only relevant in the absence of a contract.  

These cases caused quite a bit of confusion in employment law circles at the time, so the new laws make clear that ‘contract is not king’ but rather, it is necessary to access the relationship holistically.  

Update 7: Introduction of Employees’ Right to Disconnect

Employees will have the right to refuse contact outside of their working hours unless that refusal is unreasonable. The changes take effect from 26 August 2024 for non-small businesses and 26 August 2025 for small businesses. 

Further Information

If you’d like assistance with employment law to ensure your workplace stays compliant in light of the above changes, please contact us through our online form or via email at hello@studiolegal.com.au. 

Written by Solicitor, Lucy Diggle

Published 5 August 2024.

Photo by Unseen Studio on Unsplash

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The information in this article is of a general nature. It does not constitute formal legal advice and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter.