Important Update: Changes to Australia’s Workplace Law Effective August 26th
Significant changes to workplace law took effect on August 26th, 2024. These updates affect both employees and independent contractors. Employers must be informed and adjust their practices accordingly.
Critical Changes to Note:
- New Definition of ‘Employee’
Under the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2023 (Cth) (Closing Loopholes No. 2), a new approach to defining ’employee’ has been adopted. This definition emphasises the working relationship’s natural substance and practical nature, not just the label in a contract. A multifactorial assessment will now be used to determine the nature of a relationship.
- Opt-Out Provision
A new provision allows independent contractors earning above the high-income threshold to ‘opt out’ of the new definition. This means they can only apply the new definition to their working relationship. The high-income threshold will be announced soon.
- ATO Risk Categories
The ATO’s Practical Compliance Guideline (PCG) introduces a risk framework for classifying workers. This framework categorises relationships into four risk zones, from ‘very low’ to ‘high’. Your classification impacts compliance resources and scrutiny.
- The right to disconnect
As of August 26th, 2024, the Fair Work Act now includes a crucial provision known as the Right to Disconnect. This new regulation gives employees the right to disengage from work communications outside of their regular working hours without facing repercussions. It aims to promote a healthier work-life balance and ensure that employees are not expected to respond to work-related matters during their personal time. Refer to the Fair Work Ombudsman website for a deeper understanding of how this change affects workplace practices.
Implications for Your Business:
Review Employment Contracts: Ensure employment contracts accurately reflect the correct classification of workers as either employees or independent contractors.
- Consider Opt-Out Option: If contractors exceed the high-income threshold, assess if they should opt out of the new definition to avoid reclassification as employees potentially.
- Consult the ATO’s Framework: Seek HR advice to minimise risk and ensure your classification remains in the ‘very low’ or ‘low risk’ category.
Reviewing your contracts and understanding how these updates affect your operations is essential to navigating these changes and ensuring compliance. RecruitWest’s team of experienced human resource consultants are ready to assist with contract reviews and advice to keep your business compliant.
Contact us today to ensure you’re prepared!