The Fair Work Act has undergone significant changes with the introduction of the new amendments within the Act as of 26 August 2024.   Some of the changes focus on the nature of the employment relationship and address previous ambiguities, particularly regarding casual employment and the distinction between employees and contractors.

Key Changes

Establishing Employment Relationships (Section 15AA)

Section 15AA introduces a new and improved framework for determining whether a relationship constitutes employment. It emphasises the “real substance, practical reality and true nature” of the relationship over contractual language alone. The new regime requires the totality of the relationship to be considered, examining not just the terms of a written agreement but also how the arrangement functions in practice.

The introduction of this section overturns the High Court’s decision in CFMMEU v Personal Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 and provides statutory guidance to determine a worker’s employment status.

A high-income threshold was developed for contractors to opt out of the provisions under section 15AA. This provides flexibility for high-income earners who prefer maintaining contractor status, while ensuring protections for lower-income earners.

Redefining Casual Employment (Section 15A)

Section 15A of the Act has been amended to provide general rules regarding casual employees.  In this respect, an employee will only be a casual employee if:

  1. The employment relationship is characterised by an absence of a firm commitment to continuing and indefinite work; and
  2. The employee would be entitled to casual loading or a casual-specific pay rate under a fair work instrument or employment contract.

 

To establish whether or not there is a commitment to ongoing and indefinite work, the Act requires consideration of:

  1. The employer’s ability to offer or withhold work, and the employee’s ability to accept or decline work;
  2. The likelihood of continuing work in the employer’s enterprise;
  3. The presence of full-time or part-time employees performing similar roles;
  4. The existence of a regular work pattern, noting that regularity alone does not necessarily negate causal status.

Conversion from casual to permanent employment:

Employees classified as casual will remain so until a specified event occurs, such as the formal conversion to full-time or part-time status or with acceptance of a non-casual role with the same employer. Casual classification does not apply to fixed-term contracts in higher education or public sector roles covered by specific awards.

Impact on Employers and Workers:

These changes will impact workplaces where the employment status of employees and/or contractors has been contentious. The new provision protects workers from exploitation ensuring proper classification and fair access to entitlements, whilst also providing clarity for employers by helping them navigate employment relationships without legal ambiguities. Employers should review their contracts, work arrangements, and payroll systems to ensure compliance.

The amendments to the Fair Work Act 2009 aim to close loopholes and better align employment classification with the reality of workplace relationships. By examining the practical dynamics of employment and providing clarity on casual work, the reforms are a step forward towards a transparent employment relationship.

If you or someone you know is an employer or employee and in need of employment advice, you can contact our team of experts by calling us at 9525 8688 or emailing wmd@wmdlaw.com.au.

Sources:

Fair Work Commission: New workplace laws that start from 26 August 2024 may affect you.

Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024

Fair Work Act 2009 – Sect 15AA