Navigating the Impact of the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 on Medical Practices
The Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 (‘the Act’) has introduced some significant changes to the Fair Work Act that Australian medical practices should be aware of. Some of the notable amendments relate to casual employment, determining the ordinary meaning of employee and employer, sham contracting provisions, an employee’s ‘right to disconnect’ and unfair contract terms. Whilst some of the amendments have already come into operation, some commence later this year or in 2025. This article will outline the main changes relevant to medical practices, and when these will come into effect if they haven’t already.
Casual Employment
The meaning of casual employees has changed. It is now where there is ‘an absence of a firm commitment to continuing and indefinite work’, and where the employee is entitled to casual loading. Whether there is an absence of a firm commitment to continuing and indefinite work will be determined by:
the real substance/practical reality of the employment relationship;
what is contained in the employment contract;
whether other people are performing the same work on a full or part-time basis; and
whether the employee has a regular pattern of work.
The previous provision that obliged businesses to offer casual conversion has been replaced with ‘Employee choice about casual employment’. Now, all casual employees performing regular shifts will be able to request permanency after 6 months of employment (or 12 months for small business employers). This request can still be declined on fair and reasonable business grounds. These changes commence on the 26the of August 2024.
These changes reiterate how important it is that employees are correctly classified so that they are receiving the appropriate entitlements. Medical practices relying heavily on casual staff, such as nurses or administrative personnel, must carefully assess their employment arrangements to ensure compliance with the new requirements. You Legal can help to review your existing Agreements, or if you are looking at engaging new staff, can create up to date and correct legal agreements for your practice.
A definition of employee and employer
The Act introduces into the Fair Work Act a provision for determining the ordinary meaning of employee and employer for the purposes of the Fair Work Act. It now states that:
“whether an individual is an employee of a person within the ordinary meaning of that expression, or whether a person is an employer of an individual within the ordinary meaning of that expression, is to be determined by ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person.”
In ascertaining the above, the totality of the relationship must be considered and regard must be had to both the terms of the contract and other factors ‘relating to the totality of the relationship including, but not limited to, how the contract is performed in practice’.
The legislation states that this section was enacted in response to the High Court’s decisions in CFMMEU v Personnel Contracting and the Jamsek, which we have written about here. It essentially replaces it, as the High Court in those cases held the written contracts were paramount and this statutory definition illustrates that a multi-factorial approach must be taken. Both employers and principal contractors must be aware that their conduct after the agreement is entered into will be considered.
This will come into effect six months after Royal Assent, or earlier by proclamation.
Independent Contractors have a right to ‘opt-out’ of this new definition if they earn above a ‘high income threshold’. This threshold is not yet defined, however this right to ‘opt out’ came into effect the day after the Act received Royal Assent. There is a complex notification regime associated with opting out, as well as a right to revoke this.
Framework for Independent Contractors to Set Aside perceived Unfair Contract Terms
The Act also introduced a framework for independent contractors to set aside perceived unfair contract terms in service contracts via the Fair Work Commission (FWC). If they are below the high-income threshold, they can apply to the FWC to have all or part of a services contract set aside. To determine whether the contract is unfair, the criteria that will be used is the respective bargaining power of each party, whether it is reasonably necessary to protect legitimate interests/whether it imposes harsh/unjust/unreasonable requirement. Contractors above high-income threshold can still access the Independent Contractors Act though and the unfair contracts protections within it. This FWC amendment makes dealing with disputes more accessible and less cost prohibitive (as opposed to going to the Federal Court via the Independent Contractors Act).
Sham Contracting
As a reminder, sham contracting refers to the illegal practice where an employer misclassifies workers as independent contractors rather than employees to avoid providing entitlements and benefits such as minimum wage, leave, and superannuation.
The changes brought about by the Act, which have already come into effect, amended the defence to sham contracting. The threshold was previously that the employers ‘did not know and were not reckless’. Now, the defence requires the employer to have ‘reasonably believed the contract of employment was a contract for services’. To assess whether the belief was reasonable, the size and nature of the employer’s enterprise and any other relevant matters will be considered.
As always, it is important that your agreements are properly characterised because if they are, medical practices do not need to be aware of these changes to the defence!
The Right to Disconnect
The Act also introduced an employee 'right to disconnect' (‘RTD’) which gives employees the right to refuse to monitor, read or respond to, employer or third party (i.e. client/ patient) communications (or attempted communications) outside of working hours. This is provided that the refusal is deemed ‘reasonable’.
Exactly what will be considered ‘reasonable’ will depend on various factors. Key factors influencing reasonableness include the reason for the contact, the nature of the contact, whether the employee is adequately compensated, employee responsibilities, and personal circumstances. What is reasonable for one kind of business or type of employee, may be different for another business. For example, what is reasonable for a medical practice will likely differ from what is reasonable for a school or a law firm. Additionally, one email might be fine in some contexts, but constant frantic texts will probably not be.
Naturally, some organisations may need to contact their employees in the event of an emergency - a medical practice might be an example of this. In such a situation, there could be guidelines for that i.e. that allow compensation for reasonable expenses.
The RTD does not come into effect until the 26 August 2024. However, if you are a small business employer (i.e. if you have fewer than 15 employees), there is a delayed commencement date and the RTD will take effect on 26 February 2025. This allows additional time for policy and procedure adjustments.
However, as a medical practice, you can start to evaluate your current work practices, communication protocols and define clear expectations regarding working hours and duties. You can also:
Start to implement measures to prevent or reduce unnecessary contact.
Ensure your roles are designed in a way that the work can be completed within working hours.
Spend some time thinking about your own team, the current work processes and consider what will need to change.
Engage in open, two-way discussions with the team – they will often have a good understanding of what may or may not work.
Ensure your policies, procedures and contracts do not breach this new right.
Implement education and training initiatives for employees and managers to ensure a comprehensive understanding of RTD implications and compliance requirements.
In conclusion, the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 introduces changes that impact medical practices across Australia. By proactively addressing these changes and ensuring compliance with the amended legislation, medical practices can uphold workplace fairness, protect employee rights, and mitigate potential legal risks. Effective navigation of these legislative changes requires a proactive approach and a comprehensive review of existing practices.
What You Legal can do to help
Each medical practice may face unique challenges when implementing these changes, necessitating tailored strategies to address specific workplace dynamics and industry requirements. Our team can provide tailored guidance and support for medical practices navigating compliance with these amendments and addressing associated challenges. A proactive approach is always recommended, and we can review your policies, procedures and employment contracts to ensure they are consistent with these amendments. Contact us to explore how we can assist you in safeguarding your practice and empowering your workforce.
This is not a comprehensive outline of all the changes that were introduced through this Act and does not constitute legal advice. For specific legal advice tailored to your medical practice, please don’t hesitate to contact us here.