The changes in the second Closing Loopholes laws take effect at various dates across this year and into next year, with many changes already in effect.

Fair Work Ombudsman Anna Booth urged those across workplaces to educate themselves on the new laws, which cover gig work, casual employment and the right to disconnect, among many other areas.

“Employers, employees and independent contractors need to understand the changes, which create new or changed responsibilities and rights in a range of areas,” she said.

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“We offer free information and advice on the various changes to help all workplace participants. The changes substantially increase the penalties which a court can order for non-compliance with a range of workplace laws, by up to five times for non-small business employers.

“This sends a clear message and expectation – employers must invest the time and resources to meet their new legal obligations. We are here to help them get it right.”

Impact of new changes

In light of these changes, Swaab partner Michael Byrnes said that looking ahead, “it will likely be a very busy period for workplace relations lawyers”.

“After a lengthy period of what was close to legislative stasis in workplace relations, the last 18 months [have] seen the federal government implement waves of significant reforms, with the second set of ‘Closing Loopholes’ amendments being the latest of them. Businesses are going to need guidance on the impact of all of these changes,” Byrnes said.

“Of particular interest to lawyers generally will be the right to disconnect. Legal employers will be arguing that the very nature of a lawyer’s role and responsibilities, especially during the course of court hearings or active corporate transactions, will mean contact out of working hours with legal staff is reasonable and should not be refused. On the other hand, some legal employees may see it as an opportunity to draw a line on the encroachment on their precious personal time by the demands of senior colleagues and clients,” he explained.

“It is going to be very interesting to see how it plays out in practice. Law firms and other legal employers need to grapple with it, particularly when it comes to communicating expectations to clients. The first decisions of the Fair Work Commission on the ‘right to disconnect’ issue will be instructive – but might take some time in coming. Disputes on the issue that go all the way to formal orders are likely to be few and far between.”

The Right to Disconnect Bill recently passed the Senate, introducing a right for workers to disconnect once they are finished with their working hours.

The Fair Work Amendment (Right to Disconnect) Bill 2023 means that employees are not required to “monitor, read or respond to work communications from their employer outside of work hours”, and all modern awards will be updated to include a standard “right to disconnect” term.

The “right to disconnect” has continued to gain considerable traction since the pandemic, with countries, including France, Italy, Spain, and Belgium, among others, introducing related laws to protect workers’ rights. Many in Australia have also advocated for such laws to exist to improve workers’ wellbeing and mitigate burnout – which is a significant issue within the legal profession.

The changes brought by these various reforms, Maurice Blackburn senior associate Penelope Parker emphasised, are “significant and wide-ranging”.

“Since the enactment of the Fair Work Act, the labour market has changed significantly. More people are working from home, more people are working via digital platforms, and more people are engaged via the ‘gig’ economy.

“The new ‘right to disconnect’ provisions seek to address the disintegration of the distinction between work and home life, which has become increasingly important since the steep rise in the number of employees who work from home since the pandemic. The provisions also represent a distinct shift in the current approach towards placing limits on unreasonable overtime. Given the ineffectiveness of the current protections on unreasonable overtime, particularly in white-collar industries, it will be interesting to see how these provisions operate in practice,” she said.

“The new provisions are likely to lead to a shift in the kinds of disputes practitioners will be dealing with, within the employment law space. It is important that practitioners make themselves familiar with the new provisions to ensure they are giving the most up-to-date advice to their clients, whether they be workers or businesses. This is especially the case for firms [that] often represent employers, given the significant increases in penalties that will now apply.”

Significantly higher penalties

The second tranche of the “Closing Loopholes” changes increases the civil penalties by five times what they were previously, which Parker said was driven by staff being underpaid.

“The prevalence of underpayments, and the difficulty in ensuring compliance with minimum standards in a limited cost jurisdiction, has spurred the need for increased penalties. Further, the introduction of a new definition of employment is intended to largely reverse the decision of the High Court of Australia, which had the effect of limiting the considerations that could be taken into account when determining whether or not a worker was entitled to the benefits an employee enjoys, pursuant to the FW Act,” she added.

“The introduction of new provisions [that] provide protections for ‘employee-like’ workers and independent contractors are essential to fill the regulatory gap that currently exists in respect of workers who don’t currently fit into the definition of ‘employee’. Prior to the changes, these workers enjoyed very few protections in respect of their pay and conditions. Given the increase in the variety of ways workers are currently being engaged, these amendments will ensure more workers have the benefit of basic entitlements.”

The maximum penalties have increased to a total of $469,500 per contravention for a company. Maximum penalties have also increased to $4,695,000 for a company (previously $939,000).

These increased maximum penalties do not apply to individuals and small businesses – generally, maximum penalties for these employers are $18,780 per contravention for an individual and $93,900 for a company.

“The significant increases in civil penalties are going to further focus the mind of senior executives and boards on workplace law compliance. Employers will likely redouble efforts to ensure that employees are being paid and treated in accordance with applicable industrial instruments. Award compliance has made the leap from payroll administration function to critical boardroom agenda item in the space of a few years,” Byrnes added.

“The amendments introduce yet another new test for when an employee is properly categorised as a casual, which will adopt a broader approach and take into account the real substance, practical reality and true nature of the employment relationship. While this lacks the novelty of reforms such as the right to disconnect, it is a ‘bread and butter’ employment law issue of significance for employers across the board.”

Further, these reforms will also increase overall compliance measures and costs for employers, as well as increase the amount of work in the market for employment lawyers, added Emplawyer managing principal Michelle Dawson.

“The new right to disconnect and changed/new definitions affecting casual employees and contractors (in particular, the associated multifactor tests and their significant complexities) are just some examples of where this work has arisen and will continue to arise. Additionally, there are a number of new jurisdictions of the Fair Work Commission which have either recently been introduced or are about to be introduced, which will likely see employment lawyers and their business clients spending a great deal more time in the Fair Work Commission – whether engaged in disputation in relation to new rights or in seeking/resisting certain orders which were not previously available.

“This all means that business clients will ultimately be spending more money in the employment law space and that for employment lawyers, billables will go up, and demand (and, in turn, salaries and salary expectations) will no doubt increase. In addition to the [effects] that the changes will have upon businesses and their employees, the changes are significant for employment and workplace lawyers and have (and will continue to) result in a significant uptick in work for what is already currently a booming practice area.”