A number of employment law reforms and requirements are hitting Australian operations over the next several months. Laws governing wage theft, the right to disconnect, shut-down notices, privacy, sexual harassment, and independent contractors have either recently become enforceable or are about to. This Insight outlines these changes and steps Australian employers can take to address them.

Wage theft

Given the whirlwind of changes landing in Australian employment law at the moment, it is easy to lose track of this reform. But this is definitely not one to leave out of an employer’s planning.

Section 327A of the Fair Work Act 2009 (Cth) criminalizes wage theft, effective January 1, 2025. Employers must ensure correct payment of wages and entitlements, including compliance with any applicable statutory modern award,¹ to avoid severe penalties for company directors, which may include imprisonment and heavy fines for serious violations.

Key steps include reviewing entitlements under modern awards and “enterprise agreements” (i.e., collective agreements), compliance mechanisms to ensure correct classification and time recording and, importantly, reviewing and updating employment agreements as necessary. This is important not only in light of the impending criminal penalties, but also because there have been a large number of changes to modern awards since 2023 that have required updates to the employment agreement templates for many businesses.

Employers that have not undertaken a modern award and employment agreement audit during the last 12 months should consider doing so now to ensure there is plenty of time to resolve any issues prior to the January 2025 deadline.

Right to disconnect

In August we saw the introduction of a significant change around working hours expectations in Australia.

Effective August 26, the new right to disconnect laws took effect for all employers other than “small business employers,” which are those with fewer than 15 employees (calculated by including employees of associated companies).

As a result, many employees in Australia now have the right to refuse out-of-hours contact from their employer unless the refusal is “unreasonable.” Determining whether a refusal is unreasonable depends on the following factors:

• The reason for the contact or attempted contact.
• How the contact or attempted contact is made and the level of disruption the contact or attempted contact causes the employee.
• The extent to which the employee is compensated to remain available to perform work during the period in which contact or attempted contact is made, or for working additional hours outside of the employee’s ordinary hours of work.
• The nature of the employee’s role and the employee’s level of responsibility.
• The employee’s personal circumstances (including family or caring responsibilities).

We recommend that all employers take steps to address these new laws, including:

• Communicating with employees and managers about what these new laws mean for them practically.
• Training managers to provide tips on how to ensure that they are compliant with the new laws, what is required, how to identify when an employee’s refusal to work outside of Australian business hours may fall within their rights under the new laws, and how to manage such situations if and when they do arise.
• Implementing a “Right to Disconnect” policy.
• Updating employment agreements to comply with the new laws and to utilize available avenues to assist with compliance such as building in an availability allowance for those employees who may be required to work regular outside hours.

Changes to modern awards that require notice of shut down and employee consent to take unpaid leave if they do not have sufficient leave to cover shut down period

The holiday season fast approaches! A few new considerations have emerged for award-covered employees. Modern awards were changed in May 2023 to require employers to give at least 28 days’ written notice before a shut down. An employee who does not have enough paid annual leave to cover the whole period can form an agreement with their employer for other options for the days not covered, such as using accrued time off, taking annual leave in advance, or taking leave without pay.

Employers should determine if they do intend to shut down during the end-of-year period. If so, written notice in accordance with the relevant award should be prepared, and the 28-day deadline before shut down should be diarized. For any employees lacking sufficient leave to cover the period, a decision needs to be taken whether a negative leave balance will be accommodated, or if consent will be sought to use accrued time off, leave in advance or unpaid leave. Communications over consent to unpaid leave should be handled with care, with a back-up plan in place should an employee decline.

As employees have the right to decline consent, no punishment should be applied if this is the outcome, to avoid falling foul of the general protections.

Privacy changes… what to do right now

The Federal Government has proposed its first tranche of privacy law reforms, covering matters such as protections for overseas disclosures of personal information, new civil penalties, increasing transparency about automated decisions, the introduction of a statutory tort for serious invasions of privacy and changes to the criminal law to prohibit doxxing. The Government has made clear that it considers this very much just a first round of reform, and more substantial changes are predicted should the Government be re-elected. Tranche 2 for example is expected to include the introduction of a new “fair and reasonable” obligation when processing personal information. This would be a brand-new standard globally.

Notably, the employee records exemption remains in place. But employers have many relationships outside the strict employer-employee relationship that are not exempt. Unsuccessful job candidates, employees as customers, employees OF customers, volunteers, and independent contractors all have records that will fall outside the employee records exemption.

Privacy Commissioner Carly Kind gave some key insights on how to handle this phase of the reform cycle in a recent interview.² She said that the best place to start is:

Going back to the basics of good data governance generally, and all companies should be engaged in that process already. That is, first of all, looking at what data you hold, and doing a full audit of your data holdings generally. We’re seeing a lot of pretty basic privacy infringements coming across our desk where companies don’t even know what data they have or they’ve had a data breach and they’ve got so much data that’s exposed in a data breach they just shouldn’t have anymore – they should have an appropriate destruction and retention regime in place where they are de-identifying and destroying data.

I think another one is really looking at the purposes for which you collect data in the first place and really understanding the interplay of APP 3 and 6, which relates to collection, and then use and disclosure of data, which says that just because you collect data for one reason does not mean you can use it for another reason.

We still see organizations that don’t have a privacy policy, or their privacy policy references a 10-year-old provision that has long changed. Cybersecurity is the main complaint we get from complainants coming through our doors, around the security of personal information. So there are some really big pieces that are just about housekeeping, which entities could do a lot with to bring their practices up.

The positive duty to prevent sexual harassment will not be taking time off this holiday season

Most employers now have a positive duty to prevent sexual harassment. Although the duty applies year-round, the risk profile is raised during the holiday period. We’ve all heard of cases of alcohol being consumed during the festive season and inappropriate behavior being an unfortunate result.

It’s important to consider potential risk areas. For example, are policies up to date? Is there a plan in place to enable the enjoyment of festivities but in a manner that keeps everyone safe? Have managers been trained on how to handle any complaints in a sensitive and trauma-informed way?

Additionally, for those employers planning holiday parties, it is critical to ensure they are taking proactive steps to implement communications to employees around employee conduct, responsible service of alcohol and other requirements that apply to employees at these events, despite the festive season. We generally recommend issuing a general employee communication as well as a separate communication to managers to advise on their responsibilities at these events.

New protections for independent contractors against unfair contract terms commenced on August 26, 2024

The Fair Work Commission can now intervene in contracts for contractors earning below A$175,000 per year, vary terms or set aside contracts altogether. It will consider several criteria to determine if a services contract term is unfair, including:

• The relative bargaining power of the parties.
• The imbalance of rights and obligations in the contract.
• The necessity of the term to protect legitimate interests of a contractual party.
• Whether the term imposes a harsh, unjust, or unreasonable requirement.
• The remuneration comparison with employees or regulated workers doing similar work.
• Any other relevant matters.

To comply with the new criteria for fairness, organizations can:

• Review the terms of service with smaller contractors.
• Determine if any provisions of existing contracts could be classed as heavily favoring the principal.
• Consider removing any terms that could be seen as harsh, unjust or unreasonable.
• Make all terms clear and transparent to avoid misunderstandings.
• Include only terms that are necessary to protect legitimate interests.
• Ensure the contractor’s pay is comparable to that of employees or regulated workers doing similar work.
• Schedule periodic reviews of contracts to ensure pay and other terms have kept pace with employees or regulated workers performing similar work.

There’s lots to think about, but also much employers can be doing to act sensibly, proportionately, and to keep things moving.