Asia-Pacific employment law bulletin 2025

Australia

The Australian employment and labour law landscape has been undergoing significant change in recent years, and 2024 continued that trend. To recap, 4 tranches of significant reforms have been implemented over a period of 2 years: Secure Jobs, Better Pay Act 2022, Protecting Worker Entitlements Act 2023, Closing Loopholes (No.1) 2023, and Closing Loopholes (No. 2) 2024.

The second part of the Federal Government's ‘Closing Loopholes’ reforms passed the Federal Parliament on 12 February 2024 with the most notable workplace changes of those that entered in force in 2024 being the following:

Defining ‘employees’ and ‘independent contractors’

A new test has been introduced whereby the ordinary meaning of ’employee’ and ‘employer’ is to be determined by reference to the real substance, practical reality and true nature of the relationship between the parties (back to a multi-factorial test that has regard to the totality of the relationship).  This includes the terms of the contract, and how it is performed.  This marks a reversal from the ‘primacy of contract’ approach that was adopted by the High Court in 2022 (and reversed the historical multi-factorial test), holding that primacy must be accorded to legal rights, duties and terms of the written contract.

Independent contractors earning above the contractor high income threshold can elect for the new employee definition not to apply to them, even if in practice many factors would point to them being an employee. However, they can revoke an ‘opt out notice’ at any time, meaning that businesses will need to remain vigilant to the true status of the relationship as the new definition of ‘employee’ could take effect again.  If a business is collaborating with independent contractors, the best way to do so and to protect itself from claims is to engage contractors in a way that is materially different from how it engages employees, for instance to allow the contractor to provide services to others, to engage their own employees, etc.

Casual employee and conversion

Under the new definition of ‘casual employee’, the key question of whether there is the absence of a firm advance commitment to continuing and indefinite work has moved from a simpler test looking at the contract and the regularity of work to being a broader multi-factorial test based on the ‘real substance, practical reality and true nature’ of the employment relationship. Under the new test, the written terms of the contract are not decisive, although they still remain important. Other relevant casual employment indicia include whether an employer can choose to offer work or not, whether an employee can choose to accept or reject work (and, importantly, if this is the case in practice), and whether there are full-time or part-time employees performing the same kind of work in the business that is normally performed by the casual employee.

Conversion from casual to permanent employment remains an option. However, the regime has been changed so that employers are not forced to offer this and instead it is only employee-initiated. This means that a casual employee may give their employer written notification of a request to convert to permanent employment if (among other things) they:

• have been employed for at least 6 months (12 months if employed by a small business); and
• believe they no longer meet the (new) requirements to be classified as a casual employee. 

An employer may reject the notification if the employee is still, in fact, a casual employee as defined or if ‘fair and reasonable operational grounds’ exist.

Protections for gig economy and road transport workers

A new framework for protecting the interests of certain workers in the gig economy (‘employee-like’ workers) and regulated road transport contractors applies. Among other things, the Fair Work Commission now has the power to make minimum standards orders and guidelines for such regulated workers, including terms on payments, deductions, record-keeping, insurance, consultation, representation, delegates' rights and cost recovery.  Penalties will apply for breach of a minimum standards order, whereas a guideline will not attract a civil penalty if breached.

Digital labour platform operators, road transport businesses, and relevant unions can make collective agreements which include provisions that are more beneficial for relevant regulated workers than would otherwise apply under a minimum standards order.

In addition, new ‘unfair deactivation’ and ‘unfair termination’ remedies are available for eligible regulated workers earning less than the contractor high income threshold. Eligible employee-like workers can seek reactivation/lost pay (but not compensation) where they have been unfairly ‘deactivated’ from a digital labour platform. Eligible regulated road transport contractors can seek reinstatement (or up to 26 weeks' compensation) where their services contract has been unfairly terminated (similar to the current Fair Work Act unfair dismissal regime for employees).

Finally, the new workplace delegates' rights and protections, as passed in the first part of the ‘Closing Loopholes’ reforms, are extended to regulated workers, including rights to reasonable access to workplace facilities, and paid time during normal working hours for training.

Sham contracting

An employer is prohibited from representing a contract for employment as a contract for services.  This qualifies as ‘sham contracting’, unless the employer can prove that it reasonably believed that the contract is one for services. In determining whether this belief is reasonable, regard must now be had to the size and nature of the enterprise, as well as any other relevant matters. This new defence mechanism replaces the defence where employers had to show that they did not know and were not reckless as to whether the contract was in fact a contract for employment.

Right to disconnect

Employees now have a legal right to refuse to monitor, read or respond to (attempted) contact from their employer or third parties where it occurs outside of their working hours, unless their refusal is unreasonable. This right does not make contact between employee and employer after hours unlawful, but it does allow employees to ignore that contact (if reasonable to do so). The right to disconnect is in the National Employment Standards, and a term has been included in all modern awards.  Employers are prohibited from taking adverse action against an employee who is exercising their right to disconnect. Parties can seek orders from the Fair Work Commission to resolve disputes about the right to disconnect.

The right to disconnect laws are effective from August 2024, but they will apply to small business employers (i.e. with fewer than 15 employees) only from 26 August 2025.

Intractable bargaining workplace determinations

As part of the Secure Jobs, Better Pay Act 2022, the Fair Work Commission has the power to make ‘intractable bargaining declarations’ and then arbitrate on an outcome of appropriate terms and conditions of employment via an ‘intractable bargaining workplace determination’ where it is satisfied that there are no reasonable prospects of the bargaining parties reaching an agreement (providing prescribed minimum timeframes have been met – generally after at least 9 months of bargaining).

Since 27 February 2024, this arbitration process cannot result in any non-agreed terms being less favourable to employees / unions than provisions in an existing applicable enterprise agreement that deal with the same matter (with the exception of wage increase terms). In other words, employees and unions cannot go backwards on contested terms and conditions in this Fair Work Commission arbitration process. Time will tell as to whether this will be a disincentive for employees (and their representatives) to make concessions in bargaining; knowing that, if negotiations were to proceed to an intractable bargaining workplace determination, contested terms will likely be no less favourable than current enterprise agreement conditions.

Union right of entry: underpayment 

The grounds for obtaining an exemption certificate allowing union officials to enter a workplace without notice have been expanded. Since 1 July 2024, union officials have also been able to obtain an exemption from providing at least 24 hours' written notice where the Fair Work Commission is satisfied that a union official suspects a contravention involving underpayment of wages or other monetary entitlements of a member of the union who works on the premises, and advance notice would hinder an effective investigation.

Regulated labour hire arrangement orders

The power of the Fair Work Commission to make ‘regulated labour hire arrangement orders’ commenced on 1 November 2024. The stated intent of these orders is to close the labour hire loophole, specifically by lifting the pay rates of labour hire workers where they are performing work for a ‘host’ that has higher rates of pay under its relevant industrial instrument. Since the new laws commenced, several applications have been made to the Fair Work Commission by relevant unions, predominantly related to the mining and aviation industries, seeking these orders for the benefit of labour hire workers. The majority of these applications to date have not been strenuously opposed by affected labour hire employers and their   hosts’ and most regulated labour hire arrangement orders have been agreed by consent (or uncontested). This means that we are yet to see detailed authorities from the Fair Work Commission (and potentially courts) on the interpretation and application of these new laws. 

Flexible working arrangements

As part of the Secure Jobs, Better Pay Act 2022, the Fair Work Commission has had power since 6 June 2023 to conciliate and arbitrate disputes about flexible work requests. In 2024, several decisions of the Fair Work Commission provided further guidance about employer directions to return to the office in the context of a flexible work dispute, with the following key principles emerging. 

• Employers must ensure that substantiated reasons for the refusal of a flexible work request are provided.
• Sufficient medical evidence is required where the reason for a request is an employee's disability.
• Employers cannot rely on generic statements about the increased perceived productivity of working in the office in order to refuse a flexible work request.
• Reasonable business grounds for refusing a request to work remotely can include matters such as productivity and supervision, learning opportunities for junior team members, and interaction with others.

Psychiatric injury liabilities for employers

A decision of the High Court of Australia on 11 December 2024 (Elisha v Vision Australia Ltd [2024] HCA 50) has overturned a longstanding position regarding psychiatric injuries in an employment context. Based on this decision, employees will be able to seek damages for a psychiatric injury caused by an employer's breach of their employment contract. Employers must consequently be cognisant of the risk of psychiatric injuries that may result when they are engaging in a disciplinary or termination process, particularly if a vulnerability relating to an employee is known.

Contributors: Derek Humphery-Smith, Aras Mollison, and Anne-Fleur Versteegh - Lander & Rogers