Effective 26 August 2024, the Fair Work Act will introduce a new definition to better distinguish between employees and independent contractors, which will affect business operations in the cleaning, hygiene and facilities service industries.
On top of this, new frameworks will be established to safeguard contractors, particularly those engaged on digital labour platforms and in the road transport sector. These changes will affect Australian businesses – and the cleaning industry in particular.
Melissa Behrend, human resources consultant at HR On Call, says the main purpose behind the changes is to provide further clarification of the definition of a casual employee.
“The current approach remains the same, which is no firm advance commitment to offer continuing and indefinite work,” Behrend says.
“However, it broadens to include relevant factors such as mutual understanding or expectations between the employee and the employer, whether the employee can elect to accept or reject the work, future availability of work, if others are performing the same work who are part time or full time and if there is a regular pattern of work.”
Essentially, assessing the nature of a worker’s employment will now consider a wider ranger of factors. The new definition added to the Fair Work Act also helps determine the meaning of ‘employee’ and ‘employer’.
“You need to consider the real substance, practical reality and true nature of the working relationship,” Behrend says.
“You must also consider all parts of the working relationship between the parties including terms of the contract and how the contract is performed in practice – this is a change from the existing test which focuses mainly on the terms.”
Behrend says that cleaning industry may be particularly affected by the change, given the industry is a large employer of casual employees and contractors.
Employees will not be able to notify their employer of an intention to change to a permanent position if they have been employed for at least six months (12 months for a small employer) and believe they no longer meet the definition of the new casual employee. Employees will be required to give written notice of any change and employers will need to respond in writing within 21 days, after a process of consultation with the employee.
“A change in employee status will only happen where the employee wants it to change,” Behrend says.
“Employers will need to be aware of the changes and how it impacts them.”
Behrend says she sees the changes ultimately benefitting both parties.
“Both the employer and the employee [will benefit], as the definitions are further refined. This change gives certainty about status, rights and entitlements at all times as this is forward-looking not retrospective.”
Photo by Toon Lambrechts on Unsplash.
