Who's right to switch off?

This week marked the introduction of a right to disconnect for the majority of Australian employees.

Under the new section 333M of the Fair Work Act 2009 (Cth) (FWA) all employees who are not employed by a small business now have an enforceable workplace right to disconnect outside of their working hours. The right to disconnect was introduced as part of the Albanese government's 'Closing Loopholes' suite of industrial relations law reforms, pursuant to the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) passed earlier this year.

The right to disconnect will not come into force for small businesses and their employees until 26 August 2025, so businesses with less than 15 employees* have a further year in which to monitor developments and implement appropriate workplace changes.

*Remember that employees of associated entities of the employer should be included in this headcount, but casual employees should not be included unless they are engaged on a regular and systematic basis at the time.

 1. WHO’S RIGHT TO DISCONNECT?

Under the new section 333M of the FWA, an employee may refuse to monitor, read or respond to contact or attempted contact from an employer or a third party (e.g. clients, suppliers) outside of the employee’s working hours unless the refusal is unreasonable (with working hours' dependent on individual employees' remuneration and working arrangements). What constitutes 'contact' has not been defined by the FWA, but it is likely to be interpreted to include all efforts to engage with an employee (e.g. emails, messages via text or social media, and other messaging services and phone calls).

What will constitute a refusal being 'unreasonable' is also undefined and will need to be considered on a case-by-case basis. However, in determining whether a refusal is unreasonable, the following must be taken into account (without limitation):

• the reason for the contact or attempted contact;

• how the contact or attempted contact is made;

• the level of disruption the contact or attempted contact causes the employee;

• the extent to which the employee is compensated (including non-monetarily) to remain available to perform work during the period in which the contact or attempted contact is made or for working additional hours outside of their ordinary hours of work;

• the nature of the employee’s role and the employee’s level of responsibility; and

• the employee’s personal circumstances (including family or caring responsibilities).

The FWA also clarifies that it will be unreasonable for an employee to refuse such contact if it is required by law. The right to disconnect will not arise in circumstances where employees are working 'oncall'.

 2. DISPUTE RESOLUTION

The new provisions of the FWA provides for a dispute mechanism for the resolution of employer-employee disputes in relation to the right to disconnect, no matter who initiates the dispute (for example, where an employee has refused to monitor, read or respond to contact and their employer reasonably believes that the refusal is unreasonable). The parties must initially attempt to resolve any dispute via a workplace discussion, however failing a resolution at workplace level, either party may escalate the dispute by referring it to the Fair Work Commission (FWC). The FWC may make orders against either party, such as an order:

• preventing an employee from unreasonably refusing contact from their employer or a third party;

• preventing an employer from contacting an employee outside of work hours; or

• preventing an employer from taking disciplinary action against an employee as a result of the employee refusing contact outside of their normal working hours.

At this early stage, many operational aspects of the right to disconnect otherwise remains unclear. There is no doubt that the Fair Work Commission will soon need to consider things like the concept of ‘reasonable additional hours’ of work under the National Employment Standards and the meaning of what is reasonable in the context of well remunerated employees.

3. CHANGES TO MODERN AWARDS

All modern awards have now been varied to provide for the right to disconnect. The Full Bench of the FWC has advised that thewording included in awards is "intentionally minimalist in nature, reflecting the novelty of the right to disconnect and the likelihood that future variations to the term in particular awards will be necessary once the issues affecting specific industries and occupations are better understood”.

Further guidance may be introduced into awards to govern how the right to disconnect operates in different industries and occupations. It is also expected that the FWC will undertake a review of the terms in modern awards in 2025, after there has been opportunity for practical difficulties in the operation and application of the terms to become apparent.

 4. IMPACT ON EMPLOYERS

The right to disconnect is a workplace right, and employers must not take adverse action against an employee for exercising or seeking to exercise it.

The right to disconnect does not prevent employers from contacting or attempting to contact employees outside of their ordinary working hours. While this is not prohibited, employers should consider their approach to communicating with employees outside ordinary work hours and whether they can be taking steps to better facilitate employees' efforts to switch off from work.

Taking steps to avoid contacting employees out of work hours where it is not necessary - for example, by scheduling non-urgent late night emails to be delivered at the start of the next business day may be a simple step.

Employers should also consider if any updates are required to their employment contract templates or workplace policies in light of the new right to disconnect.

Contract clauses concerning working hours and remuneration may require some amending to clarify employer expectations and when out of hours contact may be reasonably required.

Workplace expectations as to out-of-hours contact may need to be clarified more broadly, particularly for employers within an international business or with international clients, whose employees are expected to accommodate different time zones. For employers, good communication about after hours expectations should be discussed with employees as to whether there is an expectation that they stay connected out of the office or before and after work by reason of role and business demands.

Employers will also need to ensure that performance management processes are managed carefully so employees are not punished for behaviour covered by the right to disconnect, like for non-responsiveness out of work hours, unless they are confident the non-responsiveness is unreasonable. This should also be considered when preparing position descriptions for new recruits.

In many respects it is just common sense, however we expect the new right to disconnect will have a big impact for employers and workplaces, with further developments through case law inevitable.

Until then, further information and resources from the Fair Work Ombudsman are available here: https://www.fairwork.gov.au/newsroom/media-releases/2024-media-releases/august-2024/20240826-right-to-disconnect-stage-1-media-release and https://www.fairwork.gov.au/employment-conditions/hours-of-work-breaks-and-rosters/right-to-disconnect.

Get in touch with Emma or Amy if you have any questions or wish to discuss.

Amy Carr O’Meara and Emma Burrell McDonald

New laws for unfair contract terms – less than 1 month away and counting down.

The secret’s out!

The prohibition on employers entering into an employment contract or written agreement containing a pay secrecy provision will take effect from 7 June 2023.

The prohibition is intended to increase transparency and accountability in the workplace, in an attempt to address the gender pay gap which the ABS reported in February 2023 to currently sit at 13.3%.

You will recall that from December 2022, the Fair Work Act was amended to introduce pay secrecy provisions. The amendment introduced Division 4, section 333B of the Fair Work Act - a workplace right for employees to disclose information about their remuneration (and any terms and conditions that are reasonably necessary to determine remuneration outcomes, such as the number of hours worked), and a right to ask other employees about their remuneration. As you would already know, employees are protected from adverse action being taken against them for exercising workplace rights, so an employer cannot take adverse action against employees who choose to disclose their remuneration details or ask other employees to do so.

WHAT THIS MEANS?

From 7 June 2023, pay secrecy provisions in an employment agreement are out (including agreements entered since 7 December 2022). It will be an offence to include a pay secrecy clause in any employment contract or other written agreement with an employee.

Penalties reaching $82,500 per contravention or $825,000 for very serious, wilful contraventions, apply.

However, pay secrecy clauses in employment contracts entered into before 7 December 2022 will remain in effect until such time as the agreement is changed or varied, at which point the provision must then be removed and can no longer be enforced.

What about other written agreements with employees?

Employment contracts are not the only agreement employers enter into with employees.

Section 333D contemplates “a contract of employment or other written agreement”. Unhelpfully, the Fair Work Act does not currently define remuneration or what comprises it. This means other documents such as deeds of release and employee share option plans may be captured by this change, depending on their terms.

EMPLOYERS SHOULD

• Check your employment contract templates and remove anything that requires employees to keep their remuneration or related terms thereof confidential. As a starting point, check your remuneration clauses and confidentiality clauses.

• Consider workplace policies addressing confidentiality, remuneration and pay reviews.

• Consider whether any employment agreement issued on or after 7 December 2022 contained pay secrecy provisions, in which case it ought to be varied to remove the offending provision (notwithstanding that the provision will be of no effect).

• Check your employee share plans and be mindful of this when entering into other written agreements.

Get in touch if you have any questions or would like some assistance with reviewing and amending your employment contract templates (emma@insideeagles.com.au).

Emma Burrell-McDonald

Inside Eagles acknowledges the Gadigal people of the Eora Nation, the traditional custodians of this land and we pay our respects to Elders past, present and emerging.