Government introduces employment definition into Fair Work Act

Government introduces employment definition into Fair Work Act

Government introduces employment definition into Fair Work Act

The Federal government, in their wisdom, has introduced a ‘definition of employment’’ as part of their wide-reaching Fair Work Legislation Amendment (Closing Loopholes) Bill No.2 (the Bill), which has amended provisions in the Fair Work Act 2009 (the Act).

As the government themselves have notated in the Act, the intention of the new definition is to reflect the federal government’s dissatisfaction with recent decisions of the High Court in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2.

Under the Act, the nature of the employment relationship is now to be ascertained by examining the “real substance, practical reality and true nature of the relationship between the individual and the person”.

That examination moves away from the above decisions, which focused on the contractual terms entered into by the parties.

As stated in the Act, in considering the totality of an employment relationship, “regard must be had to not only the terms of the contract governing the relationship, but also to other factors relating to the totality of the relationship including, but not limited to, how the contract is performed in practice”.

If a business enters into a relationship with an individual whom they consider to be an independent contractor, and that relationship is found to be incorrect, then it is likely the engaged person could make a claim for award entitlements such as leave, overtime, or minimum rates of pay.

To allow the provisions to pass through parliament, the government agreed to introduce an ‘opt-out’ clause whereby independent contractors who earn above a certain threshold will have some ability to opt out of the employer/employee definition.

Further details will be provided as they are released.

Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 – Parliament of Australia

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Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

Ref: 444.0624

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