Changes to the Fair Work Act under the ‘Closing the Loopholes’ raft of legislative amendments is about to impact Australian small businesses. The right to disconnect and employee choice for casual employment starts on 26 August 2025 for small businesses and their employees.
Small business employers must familiarise themselves with and take immediate steps to comply with key legislative changes that came into effect in 2024 for large employers, with additional obligations commencing 26 August 2025. These reforms significantly impact employment arrangements. Failure to comply may result in pecuniary action by the Fair Work Ombudsman (FWO), or other legal consequences.
Right to Disconnect
The right to disconnect starts on 26 August 2025 for small businesses and their employees. This means that employees can refuse to monitor, read or respond to contact or attempted contact outside their working hours, unless their refusal is unreasonable.
Factors in determining reasonableness include:
- The employee’s role and level of responsibility.
- The urgency and nature of the contact.
- Any agreed compensation or allowances.
- The employee’s personal circumstances, including caring responsibilities..
Casual Employee Pathways to Permanency
From 26 August 2025, eligible casuals in small businesses can notify their employer in writing of their intention to change to full-time or part-time employment. This is called the ‘employee choice’ pathway. A casual employee may only notify their employer if they :
- have been employed for at least 6 months (12 months if employed by a small business)
- believe they no longer meet the requirements of the casual employee definition under the Fair Work Act.
A casual employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work and payment of a casual loading. However, if the character of the relationship changes to resemble permanent employment e.g. a regular pattern of employment and the work can be performed on a permanent basis then the casual employee may be entitled to seek full-time or part-time employment.
Responding to a notice to convert to permanent:
The employer must respond to the notice to convert casual employment in writing within 21 days of receiving the notice. If an employer agrees, the next step is to confirm the conversion to full-time or part-time in writing including the date of commencement and all other terms and conditions.
Employers may refuse to offer conversion on reasonable business grounds including:
- the character of the employment has not changed i.e. it is still correctly defined as casual employment,
- substantial changes would be required to the way in which work in the employer’s enterprise is organised,
- there would be significant impacts on the operation of the employer’s enterprise, if the employment was converted.
Next Steps
With multiple reforms now in place (and more imminent), small businesses must take proactive steps to manage their compliance obligations. We recommend the following immediate actions:
- Assess whether current casual employees meet the criteria for conversion, particularly if they work regular, ongoing patterns.
- Do not unreasonably refuse conversion requests, as per the Fair Work Act 2009 (Cth). If notice of conversion is not accepted, make sure there are valid business reasons
- Ensure employment contracts reflect the updated definition of casual employment and the absence of a firm advance commitment to ongoing work.
- Update policies and employment contracts to include guidance on contact expectations.
- Decide the circumstances in which employees may necessarily be contracted out of normal business hours
- Develop clear procedures for emergency or time-sensitive communication.
- Train managers and supervisors on understanding and respecting the right to disconnect.
Further Information:
Feel free to contact Maguire Legal here for any enquires.