News & Insights

The Federal Government’s recently passed ‘Closing Loopholes’ legislation is set to have a substantial impact on the way Australian businesses operate. It encompasses several key reforms to the Fair Work Act 2009 (Cth) (some of which have already taken effect), including many new rights and protections for workers. One major change, which is likely to be of particular concern for foreign-owned subsidiaries operating in Australia, is the introduction of a right to disconnect.

What is the “right to disconnect”?

The new legislation provides that an employee may refuse to monitor, read or respond to contact, or attempted contact outside of the employee’s working hours, unless the refusal is unreasonable. This right extends to contact from work-related third parties, such as parent companies and clients, as well as employers.

The new laws do not prohibit contacting staff out of hours, but they do empower employees to approach the Fair Work Commission (FWC), seeking orders preventing such contact from continuing (if the employee’s refusal is not unreasonable). Employers are also able to apply to the FWC for an order requiring an employee to respond to contact where an employee’s refusal is deemed unreasonable. Applications can only be made to the FWC after attempts have first been made to resolve any disputes at the workplace level, so they are intended as a last resort. However, if orders are made by the FWC, then any breach of such orders may result in pecuniary penalties, currently up to $93,900 for corporate employers and $18,780 for individuals.

The right to disconnect will also be a ‘workplace right’ within the ambit of the general protections regime, which means that employees will be able to bring general protections claims alleging that an employer has taken adverse action against them for exercising their right to disconnect.

Impact on global operations

Global companies with Australian subsidiaries are predisposed to being affected by this new legislation because of the increased likelihood that their employees may work as part of an international team and/or service international clients across different time zones. Consider an international business that has a team operating across offices in Melbourne and London. If Australian employees sought to rely on their right to disconnect by refusing all contact from their British colleagues outside their ordinary working hours, any real-time communication across the team would become unfeasible.

However, the legislation prescribes factors which will be used to determine the reasonableness of an employee’s refusal to connect after hours, including:

• the reason for the contact;
• the method and frequency of the contact, and whether it causes a level of disruption to the employee;
• the employee’s remuneration, roles, and responsibilities; and
• the employee’s personal circumstances, such as family or carer obligations.

If an employee’s role inherently requires working with colleagues or clients located internationally, any blanket refusal to attend meetings, review emails or participate in discussions outside of regular working hours would almost certainly be unreasonable, including because it is likely that the market level of remuneration for such a role would reflect this requirement. Disputes in this type of scenario are more likely to arise in the context of an employee refusing contact in specific scenarios or borderline cases, for example, where a particular early morning meeting conflicts with child-related routines or activities, and perhaps could be scheduled at another time.

The added general protections risk will also necessitate extra caution on the part of employers looking to manage performance and define expectations around employee responsiveness and availability.

These new statutory standards will empower employees, and perhaps embolden some, to set firmer boundaries between their work and personal lives at a time when many employers and employees are still negotiating the parameters associated with new flexible ways of working.

How can you prepare?

The new right to disconnect will not take effect until 26 August 2024 (26 August 2025 for small businesses).

In the meantime, some of the steps employers can take to best position themselves for the commencement of these laws include:

• Considering the extent to which employees are currently being contacted outside their usual hours and assessing this against the statutory factors that are relevant to determining reasonableness. Areas of potential risk can then be addressed to limit any problems that may otherwise arise.
• Reviewing and, if necessary, amending employment contracts to specify that employees will be expected to be available to work reasonable additional hours outside of their usual hours of work, and that their remuneration compensates them for such work. This may include specifying explicit out of hours expectations, such as being available to communicate with colleagues or clients in different time zones, where appropriate. The FWC would take this into account when considering whether an employee’s refusal to accept contact is unreasonable.
• Engaging with employees individually in relation to personal needs and the importance of work-life balance, and if necessary, the limits on their legal right to disconnect. Establishing mutual understanding about this topic and business expectations is likely to assist in minimising future disputes in this area.
• Updating or creating new policies to deal with the right to disconnect. Policies can explain what the right is (and what it is not), clarify how a business will approach the right in practice (especially where employees are located across multiple time zones) and convey expectations for employees in relation to out of hours duties.

If you require advice on the right to disconnect, please contact our Employment, Safety and Migration team at Macpherson Kelley.