New Changes to the Australian Fair Work Act

New Changes to the Australian Fair Work Act

As of 26th August 2024, Australian employees now have 'the right to disconnect'. New changes to the Australian Fair Work Act ensure that employees are no longer expected to engage in work-related communications or activities outside their standard working hours.

Managers who discipline or treat employees unfairly for not responding to work matters outside of regular work hours may face action by the Fair Work Commission. This legislative update aims to foster a healthier work-life balance and safeguard workers' mental health.

$130 Billion of unpaid work annually

The advancements of technology over the last few decades have made it increasingly easy for managers to contact workers at any time, eroding work-life boundaries. This was further exacerbated by the COVID-19 pandemic with the widespread shift to remote work, blurring the lines between work and personal life. A study found that Australian workers are averaging 5.4 hours of unpaid overtime per week, equating to more than $130 billion of unpaid work annually across the labour market¹.

'Always on' culture affecting health

Australia's "always on" culture has also had significant repercussions for workers' mental health. Research indicates that employees who struggle to disconnect from work are more prone to anxiety, depression, back pain, sleep disorders and burn out. Moreover, the inability to fully disengage from work can strain personal relationships and reduce overall job satisfaction. Naturally, there has been a reported rise in work-related mental health problems³, costing businesses in time loss and compensation.

Mental health Workers Compensation claims on the rise

Safe Work Australia report that mental conditions accounted for 9% of all serious workers' compensation claims in 2020-21, representing a 37% increase in mental health claims since 2016-17³. Anxiety/stress disorders were the most common type of mental health condition making up 46% of mental health claims. Notably, mental health claims cost a median of $58,615 per serious claim compared to $15,743 for other injuries. The median time loss for mental health claims is 34.2 working weeks compared to 8.0 working weeks for other injuries and diseases. Additionally, the return to work rate was much lower for people with mental health claims, reported at 79% for 2021 compared to 92% for all other injuries. Considering that mental health conditions represent a significant cost for workplaces both in workers compensation and time loss, the right to disconnect also benefits businesses.

What is 'the right to disconnect'?

France was the first to introduce 'the right to disconnect' laws in 2017 and they have since been implemented in more than 20 countries across Europe, North America, South America and Southeast Asia.

The changes to the Australian Fair Work Act does not restrict managers from contacting employees outside of work hours, however they give employees the legal right to 'refuse to monitor, read or respond to communications from an employer or third party'² outside of agreed work hours, unless refusal is unreasonable. What is deemed unreasonable must consider a number of factors, including:

• the reason for the contact
• whether the employee is compensated for or paid extra for:
• being available to work within a specific period, or
• working extra hours outside their regular work hours
• the employee's personal circumstances, including family or caring responsibilities
• the employee's role type and responsibility level

Will the changes lead to a decrease in productivity?

Productivity is often equated with employees going without breaks and working long hours, however this is a misunderstanding. Productivity is defined as the amount produced per hour of work, calculated as a ratio of total output (in real terms) to the number of hours worked. Demanding employees to regularly work unpaid overtime is in fact detrimental to productivity. Ensuring that working hours align with scheduled hours compels managers to be more organised and reduces their reliance on unpaid overtime, consequently increasing output during regular hours.

Moreover, research demonstrates that well-rested, balanced, and healthy workers are more productive⁴. Interrupting workers' evenings and family time heightens stress and damages their mental and physical health, leading to decreased productivity. Not only is productivity reduced but quality of life is also adversely affected, which is fundamental to the health of the overall economy.

What has changed with the 'the right to disconnect'?

For most businesses the right to disconnect took effect on 26th August 2024. Small businesses have another year to prepare, with changes starting on the 26th August 2025. Essentially the reform mandates that employers respect their employees' personal time, prohibiting work-related communications outside regular hours except in exceptional circumstances.

Employers must establish clear policies on after-hours communication, defining appropriate contact times and providing guidelines for both employees and managers to foster a culture of well-being. Conversations between employers and employees are encouraged to determine what represents reasonable contact. All awards are required to include a 'right to disconnect term', outlining specific practices and how they apply to different industries and occupations.

The legislation includes exceptions for genuine emergencies or critical business needs, which must be clearly defined and not excessive. Employees exercising their right to disconnect are protected from retaliation, ensuring they can set boundaries without fear of negative consequences.

Should employer and employee not be able to come to an agreement, either party may apply to the Fair Work Commission who will deal with the dispute and develop an appropriate solution. Employers can proactively safeguard themselves and minimise disputes by reviewing employment contracts and position descriptions, reviewing their policies and procedures, and providing training to managers and employees on the subject.

A new era of workplace rights

The introduction of the 'right to disconnect' has marked a significant shift in Australia's approach to work-life balance, highlighting the growing recognition of mental health in the workplace. By empowering employees to set boundaries and disconnect outside their agreed work hours, the changes to the Fair Work Act foster a healthier, more sustainable work environment. These changes aim to deliver long-term benefits including increased productivity, improved mental well-being, and a more engaged workforce, proving well worth the effort.

Creating a safe workplace

As an employer, it is your responsibility to ensure your workplace is safe, which includes providing a mentally safe work environment. Our experienced workplace services teams offer comprehensive risk management solutions, including reviews of site-specific procedures, processes, and risk identification, along with tailored strategies to strengthen workplace safety.

Get in touch with one of our dedicated work services teams for expert assistance tailored to your business needs.

The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.

REFERENCES

1. https://futurework.org.au/wp-content/uploads/sites/2/2023/11/Short-Changed-GHOTD-2023.pdf
2. https://www.fairwork.gov.au/about-us/workplace-laws/legislation-changes/closing-loopholes/right-to-disconnect
3. https://data.safeworkaustralia.gov.au/sites/default/files/2024-02/Psychological-health-in-the-workplace_Report_February2024.pdf
4. https://australiainstitute.org.au/post/the-big-error-at-heart-of-right-to-disconnect-opposition/

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