New Employee And Employer Definition

The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024, also known as the Closing Loopholes No. 2 Act, has been passed. This legislation brings about changes to the Fair Work Act, in defining the terms "employee" and "employer."

One of the key highlights of this amendment is the introduction of an interpretive principle aimed at providing clarity in determining the true essence of employment relationships. Rather than solely relying on contractual terms, the focus will be on the real substance, practical reality and true nature of the relationship.

Factors such as the overall dynamics of the relationship, contractual terms, and practical execution will play a pivotal role in determining the real substance of the relationship. This signifies a return to the multi-factor test, where various elements are considered to ascertain whether an individual is an employee or an independent contractor.

When courts and tribunals apply these new provisions, they will closely examine factors like:

• the level of control exerted by the principal contractor,
• the methods of remuneration,
• the autonomy in work hours, and
• the distribution of risks and liabilities between parties.

This reform aims to provide employers with greater clarity and certainty in employment arrangements, ensuring accurate classification of individuals and appropriate adherence to legal obligations. Stay informed for further updates as these changes unfold and impact employer-employee relations.

For further information, please contact the MPAQ Advisory team on 07 3273 000 or email advice@mpaq.com.au