Between late 2023 and 2025, the Closing Loopholes amendments to the Fair Work Act 2009 (Cth) changed how employers engage casuals and contractors, how underpayments are punished, and when staff can switch off. Many businesses are still running on contracts, policies and habits from before. This page sets out what changed, when, and what to do about it. The Fair Work Ombudsman's Closing Loopholes page has more detail.
Key point: These are national system rules. If your business is a WA sole trader, partnership or trust with individual trustees, WA law applies instead, and it changed too (for example a 25% casual loading and a real-substance employee test from 31 January 2025). See our WA state system guide.
The Key Dates
| From | What changed |
|---|---|
| 15 December 2023 | Subjection to family and domestic violence added as a protected attribute |
| 27 February 2024 | Higher maximum civil penalties for larger businesses; "serious contravention" now includes reckless conduct; new sham contracting defence; stronger compliance notices |
| 26 August 2024 | New statutory definition of casual employee and the employee choice pathway to permanent work; "whole of relationship" employee test (s 15AA) and opt-out notices; right to disconnect (businesses with 15 or more employees); regulated workers, including employee-like workers; unfair contract terms for contractors in the Fair Work Commission |
| 1 January 2025 | Intentional underpayment becomes a criminal offence; Voluntary Small Business Wage Compliance Code; higher penalties for some underpayments by larger businesses |
| 26 August 2025 | Right to disconnect extends to small businesses |
A separate change from 6 December 2023 limits fixed-term contracts to 2 years in most cases (s 333E); see our page on employment contracts and policies.
Casual Employees and the Employee Choice Pathway
Who is a casual? Since 26 August 2024, an employee is a casual only if the relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work, and the employee is entitled to a casual loading or casual rate (s 15A). This is judged on the real substance and practical reality of the relationship, including how it works in practice, such as whether the business can choose to offer work and the employee can choose to accept it, and whether there is a regular pattern of work. The label in the contract is not enough.
A person who starts as a casual stays a casual until they convert to permanent employment under the Act or their award or agreement, accept an offer of permanent employment and start work on that basis, or the Commission orders a change of status (s 15A).
Converting to permanent: the employee's choice. The old "offer" system has been replaced by an employee choice pathway (Part 2-2 Division 4A):
- A casual who has worked for you for at least 6 months (or 12 months if you are a small business employer), and who believes they no longer meet the casual definition, can notify you in writing that they want to change to full-time or part-time employment.
- You must consult with them and give a written response within 21 days.
- You can refuse only on the grounds the Act allows: that the employee still meets the casual definition; that there are fair and reasonable operational grounds, such as substantial changes to how work is organised or significant impacts on the business; or that accepting would breach a legally required recruitment process. You must give reasons.
- If you accept, your response must say whether the employee becomes full-time or part-time, their hours, and the start date.
Disputes about conversion can go to the Fair Work Commission. You must also give casuals the Casual Employment Information Statement when they start, and at the later times the Act requires. See the Ombudsman's page on casual conversion.
What to do: review who you call casual, check whether their work has become regular and ongoing in practice, update your casual contracts and information statements, and set up a process for responding to notifications within 21 days.
Employees and Contractors
Since 26 August 2024, whether a worker is an employee under the Fair Work Act is decided by the real substance, practical reality and true nature of the relationship, including how the contract works in practice, not only what the written contract says (s 15AA). A contractor earning above the contractor high income threshold ($190,100 from 1 July 2026) can choose to give an opt-out notice, so that the contract terms decide the question instead (s 15AB).
The defence to sham contracting also changed on 27 February 2024: a business that misrepresents employment as contracting now has a defence only if it reasonably believed the contract was a contract for services.
Some contractors are now regulated workers: employee-like workers doing digital platform work, and certain road transport contractors. The Fair Work Commission can make minimum standards orders for them, and employee-like workers can challenge an unfair deactivation. Contractors earning below the contractor high income threshold can also ask the Commission to deal with unfair contract terms.
See our detailed page on contractors.
The Right to Disconnect
Employees can refuse to monitor, read or respond to contact from you, or from third parties about their work, outside their working hours, unless the refusal is unreasonable (s 333M). Whether a refusal is unreasonable depends on the reason for the contact, how it is made and how disruptive it is, whether the employee is paid to be available or for extra hours, their role and level of responsibility, and their personal circumstances. A refusal is always unreasonable if the contact is required by law.
The right is a workplace right, so disciplining or dismissing someone for using it can lead to a general protections claim. What to do: decide which roles genuinely need after-hours contact, reflect that in contracts and pay, set expectations in a policy, and resolve disagreements by discussion first. Disputes can go to the Fair Work Commission. See our employee page on the right to disconnect.
Criminal Underpayment and Higher Penalties
Since 1 January 2025, an employer that intentionally fails to pay wages, leave entitlements, superannuation or other required amounts on time can commit a criminal offence (s 327A). Honest mistakes are not criminal. The Fair Work Ombudsman investigates and can refer matters to the Commonwealth Director of Public Prosecutions or the Australian Federal Police; penalties can include fines and imprisonment.
- A business that discloses possible criminal underpayment and cooperates can seek a cooperation agreement with the Ombudsman, which prevents referral of the covered conduct for prosecution.
- A small business that has complied with the Voluntary Small Business Wage Compliance Code cannot be referred by the Ombudsman for criminal prosecution for an underpayment.
- Civil penalties also rose. Since 27 February 2024, maximum penalties for many contraventions by businesses with 15 or more employees are five times higher, and a "serious contravention" includes a reckless one. From 1 January 2025, some underpayment penalties for larger businesses can be three times the underpayment.
What to do: audit award coverage, classifications and pay, fix problems promptly, and get advice before approaching the Ombudsman. See our pages on underpayments and Fair Work Ombudsman investigations.
Labour Hire
The Fair Work Commission can now make regulated labour hire arrangement orders (often called "same job, same pay") requiring a labour hire provider to pay its workers at least what the host business's enterprise agreement would pay them, subject to exceptions. Businesses with enterprise agreements that use labour hire should check whether an order applies or could be sought. See the Ombudsman's Closing Loopholes page for details.
How We Can Help
We help WA businesses update contracts, casual and contractor arrangements and policies for these changes, respond to casual conversion requests and right to disconnect disputes, and deal with underpayments and Ombudsman investigations. Contact us for a confidential discussion.