What does the ‘right to disconnect’ mean for real estate?

Earlier this month, Federal Parliament passed the Fair Work Legislation Amendment (Closing Loopholes No 2) Bill 2023, which introduced an enforceable right for an employee to “switch off” or “disconnect” from work.

Offering employees the statutory right to refuse contact by their employer outside ordinary work hours, unless deemed unreasonable, the legislation will come into effect at a date yet to be determined.

To ensure real estate agents, property managers, business owners and administrators are up to speed, we get the lowdown on the changes from Bryan Wilcox, the chief executive officer at Real Estate Employers’ Federation (REEF).

Q: What is the right to “disconnect”?

Once the law commences, employees will have the statutory right to refuse to monitor, read or respond to contact or attempted contact from their employer outside of their working hours unless the refusal to do so is deemed unreasonable.

The scope of this right to disconnect will apply to phone calls, emails, texts, MS Teams messages and any other contact by an employer, outside the employee’s ordinary hours of work.

The changes to workplace law will offer employees protection against disciplinary action being taken by their employer (up to and including termination of employment) because the employee chooses to disconnect from attempts by their employers, and third parties, to contact them (if the contact or attempted contact is related to an employee’s work).

Not only will the changes be enshrined in amendments to the Fair Work Act, but industrial awards will also be varied in the coming months to include a new “model” term prescribing this new right for an employee to disconnect from work contact. This will ultimately include changes to the two main awards affecting the real estate industry, i.e. the Real Estate Industry Award 2020 and the Clerks – Private Sector Award 2020.

To be absolutely clear, however, the new laws do not prohibit an employer from attempting to contact an employee outside their ordinary hours of work. Rather, the new law sanctions an employee’s right to not monitor, read, or respond to those communications, except where doing so is unreasonable.

Notwithstanding, when the changes take effect, employers should ultimately expect that they will have less control over responses from employees to their communications if those communications occur outside of normal work hours.

Q: Is there any clarity around what is “unreasonable refusal” in responding to workplace communications outside normal hours?

Unsurprisingly, the legislative amendments do not provide any real clarity around what might be considered “unreasonable refusal” by an employee to stay connected outside their ordinary hours of work. Over time, we can of course expect to gain some clarity as the legislation is tested in matters that come before the Fair Work Commission or the Federal Court.

While an employee’s “unreasonable refusal” to stay connected will undoubtedly be considered on a case-by-case basis, REEF is of the opinion that the following factors may be relevant in determining whether an employee’s refusal to stay connected is unreasonable:

• The reason for the contact or attempted contact.
• How the contact or attempted contact is made and the level of disruption it causes the employee.
• The extent to which the employee is compensated (including non-monetary compensation) to remain available to perform work during the period in which the contact or attempted contact is made or for working additional hours outside the employee’s ordinary work hours.

It should be noted that the compensation of an employee for remaining available to perform work outside their ordinary working hours can extend to non-monetary compensation (i.e. additional time off, flexible working arrangements, tangible rewards); and

• The nature of the employee’s role and the employee’s level of responsibility.
• The employee’s personal circumstances (including family or caring responsibilities).

REEF further believes that it would be unreasonable for an employee to disconnect when the contact by the employer is for practical reasons like rostering or about upcoming shifts, in an emergency, or where there is concern for workplace health and safety.

Q: What if the employee and employer disagree about the ‘reasonableness’ of refusing to respond to employer communications?

If a dispute arises, the parties must first attempt to resolve the dispute at a workplace level in discussions between the parties. If those discussions are unsuccessful, either party may apply to the Fair Work Commission (FWC) to make an order under the Fair Work Act.

For an employer, that application would be to stop the unreasonable refusal from the employee. Or, in the case of an employee’s application, it would be to stop the unreasonable contact from the employer or to stop the employer from taking certain actions because of a belief that the employee’s refusal was unreasonable.

The FWC may order certain actions that it considers appropriate and if orders are breached, civil penalties may be applicable.

Q: When do the new laws become operative?

The changes outlined in this article will come into effect on 26 August 2024 for big businesses (a business with 15 or more employees) and on 26 August 2025 for small businesses (a business with less than 15 employees).

Q: How might this law for employees to disconnect affect the real estate industry?

To understand the possible impact of the legislation on agency practice, it is relevant to consider the varied employment circumstances of workers typically engaged in a real estate business.

In this regard, let’s consider the situation with regard to the four main occupational groups in agency practice.

1. Salespersons – whether residential, commercial, industrial, stock and station and buyer’s agents.

Most of these types of employees are engaged on incentive-based remuneration arrangements, with the incentive largely associated with the generation of commission or fees.

While a salesperson will certainly have a right to disconnect under this new legislation, it would seem unlikely that in practice they would choose to exercise this right, as it would probably have a detrimental impact on their commission earning capacity. That is, a call or email ignored might be a listing or sale missed.

2. Property management – whether residential, strata, commercial or industrial property managers

The Real Estate Industry Award currently prescribes that a property management employee is entitled to be compensated where he/she is required by the employer to be on either “standby” or actually “called out” to perform work outside of their ordinary hours of work. This requirement for property management employees to be properly compensated for responding to work-related calls/correspondence has been an award provision since 2010.

So, under the new law, property management employees will also enjoy the right to disconnect, except in circumstances where they are being compensated to remain available to be contacted by their employer and/or third parties (e.g. tenants or tradespeople) and assuming the contact is related to work.

3. Senior business managers

It is REEF’s view that in circumstances where a senior business manager is being paid well in excess of the base rate of pay prescribed by the award, it may be “unreasonable” for the senior manager to rely on the right to disconnect provisions when electing not to respond to communications from the employer outside of ordinary hours of work.

Moving forward, however, REEF will be examining the prospect of amending its template Employment Agreement for senior business managers to clarify that the salary level comes with broad communication expectations. In other words, it may become a contractual obligation to remain connected for which the senior manager is satisfactorily compensated.

4. Clerical/administration staff

In our experience, it is rarely necessary to contact this cohort of employee outside of their ordinary hours of work. However, in circumstances where these employees are required to be connected (i.e. work additional hours) they are entitled to be compensated for the additional hours worked.

The right to disconnect legislation reinforces this right but also gives all employees the right to refuse contact in circumstances where they are not being adequately compensated.

Q: So, how can employers best prepare for the new laws concerning the ‘right to disconnect’?

To accommodate an employee’s right to disconnect, employers should consider:

• providing training for managers to ensure they are aware of the new laws and avoiding taking any disciplinary action against employees who are exercising their right to disconnect.
• encouraging managers to respect the employee’s right to disconnect.
• educating employees about the new laws.
• preparing policies around the right to disconnect.

There appears little doubt that the new laws surrounding an employee’s right to disconnect from workplace communications outside of their ordinary hours of work will have some impact on the efficient operation of real estate businesses. The extent of the disruption or inconvenience caused by the new laws will clearly vary from business to business (or perhaps, more accurately, employee to employee).

Where real estate business owners experience difficulties resulting from the operation of the new laws, they should seek professional assistance to work out sensible and practical solutions to minimise any disruption to the workplace.