Right to Disconnect: What Small Businesses Must Know
From 26 August 2025, the Right to Disconnect officially applies to employees in small businesses (with fewer than 15 employees).
The law protects employees from unreasonable work-related contact outside their normal working hours, balancing workplace needs with personal time.
What is the Right to Disconnect and Why Does it Matter?
The Right to Disconnect is a legal entitlement introduced by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024, which allows employees to refuse unreasonable work-related contact outside normal hours. For small businesses, it means rethinking how, when, and why managers contact staff after hours.
The law responds to widespread overreach in workplace communication. Before its introduction, 87% of Australian office workers reported being contacted outside work hours, with over a third receiving contact more than once per week. This blurred the line between professional and personal life and contributed to unpaid overtime averaging 5.4 hours per week. Since the reform, unpaid overtime has dropped to 3.6 hours per week, a 33% reduction overall, and a 40% reduction among 18-29 year olds - a group particularly vulnerable to burnout.
The benefits are tangible. A year into the reform:
77% of employers report improvements in employee work-life balance.
64% of employers have seen higher engagement.
62% have noticed productivity gains.
The Right to Disconnect grants employees the legal right to refuse to monitor, read or respond to work‑related communications outside their working hours unless such refusal would be unreasonable. This rule, which has applied to larger employers since 26 August 2024, extends to small businesses from 26 August 2025.
This is a positive change for employees because it enshrines boundaries around after-hours communication, preventing them from being penalised for disconnecting. Employers must now assess whether contact is reasonable by considering factors like the contact's purpose, how it's made, disruption level, the employee’s role and personal circumstances and whether extra compensation applies.
Without clear policies, small businesses risk formal disputes or significant penalties (up to $93,900 for corporations) if an employee raises a complaint to the Fair Work Commission.
When is it okay for employees to refuse contact?
The Right to Disconnect does not empower employees to ignore all after-hours contact. Instead, the law requires employers and employees to consider whether refusal is unreasonable. Some of the factors to be considered includes:
The reason for the contact: urgent health, safety or legal matters are harder to refuse than routine issues.
How the contact is made and how disruptive it is: a single text is less disruptive than repeated late-night calls.
Compensation or allowances: if the employee is paid to be available outside ordinary hours, refusal may be unreasonable.
The employee’s role and level of responsibility: senior staff may reasonably be expected to handle occasional out-of-hours issues.
Personal circumstances: family or caring responsibilities may make refusal more reasonable.
Legal obligations: if the employee is contractually obligated to work overtime or certain awards regarding contact outside of working hours apply, it may be unreasonable for an employee to refuse to read, monitor or respond to out-of-hour contact.
How Should Small Businesses Manage Out-of-Hours Contact?
The Right to Disconnect doesn’t outlaw after-hours contact but it does push small businesses to think critically about when and why they're reaching out. Small businesses should develop clear, practical policies to manage when employees can and cannot be contacted outside work. The key is to balance legitimate business needs (e.g., emergencies and rostering issues) with employees’ right to switch off.
Best practices include:
Drafting a Formal Policy
Only 26% of workplaces have a formal Right To Disconnect policy, but it is the simplest way to demonstrate compliance. Policies should define what counts as “reasonable” contact in the context of the organisation, outline acceptable communication methods and explain escalation procedures for urgent issues. Context must take into account emergency needs, employee role expectations and individual circumstances.
Training Managers
Business leaders must understand the law and avoid routine after-hours emails or calls. Scheduling tools such as delayed email sending can help manage communication without breaching the law.
Respecting Flexibility
Some employees may prefer flexibility and accept occasional after-hours contact but this should never be assumed or imposed. The law protects an employee’s right to decline.
Document and Review
Keep records of how policies are communicated and reviewed. Regularly check whether communication patterns align with the law.
As of 2025, 32% of employees still receive frequent after-hours communication. Businesses should be aware that failing to act means there is a real risk of formal complaints. Within the first year of the Right to Disconnect being enacted, 56% of employers had at least one employee raise a right-to-disconnect concern within the first year.
What Risks Do Small Businesses Face if They Ignore These Reforms?
Ignoring these reforms can expose small businesses to legal, financial and reputational harm.
Legal and financial risk: Non-compliance with the Right to Disconnect carries fines up to $93,900 for corporations.
Stop orders & workplace disputes: Failure to act risks disputes escalating to the Fair Work Commission, which can issue stop orders, for example, ruling that an employer cannot require contact or that an employee must respond.
Employee disengagement: Ignoring boundaries can undermine employee morale and productivity.
Key Takeaways
From 26 August 2025, small businesses in Australia must comply with the Right to Disconnect. This means employees cannot be penalised for refusing unreasonable after-hours communication, and employers must carefully consider and manage what counts as “reasonable.”
The data shows why this matters: unpaid overtime has dropped by a third, work-life balance has improved for three-quarters of businesses and productivity gains are being realised. Yet most workplaces still lack formal policies, leaving them exposed to disputes and penalties.
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