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From August 26, 5.4 million Australians working for small businesses will have the "right to disconnect". This means they can refuse contact about work - such as emails, texts or calls - outside work hours, unless that refusal could be considered "unreasonable".

The right to disconnect has been in place for medium and large Australian organisations since August last year. But it's now extending to small businesses with fewer than 15 employees.

It signals a big shift in how Australians relate to work in an always-connected world. In an era where smartphones tether us to our jobs around the clock, the law allows employees to reclaim personal time and reassert important boundaries between work and life.

For owners of the country's 2.5 million small businesses, it presents a new challenge, especially knowing if staff will get back to them out of hours.

If you work for or run a small business, what does the right to disconnect and "unreasonable" refusal mean for you?

For employees, a "reasonable" or "unreasonable" refusal to be contacted outside work hours depends on the context.

According to the Fair Work Commission, several factors must be considered, including:

Let's take an employee who receives a non-urgent email at 9:30pm about rescheduling a meeting time. It would generally be "reasonable" for them to defer a reply until work hours.

Similarly, workers caring for sick children may justifiably ignore a routine request, especially if there's no previous agreement that they're available and if they're not compensated for out-of-hours contact.

But as the Fair Work Commission has noted, "it will be unreasonable for an employee to refuse to read, monitor or respond if the contact or attempted contact is required by law".

So if a tradesperson working for a small business receives an unexpected safety alert late at night and refuses to respond, that refusal could be deemed "unreasonable", given the urgency and workplace risk.

Another example is of an employee who's paid an on-call allowance, and gets a text message after work asking them to send clients an urgent document.

Ignoring that call, or delaying a response, would likely be judged "unreasonable". That's because their role explicitly demands availability and they're compensated for it as part of their employment conditions.

The right to disconnect legislation does not stop employers from trying to contact employees after working hours.

What's new is that small business employees now have more legal protection to switch off from work and not respond to unnecessary work-related contacts from their boss or others, such as a contractor.

For example, if you employ people in an office to work regular 9am to 5pm weekday hours, and if there's nothing in their contract about on-call availability, expecting them to reply to non-urgent emails outside those hours risks being deemed "unreasonable".

If disputes arise, employers and employees are encouraged to resolve it themselves. If that doesn't work, the Fair Work Commission can intervene if necessary.

Employers who continually demand employees respond to non-urgent out-of-hours requests could face stop orders or a Fair Work dispute, which could lead to civil penalties.

But it can go the other way, too. If you're a boss with employees you think are unreasonably refusing out-of-hours contact, you can also apply for help with your dispute.

Some in small business have voiced concerns about the lack of legal clarity about what is "unreasonable" refusal. This emphasises the urgent need for organisations to develop internal guidelines that align with legal expectations.

But if managed well, it could pay off. In a recent survey of 600 human resources professionals in private, public and not-for-profit organisations, 58% reported the right to disconnect legislation had "significantly increased" or "somewhat increased" employee engagement and productivity levels. Only 4% reported it had either "significantly decreased" or "somewhat decreased" both employee engagement and productivity levels.

If you're unsure how the new rules affect you, now is the time to start talking: setting shared expectations about out-of-hours contact, then regularly checking if it's working.

Particularly when you're working in a small business, with a small team, the right to disconnect needs to be about more than applying the law. It's about mutual respect and clarity.

That means being as clear as possible about when an out-of-hours response is necessary - or when it really is more reasonable to wait until the next work day.