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Industrial Relations Update: What You Should Know

Industrial Relations Update: What You Should Know

By LIV Workplace Relations Section

Workplace Relations 

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Industrial relations update: what you should know

On 9 October 2020, the Morrison Government introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (‘the Bill’) amending the Fair Work Act 2009 (Cth) (‘the FW Act’) and related legislation[1] to assist Australia’s recovery from the COVID-19 pandemic. The Bill covers several areas of reform including:

  • Casual employment;
  • Modern awards;
  • Enterprise agreements;
  • Greenfields agreements; and
  • Compliance and enforcement.

The Attorney-General’s Department has released a series of factsheets outlining the key proposals under each area of reform, which can be read here. This article aims to explain some of the key aspects of the Bill.

Casual employment

Why is the government looking at casual employment reform?

The term ‘casual employee’ is not currently defined in the FW Act. This has led to uncertainty for employers and employees, as highlighted in the recent court decisions of WorkPac Pty Ltd v Skene [2018] FCAFC 131 (‘Skene’) and WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (‘Rossato’)[2]. The cases of Skene and Rossato departed from earlier decisions of the Fair Work Commission[3] (‘FWC’) and found that employees who were engaged and paid as a casual were in fact ‘other than a casual employee’ for the purposes of sections 86, 95 and 106 of the FW Act[4]. The new objective statutory definition of ‘employee’ aims to provide a clearer casual employment framework that will give employers and employees greater certainty of the employment relationship[5]. Upon the offer of casual employment, the employer must now provide a casual employee with a new Casual Employment Information Sheet (to be prepared by the Fair Work Ombudsman).

Definition of a casual employee

Section 15A of the Bill inserts a new definition of the term ‘casual employee’ into the FW Act to be defined as:

“an offer of employment made by the employer to the person, on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.”

The issue for employees, employers and lawyers will be to determine what constitutes “a firm advance commitment” to continuing and indefinite work. Notably, section 15A provides that a “regular pattern of hours does not of itself indicate a firm advance commitment” to offering casual work[6], nor the subsequent conduct of the party which would otherwise be interpreted as constituting a more permanent relationship[7].

Double dipping

The Bill also inserts a new subsection 545A that appears to address the recent decision of Rossato, which left the door open for permanent casuals to “double dip” and receive casual loading as well as entitlements such as annual leave, personal leave and compassionate leave[8]. This new subsection directs that if a casual employee is misclassified and a court finds they are owed entitlements because they perform regular permanent work, the casual loading is subtracted from the employer’s liability. This amendment is aimed at preventing any double dipping from an employee who is misclassified as a casual, receives the 25% loading and also receives other entitlements that apply to permanent employment.

Casual conversion

The Bill imposes a statutory obligation on employers to offer regular casual employees’ conversion to full or part-time employment unless there are reasonable business grounds not to do so. This ‘conversion right’ is not a new concept, as it already exists under most modern awards[9]. Employers will be required to offer long-term casual employees the opportunity to convert to full-time employment or part-time employment, if:

  • the employee has been employed for 12 months; and
  • during at least the last six months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time employee or a part-time employee (as the case may be).

Note: the new definition focuses on the terms of the offer at the time of the initial engagement, rather than considering the subsequent conduct.

Under section 66A of the Bill, an employer must make an offer of ‘casual conversion’ for an employee to be considered full or part time employed, and this must be in writing[10]. An employer can deny making a ‘casual conversion’ if there are:

  • reasonable grounds not to make the offer; and
  • the reasonable grounds are based on facts that are known, or reasonably foreseeable at the time of deciding not make the offer[11].

Additionally, should a casual employee decline the initial offer to convert, they still retain the right to request conversion for every six months that they remain eligible.

Modern awards

Simpler award for flexible work and penalties

A controversial aspect of the Bill is that it proposes additional flexibility for those in part-time employment who are working a minimum of 16 hours per work to be offered additional ordinary hours without overtime loading. The Bill proposes that the arrangement be documented by the parties in a “Simplified Additional Hours Agreement”.

As noted in the explanatory memorandum of the Bill, simplified additional hours agreements will be subject to a range of protections. For example, the employee will not be required to enter into an agreement, and if the agreement is not in writing then the employer must make a record of the fact that the agreement has been entered into. The employee’s regular hours must be at least 16 ordinary time hours per week and there will be a minimum requirement of work or at least 3 continuous hours[12].

This flexibility will only apply to 12 modern awards covered by “distressed industries”, such as retail, accommodation and food awards. However, it has the potential to disadvantage certain employees who would have otherwise been paid overtime for working beyond their regular hours of work up to fewer than 38 ordinary hours per week.  Part 6-4D of the Bill also allows for an employer to vary a workers’ duties and location for two years (an allowance brought in with the JobKeeper subsidies) in the retail, accommodation and food awards.

The FWC recently confirmed it would conduct a review of awards covering retail, hospitality restaurant and registered and licenced clubs, which will open the door to “loaded rates” instead of penalty rates[13].

Enterprise Agreements

Procedural changes to enterprise bargaining

There are several administrative changes aimed at simplifying the procedural steps and improving approval outcomes. This includes issuing the notice of employee representational rights (‘NERR’) within 28 days rather than 14 days, the inclusion of a new model NES[14] interaction term, and the FWC to determine approval of the agreement within 21 days.

Changes to FWC procedures

Part of the proposed legislation allows for more efficient FWC procedures to deal with appeals on the papers where appropriate, and the ability to vary/revoke decisions relating to enterprise agreements and workplace determinations more easily to correct minor errors and to deal with ‘unmeritorious applications’ more promptly.

Changes to the ‘better off overall’ test

The Bill allows employers to apply for pay deals over the next two years that do not meet the “better off overall test” (‘BOOT’). This test currently requires that any pay deals must improve on the minimums set out in the relevant award[15]. The government argues that this would allow ‘award flexibility’ and boost jobs in the pandemic recession recovery[16].

The new proposed test is that the FWC must now determine if the change in income is “appropriate” in all the circumstances[17]”. There are already provisions that allow for the FWC to approve an agreement that does not pass the BOOT if it is due to “exceptional circumstance” and not contrary to the public interest[18]. The proposed Bill permits the FWC to have greater flexibility to approve agreements that are not BOOT compliant by considering the views and circumstances of the parties, COVID-19 impacts on the enterprises and the extent of the support for the agreement[19].

In response, unions and Labor have argued suspending the BOOT test will result in cuts to take-home pay for one in four workers covered by enterprise agreements[20].

Phasing out of legacy agreements

Transitional agreements (under the FW Act), commonly referred to as legacy or zombie agreements are proposed to be phased out by 1 July 2022[21].

Greenfield Agreements

The Bill proposes to allow greenfields agreements of up to eight years that relate to the construction of major projects valued over $500 million or for projects above $250 million and up to $500 million in value, where the project has national or regional significance or is likely to contribute to significant jobs creation[22]. It also seeks to ensure that greenfields agreements that will operate for more than four years must provide for annual wage increases for the nominal term of the agreement[23].

Compliance and enforcement

Criminal offences for serious wage theft

The Bill enhances the FW Act compliance and enforcement framework to deter non-compliance, while also making it easier to recover underpayment of wages and entitlements. The Bill seeks to criminalise serious wage theft – that is, where an employer dishonestly engages in a deliberate and systematic pattern of underpaying one or more of its employees[24]. The proposed penalties are up to four years in prison and $1.1 million for an individual and $5.5 million for a corporation[25]. Civil penalties would similarly be boosted by 50% - fines up to $19,980 for individuals and $99,000 for corporations.

The monetary cap of the ‘small claims process’ has increased from $20,000 to $50,000. Additional provisions are included to provide for conciliation and arbitration of small claims.

Summary

As consultation and debate on the Bill continues it is expected that not all of the proposed changes will be passed without amendment. The LIV will seek to provide a further update once the Bill passes through parliament.

Contributors: Rachel Storey and Kate Sheridan of the LIV Workplace Relations General Committee.



[1] Fair Work (Transitional Provisions and Consequential Amendments Act 2009 (Cth).

[2] Explanatory Memorandum, Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), vii [page 9].

[3] Ibid.

[4] Aaron Dearden et al, ‘Rossato decision confirms Skene: casuals may not truly be casuals at all’, Hall & Wilcox (Web page, 22 May 2020) <https://hallandwilcox.com.au/thinking/rossato-decision-confirms-skene-casuals-may-not-truly-be-casuals-at-all/>.

[5] Explanatory Memorandum, Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), ix [page 11].

[6] Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), s.15A(3).

[7] Ibid, s.15A(4).

[8] Maddy Hearn, ‘Full Federal Court allows double dipping for casual employees’, Tisher Liner FC Law (Webpage, 22 May 2020) <http://tlfc.com.au/double-dipping-casual-employees/>.

[9] Fair Work Commission Decision [2017] FWCFB 3541, 5 July 2017

<https://www.fwc.gov.au/documents/documents/summaries/2017fwcfb3541_summary.htm>.

[10] Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), s.66BN(2)(a).

[11] Ibid, s.66C(1).

[12] Explanatory Memorandum, Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), cviii [page 110].

[13] Paul Karp, ‘Labor’s claim workplace changes could lead to $11,000 pay cut ‘desperation’, Christian Porter says’, The Guardian (Victoria, 10 December 2020) <https://www.theguardian.com/australia-news/2020/dec/10/labor-claim-industrial-relations-bill-could-lead-to-11000-pay-cut-desperation-christian-porter-says>.

[14] National Employment Standards.

[15] Fair Work Commission, ‘Enterprise Agreement Benchbook – Better off overall test (BOOT)’ (Webpage, updated 24 May 2019) <https://www.fwc.gov.au/enterprise-agreements-benchbook/commission-approval-process/better-off-overall-test>.

[16] Paul Karp, ‘How Australia’s industrial relations bill will affect you and your workplace’, The Guardian (Victoria, 9 December 2020) <https://www.theguardian.com/australia-news/2020/dec/09/how-australias-industrial-relations-bill-will-affect-you-and-your-workplace>.

[17] Ibid.

[18] Fair Work Act 2009 (Cth) s.189(2).

[19] Ewin Hannan, ‘Working without a safety net’, The Australian (Victoria, 12 December 2020)

<https://www.theaustralian.com.au/inquirer/working-without-a-safety-net/news-story/ddf0bdded1ed69f00b7f6f57c978884d>.

[20] Karp, above n 16.

[21] Explanatory Memorandum, Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), lxv [page 67].

[22] Ibid, lxxxviii [page 90].

[23] Ibid, lxxxix [page 91].

[24] Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), s. 324B(1).

[25] Explanatory Memorandum, Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), 77 [page 199].

 


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