Insights & News

December 9, 2020

Today, the Morrison Government has introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 into the House of Representatives.

Attorney-General and Minister for Industrial Relations, Christian Porter, has been meeting with working groups comprising business and union groups since June 2020 to tackle known problems within the industrial relations system in the broader context of the Covid-19 pandemic.

Although the discussions of the working groups were confidential, and no public consensus was reached, the Bill has been presented as the Government’s considered response to what the stakeholders had to say.

Importantly, what is presented is not a laundry list of employer or union demands, which has characterised most industrial relations reform over the last 20 years.

Instead these are changes that are aimed at providing comfort to employees but also certainty to employers that the Fair Work Act can be used to encourage, rather than undermine job creation in the post-recession environment.

The changes correlate in many respects with the subject areas dealt with by the working groups. We have prepared Fact Sheets for each area which can be accessed here:

• Casual Employees
• Compliance & Enforcement
• Greenfields Agreements
• Enterprise Agreements
• Award Flexibilities

Some of the changes were expected:

• Harsher penalties for wage theft and underpayments.
• A broad right for regular and systematic casual employees to convert to permanent employment balanced against a mechanism to stop double dipping on entitlements.
• Extended nominal terms for greenfield agreements on major projects to give certainty of employment conditions and prevent strike action mid-project.
• The introduction of “Flex up” provisions in certain Awards to allow part time employees to volunteer to work extra hours without creating an overtime burden on their employer.
• An improved Better Off Overall Test for enterprise agreements with a focus on the actual circumstances in the workplace and a relaxing of technical procedural requirements that have clogged enterprise agreement approvals.
• A redefining of the “genuine agreement” requirement by reference to an overall discretionary test of an “informed decision”.

Some of the changes were not expected:

• Extension of Covid-19 flexibility provisions in Awards for a further two years.
• A 21 day time limit on the Fair Work Commission to approve enterprise agreements unless there are “exceptional circumstances”.
• A much tougher test for non-parties and bargaining representatives to intervene to prevent enterprise agreement approval.
• A sunset deadline which will terminate all pre-2009 (so called zombie) enterprise agreements by 1 July 2022.
• Express legislative confirmation that there will not be an enterprise agreement transfer of business between related entities if employment with the new entity is “at the initiative of the employee”.
• A three month cooling off period after nominal expiry before an application to terminate the agreement can be made.
• Permitting a new franchise employer to opt in to an existing enterprise agreement with a vote of only that new franchisee’s employees.

There were also some missed opportunities:

• Preventing strike action while an employee is employed on an individual flexibility agreement.
• More detailed streamlining of Awards to encourage the use of standard terms across the Award system.
• Permitting provisions in Awards exempting employees above certain classifications from the application of nominated Award provisions.
• A shortened timeframe for a circuit breaker greenfield agreement to be made where a union refuses to reach agreement.

Overall the package looks to be a methodical response to the issues facing employees and employers in a post Covid-19 recovery. It remains to be seen what actually becomes law, when passed.

Irrespective, it will present risks and opportunities to employers.

Now is the time to revisit the issues that your workplace faces in each of the areas that have been covered and be ready to consider how your strategy might change once the legislation is finalised.

Duncan Fletcher
Partner
+61 8 6381 7050
[email protected]

Christa Lenard
Partner
+61 2 9169 8404
[email protected]

Steven Amendola
Partner
+61 3 9958 9606
[email protected]

December 4, 2020

In an important development for expecting parents and their employers, Parliament has passed legislation extending unpaid parental leave entitlements to parents of stillborn children or those who die during the first 24 months of life. The changes provide parents who would otherwise have been entitled to unpaid parental leave, with the same amount of parental leave in the event of a stillbirth. Changes to the requirements for how and when parental leave can be taken, and to the interaction between the NES and the government-funded Paid Parental Leave (PPL) scheme have also come into effect. Here’s what you need to know.

Leave entitlements for parents of a stillborn child or child who dies during their first 24 months

The legislative changes replace the previous s 77A of the Fair Work Act 2009 (Cth) (FW Act) that allowed an employer to cancel planned parental leave in the event of a stillbirth and direct the employee back to work with 6 weeks’ notice. The new s 77A provides those employees with an entitlement to 12 months’ unpaid parental leave and extinguishes the right for the employer to cancel that leave. The employee can still cancel planned parental leave and can return to the workplace with at least 4 weeks’ notice to the employer. The FW Act now defines a stillborn child as one whose gestation period was at least 20 weeks or who weighs at least 400 grams at delivery.

The relevant evidence requirements have also been amended to ensure that employers can require evidence that would satisfy a reasonable person that the new provisions regarding stillbirth or death of a child apply in the case of the relevant employee.

Employees on unpaid parental leave were also previously unable to access compassionate leave. They are now eligible to access 2 days paid compassionate leave in the event of a stillbirth of a child.

Permitted breaks in unpaid parental leave

As a general rule, employees are required to take unpaid parental leave in one block and not return to the workplace, apart from for the purpose of keeping in touch days, until they intend to do so permanently. In practice, this means that once an employee goes on parental leave, if their baby is born prematurely or requires hospitalisation, they can’t return to work even for a short period and then recommence unpaid parental leave once their baby is discharged. Whilst some employees in this situation may choose not to return to work during the period of hospitalisation, the result may be less time at home with their child after they are discharged.

The changes to the FW Act now provide for a new exception to that rule. The new s 78A provides that where a child is required to remain in hospital or is hospitalised immediately after birth, an employee who has given notice of taking unpaid parental leave, will have the option to return to the workplace while the child remains in hospital without breaking the continuity of their parental leave. This is to be known as a permitted work period. The end date of the unpaid parental leave can then be extended by the duration of the permitted work period.

Only one permitted work period will be allowed during unpaid parental leave, and the employer can require medical evidence of both the circumstances giving rise to the applicability of the section and of the employee’s fitness for work during the permitted work period.

The NES and PPL scheme

Finally, recent changes to the Paid Parental Leave Act 2010 (Cth) on 1 July 2020 mean that employees receiving the 18 weeks’ paid parental leave under that scheme can how take 12 weeks’ paid leave in one block and the remaining 6 weeks’ at any time within 24 months of the birth or adoption of the child. This could also be at a time after the employee returns to work. Whilst this flexibility has been introduced in respect of the PPL scheme, it has not previously been reflected in the unpaid entitlement under the NES. This meant that where an employee wished to access the PPL scheme after the first 12 months of unpaid leave, they were required to negotiate this time off with their employer, because the NES previously required that once an employee returns to work they would forfeit the remaining unpaid leave entitlement.

A new s 72A in the NES now mirrors the flexibility in the PPL scheme allowing employees to take up to 6 weeks of their unpaid parental leave at any time in the first 24 months after the birth of the child, even after a return to work. The period of unpaid leave being taken ‘flexibly’ or separately from the initial block of leave, can be taken in separate periods as short as a single day at a time. Employees wishing to use part of their unpaid parental leave flexibly will need to advise their employer of this when giving notice of their intention to take unpaid parental leave, unless the employer agrees to receive the notice at a later date.

Tips for employers

Employers should consider whether their parental leave policies require any amendment to reflect the above changes. In particular, query if exceptions to the requirement to take parental leave in a single block should be set out in your policy.

If you are in any doubt as to how these changes may affect your business, contact us at Kingston Reid to discuss.

Katie Sweatman
Partner
+61 3 9958 9605
[email protected]

Bronte Richardson
Lawyer
+61 2 9169 8418
[email protected]

November 12, 2020

A Full Bench of the Fair Work Commission recently issued its final determination in the 4 yearly review of modern awards – overtime for casuals.

While historically it may have been considered antithetical that overtime loadings could be payable to casual employees who, by their definition, perform ad hoc and flexible hours of work, an ambiguity around whether casual employees were entitled to overtime loadings, and if so, how those overtime loadings should be calculated, was identified during the Commission’s first and final four-yearly modern award review.

As a consequence, the Commission determined to consider the question of overtime for casual employees as a common matter. In July 2020, the Commission issued its proposed determinations for resolving ambiguities around overtime for casual employees, and at the end of October, it issued its final determinations for the variation of 96 modern awards to clarify casual employee entitlements to overtime loadings.

Following this decision, as of 20 November 2020, overtime for casual employees under these 96 modern awards will need to be calculated either:

• in substitution for casual loading;
• in addition to casual loading (cumulative approach); or
• in addition to the sum of an employee’s minimum hourly rate plus casual loading (compounding approach).

The result under a number of these modern awards that casual employees’ overtime loadings should be calculated inclusive of casual loading (the compounding approach), has left some employers scratching their heads.

The Full Bench pointed to two previous decisions, to conclude that the meaning of the award expressions “time and a half”, “double time” and “double time and a half” referred to an employee’s ordinary time rate of pay. Applying the “compounding approach”, the Full Bench found that casual loading forms part of a casual employee’s ordinary rate of pay, unless the definition in that modern award of “hourly ordinary time rate” explicitly excludes casual loading.

Kingston Reid is currently discussing with impacted clients the possibility of seeking judicial review of the Commission’s decision to the Federal Court but for now the decision stands, as the Full Bench has made clear that no further submissions will be accepted in respect to any of the determinations. Modern award covered employers should consider the determination that will operate in respect to the modern award that covers them and ensure that it is well understood when casual employees may become entitled to overtime, and how that overtime loading is to be calculated.

The terms of each modern award do vary, however the entitlement to an overtime loading typically arises where:

• an employee works in excess of 38 hours per week; or
• an employee performs work outside the spread of hours prescribed under the applicable modern award.

Employers who engage casual employees under an enterprise agreement do not need to make any immediate change to overtime payments for those casuals, while the current enterprise agreement continues to apply. However, on entering into bargaining for any future enterprise agreements, employers will need to review their overtime calculation methods, to ensure that their casual employees are still Better Off Overall where the cumulative or compounding calculation methods of overtime calculation would otherwise apply under the applicable modern award.

If you are in any doubt as to how this decision may affect your business, contact us at Kingston Reid to discuss.

Katie Sweatman
Partner
+61 3 9958 9605
[email protected]

Aimee Ford
Lawyer
+61 3 9958 9610
[email protected]

September 1, 2020

In late March 2020, extraordinary measures were put in place to address the impacts of restrictions put in place to manage the spread of COVID-19. In addition to the JobKeeper payment scheme, flexibilities were introduced into the Fair Work Act 2009 (FW Act) for JobKeeper eligible employers to support employers to keep employees on their books.

The Federal Government has passed a Bill to amend the FW Act to extend and amend the JobKeeper provisions. The effect of these amendments are that, following 28 September 2020, two categories of employers will be created:

• Qualifying employers – being those employers who are eligible for JobKeeper payments after
  28 September; and
• Legacy employers – being employers who received one or more JobKeeper payments prior to
  28 September, but no longer qualify for a payment after 28 September.

Qualifying employers will retain access to the full range of flexibility measures, whereas legacy employers will only have access to modified flexibilities, and only where they have a certificate from an eligible financial service provider (tax agent or qualified accountant) stating that the employer has experienced a 10% decline in turnover (unless they are an exempt small business).

JobKeeper 2.0 flexibilities under the FW Act will sunset on 29 March 2021.

What will change?

The key change introduced by the amending legislation relates to the capacity of legacy employers to issue JobKeeper enabling stand down directions.

Legacy employers may only issue a JobKeeper enabling stand down direction to reduce an employee’s hours of work:

• Where they hold a 10% decline in turnover certificate (unless they are an exempt small business, which may instead give a statutory declaration in the prescribed form);
• Where 7 days’ (up from 3 days’) notice is given prior to the implementation of the JobKeeper enabling standing stand direction, and enhanced consultation requirements are followed (see below);
• Where they otherwise comply with the procedural requirements to issue such a direction;
• Where the direction will not result in the employee working less than 60% of the ordinary hours that they worked at 1 March 2020; and
• Where the direction will not result in the employee working less than 2 hours on any day.

Qualifying employers may continue to issue a JobKeeper enabling stand down direction to reduce an employee’s hours by any amount, including to no hours at all, provided that they comply with the procedural requirements to issue such a direction.

Legacy employers seeking to issue a JobKeeper enabling stand down direction will be subject to enhanced consultation obligations requiring:

• Recognition of the employee’s chosen representative, if they choose one;
• Provision of information to the employee and their representative (if any) about the nature of the direction, when the direction takes effect, and the expected effects of the direction;
• Inviting the employee and their representative (if any) to give their views about the proposed direction;
• Giving prompt and genuine consideration to any views expressed by the employee and their representative (if any) within the 7 day period.

What will stay the same?

Save for the additional consultation requirement for legacy employers, most of the procedural aspects of the JobKeeper flexibilities remain the same, notably:

• The requirement to consult about proposed directions;
• The requirement to comply with JobKeeper payment obligations;
• The right for employees subject to reduced hours under a JobKeeper stand down direction to engage in reasonable secondary employment or to engage in training or development;
• The requirement to recognise pre-stand down hours for the purposes of service based entitlements such as the accrual of annual leave or personal leave;
• The Fair Work Commission’s scope to resolve disputes;
• The requirement to pay employees the greater of their JobKeeper payment or the wages earned by them in the relevant period.

Qualifying employers and legacy employers will also retain the scope to give reasonable directions to employees around duties and location of work (including working from home).

What will stop?

The additional scope to request employees to take annual leave or to agree to take annual leave at half pay will come to an end on 28 September 2020, as originally planned, for both qualifying employers and legacy employers.

Employers may still direct employees to take excessive annual leave where pockets of excessive leave continue to exist, and employers and employees may continue to reach agreements for the taking of annual leave with half pay where the applicable industrial instrument provides scope to do so.

Will I need to issue new JobKeeper enabling stand down directions?

Qualifying employers will not need to issue new JobKeeper enabling stand down directions where their eligibility for JobKeeper payments is continuing beyond 28 September 2020. Agreements reached with employees about changing the days and times of their work will also carry over.

Any current JobKeeper enabling stand down direction previously issued by an employer that is not a qualifying employer will automatically cease to have effect on and from 28 September 2020. Affected employers who will become legacy employers will accordingly need to issue a new JobKeeper enabling stand down direction under the new laws.

What do I need to do between now and the end of September?

Employers who will not be qualifying employers after 28 September 2020, but may fit the definition of a legacy employer under the amendments should speak with their accountant (or other eligible financial service provider) about being issued with a 10% decline in turnover certificate.

Small business employers (as defined under the FW Act) may, instead of a certificate provided by an eligible financial service provider, have an individual with knowledge of the employer’s financial affairs make a statutory declaration that the 10% decline in turnover test is satisfied.

What is the relevant period for the 10% decline in turnover test for prospective legacy employers?

An employer will satisfy the decline in turnover test at a particular time where there is a 10% decline in current (not projected) GST turnover:

• If the test time is prior to 28 October 2020 – during the quarter ending 30 June 2020;
• If the test time falls from 28 October 2020 to 27 February 2021 inclusive – during the quarter ending 30 September 2020; or
• If the test time is on or after 28 February 2021 – during the quarter ending 31 December 2020.

A new certificate must be obtained in each quarter. If the employer does not continue to meet the 10% decline in turnover test in any given quarter, any JobKeeper enabling stand down directions will automatically cease at the end of that quarter, unless withdrawn or revoked prior.

Is there anything else we should be thinking about?

Employers who may still have employees stood down pursuant to section 524 of the FW Act should seek advice regarding whether those stand downs continue to be valid. The Fair Work Commission has now considered a number of disputes under the “ordinary” stand down provisions of the FW Act.

Employers who have some, but not full capacity, for employees to return to work should consider implementing JobKeeper enabling stand down directions where available. Where such directions are not available due to eligibility considerations, please contact us to discuss your options.

Katie Sweatman
Partner
+61 3 9958 9605
[email protected]

August 13, 2020

Keep calm and carry on accruing paid personal leave based on ordinary fortnightly hours…

Employers can breathe a heavy sigh of relief!

The High Court has, this morning, handed down its much anticipated decision in the Mondelez v AMWU & Ors case.

By a majority (4:1), the Court has overturned last year’s Full Federal Court majority decision which found that section 96 of the Fair Work Act 2009 (Cth) entitles all employees (except casuals), regardless of their weekly hours of work, to 10 days of paid personal leave per year, with a “day” being the portion of a calendar day that would be allotted to working. The High Court majority found that such an interpretation “would give rise to absurd results and inequitable outcomes, and would be contrary to the legislative purposes of fairness and flexibility in the Fair Work Act”.

Today’s decision confirms that a ‘day’ is a “notional day consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week period” for the purposes of accruing and taking paid personal leave under the Act.

Key Arguments

The key arguments advanced by Mondelez in support of its ‘average day’ construction of the word ‘day’ were that:

• It means that the leave entitlement is effectively converted into hours based on an employee’s ordinary hours of work over a week, regardless of how those hours are distributed throughout the week. For example, an employee who works 36 hours per week will have worked, across a standard five-day working week, 7.2 hours per day on average. Over the course of the year, that employee will accrue 72 hours personal leave, irrespective of the number of days over which that employee’s hours are worked.
• It ensures that leave accrual for part time employees achieves the expected results. For example, a part time worker who works half the weekly hours worked by a full time colleague accrues half the amount of personal leave that the full time employee accrues.
• Interpreting a ‘day’ based on a ‘calendar day’ or ‘24-hour period’ (as the Full Federal Court majority did), produces varied results as to the accrual of personal leave. For example, an employee who works 36 ordinary hours per week at 7.2 hours per day would accrue 72 hours of personal leave per year. Comparatively, if the 36 hours were compressed into 3 x 12-hour shifts, that employee would be entitled to 120 hours of personal leave per year.
• For employees who work different hours on different days, their ‘day’ will vary depending on the day that the leave is taken.

Ultimately, the High Court majority accepted these arguments and rejected the working day construction, finding that such a construction would lead to inequalities amongst employees with different work patterns, resulting in unfair outcomes.

In particular the majority noted that an employee whose hours are spread over fewer days but with longer shifts would accrue more paid personal leave than an employee working the same number of hours throughout the week, with shorter shifts, spread over more days.

The majority also noted that the “working day” construction would discourage employers from employing anyone other than on a five-day working week basis, which would not be consistent with assisting employees to balance their work and family responsibilities.

Upshot

As envisaged in our ‘Looking Ahead – 2020 Insight’ published earlier this year, the High Court has provided employers with certainty as to how paid personal leave is accrued and taken under the Act.

As the decision aligns with the approach that has been adopted by the vast majority of employers since the introduction of the Act, it avoids the prospect of large scale underpayment claims being made by employees seeking to recoup additional payments for personal leave taken in recent years.

Dominic Fleeton
Partner
+61 3 9958 9616
[email protected]

Shivani Gosai
Lawyer
+61 2 9169 8417
[email protected]