Insights & News

May 27, 2020

Yesterday’s announcement by the Prime Minister brings the opportunity for industrial relations in Australia to change for the better as the nation rebuilds from the economic damage caused by COVID-19.

It appears that the Government is not aiming for the type of “business or unions first” reform that last caused difficulties for the Howard government over 10 years ago but rather a consensus approach not seen since the early days of the Accord more than 35 years ago.

The Prime Minister has announced that Industrial Relations Minister, Christian Porter will chair 5 working groups made up of business and union representatives in the following areas between now and the release of the October Budget (Due on 6 October 2020).

The working groups will cover the following areas, and the Prime Minister’s comments or rationale is noted too, for context:

1. Award simplification – As this is what small and medium sized businesses deal with “every single day”.
2. Enterprise agreement making – “We’ve got to get back to basics”.
3. Casuals and fixed term employees – Apparently “made even more prescient by recent changes through the Fair Work Commission”.
4. Compliance and enforcement – Since “People should be paid properly. And unions need to, obviously, do the right thing. As must employers.”
5. Greenfield agreements for new enterprises – As this is “where the new investment will go and the certainty is needed more so than ever”.

Apart from confirming the involvement of business and unions in the working groups, the Prime Minister has confirmed his government will pause its pursuit of new laws which would have allowed courts to deregister rogue unions and officials.

This looks to be a concession aimed at building on the goodwill that the Government has built with unions in the response to the economic challenges of COVID-19.

This process is being described as similar to the Accord but this is not simply about wages; dealing with business concern with overregulation and red tape is covered in the “Award simplification” and “Enterprise agreement making” working groups but this is balanced against a working group dealing with the protection of employee rights through “Compliance and enforcement”.

Employers, industry groups and employee representatives will be invited to join each group, as well as individuals chosen based on their demonstrated experience and expertise. This will include “especially small businesses, rural and regional operators, multicultural communities, women, families”.

The purpose of the working groups is to attempt to reach consensus on industrial relations reform.

The process will be “time bound” and the PM has indicated that the process will move quickly, noting “It will become apparent very quickly if progress is to be made. The working groups will either reach something approaching a consensus on issues, or they won’t.”

Kingston Reid will contribute to the public debate that accompanies the discussions and policy responses that the working groups may develop.

What should you do?

1. Give careful consideration to how your voice is heard during the debate. Will you contribute? If you contribute, will it be through direct comment or via an industry association or other representative?
2. Think about the areas to be covered by the working groups are relevant to your business?
3. Keep up to date with reform proposals so that you can build the potential for change into your long term planning.

Although it is the very early stages, we see the potential value in this process for you and the Australian Economy.

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

May 22, 2020

If you’ve been holding your breath for the double-dipping precedent set by WorkPac v Skene[1] to be overturned, unfortunately your wait isn’t over.

On Wednesday, the Federal Court in WorkPac Pty Ltd v Rossato[2] confirmed that Rossato, who had been employed as a ‘casual’ by WorkPac, was entitled to paid annual, personal/carer’s and compassionate leave, plus payments for public holidays.

The Court rejected the employer’s claim that they could off-set these entitlements via a higher hourly rate, stating that “where the purpose of a payment is not to provide the entitlement in the terms required but to provide a substitute, there will not be a “close correlation” between that purpose and the entitlement”.[3]

Significantly, WorkPac’s bid for restitution of the casual loading paid to the employee was also rejected.

Background

The Rossato decision upholds the precedent set by WorkPac v Skene in 2018, where a casual miner who had regular and predictable shifts was found to be entitled to permanent employee benefits.

Controversially, WorkPac chose to run Rossato using a different employee with a different Full Court, rather than appeal WorkPac v Skene to the High Court.

In Rossato the employee was classed by WorkPac as a ‘casual’ but had been engaged under six consecutive contracts for a period of four years.

WorkPac’s primary case this time round was that, unlike in Skene, because Mr Rossato’s written contract had no firm advance commitment regarding days or hours, he was a casual employee.

“Permanent casuals” can’t exist; employers can’t seek restitution

WorkPac’s primary case was rejected.

Instead, the Court found that WorkPac and Rossato “had agreed on employment of indefinite duration which was stable, regular and predictable such that the postulated firm advance commitment was evident in each of his six contracts”.

Under each contract, Rossato was ‘other than a casual employee’ for the purposes of the Fair Work Act and not a casual FTM (Field Team Member) under the 2012 WorkPac EA. This meant that Mr Rossato became entitled to payments of annual, personal/carer’s and compassionate leave and payment for public holidays.

Significantly, the Court also held that WorkPac was not entitled to recover any amount from Mr Rossato as restitution of the casual loading paid to Mr Rossato in a bid to off-set any liabilities.

Can the decision in Rossato be distinguished from other casual engagements?

We think so.

Mr Roassato’s employment was covered by an Enterprise Agreement as well as six consecutive common law contracts. The Court looked at the interaction of respective contracts with the Enterprise Agreement(s) and held that the Enterprise Agreement(s) did not provide for the payment of a casual loading in lieu of annual leave entitlements and personal leave entitlements. In addition, the underpinning award to the Enterprise Agreement was an award that did not provide for casual employment.

Mr Rossato and the CFMMEU also disputed WorkPac’s claim that it had paid Mr Rossato a causal loading of 25%. White J agreed with this proposition in respect of each of the fourth, fifth and sixth contracts, on the basis that those contracts did not contain an independent express term that a casual loading was to be paid in substitution of leave or public holidays.

However when assessing whether WorkPac could successfully say it had ‘set off’ the entitlement to paid leave by paying a higher rate under the first, second and third contracts, the Court still found there was no entitlement to set off portions of the casual loading paid to Mr Rossato.

But didn’t the Government amend the FW Regulations to enable employers to offset certain amounts?

It did. You will recall that in December 2018, regulation 2.03A was introduced and WorkPac sought to rely on this regulation. Importantly, the regulation applies if:

1. a person is employed by an employer on the basis that the person is a casual employee; and
2. the employer pays the person an amount (the loading amount) that is clearly identifiable as an amount paid to compensate the person for not having one or more relevant NES entitlements during a period (the employment period); and
3. during all or some of the employment period, the person was in fact an employee other than a casual employee for the purposes of the National Employment Standards; and
4. the person makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements. (our emphasis)

However none of Mr Rossato’s claims were for ‘an amount in lieu of’ an NES entitlement.

Rather Mr Rossato sought payments of the entitlements (namely annual leave for the entire period of his employment, personal and paid compassionate leave for leave he took but did not receive payment and public holidays in which he was rostered off over the period of employment). On this basis, the Court rejected WorkPac’s set off claim.

Takeaway for Employers

So where does this leave employers?

The situation remains unchanged from Skene in the sense that the critical issue is the characterisation of the ‘casual’ employment. Ask yourself, are your casual employment arrangements ‘stable, regular or predictable’ and is there an indefinite period of engagement or advance commitment?

The decision in Rossato does however present further concerns for those employers who do or have had ‘permanent casuals’ on their books and this decision will also have a critical impact on several pending class actions. Whilst each case will stand and fall on its own facts, the decision of the Court not to accept WorkPac’s offset argument is significant.

Allowing casuals to effectively “double-dip” through accessing both leave entitlements and hourly casual loadings, without entitling businesses to restitution, could have significant financial and logistical impacts on employers, especially in the context of COVID-19.

What is abundantly clear is that legislative change will be needed if Regulation 2.03A is going to have any practical work to do moving forward.

Whilst there are (many) calls for legislative intervention, the fact remains that employers need to deal with the practical issues arising from the decisions now.

Some initial steps to be taken by businesses responding to these decisions could include:

• reviewing all existing casual employees and considering converting those who work on a regular, ongoing basis with an advance commitment to more work;
• considering the interaction of any common law contract with an underlying industrial instrument, including any applicable enterprise agreement;
• ensuring casual employees are engaged from now in a manner that is irregular, uncertain, intermittent and unpredictable; and
• implementing a framework that allows you to monitor the nature of your casual employees.

Should you be worried about your exposure, or how to implement the above, please feel free to reach out to us here at Kingston Reid to discuss.

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

Kathleen Weston
Lawyer
+61 2 9169 8415
[email protected]

[1] [2018] FCAFC 131.
[2] [2020] FCAFC 84.
[3] Rossato, [231].

May 19, 2020

Intuitively it makes sense that you can’t access paid personal leave if you aren’t at work in the first place. This common sense principle was affirmed on Monday by the Federal Court as it sided with Qantas in a dispute over the payment of entitlements to employees stood down due to COVID-19 restrictions.

The Court made it clear that the purpose of the entitlement to personal/carers’ and compassionate leave is to relieve employees from the work they were otherwise required to perform. That is, you get paid when you are too sick to come to work. Where employees have been stood down due to COVID-19, there is no work. Thus, “if there is no work available to be performed by the employee, there is no income and no protection against that which has not been lost.”[1]

Background

In mid-March this year Qantas announced its intention to temporarily stand down approximately two-thirds of its employees, a total of around 20,000 workers. A number of Unions, on behalf of those Qantas employees, claimed that stood down workers were entitled to access paid personal, carer’s or compassionate leave during their period of stand down.

Qantas denied that it owed stood down employees these entitlements.

While the proceedings also dealt with certain entitlements under Qantas enterprise agreements, the relevance of the case for all employers is what the Court said about the provisions of the Fair Work Act (the Act) and the National Employment Standards.

No work, no income, no protection

If asked the question without looking at the provisions of the Act, most people would assume that where there is no work and an employee is stood down, it would be incongruous for that employee to be paid because they were sick or had to care for a family member. However, the words of the Act do not state this logical conclusion expressly.

The Court’s decision was that logic prevails following from:

• the terms of ss 97, 105, 524 and 525 of the Fair Work Act;
• an understanding of the object and purpose sought to be achieved by the power to stand down employees; and
• a proper understanding of the object and purpose of the leave entitlements in issue in the present proceeding.[2]

Central to the analysis of the above was the idea of personal, carer’s and compassionate leave as a form of ‘income protection’.

In circumstances where an employee is lawfully stood down, and there is no work which the employee can perform and thus receive an income for, an employee is not entitled to access these ‘income protection’ leave entitlements.

Should employees have been able to access sick leave and other related entitlements whilst lawfully stood down because there was no work, this would “go against the very object and purpose of conferring those entitlements – namely an entitlement to be relieved from the work which the employee was otherwise required to perform”.[3]

The Court also emphasized that the stand-down power itself served two important purposes; offering businesses financial relief and protecting workers from termination. Making employers pay these entitlements after standing down employees would defeat the principal purpose, being “namely, to protect the employer against such claims”.[4]

Takeaway for Employers

If you have had to stand down employees as a consequence of COVID-19 restrictions, and have done so lawfully, those employees do not have a right to access paid personal, carer’s or compassionate leave during their stand down period.

However, keep in mind that stood down employees can access other entitlements, such as annual leave, long service leave and government assistance like JobKeeper payments.

The unions involved have foreshadowed an appeal so employers should keep an eye on this space.

If this alert has raised any concerns for you in relation to stand downs and leave or other entitlements, please feel free to contact us here at Kingston Reid to discuss.

Alice DeBoos
Partner
+61 2 9169 8444
[email protected]

Kathleen Weston
Lawyer
+61 2 9169 8415
[email protected]

[1] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors v Qantas Airways Limited [2020] FCA 656, [35] (Qantas Decision).
[2] Ibid, [10].
[3] Ibid, [35].
[4] Ibid.

May 6, 2020

Signs are encouraging that our communities will slowly start to return to normal. Students are returning to schools, the Premier has encouraged business to “have a go” at reopening their doors provided adequate safety measures are in place, more people are downloading the COVIDSafe app and encouragingly the curve continues to flatten. In this context, it is likely that within a few weeks, employees will be encouraged to return to the workplace.

It was impressive to see how quickly and effectively NSW government sector employees were able to transition to a largely remote workforce where required (acknowledging of course that many continued to work as normal).  It is evident that there are both the resources and processes in place to facilitate a productive and engaged workforce working from home.  Whilst feelings will no doubt be mixed; it is inevitable that for a lengthy period there will be a portion of the workforce who will remain working from home; even if it is for just a portion of the week.

Flexible work has long been available to all NSW government sector employees.  Given the evidence that is now available to employees to support an argument that flexible work is successful on a large scale, agencies and departments should now start thinking about the circumstances in which flexible work is not desirable and instead when you need employees to be physically present in the workplace.  The preparations that you make now will make the return of your employees easier to manage.  It will also assist you to identify which roles will have greater restrictions in terms of flexible work and to explain why some requests for ongoing flexible work cannot be accommodated.

Of course, maintaining social distancing and hygiene measures will be paramount to any successful return to work planning. COVID-19 safe workplaces will require significant changes for the many thousands of public sector employees who hot desk or work in open plan environments.  These, at least for a time, will require adjustments as hot desking becomes a thing of the past.

What questions do you need to answer?

1. What work is best done in the office?

The recent period will have given you a clear indication of work which is simply more difficult to manage and complete from home.  It may be work that is more difficult for a team to complete when they all work remotely, or work that requires access to resources that are not available from home.

Identifying the work that is best performed in the office will enable you to identify which roles will require less flexibility moving forward.

2. When is it preferable to have a team working in person, and why?

No doubt in the last month, you have experienced the challenges that can arise when an entire team is remotely located.  Identifying and specifying that work which requires a team to work face to face either all or some of the time, will enable you to justify why certain teams may have less flexibility than others.

3. What works from home?

In the same way that you have been able to identify which work is not done as effectively from home, you will also have been able to identify work which can be done efficiently and effectively at home. Employees who perform that work, and who request ongoing flexibility should be more easily accommodated.

4. When does working from home cause a major disruption to the flow or completion of work?

It is important to identify those projects or other pieces of work that will be impacted if those people working on them are working from home. Those employees working on these projects, or pieces of work, may have less flexibility than others.

5. How does the physical office environment impact on the above?

Employees who previously hot desked or who work in open plan offices will be anxious to return where there is inadequate consideration of the physical environment and hygiene measures. A natural barrier to full integration, open plan layouts will require proactive planning around staggered working days and start times. Clear communication regarding expectations will be key.  The removal of hot desks, greater distancing and staggered starts will be the norm.

6. What about collaboration and team dynamics?

Separate from the details of specific tasks and operational requirements, a big factor in requiring physical presence is the need for employees to collaborate, supervise, coach, learn, interact and relate to one another in a physical environment. While this can be done remotely, it is often a poor substitute for a physical working environment and this should not be discounted. This is particularly important for very junior roles and those in supervisory or managerial positions.

How do you manage flexible work by a larger portion of your team on an ongoing basis?

As it is likely that there will be an increase in the number of employees working from home, it will be more difficult to maintain cohesiveness and inclusion once the workforce is split.  You will need to implement practices to:

1. Mitigate against isolation.
2. Ensure work is allocated in a fair and equal manner.
3. Ensure work and performance requirements are clear and demonstrable.
4. Address issues quickly when they arise.
5. Ensure that you can properly manage your employee’s performance as well as them meeting deadlines and achieving outcomes.

Remember there are steps you can take to require employees to perform their functions from the workplace.  It is preferable however to consult directly with your employees to resolve issues and questions that arise.

What safety issues do you need to consider?

Of course, the issues identified above raise a number of health and safety issues employers will need to consider when returning workers back into the workplace. We have identified a number of these issues in our article “Are you COVID-19 ready to get back to your workplace?”. These include:

• Have you identified the physical and psychological risks of your returning workplace arrangements, and what specific controls do you need to implement to address those risks?
• How will you consult with your workforce about the proposed arrangements including those workers who will continue to work from home?
• What hygiene and distancing measures do you need to implement to reduce the COVID-19 risks and are compliant with WHS legislation (including applying the hierarchy of controls)?

It will be crucial that you remain up to date with Federal and State health authority updates and information from Safe Work Australia’s COVID-19 Information for Workplaces pages to meet your health and safety obligations.

COVID-19 has given both departments and agencies the chance to lead the way in properly assessing how to make the most of working from home.  Whilst there will be employees who are happy to return to the office as soon as possible, there will be others who want to continue to work from home. It is important that whatever model you implement works for your team, your department or agency and you. Giving consideration to these factors now will assist both with returning your employees to the workplace and managing an increased remote workforce, both now and in the future.

Lucy Shanahan
Partner
+61 2 9169 8405
[email protected]

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

John Makris
Partner
+61 2 9169 8407
[email protected]

May 1, 2020

The New South Wales, Queensland and Western Australian Governments recently announced plans to slowly wind back social distancing restrictions from late April 2020 and early May 2020. The Victorian Government has indicated it won’t take similar steps until it is certain that there is no undetected community transmission.

The Prime Minister is urging schools to re-open and has recently indicated that Australia is ‘not too far away’ from easing coronavirus restrictions. And, he says, the COVIDSafe app is the ‘ticket’ to ending COVID-19 (but that’s a discussion for another time).

What does this mean for workers returning to workplaces where the COVID-19 risks in the community remain?

The official position, it appears, is that Australians should continue to work from home unless you can’t work remotely. There are many industries which have been ‘identified’ as essential, such as health, aged care, education, construction and supermarkets. Those workers have continued working from their workplaces because working from home is simply not an option or their services are essential (eg the supply of toilet paper). There are many other workplaces who have implemented unique hybrid arrangements which have included partial working from the workplace location and partly from home. Others have their workforces working productively from home.

Let’s face it: For many of us who have been working from home, we are itching to get back to the workplace (even if it’s just so we can attend Friday afternoon drinks).

As the COVID-19 curve hopefully continues to flatten, and as restrictions are hopefully eased, we need to think about how we are going to transition our workforces back into the workplace.

Here are some things to think about when transitioning part or all of your workforce back into the workplace:

There may be more things to think about that are specific to your business.

As to exactly when back-to-workplace transitioning occurs, that is anyone’s guess (stay tuned to the Chief Medical Officer).  However, these issues can’t be considered and implemented overnight. Your business will need to plan for getting everyone back safely.

Please stay in touch with the current advice from the health authorities.

Our COVID-19 Resources Page will be updated as information and guidance becomes available. And of course, if you just want to have a chat to break that COVID-19 isolation monotony, give us a call.

Source: Department of Health

John Makris
Partner
+61 2 9169 8401
[email protected]