Insights & News

July 26, 2023

The recent case of SafeWork NSW v A1 Arbor Tree Services Pty Ltd and Anor [2023] NSWDC 256, in which a worker suffered fatal injuries after being drawn into a woodchipper, has led to the imposition of the highest fine ever given under the Work Health and Safety Act 2011 (WHS Act) in New South Wales. This case serves as a reminder to PCBUs of the importance of implementing and maintaining safety systems and procedures, and highlights the increasing trend of courts imposing larger penalties for contraventions of the WHS Act.

Background

A PCBU, which specialised in tree pruning and removal, was engaged by a high school to remove three trees and prune another.

The injured worker was engaged by the PCBU in mid-2019 as a trainee groundsman. The injured worker had only worked five to seven days for the PCBU prior to the incident.

On 7 September 2019, the Manager assigned tasks to the workers, and then began cutting branches himself while the injured worker and another colleague were responsible for hand-feeding the branches into a woodchipper.

While hand-feeding branches into the woodchipper, the Manager directed the injured worker’s colleague to undertake another task, leaving the injured worker unsupervised with the woodchipper.

Upon the colleague coming back from his task, it was noticed that the injured worker was missing. It was assumed by the workers that the injured worker had gone to the bathroom. The colleague continued chipping the trees. Approximately 20-30 minutes later, it became evident that the injured worker had become entangled in the woodchipper and suffered fatal injuries.

The PCBU was charged by SafeWork NSW and pleaded guilty to recklessly failing to comply with its health and safety duty and exposing an individual to the risk of death.

The Manager was also charged by SafeWork NSW and pleaded guilty to failing to take reasonable care, as a worker, that his acts or omission did not adversely affect the health and safety of other persons, and exposing others to the risk of death or serious injury.

Safety Failures

The Court found that there were numerous critical safety failures which contributed to the incident, being:

1. There was a complete absence of safe systems in place, with no proper supervision;
2. The hazards and risks associated with hand-feeding branches into the woodchipper was well-known in the forestry and arborist industry;
3. Both the PCBU and the Manager underwent an equipment familiarisation program conducted by the importer of the woodchipper, during which they received relevant documents on the safe operation of the woodchipper;
4. The woodchipper’s design and operating manual explicitly warned against hand feeding;
5. The woodchipper involved in the incident was a ‘whole tree chipper’ meaning it was designed to be fed by an auxiliary loader, not by hand;
6. The PCBU did not assess the competency of any of its workers to safely operate the woodchipper. The injured worker was a trainee and had not undergone any formal training or assessment in relation to his competency to undertake work in operating the woodchipper;
7. The primary safety device, the feed control bar, was not fitted as required by the manufacturer to the woodchipper;
8. The PCBU’s continued use of the woodchipper without an operational feed control bar, despite being repeatedly warned by the importer of the woodchipper, demonstrated recklessness and disregard for worker’s safety; and
9. The PCBU’s and Manager’s lack of genuine remorse and focus on their own problems did not meet the requirements for leniency.

The Court found that both the PCBU and Manager had engaged in conduct that was “arrogant and irresponsible“, which “…requires the maximum fine be imposed. The defendants were repeatedly warned that the woodchipper was needing of repairs on at least five occasions. The repairs would have been simple and could have been done easily by [the importer of the woodchipper]. Despite such warnings, [the PCBU] blatantly and recklessly allowed the damaged machine to be repeatedly used, until the subject incident occurred”.

The PCBU was found guilty and initially fined $3,000,000.00 (being the maximum fine at the time of the incident). However, this amount was reduced to $2,025,000.00. The reduction was a result of a 25% discount for pleading guilty early and an additional 10% discount based on their ability to pay.

The Manager was convicted and initially fined $150,000.00, but his fine was also reduced to a total of $101,250.00. This reduction was also due to a 25% discount for pleading guilty early and an additional 10% discount based on his capacity to pay.

Key takeaways

This case highlights four important areas for PCBUs to review and consider.

First, it is important for PCBUs to review and update their existing safety protocols to ensure they align with current industry standards and best practices.

Second, PCBUs should take proactive measures to develop and implement robust Standard Operating Procedures that are tailored to the specific machinery and equipment used in the workplace.

Third, Supervision plays a vital role in maintaining a safe work environment. PCBUs should ensure that competent supervisors are assigned to oversee operations.

Fourth, PCBUs should assess the competency of their workers in operating machinery. Competency assessments help identify any gaps in knowledge or skills of workers.

Our team at Kingston Reid is available to proactively advise organisations on meeting their obligations under the WHS Act, including providing bespoke training and workshops to management and workers on a range of regulatory issues. Please reach out if you require any assistance.

 

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

George Stent Lawyer +61 2 9169 8421 [email protected]

July 17, 2023

The regulations under which employers were permitted to collect and hold COVID-19 vaccination information in Victoria have been revoked by the Victorian Government with effect from Wednesday 12 July 2023, triggering a positive obligation to destroy that information within 30 days, namely by 11 August 2023.

The regulations were introduced in mid-2022 upon the rolling back of certain vaccination requirements under Victorian pandemic orders.  The regulations provided a clear legal basis for employers to gather COVID-19 vaccination information from specified persons attending a workplace to determine and implement reasonably practicable measures to control the health and safety risks associated with COVID-19 in the workplace.

What information will need to be destroyed?

The effect of the revocation is that any COVID-19 vaccination information that an employer collected for the purposes of complying with Victorian public health orders and/or in furtherance of their own COVID-19 vaccination policies will need to be destroyed.

Relevant COVID-19 vaccination information includes any information about whether a specified person:

• had received any dose of a COVID-19 vaccination, including the date received and the number of doses;
• is or was unable to receive a dose, or a further dose, of a COVID-19 vaccination for reasons including a medical contraindication or an acute medical illness;

The types of documents that this will capture include:

• information derived from a record kept in the Australian Immunisation Register, including immunisation history statements;
• letters from registered medical practitioners about a person’s vaccination status;
• any certificate issued by Services Australia stating that the person is unable to receive a dose or further dose of a COVID-19 vaccination due to a medical contraindication or an acute medical illness.

A “specified person” will include any employee, independent contractor, employee of a contractor, volunteer or student from whom vaccination information was collected.

Employers may need to consider whether any registers or other documents created to monitor or record the collection of vaccination information may also need to be destroyed in order to comply with these obligations.

What if my organisation has a relevant need to continue to ensure that workers are vaccinated against COVID-19?

The effect of the revocation of these regulations is to draw a line under collection of information necessary to respond to the public health emergency and associated need to manage workplace safety concerns.  While Victoria continues to experience waves of COVID-19 through the community, the collection of vaccination information will revert to the standard approach to the collection, holding and use of health information.

If an employer believes they have a continuing need to collect, record, hold and use COVID-19 vaccination information, particularly those in or supporting the health or emergency services industries, this will need to be collected with consent and otherwise in accordance with health records legislation.

It will also be prudent for employers to revisit any obligations set out in policies, procedures or contracts of employment requiring employees to provide vaccination information to ensure that the capacity to collect, store and use that information is consistent with applicable health records information.

Kingston Reid’s dedicated team can assist with providing specific advice on this issue.

 

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

Chris Cooper Associate +61 3 9958 9603 [email protected]

July 6, 2023

Where an employee is terminated due to the ordinary and customary turnover of labour, an employer may not need to pay redundancy. The term ‘ordinary and customary turnover of labour’ has been the subject of judicial debate which remains ongoing following two recent full court decisions.

As you may recall from our previous Insight, in Berkeley Challenge Pty Ltd v United Voice [2020] FCAFC 113 (Berkeley), the Full Federal Court found that an employer’s ability to rely on the exception depends on:

1. the reasonable expectations of ongoing employment held by employees;
2. whether the termination due to ordinary and customary turnover of labour is common or usual; and
3. if it is usual practice for the particular kind of business to terminate the employment of its employees following the loss of a commercial contract.

Since Berkeley, the full court has handed down two key decisions that demonstrate how these principles are applied, with both cases resulting in different outcomes.

When can an employer rely on the exception?

In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Delta FM Australia Pty Ltd [2021] FCAFC 107 (Delta FM), employees performed facilities maintenance services at a camp facility as part of the construction of an onshore LNG facility. At the completion of the project, the employer terminated the employees due to the ordinary and customary turnover of labour.

The full court found that the employer in Delta FM could rely on the exception because employees could not have held a reasonable expectation of continuing employment in circumstances where:

• the terms of their employment contracts clearly stated they were engaged for the project and their employment was subject to the ongoing contract between the employer and its client;
• the applicable enterprise agreement contained a clause that said termination of employment due to a change or end of contract between the employer and a client is a usual reason for a change to the employer’s workforce and part of the ordinary and customary turnover of labour; and
• both parties knew the employees’ jobs would be terminated when the construction of the facility was completed.

When can’t an employer rely on the exception?

In United Workers Union v Compass Group Healthcare Hospitality Services Pty Ltd [2023] FCAFC 92 (Compass Group), the full court came to a different conclusion.

Medirest (a Compass Group subsidiary) was contracted to supply aged care services to Eldercare’s facilities for over 18 years under successive commercial contracts. On 18 June 2018, the longstanding commercial contract came to an end and Medirest terminated the employment of the 31 employees it employed at the Eldercare facilities. Medirest relied on the ordinary and customary turnover of labour exception to avoid paying redundancy pay to the employees.

Medirest sought to rely on the decision in Delta FM, however, the Full Court found the circumstances were distinguishable and Medirest was not able to rely on the exemption because:

• the work performed by Medirest’s employees was of an ongoing nature and required indefinitely by Eldercare, whereas in Delta FM all parties knew that the particular work would end on completion of the construction of the onshore facility;
• many of the Medirest employees had a significant period of continuous service of up to 13 years, which demonstrated the ongoing nature of their employment despite the renewal of successive commercial contracts;
• Medirest did not inform the employees of the end date of its commercial contract with Eldercare or the possibility that the contract might not be renewed; and
• Medirest’s employment contracts suggested that Medirest might offer employees employment elsewhere if their employment at Eldercare’s facilities were to cease.

What can employers do to put themselves in the best position to rely on the ordinary and customary turnover of labour exception?

Where employees are engaged to work on a discrete project, an employer should make it clear to employees that their employment will end on completion of that project. Ordinarily, this would appear in the terms of an employment contract.

If on the other hand, an employer is engaged to perform work that their client requires with no obvious end date, the employer should ensure its employees are aware that their employment is subject to the ongoing contract between the employer and its client.

Kingston Reid can assist with providing specific advice about an employer’s ability to rely on this exception and reviewing employment contracts to ensure they are drafted appropriately.

 

Shelley Williams Partner +61 7 3071 3110 [email protected]

Sophie Baartz Senior Associate +61 7 3071 3118 [email protected]

Kat Bennett Associate +61 7 3071 3103 [email protected]

 

May 25, 2023

6 June 2023 heralds more change in workplace relations for business.

Revamped and much expanded multi-employer bargaining will commence, employees may be dragged into enterprise agreements whether willing or not, employees seeking flexibility and parental leave get ramped up rights, and pay secrecy prohibitions will be expanded and penalties for non-compliance are applied.

Business is reeling under this onslaught of change. We will tell you what it means.

What are the changes to bargaining disputes procedures (intractable bargaining disputes) and PABOs?

Do I have to bag a bargain even if I don’t want one?

Enterprise bargaining is where terms and conditions of employment are set at an individual enterprise level, rather than through an industry or occupation level award.

In the new world, it’s much easier for employee organisations (unions) to start the process of bargaining with an employer for a single-enterprise agreement without the employer’s agreement. In particular, they’ll be able to force an employer to bargain where:

• the proposed single-employer agreement replaces an earlier single-employer agreement;
• it has been less than five years since the earlier agreement’s nominal expiry date; and
• the proposed agreement will cover the same, or substantially the same, employees that were covered by the earlier agreement.

These changes operate alongside new provisions about bargaining orders which enable unions to apply to the FWC for bargaining orders if they have made a written request to an employer to bargain for a single-enterprise agreement.

So does the FWC have more power to impose decisions on the parties?

Under the old system, the FWC had limited power to arbitrate disputes. This was mainly confined to circumstances where there was a serious and sustained breach of good faith bargaining in respect of which a serious breach declaration has been made, or protected industrial action was terminated by the FWC.

The FWC now has beefed up powers to arbitrate bargaining disputes, with intractable bargaining declarations replacing serious breach declarations and determinations.

In the new world, any bargaining representative can apply for an intractable bargaining declaration except in relation to a proposed cooperative multi-enterprise agreement (which we explain below).

The FWC will make the declaration where:

• the FWC has dealt with a bargaining dispute;
• the applicant participated in the dispute;
• there is no reasonable prospect of agreement; and
• it is reasonable in all the circumstances to do so.

The FWC may order a post-declaration negotiation period for a specified time.

The Full Bench of the FWC may make an intractable bargaining workplace determination if there are outstanding disputes after a declaration is made, or if there is post-declaration negotiation period, after that period. The FWC will determine the outstanding issues in dispute, with the FWC determination becoming part of the determination and binding on the employer and employees.

This means unions and employers have an alternative source of leverage and bargaining strategies will need to adapt to address this.

What about industrial action?

Before 6 June, a protected action ballot order (PABO) pressed the button for employees to vote up protected industrial action. Protected industrial action then usually commenced within 30 days of the ballot approval result.

However, in the new world those bargaining for single enterprise agreements will be forced back to the table before the PABO closes for a mandatory conciliation conference. A “no show – big stick” will punish bargaining representatives who fail to attend where any subsequent industrial action will be unprotected.

This mandatory conciliation may present an opportunity to resolve bargaining. It will also take resources away from a business at a time when contingency planning may be occurring.

If the conciliation is not successful, employees still have 30 days from PABO results to commence industrial action. They must provide either three days’ notice (for single enterprise agreements) or 120 hours’ notice (for multi enterprise agreements) or up to seven days’ notice (if ordered by the FWC).

What does this mean for employers?

The balance of power between employees and employers when conducting negotiations on enterprise agreements has been changed. We suggest employers review their bargaining strategies and make necessary changes to plans to take these changes into account (including by contingency planning in advance).

What are the changes to the Enterprise Agreement approval process and Better Off Overall Test and why should I care?

Is the approval process simpler?

The process for FWC approval of enterprise agreements has been ‘simplified’ for employers and focuses on whether there is genuine agreement between the parties.

The FWC’s decision about “genuine agreement” will align with the Statement of Principles on Genuine Agreement.

Broadly speaking, genuine agreement requires employers to demonstrate an authentic exercise in agreement-making, including:

• by giving employees information about bargaining and their right to be represented by a bargaining representative;
• by providing employees with a reasonable opportunity to consider a proposed agreement and become informed about it prior to a vote;
• by explaining the proposed agreement terms and their effects to employees; and
• by providing employees with a reasonable opportunity to vote on an agreement.

The FWC will also consider any other matters it considers are relevant. For example, it is likely the FWC will look at employees’ comparable rates of pay under the proposed enterprise agreement when deciding whether employees have sufficient interest in the agreement. This is consistent with Full Federal Court decision in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (2018) 262 FCR 527. In that case the Full observed that whether an agreement has been genuinely agreed involves consideration of the authenticity of the agreement of the employees, including whether the employees who voted for the agreement had an informed and genuine understanding of what was being approved.

What does this mean for employers?

The stated goal is simplification but the increased discretion given to the FWC means it is very important for employers to be aware of the Statement of Principles and monitor how it is applied in future decisions of the FWC.

Also, voting employees must have a “sufficient interest” and be “sufficiently representative” of employees who will be covered. This means the voter cohort must authentically represent employees in terms of size and industry, occupation and classification.

Businesses must ensure they avoid:

• a small cohort of employees (paid above the agreement) voting up an agreement that will cover more employees in the future; and
• employees engaged in one industry, occupation or classification voting up an agreement that covers employees across a substantially wider range of industries, occupations or classifications.

Are the changes to the Better Off Overall Test better?

The Better Off Overall Test (BOOT) provisions have been revised to make significant changes to:

• which employees need to be better off overall;
• how the FWC approaches the application of the BOOT (i.e. “reasonably foreseeable employees” rather than “prospective award covered employees” and reasonably foreseeable patterns or kinds of work or types of work); and
• the measures the FWC can take to address any BOOT concerns.

The post 6 June BOOT removes unnecessary complexity. The FWC will no longer conduct line-by-line assessments of a proposed enterprise agreement against the terms of the underlying Modern Award. This was a source of much frustration for employers.

Instead, the BOOT will be a global assessment, with the FWC having regard only to patterns or kinds of work, or types of employment, that are reasonably foreseeable at the time of the BOOT.

As a motivator for all parties, if the agreement does not satisfy the BOOT, the FWC can amend or remove terms so the agreement passes the BOOT. It is the FWC who decides these amendments and not the employers, employees or unions – although the FWC must consider their views. Most parties will wish to avoid this outcome, especially employers.

If the reasonably foreseeable employees or patterns or kinds of work, or types of work change after the test time, employers, employees and unions may apply to the FWC to reconsider whether the agreement continues to satisfy the BOOT. If it doesn’t, the FWC may accept an undertaking or amend the agreement. An amendment operates seven days after the Commission makes the amendment or another day specified in the amendment, which may be a day before the amendment is made.

What does this mean for employers?

It should be easier for employers to demonstrate that employees have genuinely agreed to a proposed agreement, and they are less likely to trip up on technicalities.

The FWC is less likely to raise BOOT issues for enterprise agreements especially if the employer and bargaining representatives share a common view. Employer undertakings may be less common as the FWC may amend an agreement on its own motion.

However, agreements are no longer “set and forget”. Employers covered by enterprise agreements will need to revisit BOOT assessments even after the agreement has been approved by the Commission to avoid applications for the BOOT to be reassessed where there has been a material change in working arrangements or the relevant circumstances were not properly considered during the approval process.

Of course, there is also the safeguard against agreements which are not the result of collective bargaining in good faith, including “unrepresentative” and “low voter cohort” agreements.

Businesses will be well advised to:

• undertake a proper analysis of voting cohorts to make sure they are representative;
• be familiar with Statement of Principles on genuine agreement; and
• proactively timetable reviews of BOOT.

What do the new supported bargaining and single interest authorisation bargaining streams do?

We will have three types of multi-enterprise agreements: cooperative workplace agreements, single interest employer agreements and supported bargaining agreements.

Bargaining for a multi-enterprise agreement must involve employee organisations.

The type of multi-enterprise agreement being bargained for will (at least initially) be determined by how the bargaining commenced.  For example, if the bargaining commenced:

• by consent, it will be a cooperative workplace agreement;
• because of a single interest employer authorisation, it will be a single interest employer agreement; or
• because of a supported bargaining authorisation, it will be a supported bargaining agreement.

The type of agreement ultimately made will be determined by the authorisation (if any) in place immediately before the agreement was made. For example, if a single interest employer authorisation was in place immediately before the agreement was made, it will be a single interest employer agreement.

Also, the FWC cannot approve a cooperative workplace agreement unless it is satisfied that at least some of the employees covered by the agreement were represented by a union in bargaining.

Which industries are likely to see supported bargaining authorisations?

The supported bargaining authorisation replaces the low-paid bargaining provisions. It is intended to assist employees who have difficulty bargaining at the single-enterprise level. This new authorisation is easier to access and has less stringent criteria.

For example, supported bargaining is likely to feature in low-paid industries such as childcare, aged care etc.

When an application for a supported bargaining authorisation is made, the FWC will assess whether it is appropriate for the parties to bargain together. It will look at prevailing pay and conditions in the relevant industry, whether employers have clearly identifiable common interests (eg, location, nature of enterprise and terms and conditions) and whether the number of bargaining representatives would be consistent with a manageable collective bargaining process and other matters the FWC sees as relevant. For example, imagine what it might be if you had more than 100 employee representatives as is the case in the Apple bargaining dispute. This required the Deputy President of the FWC, DP Hamptom, to make a statement and recommendations on how such difficulties may be managed.

If an employer is specified in a supported bargaining authorisation, the employer cannot bargain for a different type of agreement. That is, they’re locked into making a supported bargaining agreement. The only means of avoiding this is to make an application to vary the authorisation on the basis that the employer’s circumstances have changed.

An employer specified in a supported bargaining authorisation may apply to the Commission for a variation to remove its name from the authorisation. The Commission must vary the authorisation to remove the employer’s name if it is satisfied that, because of a change in the employer’s circumstances, it is no longer appropriate for the employer to be specified in the authorisation. An employer, an employee bargaining representative or a union entitled to represent the industrial interests of an employee in relation to work to be performed under that agreement, may also apply to have an employer’s name added to the authorisation.

What do these changes to multi-employer bargaining mean for employers?

Bargaining will be a reality even for the unwilling or, indeed, the unaware.

The new provisions are designed to make it easier for employees (and their representatives) to bargain for multi-enterprise agreements. The broader eligibility and relaxed preconditions for making authorisations mean employers are much more likely to be compelled to bargain for a multi-enterprise agreement. Moreover, once they’re locked in, it will be extremely difficult for them to extricate themselves from the process. This stream of bargaining will be particularly relevant for medium-sized employers that have traditionally “fallen under the radar”.

What about the single interest authorisation?

Before 6 June, two or more employers who would be covered by a proposed enterprise agreement could apply for a single interest employer authorisation. However, this was limited to certain employers such as franchisees or employers who had obtained a ministerial declaration based on their common interests. This meant it had limited application.

In the new world, the existing limits on access to single interest employer authorisations have been removed and the application process has been simplified so:

• employers with common interests (who are not franchisees) no longer need to obtain a ministerial declaration before applying for a single interest employer authorisation;
• employee bargaining representatives can apply for a single interest employer authorisation, subject to majority support of the relevant employees; and
• both employers and employee bargaining representatives can apply to vary a single interest employer authorisation to add or remove employers.

This is of much wider application and should be on an employer’s radar.

A single interest employer authorisation ceases operation when the relevant enterprise agreement is made or after 12 months (or a longer period, if extended by the FWC). The FWC may extend the period if it is satisfied:

• there are reasonable prospects that the agreement will be made if the authorisation is in operation for a longer period; and
• it is appropriate in all the circumstances to extend the period.

What does this mean for business?

If an employer thinks a single interest employer authorisation or a supported bargaining authorisation will likely be made by the FWC (i.e. the employer will be required to bargain), the best approach may be to consent to that bargaining.

This has two significant upsides:

• employees cannot take protected industrial action; and
• the FWC will not be able to arbitrate the terms and conditions by making an intractable bargaining workplace determination.

So, what about Flexible Working Requests?

More employees are now able to request flexible working arrangements, including those who are experiencing family domestic violence and pregnant employees.

Also dispute resolution has been made available to employees with flexible working arrangements entitlements. Previously only modern award covered employees could seek dispute resolution from the FWC.

Refusal is no longer a slam dunk for award free employees and employers must:

• discuss the request and genuinely try to reach agreement with the employee about other changes that can be made to accommodate their circumstances;
• consider the consequences of the refusal for the employee;
• refuse only on reasonable business grounds; and
• provide the refusal in writing, including the details of the reasons for refusal and any other changes the employer would be willing to make that could accommodate the employee’s circumstances.

Only after taking these steps may an employer refuse a request, on account of reasonable business grounds (which are unchanged). The decision must also have regard to the consequences of the refusal for the employee.

If the dispute is referred to the FWC, the FWC will mediate to try and come to an agreed outcome or may make a recommendation or express an opinion. In some circumstances, the FWC may also arbitrate and issue an order to affirm the refusal, grant the employee’s request or make other changes to accommodate the employee. Employers must comply with this otherwise they may be fined.

For employers already dealing with Modern Award based flexible working requests, this is more of the same. Of course, this may change too after the FWC reviews modern awards regarding this NES entitlement and makes necessary consequential amendments.

The President of the FWC, Justice Hatcher, has issued a Statement providing guidance on how the FWC will deal with this new entitlement.

So, what does this mean for business?

Yoga may be an option. At a minimum there needs to be genuine thought to whether an arrangement of some kind can be permitted for eligible employees.

The President’s Statement should also be a doorstop for HR practitioners.

If a flexible arrangement is agreed, give careful thought to what additional policies or contractual arrangements may be appropriate to ensure that the arrangement aligns with performance and conduct management and is safe.

What about unpaid parental leave extensions?

What do I do with a request to spend more time with their child?

Similar to requests for flexible working arrangements, employers must now give more regard to requests to extend unpaid parental leave. It is no longer a question of simple technical compliance accompanied by a refusal.

When an employee makes a request to extend a period of unpaid parental leave, employers must discuss the request with them, and if they refuse the request, must provide the reasons for refusal in writing. If there is a different extension period that the employer can agree to or is willing to consider, the employee should be informed of this in the written notice.

As is the case for requests for flexible working, the FWC can deal with disputes about refusing to extend unpaid parental leave, including by conciliation, mediation or arbitration. If the FWC arbitrates and an order is issued, a failure to comply may mean a fine.

What does this mean for employers?

The President’s Statement provides excellent guidance on how the FWC will approach requests to extend unpaid parental leave.

Employers must give genuine consideration about whether to agree to an extension. If agreeing, employers would likely benefit from some agreed keeping in touch incentive to ensure that the parent remains embedded in the workforce.

What about pay secrecy?

Pay secrecy prohibitions started on 7 December 2022 for employment contracts entered into after that date and older contracts without pay secrecy provisions. However, those provisions did not apply to older contracts with pay secrecy provisions, unless the contract was varied. In the new world, it is now unlawful for employers to enter new contracts (or other written agreements) with employees that contain pay secrecy clauses. The prohibition does not, however, extend to contractor/consulting arrangements.

Employees will also have a workplace right to ask other employees about, and disclose their own, remuneration and relevant conditions of employment, such as hours of work (i.e. except for older contracts with existing pay provisions). Employees may use this information to determine if their remuneration is fair and comparable to others in the same workplace and/or industry.

Employees cannot be compelled to disclose information about their remuneration and retain the right not to share this information if they do not want to. An employer will breach the general protections provisions of the FW Act if they take adverse action against employees who ask for pay information or employees who wish to keep it secret.

What does this mean for employers?

The only permissible pay secrecy provisions are those in contracts made before 7 December 2022. This exception continues until the contract is varied by agreement. In practice though, the exception will have negligible impact save for the extent of liability if there is widespread non-compliance, in which case it only applies to eligible contracts or instruments.

If an employer is applying a discretionary approach to bonus or incentive awards it may pay to have a structured approach to discrimination. Otherwise, an employee getting a lower award who also has a protected attribute may allege discrimination.

 

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

Brendan Milne Partner +61 3 9958 9611 [email protected]

Yoness Blackmore Executive Counsel – Knowledge +61 2 9169 8419 [email protected]

May 17, 2023

Unpacking the Fair Work Commission Statement of Principles on Genuine Agreement which appears to replace technicality with uncertainty

From 6 June 2023, the process for approval of agreements was set to become clearer and move away from the prescriptive steps that employers must currently follow.

Following consultation with key stakeholders, the Fair Work Commission (FWC) has now released the final version of its Statement of Principles on Genuine Agreement in enterprise bargaining (Statement of Principles).

• Is it clear? Not necessarily – Technicality may be replaced with uncertainty about interpretation.
• Is it less prescriptive? Maybe – New steps and considerations could potentially be applied in a prescriptive way.

There are new obligations that employers must endeavour to satisfy in order to meet the genuine agreement test.

The Statement of Principles essentially codifies and condenses to a single document a number of the tests and considerations that have, until now, been expressly stated in the FW Act or developed by the FWC and Federal Courts in previous cases.

It marks a key milestone in the FWC’s preparation for numerous bargaining-related amendments to the Fair Work Act 2009 (Cth) (FW Act) (refresh your memory with Kingston Reid’s Secure Jobs, Better Pay Act Overview).

How will the Statement of Principles change enterprise agreement approval applications?

Informing employees of their right to be represented by a bargaining representative

What is clear: Employers may be able to continue to meet this requirement by issuing a Notice of Employee Representational Rights.

What is uncertain: There is a new provision which provides that employers should not mislead employees (by words, action or otherwise) as to their rights to be represented or the role of an employee organisation as the default bargaining representative.

• There is no clarification on whether this is subjective or objective.
• There is no express statement as to intention.
• The terms “by words, action or otherwise” are uncertain and may be disputed.

Providing employees with a reasonable opportunity to consider a proposed enterprise agreement

What is clear: Employers will be able to continue to meet this requirement by providing employees with a copy of the agreement and the material incorporated by reference for 7 full calendar days before the voting starts (or such other reasonable period agreed with an employee organisation – as distinct from any bargaining representative). This can be a hard copy, an electronic copy or a combination of both.

What is uncertain: There is a new provision which provides that employers can only do so provided that employees have a reasonable opportunity to access and read the material during the whole of the period from the time the material is provided until completion of the voting process.

Explaining to employees the terms of a proposed enterprise agreement and their effect

What is clear: Employers will be able to continue to meet this requirement by taking all reasonable steps to explain the terms of a proposed enterprise agreement, and the effect of those terms, to employees employed at the time who will be covered by the agreement. This should include at a minimum explaining to employees how the proposed agreement will alter their existing minimum entitlements and other terms and conditions of employment.

What is uncertain: This is set as a minimum requirement. When is “more” going to be required?

• There are new requirements which provide for what might “generally be sufficient”. This leaves it open as to when, and in what circumstances, it would not be sufficient.
• It will generally be sufficient to explain the differences in entitlements and other terms and conditions between the proposed agreement and any applicable modern award provisions that have been varied since a predecessor agreement was made (including award variations that have not yet come into effect). There is no reference to the timeframe for new variations to come into effect or what might otherwise be reasonable.
• There are new provisions which set out that there is usually no need to explain “trivial differences” between the proposed agreement and an existing enterprise agreement or modern award that have no effect on employees’ entitlements or obligations. Disputes will arise around what makes it trivial and the extent to which an employer was required to explain a “triviality”.
• There is a provision which provides that section 180(5) will generally not be satisfied if the employer makes an incorrect representation or misleads employees (by words, action or otherwise) about a “significant term” of the proposed enterprise agreement or its effect. All the same issues arise about what makes something “misleading” but there is a question about what is deemed to be “incorrect” about a “significant term”.
• Where oral explanations are given, there must now be a written record or summary of the oral explanation. Additionally, employees should have a reasonable opportunity to attend the oral explanation. There will likely be disputation over what a “reasonable opportunity” is and over what percentage of the employee voting group this applies to (for example, where employees are on leave throughout the relevant period).

Providing employees with a reasonable opportunity to vote on a proposed agreement in a free and informed manner, including by informing the employees of the time, place and method for the vote

What is clear: Employers will be able to continue to meet this requirement by ensuring employees are informed of the time, place and method for the vote at least 7 full calendar days before the day the vote commences (or such other reasonable period agreed with an employee organisation – as distinct from any bargaining representative).

What is uncertain: The method and period of voting should provide all employees entitled to vote with a fair and reasonable opportunity to cast a vote. Who and what determines whether the method and period make it fair and reasonable will likely be put to employers in challenging an approval application.

Other matters considered relevant

What is clear: The matters which the FWC may take into account in determining whether employees have sufficient interest in the terms of an enterprise agreement and whether those employees are sufficiently representative.

What is uncertain: When the following matters will be appropriate to take into account.

• The inference that an enterprise agreement should not be a safety net agreement for employees but rather, a paid rates agreement so that employees are not going backwards in enterprise agreement provisions and have a “sufficient interest”.
• The inference that the employee voting group for an enterprise agreement must cover:
• the full range of classifications in the enterprise agreement;
• the full range of types of employment contemplated (e.g. full time, part time, casual etc);
• the full range of geographic locations the enterprise agreement covers; and
• the full range of industries and occupations the enterprise agreement covers.
• The starting position that an enterprise agreement has not been genuinely agreed unless it was the product of an “authentic exercise”. What makes it “authentic” and, according to who, will be the subject of dispute upon an application for approval.
• The “significant weight” attributed to an employee organisation having “concerns that the agreement was not genuinely agreed to by the employees”. An area of dispute will likely be around the basis of those concerns – specifically, whether they need to be reasonable and in good faith.

Getting ready for the Statement of Principles

It remains to be seen how the Statement of Principles will ultimately be used by employee organisations or applied by the FWC in enterprise agreement approval applications that come before it.

Irrespective of this, employers should:

• be ready to engage with the Statement of Principles as effectively as possible;
• be prepared for a lengthy and more complicated approach to bargaining (and more importantly, approval processes); and
• consider approaches to bargaining.

If your business requires advice or assistance relating to enterprise bargaining, please reach out to the team at Kingston Reid.

 

Michael Stutley Partner +61 8 6381 7060 [email protected]

James Parkinson Special Counsel +61 8 6381 7053 [email protected]

Emily Baxter Special Counsel +61 2 9169 8411 [email protected]

Paige O’Shea Lawyer +61 8 6381 7063 [email protected]

Tae Kim Lawyer +61 8 6381 7068 [email protected]