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22 July 2024
‘Same Job, Same Pay’ labour hire provisions still waiting for first test
July 22, 2024

The Same Job, Same Pay provisions[1] of the Fair Work Act 2009 (Cth) (FW Act) commenced on 15 December 2023, as part of the Federal Government’s ‘Closing Loopholes’ amendments (see our earlier article discussing the changes here).

At their core, these provisions enable the Fair Work Commission (Commission) to make a regulated labour hire arrangement order (RLHAO) that labour hire workers receive the same ‘rate of pay’ as host employees covered by an enterprise agreement (or other prescribed instrument) at the workplace, when undertaking work covered by that agreement.

For those familiar with industrial relations and the introduction of these provisions, it is well known the laws were intended to be used against major employers who operated internal labour hire entities. In May 2023, the ACTU named BHP, Qantas, Qube and CIMIC as four examples in a research note supporting the legislation[2].

It is therefore unsurprising that BHP and Qantas are at the centre of cases expected to test the scope and application of these provisions. In the meantime, the first RLHAO decision has been handed down by the Commission.

Same Job, Same Pay

At their simplest, the Same Job, Same pay provisions set out ‘qualifying criteria’ for when an RLHAO must be made, and “disqualifying criteria” which will prevent an order being made, even when the qualifying criteria are satisfied.

Qualifying Criteria Disqualifying Criteria
  • The application must be made by a person with standing.

This can be an employee of the host site, a labour hire worker, the host employer, or a registered organisation with coverage of the employees or labour hire worker.

  • There must be a ‘covered employment instrument’ that applies to the host employer that would apply to the work being done by the labour hire worker.

This will be a question of fact.

  • The host must not be a small business.

While this may appear straightforward, the issue can become complex in some corporate structures.

  • The performance of work is for the provision of services, not the supply of labour.

This is like the multi-factor tests previously used to assess whether a person was a contractor or employee. It requires consideration of, in effect, the degree of control that the host employer has over the work performed by the labour hire worker and assessment of the nature of the work being performed.

  • Making the order would not be fair and reasonable in all the circumstances.

This considers pay arrangements, any history of industrial arrangements, and any corporate relationships.  

We expect the ‘disqualifying’ criteria will be the most contested in RLHAO disputes.

The MEU Decision

To date there has only been one decision relating to the new laws, Application by the Mining and Energy Union [2024] FWCFB 299 (MEU Decision), which was unopposed. Other applications commenced (including against Thiess, a subsidiary of CIMIC), have been resolved without contest or are yet to be heard.

Notwithstanding that the matter was uncontested, the MEU Decision is useful as the Commission has succinctly set out its observations as to how the RLHAO provisions will be applied.

The Commission confirmed the process was to firstly assess the ‘qualifying criteria’ and, if these were met, to then consider whether any ‘disqualifying criteria’ applied, as follows:

  1. Does the applicant in the matter have standing to bring the application?
  2. Can the Commission be satisfied, based on evidence or logical grounds, that the qualifying criteria are met? This requires a state of satisfaction that:
    1. the labour being supplied is principally for the benefit of the host entity, whether directly or indirectly; and
    2. there is a ‘covered employment instrument’ which applies to the host;
    3. there is a ‘covered employment instrument’ which applies to the host;
    4. the ‘covered employment instrument’ would apply to the labour hire workers in relation to the work being performed. This requires:
      1. assessment of the nature of the work being performed, including required qualifications, tasks undertaken, and skills exercised; and then
      2. determining by reference to coverage and classification whether that work is covered by the employment instrument.
  3. Is the employer a small business within the definition provided in the FW Act?
  4. Is the Commission satisfied the performance of work is not the provision of service rather than the supply of labour? This requires determining if the performance of work requires something ‘more than’ the provision of labour.
  5. Only if there are submissions regarding whether the order is ‘fair and reasonable’ will this disqualifying factor be considered.
  6. Does the order sought meets the mandatory requirements of the Act?

The Commission applied this approach to the MEU Application and unsurprisingly made the RLHAO as:

  • the applicant Mining and Energy Union had standing;
  • WorkPac provided labour hire workers to Batchfire for Batchfire’s benefit;
  • Batchfire had a relevant enterprise agreement; and
  • the Batchfire agreement would apply to work performed by the WorkPac workers.

The Commission then considered whether WorkPac was providing services or labour, ultimately being satisfied that the arrangement was for the supply of labour. In considering this, the Commission found:

  • WorkPac did not have any involvement in matters other than supplying workers;
  • WorkPac did not control, direct or supervise its workers on the Mine. It was Batchfire who managed rosters, assigned tasks and supervised work;
  • WorkPac workers used Batchfire systems, plants and structures to perform work; and
  • the work was not specialist or expert.

As no submissions were made regarding whether the order was fair and reasonable, this was not considered.

Once satisfied of the above, the Commission observed it was required to make the RLHAO sought by the MEU due to the operation of section 306E of the FW Act.

Given the facts of the matter and that there was no contest, the scope of the ‘Same Job, Same Pay’ provisions remain untested.

BHP Coal and the MEU & AMWU set for test case

This looks set to change as BHP Coal Pty Ltd (BHP Coal) and the MEU & the Australian Manufacturing Workers’ Union (AMWU) look set to argue a major case for a RLHAO before the Full Bench of the Commission.

The case is expected to be highly complex and heavily contested. It involves thirteen separate applications: six separate labour hire providers, including BHP’s own labour hire entities, and three BHP Bowen Basin mines. It has been reported that approximately 1,700 workers would be covered by the applications.

BHP Coal is opposing the application on two key grounds:

  1. the performance of the work by the supplied workers is for the provision of a service, rather than the supply of labour; and
  2. it is not fair and reasonable in all the circumstances to make the RLHAO, taking into account pay arrangements, industrial instruments and the nature of the relationship between BHP Coal and the employers of the supplied workers.

This means the ‘disqualifying factors’ will likely be examined in detail in this matter and the decision will provide guidance on the scope and application of the new provisions including what is meant by ‘fair and reasonable’ within this context.

While the hearing date has not yet been set, evidence for both sides is currently expected to be filed in the second half of 2024. The case can be monitored on the Commission’s website.

Flight Attendants’ Association of Australia and Qantas

At the same time, the Flight Attendants’ Association of Australia (FAAA) has brought RLHAO applications against two entities which provide workers to Qantas, including a Qantas labour hire entity. It currently appears these applications will be opposed by Qantas. The grounds for the opposition have not yet been detailed. It may be that this case is heard before the BHP Coal matter given it is smaller in size.

What does this all mean?

It is clear that the Same Job, Same Pay provisions are most likely to be contested on the ‘disqualifying factors’, particularly the questions of the supply of services versus supply of labour, and the yet to be explored concept of ‘fair and reasonable’.

Enterprise agreement coverage of the work being performed also stands to be a point of interest, given it is necessary to determine if the work being performed by a labour hire worker is covered by an enterprise agreement.

Employers who utilise or rely on labour hire as part of their workforce planning who want to understand their potential risks of a RLHAO application, should proactively assess:

  • the nature of the services being engaged through labour hire and whether these include services that go beyond the supply of labour;
  • how labour hire personnel are engaged, managed and instructed when performing the work; and
  • coverage of existing ‘employment instruments’, particularly enterprise agreements over the work being performed being performed by labour hire services.

This may identify issues within existing labour hire engagement and procurement practices where strategic changes could be made to mitigate the risks of an RLHAO being sought, or made.

Employers should also ensure that their commercial contracts for labour hire have been reviewed and updated to account for these new provisions and risks.

Watch this space for more updates.

To keep up with the latest developments across employment, workplace relations and safety and regulatory law, sign up to our e-newsletter, Kingston Reidable, by subscribing here.

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

[1] The Same Job Same Pay provisions are contained in (new) Part 2-7A (Regulated labour hire arrangement orders) of the Fair Work Act 2009 (Cth).

[2] Same job, less pay: the exploitation of outsourcing loopholes ACTU Research Note – May 2023

 

Beth Robinson
Partner
+61 8 6381 7064
[email protected]
Shannon Walker
Special Counsel
+61 8 6381 7054
[email protected]
Kevin Jarrett
Associate
+61 8 6381 7067
[email protected]
24 June 2024
News: Kingston Reid Partner Promotions July 2024
June 24, 2024

From July 1 Kingston Reid, not yet 5 years old, will further consolidate its position as Australia’s largest specialist workplace law firm with the elevation of three Special Counsel to Partnership, bringing the firm’s National Partnership to 16. Managing Partner Alice DeBoos said it “is an exciting time, as we continue to expand and build for the future”.

Indicative of the firm’s national footprint, Brad Popple, Emily Baxter and James Parkinson hail from different offices (Melbourne, Sydney and Perth respectively), and are each “fabulous embodiments of the Kingston Reid way…… completely dedicated to the firm, our team and our clients” said DeBoos, adding that “these three will greatly enrich our partnership and our firm into the future”.

Brad, Emily, and James support their clients across workplace relations and employment matters, in both advice and litigation. But where similarities in their expertise may exist, each brings their own character to the practice of law and the expression of Kingston Reid’s values.

“It’s a really interesting time in employment and industrial relations law, and I’m proud to be able to help our clients stay at the cutting edge of navigating the challenges” shared Brad Popple. “Kingston Reid is unique in having a large national team of lawyers who are so intensely curious and passionate about what we do, and I’m looking forward to contributing as a Partner” Popple says.

“I am delighted to be joining the ranks of such frank, fearless, and fantastic Partners at Kingston Reid who are experts in their field and whose focus is on delighting and achieving the best outcomes for clients” Emily Baxter explains. “I enjoy my work as a lawyer and am passionate about solving problems and resolving legal issues. The dynamic and fast-paced nature of employment and industrial law in Australia makes for an exciting and challenging opportunity and I am looking forward to navigating the complexities and delivering innovative solutions for clients as a Partner at Kingston Reid”.

“With a significant amount of recent change and more on the horizon, workplace relations is at an intriguing crossroads” says James Parkinson. “I am honoured to join Kingston Reid as a Partner and continue walking in our clients’ shoes, alongside some of the most talented and professional legal practitioners in this space” Parkinson shared.

In addition to the newly minted Partners, three more lawyers have been promoted to Senior Associate, further demonstrating the firm’s commitment to developing legal talent and rewarding individual effort. Marcus Topp, Kat Weston and David Perrozzi (Melbourne, Sydney and Perth respectively) “demonstrate our core values through their approach to work, client service and their loyalty to firm and their colleagues” said DeBoos. “Kingston Reid’s collective success has enabled growth to the extent that we can promote six individuals this year, and I’m exceptionally proud of that fact”.

14 June 2024
NSW’s New Industrial Manslaughter Bill: What PCBUs Need to Know
June 14, 2024

On 4 June 2024, the Work Health and Safety Amendment (Industrial Manslaughter) Bill 2024 (WHS Bill) was introduced into the NSW Legislative Assembly to amend the Work Health and Safety Act 2011 (NSW) by creating an offence of industrial manslaughter. If passed, the WHS Bill will set some of the highest WHS penalties in Australia, with individuals found guilty of industrial manslaughter facing up to 25 years in prison, while corporations could be fined up to $20 million.

The proposed offence

NSW is one of the last mainland states to introduce a dedicated industrial manslaughter offence, aligning it with other states that have already enacted similar laws. Under the WHS Bill, the proposed offence will be committed where a person:

  • has a health and safety duty; and
  • is a person or an Officer of a person, conducting a business or undertaking (PCBU); and
  • engages in certain conduct, by an act or omission, that caused the death of a worker or another individual, to whom the person’s health and safety duty is owed; and
  • engages in conduct with gross negligence.

As made clear in the second reading of the WHS Bill, the proposed offence will cover those individuals whose behaviour or decisions have the power to influence the activities and culture of a workplace (i.e. officers of a PCBU).

Interestingly, the WHS Bill attempts to provide guidance on when a body corporate may be considered grossly negligent. According to the WHS Bill, a PCBU may be grossly negligent if there is inadequate corporate management, control or supervision of the conduct (act or omission) of one or more authorised persons (defined in the existing WHS Act as an officer, employee or agent acting within their actual or apparent authority), or a failure to provide adequate systems for conveying relevant information to relevant persons within the body corporate.

This formulation is unhelpful and creates more questions than answers. For example, conduct may be readily established where multiple rogue individuals do not adhere to systems implemented or promoted by the business, exposing the PCBU and other officers. The Bill does not define what constitutes inadequate corporate management, control and supervision. Additionally, there is no clear standard for what makes a system for conveying information inadequate or who the ‘relevant persons’ are within the body corporate.

Other notable sections of the WHS Bill

No time limitation period for prosecutions: There is no limitation period for prosecuting industrial manslaughter offences. This means that legal proceedings can be initiated at any time following the offence.

Alternative verdicts: If a prosecution for industrial manslaughter is initiated and the court finds the individual or PCBU not guilty of industrial manslaughter, the court may still convict for a Category 1 offence, even if the time limitation period for a Category 1 offence has lapsed. This alternative charge is consistent with industrial manslaughter provisions across Australia. However, unlike other industrial manslaughter laws, NSW’s proposed provisions lack the requirement to afford the defendant procedural fairness concerning the alternative Category 1 offence.

Exemption for volunteers: The industrial manslaughter offence is not intended to apply to volunteers.

Enforceable undertakings: Enforceable undertakings cannot be accepted by the regulator for contravention of an alleged industrial manslaughter offence. This is consistent with the current approach taken to Category 1 offences.

Establishment of special unit: In addition to the WHS Bill, the NSW Government proposes to establish a special unit within the Office of the Director of Public Prosecutions that will be responsible for prosecuting industrial manslaughter cases.

Increased penalties

Under the new bill, individuals found guilty of industrial manslaughter could face up to 25 years in prison, while corporations could be fined up to $20 million. These penalties are significantly higher than the current maximums under the WHS Act, which are $399,479.85 and/or five years’ imprisonment for individuals, and $3,992,492.70 for PCBUs. The highest court-imposed WHS fine to date stands at $2,025,000. The new industrial manslaughter laws represent a dramatic increase in the maximum penalties.[1]

Below is a comparison of industrial manslaughter penalties across the Australian jurisdictions:[2]

Jurisdiction Industrial manslaughter law Maximum penalties
Commonwealth In force from 1 July 2024 Individual: 25 years’ imprisonment

Body corporate: $18,000,000

ACT Law in force Individual: 20 years’ imprisonment

Body corporate: $16,500,000

SA In force from 1 July 2024 Individual: 20 years imprisonment

Body corporate: $18,000,000

QLD Law in force Individual: 20 years’ imprisonment

Body corporate: $15,480,000

WA Law in force Individual: 20 years imprisonment and a fine of $5,000,000

Body corporate: $10,000,000

VIC Law in force Individual: 25 years’ imprisonment

Body corporate: $19,231,000

TAS No law in force N/A
NT Law in force Individual: imprisonment for life

Body corporate: $11,440,000

Implications for Employers

While the new industrial manslaughter laws do not change the obligations of individuals and PCBUs duties under the WHS Act, the significant penalties that will apply following conduct that causes the death of a worker heightens the importance of taking a proactive approach to meeting those duties.

The duties under the current WHS Act already require individuals and PCBUs to ensure the health and safety of workers and others affected by their operations, as far as is reasonably practicable. These duties remain unchanged with the introduction of the industrial manslaughter laws. These laws only introduce more severe penalties for breaches that result in fatalities, but also create uncertainty in relation to what exact conduct will constitute gross negligence by way of inadequate corporate management, control or supervision of the conduct or authorised person(s) or the failure to provide adequate systems for conveying relevant information to relevant persons. The WHS Bill is yet to be debated in Parliament, and changes may occur during this process. Kingston Reid will provide updates as the changes develop.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

[1] As at June 2024. Penalties will increase in July 2024.

[2] As at June 2024.

 

John Makris
Partner
+61 2 9169 8407
[email protected]
George Stent
Associate
+61 2 9169 8421
[email protected]
13 June 2024
From Direct Involvement to Delegation: WHS Due Diligence Challenges for Directors of Large Companies
June 13, 2024

The recent case of SafeWork NSW v Miller Logistics Pty Ltd; SafeWork NSW v Mitchell Doble [2024] NSWDC 58 (Doble) contrasts the challenges and complexities directors face in fulfilling their WHS due diligence obligations. While Doble serves as a good example of the due diligence expectations placed on directors, it also highlights the impracticality of relying solely on direct involvement, particularly in day to day WHS matters, as evidence of exercising due diligence for directors overseeing large and diverse business operations.

In Doble, the sole director of Miller Logistics Pty Ltd was accused of failing to exercise due diligence under section 27 of the Work Health and Safety Act 2011 (NSW) (WHS Act). The court found that Mr Doble had taken significant steps to ensure compliance with his due diligence obligations. He regularly attended management meetings where WHS was a standing agenda item, engaged in discussions about safety measures, and followed up on their implementation. Furthermore, Mr Doble ensured that the business had a WHS manager responsible for updating policies and procedures and addressing WHS issues promptly.

The court acknowledged that Mr Doble had engaged a competent WHS manager and took an active role in ensuring WHS compliance. Consequently, the court found that he had not breached section 27 of the WHS Act. While Doble provides PCBUs with some guidance on directors’ duties under section 27 of the WHS Act, there remains limited guidance from Australian courts on how directors of larger organisations, with extensive operations and numerous employees, can sufficiently discharge their duty of due diligence.

Even with the guidance now provided in Doble, ambiguity remains for larger organisations. This is partly because safety regulators around Australia historically have prosecuted directors who were directly involved in the events leading up to the incident. Many directors charged under section 27 were often ‘on the tools’. That is, they were actively engaged in the operational task leading to the incident. This direct involvement makes it easier for safety regulators to link the risk to the acts or omissions of the director.

Doble was a rare case in which the director who was prosecuted was not directly linked to the incident. Although Mr Doble was directly involved in WHS matters, the case highlights a key issue: a managing director cannot practically be aware of everything occurring at any given moment within the company. Managing an organisation, especially a large and diverse one, necessitates a high level of delegation. Therefore, to what extent does Doble provide guidance to large companies and organisations with complex, vertically integrated businesses? The answer is very little.

A review of case law over the past decade shows that in all cases involving the prosecution of a director, the director was almost always both ‘hands-on’ and the sole director.  To date there has not been a WHS prosecution in Australia of a director of a large company failing their due diligence duties under any model WHS laws. The lack of guidance for large corporate or ‘professional’ directors has led to some ambiguity about the extent of directors’ duties in large organisations.

Given that Doble is the first recent case dealing with a ‘hands-off’ director, further questions arise about the obligations of directors of large companies.

The reality is that many of the measures safety regulators provide guidance on are either vague or simply impracticable for large companies and organisations with multiple directors or officers overseeing diverse business operations.

Unlike the company in Doble, many large companies or organisations operate across multiple industries and geographical locations, employing hundreds or thousands of workers. This vast and dispersed workforce makes it impracticable for directors to be intimately involved in every aspect of WHS detail. Directors of such companies are responsible for strategic oversight and governance rather than day-to-day operational details.

Mr Doble’s direct involvement in WHS matters was feasible due to the company’s size and structure. He attended management meetings, engaged in discussions about safety measures, and ensured the implementation of WHS policies. However, replicating this level of personal involvement in a large, multi-layered organisations is simply unrealistic. Directors of large companies are typically required to oversee multiple business units, each with its unique set of WHS challenges.

Fortunately, the WHS Act does not require directors to personally manage every aspect of WHS in the business, but instead, to exercise due diligence, which can in part be achieved through appropriate delegation to persons who are competent. Large corporations employ specialised WHS professionals whose expertise and focus are dedicated to maintaining compliance with the WHS Act, with adequate consultation and oversight by directors.

The Doble case underscores the necessity for directors to be actively engaged in WHS compliance but also highlights the practical challenges faced by directors of larger corporations and organisations.

Further guidance will assist directors to understand the measures they need to take to meet their duties under the WHS Act. This is even more important now with various amendments and proposed amendments in different jurisdictions to include provisions whereby the conduct and/or attitudes of key individuals will be determinative of corporate cultures of their organisations.

Organisations should review their governance structures and assurance processes so as to arm their officers with the requisite tools to meet due diligence responsibilities.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

 

Liam Fraser
Partner
+61 7 3071 3113
[email protected]
John Makris
Partner
+61 2 9169 8407
[email protected]
George Stent
Associate
+61 2 9169 8421
[email protected]
13 June 2024
Annual Wage Review 2023-24

Last week, the Fair Work Commission published its decision for this year’s Annual Wage Review (Review) and the predictions across Kingston Reid were certainly varied, with many focussed on how the Commission might grapple with inflation and cost of living pressures, as well as the findings of its gender pay equity research project.

In conducting the Review, the Commission is required to undertake two specific tasks, as prescribed by the Fair Work Act 2009 (Cth).

One, it must review and make the National Minimum Wage Order each year, setting a minimum rate for national system employees who are award or agreement free. Two, the Commission must also review modern award minimum wages, (the more impactful component of the Review), noting the Commission’s own assessment that approximately 20.7% (or about 2.6 million employees) of the Australian workforce are paid in accordance with the minimum rates set by modern awards, and are therefore directly impacted by this decision each year.

The Annual Wage Decision 2023-2024

The Commission has decided to increase both the National Minimum Wage, as well as all modern award minimum wage rates by 3.75%, with the change to take effect in the first full pay period on or after 1 July 2024. In doing so, the Commission has noted cost of living pressures – particularly for those low paid modern award reliant workers who live in low-income households – as a ‘primary consideration’, given modern award minimum rates remain, in real terms accounting for inflation, lower now than they were five years ago.

Analysis of the Australian Bureau of Statistics Wage Price Index data certainly shows the impact to wages for low-paid and modern award-reliant workers of sustained higher inflation over the past few years, even despite the Commission’s decision last year to increase award minimum rates by 5.75%, the largest national wage increase for approximately 40 years.

The Review decision shows the careful balancing exercise undertaken by the Commission, which noted that for low-income households of modern award-reliant workers and workers receiving the National Minimum Wage, the increase may only be truly meaningful once the ‘stage 3’ tax cuts and other recently announced Budget measures to address ‘cost of living’ pressures come into effect too.

With inflation having eased considerably since the time of last year’s annual wage review (although there is, of course, still a way to go until the forecast return to a sub-3% inflation rate in 2025), the Commission has taken a conservative approach to move wages just a touch above the Consumer Price Index (currently 3.6% for the 12 months to March 2024 quarter). Given the complexity of the task before the Commission in 2024, it is hard to imagine that there was much room for the Commission to move otherwise, especially in the face of Australia’s uncertain productivity outlook.

Work to address historical gender undervaluation continues

The decision also contained the promise of further work to be done to address the findings outlined in its gender pay equity research program (undertaken after last year’s annual review), with its Stage 2 report just recently published in April.

The Commission has now confirmed a program of work to address gender undervaluation issues arising in respect of certain sectors which the Commission’s research has termed as ‘large, very-highly feminised occupations in feminised industry classes’ (being occupations containing more than 10 000 people, where over 80% of people working in that occupation are women and the industry in which that occupation is located is over 60% female). Considering those sectors, the modern awards identified as a priority are:

  • Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020;
  • Children’s Services Award 2010;
  • Health Professionals and Support Services Award 2020;
  • Pharmacy Industry Award 2020; and
  • Social, Community, Home Care and Disability Services Industry Award 2010.

The Commission will now consider submissions as to whether, having regard to the findings of the Commissions’ gender pay equity research, the work (to which the classifications within these five priority awards apply) has been historically undervalued because of assumptions based on gender, amongst other key issues. The Commission has committed to completing this program of work ahead of next year’s Annual Wage Review decision.

The Commission’s new program of work to review gender undervaluation is now inviting submissions from relevant parties, including employers, and has expressed a provisional view that relevant issues will include:

  • whether the work of relevant employees involves the exercise of ‘invisible’ skills or caring work;
  • whether work value increases would justify higher award minimum wages; and
  • the benchmarking of wage rates against particular qualifications.

Employers, particularly those in the health and social services sectors, will be keeping a keen eye on the progress of this review.

Get ready to bargain…

The Commission’s annual review has also considered the need to encourage collective bargaining (which will both enliven and test the limits of many of the extensive legislative amendments to the FW Act since Labor took power in May 2022).

Whilst there has been a reduction in enterprise bargaining over the last ten or so years, a more recent return to pre-COVID norms in the number of applications for approval of enterprise agreements seems likely to continue in the current landscape of wage and cost of living pressures, with new rights and protections for bargaining parties and workplace delegates in the mix as part of a broader (legislatively enhanced) bargaining framework.

Given the broad reporting of the Commission’s annual wage review outcome, the decision can tend to cement a floor from which Unions and employees seek to spring from in their pursuit of wage outcomes as part of enterprise agreement negotiations. Put another way, a 3.75% adjustment might be the minimum ‘cost of doing business’ in the context of prospective wage claims, and more likely an annual adjustment starting with a ‘4’. This would represent a slight up-tick in enterprise agreement outcomes (based on the most recent data from the Department of Employment and Workplace Relations) for private sector bargaining, which had average annualised wage increases at 3.8% for the December 2023 quarter.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

 

Jane Silcock
Executive Counsel – Knowledge
+61 2 9169 8419
[email protected]
Luke Maroney
Senior Associate
+61 2 9169 8433
[email protected]
Michael Mead
Partner
+61 2 9169 8428
[email protected]
13 June 2024
Evergreen Guarantee of Annual Earnings Clauses Given the Green Light

Employers can breathe a sigh of relief after a recent Federal Court decision in Roebuck v Shopping Centres Australasia Property Group Re Limited [2024] FCA 503 which provided much needed clarity regarding the drafting of guarantee of annual earnings clauses.

The Facts

The case centred on whether Mr Roebuck, employed as a Regional Leasing Manager, was covered by the Real Estate Industry Award 2020 (Award), and if so, whether the award applied to him given the guarantee of annual earnings included in his employment contract.

Mr Roebuck claimed that Shopping Centres Australasia Property Group (SCA) had breached the Award and made misrepresentations in relation to his redundancy in July 2021. SCA disputed this claim, arguing that Mr Roebuck was a “high-income employee”, meaning that the Award did not apply to him. A full-time employee is a high-income employee at a time if:

  • the employee has a guarantee of annual earnings for the guaranteed period; and
  • the time occurs during the period; and
  • the annual rate of the guarantee of annual earnings exceeds the high-income threshold at that time.

In determining whether Mr Roebuck was a high-income employee, the Court was tasked with resolving questions of statutory interpretation and the construction of Mr Roebuck’s written contract of employment.

The question of statutory interpretation turned on whether the criterion of a ‘guarantee of annual earnings’ in s 330(1)(b) of the Fair Work Act 2009 (Cth) that an employer give ‘an undertaking in writing to pay the employee an amount of earnings in relation to the performance of work during a period of 12 months or more’ requires there to be a ‘guaranteed period’, within the meaning of s 331 of the Act, for a ‘fixed’ period with a specified or identifiable end date.

Mr Roebuck asserted that there is a requirement for a fixed period and that an evergreen or rolling undertaking is not permitted and that annual earnings must be renegotiated or given again at the end of each guarantee period.  SCA, on the other hand, argued that a fixed period is not a requirement and that an undertaking may be evergreen or rolling so as to renew for annual periods of 12 months throughout an employment of an indefinite period.

The contractual construction point centred on whether the employment contract contained an undertaking to pay an amount of earnings in relation to the performance of work during a period of 12 months with or without a specific or identifiable end date and, in any event, whether it provided for an evergreen or rolling annual undertaking for the duration of Mr Roebuck’s employment.

Decision

In resolving these issues, Feutrill J found that the undertaking SCA gave to Mr Roebuck as a term of his written contract was an undertaking of the kind described in s 330(1)(b). On the proper construction of the contract, it was a promise to pay Mr Roebuck $219,178 for each year of his employment commencing on 1 January 2021.

Peabody

The decision comes as a welcome clarification of the status of guarantee of annual income clauses and addresses uncertainties created by the decision in The Association of Professional Engineers, Scientists and Managers Australia v Peabody Energy Australia Coal Pty Ltd [2022] FCA 945 (Peabody). In Peabody, the Court held that the employee’s contract did not meet the requirements of a guarantee of annual earnings because it lacked a fixed or identifiable period. The Court emphasized that for a guarantee to be valid under the Fair Work Act, it must specify a period of at least 12 months with a clear end date, ensuring the guarantee is identifiable and enforceable. While this decision was in the context of a clause in an employment contract that did not contain an undertaking or notice that a modern award would not apply, it created uncertainty for employers about the validity of rolling annual guarantees.

In Roebuck, the Court highlighted that there is nothing in the legislative purpose of Pt 2-9 Div 3 or the purpose of the Act to suggest that an employer cannot give multiple or serial undertakings (which we understand to mean an evergreen or rolling undertaking) to pay an amount of earnings in relation to the performance of work during multiple periods of 12 months. Given this, the Court found that the rolling guarantee was sufficient and met the statutory requirements.

Impacts

Employers can rely on Roebuck as authority that rolling and evergreen clauses meet the requirements of the Act and constitute a guarantee of annual income. This case serves as a timely reminder to ensure that your contract clauses are explicit, cover a period of 12 months of more, and that employees are fully aware of the impacts of an annual guaranteed income clause.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

 

Brendan Milne
Partner
+61 3 9958 9611
[email protected]
Jessica Dellabarca
Lawyer
+61 3 9958 9620
[email protected]
13 June 2024
The explosion of rights and regulation – workplace delegates

Over the past century or so, two trends have pervaded Australian industrial relations as consistently as death and taxes.

The first is that legal regulation has become ever more complex. The Commonwealth Conciliation and Arbitration Act of 1904 ran over 22 pages. The current Fair Work Act is well over 1300 (leaving to one side, the regulations, the “registered organisations” act, and the plethora of other state and federal laws concerning employment).

Second, union membership has steadily declined. It is now down to 12.5% of employees overall (and likely much less than 10% in the private sector). That compares to over 50% in the mid 1970s.

It’s interesting to think about the correlation between those trends. The past 18 months have seen a new explosion of employment related rights and regulations, with many of the changes directed at entrenching union relevance.

One example are the new rights for workplace delegates.

The legislative provisions

The “Closing Loopholes” reforms to the Fair Work Act introduced a suite of new rights and protections for union delegates.

This included:

  • a right to represent the industrial interests of those who are, or are eligible to be, members of the union (including in workplace disputes);
  • “reasonable communication” with these individuals, along with reasonable access to the workplace and facilities where the relevant enterprise is being carried on; and
  • paid time for delegate training during normal working hours.

Importantly, there is no express requirement that the persons a workplace delegate seeks to represent or communicate with have the same employer as the delegate. The provisions provide a right to reasonable workplace access where the “enterprise” – which includes an activity, project or undertaking – is carried on. This is primarily relevant where multiple employers carry on operations in a common location.

At the same time, employers are subject to new civil penalty obligations in relation to union delegates they employ – including prohibitions on unreasonably failing or refusing to deal with a delegate; or hindering, obstructing or preventing the exercise of their rights.

The model award term

Of equal significance is a new requirement that by July 1, all modern awards also include a delegates’ rights term. This will be taken to be a term of any enterprise agreement made after this time, unless the enterprise agreement contains a delegates’ rights term that is at least as favourable.

These award delegates rights terms assume additional significance, in that an employer who complies with them will be taken to have afforded the delegates rights now included in the Fair Work Act.

Following a consultation process, on 10 May 2024, Fair Work Commission President Hatcher J issued a draft delegates’ rights model term (Model Term) for comment. It can be accessed here.

A number of observations can be made about the Model Term:

  • It is somewhat lengthy – running over more than 3 pages. (Remember that a century ago the federal industrial relations legislation as a whole was just over 20 pages).
  • The arenas in which a delegate is entitled to represent employees is broadly stated in a non-exhaustive list. Most of what is included in the list are circumstances where a delegate has always been able to play a representative role. For instance, enterprise agreement dispute resolution terms must allow for the representation of employees, and commonly this would allow for an employee to appoint a workplace delegate as their representative for that process.
  • However, the inclusion in the Model Term of a right for delegates to represent employees in “performance management and disciplinary processes” is novel, and will cause concern for many employers. Delegates also have a right under the Model Term to represent employees in enterprise bargaining, although they will not strictly be a “bargaining representative” and subject to the rights and obligations of the “good faith bargaining requirements”. Accordingly, these delegates rights terms will impact on the bargaining framework.
  • Delegates have a right under the model term to communicate with other employees for the purposes of their delegates rights. This can occur during working hours. While the heading of the clause refers to “reasonable” communication, the substantive entitlement is not expressly subject to any such limitation.
  • There are relatively extensive rights for delegates to access the workplace and facilities, although only to the extent that the employer has them. This includes (in short) access to appropriate rooms or areas, notice boards, a lockable filing cabinet, means of communication and other facilities. This is not a list of examples, and it is not constrained by “reasonableness”; a delegate has a right to each listed item (again, unless the employer does not have them).
  • Delegates are entitled to up to 5 days’ paid time during working hours for relevant training (and 1 day each subsequent year).
  • There’s no limit on how many delegates might exist – and therefore have the various rights set out above – in each workplace (although the paid training requirement is limited to 1 delegate per 50 employees). Employers will however know who their delegates are, because delegates must give written their employer notice of election or appointment, and also a further notice when they cease to be a delegate.

The Model Term contains some guardrails around how delegates are to exercise their rights. However, there is to some extent a lack of clarity around how these sit with the rights themselves.

For instance, delegates must comply with their duties and obligations as an employee. They must also not hinder, obstruct or prevent the normal performance of work. But what if this is a necessary consequence of the delegate exercising their rights? As noted above, a delegate has the right to communicate with other employees during working hours. Does this entitle the delegate to stop performing their own work to do so?

Moreover, unlike the statutory rights (with which an employer is taken to have complied if they comply with the relevant award or enterprise agreement term), it seems clear from the Model Term that a delegate’s rights extend only to those who (or are eligible to be) members, and who have the same employer. This interaction is also unclear.

Watch this space

As feedback is received on the Model Term, it is likely that modifications will be made (and we’ll publicise further details when they become available).

Regardless, as they take effect this new array of delegates rights will almost certainly become a prominent battleground at least for some employers, and a significant tool in the union’s armoury in their struggle to build relevance.

That is despite the relatively modest attention these changes received in the public debate as a consequence of the sheer number of new rights and regulations introduced as part of the “closing loopholes” reforms, all competing for attention.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

 

Steven Amendola
Partner
+61 3 9958 9606
[email protected]
Brad Popple
Special Counsel
+61 3 9958 9613
[email protected]
28 May 2024
HR professionals are from Saturn, WHS professionals are from Mercury, so how on Earth could they ever work together?
May 28, 2024

In many organisations, human resources (and employee relations) (HR) teams and work health and safety (WHS) teams have operated like two (space) ships in the night – often working on the same projects and problems in parallel, yet unfortunately not always in complete harmony. This must change, and will, whether people like it or not.

Why the rift?

There is a common and, unfortunately, frequently repeated assessment of the scope of HR and WHS teams’ roles: HR people deal with subjective matters and WHS people deal with objective matters.

The truth is, there are elements of both in the work that HR and WHS teams do. Never has this been more evident than in the last few years.

So why change now?

Organisations worldwide were kicked into a tailspin in 2020 and 2021 when the Covid-19 pandemic struck. Unforeseen challenges and ideas were thrown at workplaces, many without ever having been dealt with before, like mandatory vaccinations, stand-downs, the rise of working-from-home, as well as the impacts of travel and border restrictions. Each of these presented unique challenges for HR and WHS teams who were tasked with ensuring that workers felt secure, healthy and safe at work (wherever that was).

In the face of these challenges, we saw many instances of HR and WHS teams coming together to find solutions that worked for their organisations – although this cross-functional approach felt more novel than it ought to have.

That is, Covid-19 should not be the exception to the rule, it should be seen as a benchmark for what cross-team collaboration can look like when done effectively.

A raft of recent legislative changes mean that cross-functional collaboration is more important than ever.

How can it work?

An obvious example of where WHS and HR teamwork must occur is in dealing with psychosocial hazards. Unlike other safety matters which are often conjured to mind when someone says ‘WHS’, psychosocial hazards are not physical and cannot effectively be managed by elimination or engineering controls – that is, because they are often perceived and responded to differently by individuals.

Take a performance management or ‘show cause’ process, for example. Some people might find the process uncomfortable or distressing.

Does that mean that they shouldn’t be put through it at all then? Absolutely not. Reasonable management action, when carried out in a reasonable way, is a legitimate way for managers and supervisors to lead, give feedback and make employment related decisions.

What it does mean is that serious consideration needs to be given in advance to how the processes are run to ensure they are designed in a way that minimises the risk of psychological harm arising.

Similar completely closeable information gaps presented themselves in light of organisations’ responses to Respect@Work changes – which saw a positive duty introduced to eliminate, as far as possible, sex-based discrimination and harassment, and sexual harassment.

Addressing these changes can no longer be thought of as ‘just an HR issue’ or ‘just a WHS issue’, these are issues which require forward-thinking input and action, drawing on the broad expertise of both WHS and HR teams in tandem (and potentially others too).

What can organisations do?

Proactive discussions are required. Given the nature of many risks arising at work today – particularly to psychological health – by the time a risk has presented physically or to the point it is noticeable, significant issues may have already developed, making it much more difficult to address.

Frequent and ongoing consultation between HR and WHS teams will assist all parties greatly. Patterns or trends can only be identified over a period of time and a sequence of observations – meaning that regular conversations about things that are happening will likely be of assistance in addressing issues as they arise.

How can a WHS team develop and advise on effective controls without their colleagues in HR providing insights into the work practices and issues arising with workers?

Equally, how can HR teams train workers and manage situations without first having discussed controls and possible risks with a WHS team?

The answer to both these questions is quite simply, they can’t.

Policies must also be developed collaboratively – with input from both HR teams (who will generally enforce the policies and have a practical understanding of the workplace) and WHS teams (who may have ideas about possible controls).

Reporting frameworks should be established (and reviewed regularly) so that feedback can be provided and records kept in relation to how incidents have been managed. These reports should of course then be circulated among both HR and WHS teams so that all team members stay across developments. Where the matter being reported relates to something that was discussed previously between HR and WHS teams, it is appropriate for a follow-up or debrief to take place to unpack what occurred and what can be improved.

And it’s not just Kingston Reid who has identified this as an emerging issue (with a simple and achievable solution). Marie Boland, CEO of Safe Work Australia, called out the need for HR and WHS collaboration at the Australian Institute of Health and Safety’s 2024 National Health and Safety Conference:

[An] area [Safe Work Australia] will focus on is evaluation how new psychosocial regulations are being embedded into safety systems.

A key question here will be how HR and [industrial relations] professionals are working together with WHS practitioners to bring a holistic approach to workplace relations.’

Key Takeaways

It is unacceptable in the current regulatory and legislative landscape for HR and WHS teams to adopt a ‘stay in your lane’ mentality when dealing with matters at work. Collaboration is essential and must be undertaken if organisations wish to stay on top of their legislative obligations and arising workplace issues more broadly.

  • WHS and HR teams must collaborate:
    • frequently;
    • proactively;
    • openly; and
    • wholistically.
  • Recent changes mean workplace issues now incorporate safety elements and human resources elements – each of which requires expertise in dealing with.
  • HR and WHS team members must constantly be asking themselves about how a matter may develop into a situation where they need input from each other. The earlier these questions are asked, the better.
  • Regular reporting of HR and WHS matters should be circulated widely to generate awareness and encourage proactive engagement.
  • Without limiting informal means of collaboration, HR and WHS teams should sit on consultative committees and processes, for the purposes of:
    • facilitating a broader, cross-functional discussion regarding the performance of, and intersection between the organisation’s policies and work practices;
    • sharing relevant activities and information; and
    • assessing the organisation’s compliance with its legal obligations.

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

 

Xavier Burton
Lawyer
+61 8 6381 7068
[email protected]
Sarah-Jayne Rayner
Senior Associate
+61 7 3071 3122
[email protected]
17 May 2024
Unions and ‘Free-Riders’: avoid getting caught in the crossfire
May 17, 2024

For years now, union leaders have publicly decried the concept of ‘free-riders’.  The pejorative term is used to describe employees who receive the benefits of an enterprise agreement, despite not being members of the union that bargained for it.

One of the reasons this situation of ‘free-riding’ exists is freedom of association. Employees remain absolutely free to choose to join a union or not. Recognising the right to freedom of association is one of the objects of the Fair Work Act 2009 (Cth) (FW Act). It is a civil remedy provision for an employer to induce an employee to become, remain, or cease to be a member of a union. Nevertheless, unions have expressed frustration that the situation has contributed to decreased rates of union membership; a trend they do not want to see continue.

Bargaining for enterprise agreements has increased since the Secure Jobs Better Pay and Closing Loopholes amendments to the FW Act. We are seeing logs of claim to-ing and fro-ing at rates not seen since the FW Act was first introduced. The question is whether unions will try to address their ongoing ‘free-rider’ concerns through enterprise agreements. In other words, whether unions will pursue enterprise agreements which, in effect, benefit union members over non-union members.

If unions yield to this temptation, it could expose employers to legal difficulties. If an employer agrees to an agreement which preferences union members, they may fall foul of the anti-inducement provisions in the FW Act and be exposed to financial penalties.

In this context, if you are faced with a log of claims that raises concerns, we suggest you ask two things:

  • If I agree to this claim, would it provide an incentive for employees to join a union?
  • Does the incentive constitute an unlawful inducement?

Voluntary membership and general protections

Section 350 of the FW Act provides that an employer must not induce an employee to take, or propose to take, “membership action”. A person takes membership action if the person becomes, does not become, remains or ceases to be, an officer or member of an industrial association. This section does not apply to unions.

If an employer makes an enterprise agreement that induces employees to become, or not become, members of a union, the employer may fall foul of s.350 of the FW Act and face penalties.

What do the cases say?

In BHP Iron Ore Pty Ltd v Australian Workers’ Union [2000] FCA 430, the Federal Court examined whether BHP’s offer of individual workplace agreements constituted an inducement for employees to leave their union, as prohibited by section 298M of the Workplace Relations Act 1996 (Cth). The Court found that the term “induce” is not limited to explicit threats or promises and includes leading or moving by persuasion or influence. The evidence indicated that the acceptance of these agreements led to a decline in union membership and activity, thus potentially violating section 298M. An interlocutory injunction was granted to prevent BHP from offering further agreements until the final hearing, aiming to maintain the status quo and uphold the integrity of union membership. However, in the final hearing, the Court found there was insufficient evidence to establish that BHP’s offering of individual workplace agreements constituted an inducement for employees to resign from their unions under section 298M. The Court was not satisfied that BHP’s actions were designed to reduce union membership or that employees’ resignations were a necessary outcome of the offers.

In TWU v DHL Exel Supply Chain (Australia) Pty Ltd [2008] FMCA 604, the Federal Magistrates Court determined that DHL contravened the Workplace Relations Act 1996 (Cth) by inducing employees to cease their membership with the Transport Workers Union (TWU) and join the National Union of Workers (NUW).

The Court found DHL had conducted secret negotiations with the NUW, excluded TWU officials from the workplace, and gave preferential access to NUW officials, who then promoted their union to the employees. The Court found that these actions were deliberately aimed at encouraging employees to switch their union, thereby violating section 794 of the Act, which prohibited employers from inducing employees to leave or not join an industrial association. The Court concluded that the company’s conduct was intended to undermine the TWU and promote the NUW, significantly affecting the employees’ freedom of association and their right to choose their union representation.

By contrast, in Australian Industry Group v Fair Work Australia [2012] FCAFC 108, the Federal Court of Australia reviewed a decision by Fair Work Australia (FWA) – as it was then – concerning the approval of an enterprise agreement. Australian Industry Group (AIG) argued that clauses 16.6(b) and 16.6(d) of the agreement, which stated that union membership should be promoted and union members encouraged to participate in union meetings, required the employer, ADJ Contracting Pty Ltd, to induce employees to take membership action in contravention of section 350 of the FW Act.

The Federal Court examined whether the terms “promote” and “encourage” equated to “induce,” as prohibited by section 350. It concluded that “induce” did not necessarily mean “promote” or “encourage.” The court held that the clauses did not contravene section 350 as they did not explicitly require ADJ to induce employees to join or remain in the union. In short, the employer could promote and encourage membership action, without actually inducing it.

The key lessons from these cases are as follows:

  • inducement action can occur both in the context of bargaining, as well as once an agreement is introduced;
  • the practical consequence of the employer’s conduct is highly relevant; in other words, whether the conduct actually results in a change in union membership at the workplace is relevant; and
  • even clauses which appear on their face to require an employer to promote union membership can be ‘read down’ so as not to require ‘inducement’, emphasising the significance of drafting and adding a layer of complexity for employers.

In conclusion, navigating the complexities of enterprise agreement bargaining requires a keen understanding of the legal landscape, including in relation to inducement provisions. The cases of BHP Iron Ore Pty Ltd v Australian Workers’ Union and Australian Industry Group v Fair Work Australia discussed above continue to serve as critical reminders for employers in this respect. They underscore the importance of precise language in agreements, the need to focus on bargaining without contravening anti-inducement laws, and thus the importance of getting legal advice on these issues.

Key takeaways:

  • Familiarise yourself with the FW Act and its provisions regarding union membership and inducement to ensure compliance.
  • Before agreeing to any claims, consider if they provide an incentive for employees to join or leave a union and whether such incentives are lawful.
  • Seek legal advice to navigate the complexities of enterprise agreements and ensure precise language to avoid inadvertent inducements.
  • Prioritise fair bargaining practices that do not discriminate between union and non-union members and benefit all employees equally.

 

To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].

The views expressed in this article are general in nature only and do not constitute legal advice.

Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.

 

Steven Amendola
Partner
+61 3 9958 9606
[email protected]
Peter Willink
Senior Associate
+61 2 9169 8457
[email protected]
Dylan Pietrocola
Lawyer
+61 2 9169 8423
[email protected]