Insights & News

July 7, 2022

Last year, we wrote about WHS changes afoot as a result of a meeting of Commonwealth, State and Territory Ministers centred around the Boland review, including their agreement to amend the model WHS Regulations to deal with psychological injuries.

Flowing from this agreement, and a further commitment from the Victorian Government to develop regulations to provide “clearer guidance” to employers on their obligations relating to psychological risks and hazards, the Victorian Government has prepared a draft amendment to Victoria’s Occupational Health and Safety Regulations, which are expected to come into effect in July 2022 following consideration by the Victorian Government.

If enacted as currently proposed, the amendment will introduce:

New definitions relating to “psychosocial hazards”

These definitions are aimed at supporting employers’ understanding of “psychosocial hazards”, which will be defined to mean:

“any factor or factors… that may arise in the working environment and may cause an employee to experience one or more negative psychological responses that create a risk to their health and safety.”

The amendment thereby formalises the requirement for employers to, so far as is reasonably practicable, protect workers from psychosocial hazards, such as:

The risk of exposure to traumatic events or content

This psychosocial hazard was discussed in the recent and widely-reported High Court appeal in Kozarov v State of Victoria,[1] in which the Office of Public Prosecutions (OPP) was found to have failed to meet its obligation to take reasonable steps to safeguard the mental health of Ms Kozarov, a public prosecutor with the OPP whose work involved “cases of an abhorrent nature involving child rape and offences of gross depravity”.

If your employees are exposed to any such hazards, it would be wise to revisit any trauma policies and confirm that they are in fact being enforced as intended.

Job demands

While employers are no doubt already alive to the potential psychosocial hazards of “high job demands”, which are to be formally defined to mean “sustained or repeated physical, mental or emotional effort which is unreasonable or frequently exceeds the employee’s skills or capacity.

Employers may be surprised to see that the amendment will introduce a further requirement to protect against the risk of “low job demands” – for instance, tasks that are highly repetitive, monotonous or where there is just too little work for an employee to do.

Other types of psychosocial hazards

Some other examples of psychosocial hazards include:

• aggression or violence;
• bullying;
• sexual harassment;
• poor support;
• low role clarity;
• low recognition and reward; and
• poor workplace relationships.

For employers, the first step to addressing these amendments will necessarily be a thorough review of your employee’s systems of work and the way in which they carry out their work, with a view to identifying and eliminating (where possible) any potential psychosocial hazards.

Prevention plans

For employers that have identified any of the following psychosocial hazards:

• aggression or violence;
• bullying;
• exposure to traumatic content or events;
• high job demands; or
• sexual harassment

A written prevention plan must be created which identifies the hazard, addresses the measures implemented to control the hazard (including an implementation plan) and the consultation undertaken in line with section 35 of the WHS Act.

Employers must also be ready to produce any such prevention plan, upon request, to a WorkSafe inspector and, if applicable, an employee health and safety representative and/or member of the employer’s health and safety committee.

Reportable psychosocial complaints

For employers with more than 50 employees, any complaints received about aggression or violence, bullying or sexual harassment will now need to be set out in a biannual written report to WorkSafe.

In addition, a copy of the report must then be kept for 5 years from the date on which it was provided.

Further proposed changes in other jurisdictions

Other jurisdictions have also taken on board the recommendations of the Boland Review in relation to psychosocial risks. Both New South Wales and Western Australia have introduced Codes of Practice for Managing Psychosocial Hazards at Work which will be admissible in court proceedings.

Further changes are expected in Western Australia with the release in June 2022 of the Community Development and Justice Standing Committee Report on sexual harassment against women in the FIFO mining industry.

Canberra has taken its own steps to implement some of the recommendations from the Boland review, via an amendment to the Workplace Health and Safety Act (ACT)including the inclusion of a sexual assault incident into the definition of a “notifiable incident” that must be reported to WorkSafe ACT.

Next Steps

Employers and their Boards need to enquire into how their organisations are managing psychosocial risks, and how the changes in each jurisdiction will impact upon their reporting and governance processes. We are seeing increased regulator enquiries into the management of psychosocial risks in workplaces, and in particular evidence that those risks are being addressed through risk assessment, policies, training, instruction and supervision. We can assist with undertaking a review of your policies and systems and providing training in relation to the management of psychosocial hazards and the proper handling of complaints.

[1] 2022 [HCA] 12

June 30, 2022

The labour hire arrangement is a simple one. One organisation (the labour hire provider) employs workers and provides a service to another organisation (the labour hire user) by assigning those workers to perform work for that labour hire user. The labour hire user pays the labour hire business a fee for providing labour hire workers to work for them. Labour hire workers are employed by the labour hire provider; they are not employees of the labour hire user.

Labour hire arrangements are used in countless industries to provide organisations with specialised labour, often on a temporary basis, allowing them to streamline their processes by outsourcing recruitment and focus on the core aspects of their business. It can also have a beneficial impact on productivity, efficiency and the bottom line.

But this arrangement has been criticised by unions and employee advocacy groups who say it leads to labour hire workers being paid unfairly low wages to cover work that could be done by salaried employees of the labour hire user.

This criticism is one of the areas of workplace and industrial reform the new federal Labor Government says they intend to address through the principle of ‘same job, same pay’.

If this mantra is translated into law, it’s vital that all organisations who use labour hire arrangements, whether they be labour hire providers or labour hire users, understand the potential change and what it may mean for the way they do business.

The current position

Labour hire workers are covered by any relevant award and the National Employment Standards regardless of the employment arrangements in place at the labour hire user. A labour hire provider may have also have its own enterprise agreement that will apply to labour hire workers if it covers the work they perform.

Labour hire workers are not covered by an enterprise agreement made between a labour hire user and its own employees unless the labour hire provider itself is a party to the agreement. Whilst there are occasions (most commonly in manufacturing or heavy industry environments) where the terms of an enterprise agreement between a labour hire user and its own employees, may require the user to ensure that any labour hire provider it engages pays at least the pay and conditions reflected in the users enterprise agreement, these are arrangements set by the labour hire user. They are not enshrined in legislation and where they are not present, a labour hire worker can work side by side with an employee of the labour hire user on different terms and conditions, including different pay.

Labor’s policy position

Labor’s pre-election ‘Secure Australian Jobs’ policy included the principle that if you work the same job, you should get the same pay. Labor has committed to ensuring that workers employed through labour hire providers receive no less than workers employed directly by the labour hire users.

This will undoubtedly be achieved through introducing legislation that makes ‘same job, same pay’ a minimum entitlement, such as including it as a new National Employment Standard.

Labor has a majority in the House of Representatives, meaning it will only need the support of the Greens and one other Senator for such legislation to pass. Given the Greens had a similar pre-election policy stating that “Workers should be paid and treated equally for the same kind of work”, they are likely to support Labor’s amendments making the change almost inevitable. The only stumbling block may be if the Greens and/or an independent or minor party Senator demand more than Labor is willing to give, resulting in a stalemate.

Two weeks ago, Tony Burke said following the summit and more consultation, further consideration will be given to the implementation of the policy.

What would this change mean?

This change will have a significant impact on the way labour hire providers and most labour hire users conduct business.

In practice, it will mean that the wage rates of a labour hire user will be applied to the labour hire workers, where they are higher than they would ordinarily receive from the labour hire provider, and presumably only if there is like-for-like work being done where a clear comparison can be made.

The policy slogan however leaves many questions unanswered:

1. What does ‘same job, same pay’ mean for other entitlements beyond headline pay rates (such as overtime, penalty rates and allowances)? Will these need to be equal? If it is all monetary elements, this will remove one of the key incentives for labour hire users engaging labour hire workers – a more flexible labour model and differentiated cost base.
2. What does ‘same job, same pay’ mean for non-monetary terms and conditions such as working hours, rostering, and flexibility? When the Fair Work Commission applies the Better Off Overall Test when assessing enterprise agreements, they recognise that wage rates are only part of the equation and should not be considered in a vacuum, absent consideration of other terms and conditions. It is therefore an interesting and potentially dangerous approach to look at monetary elements in isolation from other terms and conditions.
3. What does ‘same job’ mean? Not all labour hire arrangements involve labour hire and labour user workers doing the same job side-by-side. Many labour hire arrangements are used by labour hire users to outsource entire functions, so that the labour hire user has none of its own employees performing those jobs. In this case, applying the ‘same job, same pay’ principle has no application.

A wholesale push of the policy may result in this becoming more prevalent which would make the policy self-defeating.

What should the impacted stakeholders be thinking:

For labour hire users:

• It may impact future enterprise agreement negotiations given the agreed wage rate (and potentially other monetary entitlements) may apply not only to an organisation’s employees, but to those they engage via labour hire arrangements.
• It may impact the business case as to whether to outsource certain functions or engage labour hire workers to supplement or replace your workforce.
• It may impact existing labour hire agreements.

For labour hire providers:

• It may change the way labour hire workers are employed, given their rate of pay will differ based on the wage rates of the labour hire user they are providing services to.
• It may impact on existing labour hire agreements.
• It may lead to a reduction or growth in the use of labour hire arrangements.

There is more to consider as the Government continues to develop its position on this important legislative issue. The upcoming Employment Summit, which the Government has indicated will bring together Unions, Employer groups and other stakeholders will be an important opportunity for these issues to be further discussed and detail debated.

We will continue to provide Insights as this issue develops. Please contact us if you have any questions.

June 9, 2022

In a decision published yesterday (CFMMEU v Falcon Mining)[1], a Full Bench of the FWC (Hatcher VP, Catanzariti VP and Easton DP) expressly disagreed with a decision made by another Full Bench (Gostencnik DP, Colman DP Saunders DP) in Simplot v AMWU.[2]

In yesterday’s decision, the Full Bench said they had reached the “firm conclusion” that the Simplot decision was “not correct.” The Full Bench went on to observe that the fact there are conflicting decisions is “obviously unfortunate” and that “appropriate legislative change to clarify the position would be desirable”.

The vexing question is whether the FWC can still arbitrate a dispute under an enterprise agreement if the agreement is replaced or terminated before the FWC has determined the matter.

The answers given by the FWC have varied over time.

In Falcon Mining, the Full Bench observed that:

“Simply put, the Commission is seized of jurisdiction to arbitrate in respect of a dispute arising under a dispute resolution term described in s 738(b) once an application is made in accordance with s 739(6) and the requisite agreement under s 739(4) exists, and it is thereafter entitled to exercise that jurisdiction to completion.”

That passage evokes an earlier decision of a single member of the Commission (now retired), Deputy President Sams, in 2018 in which he wrote “[t]o my mind, once the Commission is seized of jurisdiction, unless there is a specific statutory bar or the replacement Agreement expressly provides for its extinguishment, the Commission’s jurisdiction remains on foot, and is exercisable.”[3]

However, in Simplot, a Full Bench of the FWC disagreed with Deputy President Sams’ conclusion and held “[t]he Commission has no jurisdiction to deal with a dispute under a disputes procedure in an enterprise agreement that has ceased to operate.”

In light of the differing authorities, those employers and employees bound by enterprise agreements are left in something of a quandary. Perhaps the matter will be resolved at the government’s employment summit later this year. Alternatively, it may be a matter for which judicial guidance is needed.

[1] [2022] FWCFB 93.

[2] [2020] FWCFB 5054 (22 September 2020).

[3] APESMA v TransGrid [2018] FWC 6335, [98] (20 November 2018).

May 26, 2022

The 2022 federal election has delivered a new Labor Government. Whilst it is yet to be determined, it looks like Labor will form a majority in the House and Labor and the Greens will form a majority in the senate. This is likely to lead to workplace and industrial relations reform. Although Labor’s ‘Secure Australian Jobs’, ‘Aged Care’ and ‘Equality for Women’ pre-election policies give us a fair idea of what these reforms will be, the presence of Greens and teal independents in our Parliament may see a reprioritisation of proposed reforms or the adoption of reforms which were not front and centre during the election campaign.

Although we will have a better insight into what the key ticket items for the new Government will be following the ‘Australian Jobs Summit’ (which Labor intends to convene with the business community and trade union movement as soon as practicable), we predict what major reforms will be trumpeted in the short to medium term future below.

Au revoir ABCC (again)

It is likely that Labor (with the support of the Greens) will quickly introduce a Bill into Parliament to abolish the Australian Building & Construction Commission (ABCC) and repeal the Building and Construction Industry (Improving Productivity) Act 2016 including the Code for the Tendering and Performance of Building Work 2016.

While the legislation and Code remain in place for now, it is unlikely that moving forward the ABCC will prosecute new matters, particularly those relating to union activities (such as union materials on building sites).

I am woman, hear me reform

As well as being the “climate change election”, the election was also fought and won on gender issues. Labor, the Greens and several teal independents campaigned on the adoption of all 55 recommendations of the Australian Human Right Commission’s (AHRC) Respect@Work. As such, these recommendations are likely to be implemented sooner rather than later.

As a recap, key reforms recommended in the Respect@Work report include:

• Introducing a positive duty for employers to “take reasonable and proportionate measures to eliminate sex discrimination, sexual harrassment and vistimisation, as far as possible”. This will require employers to take active steps to make sure that its workplace(s) are free from sex discrimination, sexual harassment and victimisation. Simply having a policy which states that your organsiation has a zero-tolerance to these things is unlikely to be enough in fulfilling this positive duty. Employers will have to introduce measures such as mandatory bystander training for all employees, appointing “Respect@Work Officers” (as you would appoint First Aid Officers) to be a points of contact within your organisation for affected employees and those who need further education, regularly surveying employees on their experience within the workplace and holding managers accountable if there is any failure to prevent, or intervene early in cases of, sexual discrimination, sexual harassment and/or victimisation.
• Give the AHRC broader powers to assess compliance with the positive duty outlined above and investigate workplaces over systemic sexual discrimination and harassment. The AHRC will be given investigative and enforcement powers similar to those of the Fair Work Ombudsman, including powers to:
  • require the giving of information, production of documents and examination of witnesses;
  • enter into enforceable undertakings with an organisation in breach of the positive duty; and
  • apply to the Court for an order requiring compliance with the positive duty.
• Amend the AHRC Act to insert a cost protection provision where a claim proceeds to the Federal Court. The report recommends that such a provision is consistent with section 570 of the Fair Work Act 2009 (FW Act). In this past, the absence of a provision in the AHRC Act similar to section 570 of the FW Act has deterred persons from making an application to the Australian Human Rights and instead, these persons have utilised the general protections provisions in the FW Act (where applicable). Thus, employers can expect to see an uptick in claims made to the AHRC. Particularly in circumstances where the report also recommends that unions and other representative groups should be given the right to bring claims under the AHRC Act to Court.

In addition to the reforms recommended in the Respect@Work report, it is likely that the following will be introduced:

• ‘gender pay equity’ as an objective of the FW Act, a statutory ‘Equal Remuneration Principle’ (modelled on the Queensland Equal Remuneration Principle) and the establishment of a ‘Care and Community Sector Expert Panel’ and ‘Pay Equity Panel’ within the Fair Work Commission (FWC). In practice, this may result in a higher number of applications for equal remuneration orders and equal remuneration orders made by the FWC.
• payment of superannuation contributions on paid parental leave. Although Labor appeared to abandon this policy during its election campaign, this policy formed part of the Greens’ platform and therefore, may re-enter the policy debate, particularly if the Labor government secure a second term in 3 years.

Higher wages and ending insecure work

If Labor commands a majority in the House of Representatives in its own right, it is likely to be in a position to implement its ‘Secure Australian Jobs’ policy. Obviously, the composition of the Senate will have a baring on just how aggressive the policy position is pushed.  We consider that there are four key policies that Labor will prioritise.

• Casual definition – Labor will amend the definition of casual employment to enable post-contractual conduct to be taken into consideration (e.g. patterns of work) in assessing whether a casual employee is a “true” casual employee.
• Independent contractors – following the High Court decisions in Jamsek and Personnel Contracting, Labor will also likely introduce legislation which restores the ‘multifactorial test’ (or similar) previously applied by Courts and Tribunals in determining whether a person is an independent contractor or employee. Labor will also likely move to give the FWC new powers to deal with “employee-like” relationships (i.e. relationships in the gig economy), including powers to make orders for these workers and powers to resolve disputes between these workers and the platforms through which they perform work.
• Same job, same pay for labour hire employees – Labor will introduce legislation to ensure workers employed through labour hire companies receive at least the same pay as workers who are employed directly.
• Fixed term contracts – the FW Act will be amended to ‘cap’ fixed term contracts for the same role to two consecutive contracts or to a maximum duration, including renewals, of two years with some limited exceptions.

In addition, as promised during the election campaign, the Albanese-led Government will make a formal submission to the FWC (as part of its annual wage review this year) in support of an increase to the minimum wage. It is unclear what percentage increase the Government will be supporting, however, it is likely to be somewhere between 5% and 5.5% (an increase of 5.5% is contended for by the ACTU). Although any submission made by the Government to the FWC will not necessarily result in an increase higher than 5%, any position taken by the Government will likely impact on current and upcoming enterprise agreement bargaining rounds as unions shift to demand increases in line with any minimum wage increase contended for by the Government.

‘Unstacking’ of the Fair Work Commission

There has been a lot of talk from Labor this election about fixing the “stacking” of the FWC by appointing more “Labor representatives” to the FWC, before returning “half/half appointments”.

Labor will likely seek to justify making its new appointments by extending the powers of the FWC to include:

• the powers of the new expert ‘Care and Community Sector Expert Panel’ and ‘Pay Equity Panel’ (as outlined above).
• powers to deal with “employee-like” relationships (as outlined above).
• (potentially) powers to set minimum pay and standards for owner-drivers as previously done by the Road Safety Remuneration Tribunal. It is unclear whether there will be separate legislative provisions introduced into the FW Act including these powers or whether owner drivers will simply be covered by the new “employee-like” work jurisdiction. It is also possible that Labor will seek to set up a tribunal separate to the FWC to deal with minimum pay and standards for owner drivers, as currently pushed for by the Transport Workers Union.
• powers to regulate registered organisations. Labor will abolish the Registered Organisations Commission and refer serious contraventions of regulatory laws by registered organisations to the Australian Securities and Investments Commission for investigation and prosecution.
• (potentially) powers to conciliate and arbitrate (by consent) underpayment of wages claims.

It is also possible that Labor will introduce a ‘Fair Work Court’, an independent judicial division of the Fair Work Commission determining matters such as unlawful dismissal, general protections claims and underpayment of wages claims.

Criminalising wage theft and industrial manslaughter

The new Government is committed to legislate to make wage theft and industrial manslaughter criminal offences. It will consult with unions, States and Territories and employer groups to ensure federal wage theft and industrial manslaughter laws will not override existing state and territory laws in operation.

Employers need to start considering how they are currently managing these issues and how current policies could be strengthened. Apart from any Government policy, the Election results provide employers with helpful insights into what issues matter most to their employees which presents an opportunity to reflect on how your organisation fairs in relation to these issues.

We will continue to keep you updated as these post-Election issues develop. Please reach out if you have any questions.

May 10, 2022

The Victorian Government confirmed in last week’s State budget that $246 million has been set aside for the pilot Victorian Sick Pay Guarantee, an administrative scheme that provides casual employees and contract workers with a “guarantee” that they will be paid when they need time off sick or to care for loved ones.

Across 2021, the Victorian Government consulted with members of the community, both employers and employees, on the design of a scheme to improve the economic security of Victorian workers prompted by instances of COVID transmission by casual and contract workers continuing to attend work notwithstanding COVID symptoms due to a financial pressure to do so.

The belief was that there had been a ‘choice’ between a day’s pay and a worker’s health (or the health of their loved ones). This belief has now evolved into the creation of a state-run administrative scheme.

Do casuals in Victoria get sick leave now?

Yes. Both casual employees and contract workers now have the opportunity to register to access sick leave payments under the new Victoria Sick Pay Guarantee. It is estimated that around 150,000 workers will be eligible for the first phase of the Guarantee.

The Guarantee is currently operating under a pilot scheme that will last for two years.

It is, in effect, another form of portable leave designed to provide financial security to workers engaging in insecure work across different employers across Australia.

Who will fund the sick leave?

The scheme will be administered by the Victorian Government in an effort to minimise the administrative burden upon employers.

It is, however, difficult to conceive how the Government will verify eligibility without engaging with the employer of an employee or contract worker seeking to access sick pay.

While fully funded by the Victorian Government for the initial pilot, employers will also be expected to contribute levies to fund the scheme moving forward. What these levies will look like remains to be seen.

Which occupations does the Sick Pay Guarantee cover?

The first phase of the Guarantee is open to the following occupations, which the Victorian Government states are “highly insecure”:

• Hospitality workers
• Food preparation assistants
• Food trades workers
• Sales support workers
• Sales assistants
• Aged and disability carers
• Cleaning and laundry workers
• Security officers and guards
• Other labourers in the supermarket and supply chains industries

The full list of workers who are eligible appears on the Victorian Government website.

Workers also need to:

• Be 15 years of age or over;
• Be casual employees or self-employed with no other employees (for example, a sole trader operating with an ABN);
• Not be entitled to paid personal, sick or carer’s leave in any of their jobs (so, for example, a permanent part-time employee with a second casual job would not be entitled to register);
• Work physically in Victoria (no matter where they live) and have the right to work in Australia; and
• Work on average at least 7.6 hours per week in an eligible occupation.

It is clear that the Guarantee will cover employees in a range of small businesses, many of whom are dependent upon casual employees and contract workers to respond to the peaks and troughs of workload.

Do workers need to prove they are eligible for the Guarantee?

Yes. Workers must not only meet the extensive eligibility criteria of the Guarantee, but also furnish evidence that to prove that they are eligible.

They will need to show two identity documents (for example, an Australia drivers’ license, passport or birth certificate) although if they are under 18 and only have two forms of ID, they can apply with only one.

They will also need to prove that they are eligible by showing documents to prove that they are either casual employees or self-employed individuals. This may include, for example, their employment contract, a recent payslip, a recent invoice issued by their business or their most recent business activity statement.

Does Victoria’s new sick pay guarantee protect ‘insecure’ workers?

The new Guarantee provides certain casual employees and contract workers with rights to register for a new government scheme with a view to receiving pay when they need time off sick or to care for others.

However, casual employees already had the benefit of the general protections provisions of the Fair Work Act 2009. They could not be subject to adverse action, such as dismissal or reducing shifts, because they suffered an illness or injury, or because they needed to care for a member of their household or immediate family.

The introduction of the Sick Pay Guarantee, therefore, doesn’t create new rights or obligations in this regard. Although it may mean that casual employees may view their right to be absent from work due to illness more strongly.

What does this mean if I hire casual employees or contract workers?

If you hire casual employees or engage contract workers in Victoria, then you will need to take particular note of the new Sick Pay Guarantee.

• Keep an eye out on the news about the Guarantee and, in particular, who will finance it once the two-year pilot comes to an end.
• The administrators of the Guarantee may approach you to confirm whether an applicant to the Guarantee is eligible. Take particular care in how you respond to such request for your employees’ information.
• Human Resources teams should make clear to their casual employees the company’s expectations around absences. It is foreseeable that, in light of the Guarantee, there may arise a perception amongst casual employees that they are not accountable to their employer when they fail to attend work for single day absences.
• If you haven’t already, review your employment agreements with your casual staff to ensure they are consistent with changes to the law of casual employment that occurred in 2021.

Get in touch with our specialist employment team at Kingston Reid if you have any questions about how the Victoria Sick Pay Guarantee Scheme will affect you and your staff.

February 11, 2022

The High Court’s decisions on Tuesday in ZG Operations Australia Pty Ltd v Jamsek[1](Jamsek) and CFMMEU & Anor v Personnel Contracting Pty Ltd[2] (Personnel Contracting) provide a refreshing reset on how to assess whether a person is a contractor or employee.

The decisions provide more certainty to business’ that have genuinely and comprehensively committed the terms of their relationship with a contractor in a written contract. Instead of engaging in a subjective, checklist approach, Courts will now consider the question of employee vs contractor through the prism of normal principles of contractual interpretation, consistent with the High Court’s decision last year in WorkPac Pty Ltd v Rossato[3]. The indicia set out in the multifactorial test will now only be relevant to the extent they are concerned with the rights and duties established by the parties’ contract.

Less about totality

Determining the nature of the relationship has, to date, not been an easy task – despite the fact that there is usually a written contract entered into at the outset of either relationship which purports to make it clear.

This is because, historically, Courts have looked beyond the terms of the written contract, considering the “totality of the relationship” between the parties. Commonly known as the multifactorial test, Courts have considered the totality of the relationship between parties by reference to a range of indicia including the degree of control the worker is under and whether workers operate their own business.

In applying the multifactorial test, Courts have long grappled with the notion of whether a person is truly a contractor in circumstances where the weight accorded to each indicium is wholly in its discretion.

The application of this discretion has meant that, to date, the well-settled multifactorial relationship test applied by Courts has yielded different and sometimes inconsistent assessments of whether a person is a contractor or not.

Take Jamsek as an example.

In this case, two truck drivers provided delivery services to ZG Operations Pty Ltd (and its predecessors) (ZG Operations), initially as employees and subsequently as contractors. On agreeing to “become contractors”, the drivers set up partnerships (with their respective wives). Via their newly formed partnerships, the drivers purchased vehicles from ZG Operations and executed contracts with it for the provision of delivering services. The drivers subsequently made deliveries as requested by ZG Operations. Lawyers for ZG Operations argued that from this point, each driver owned their own business and there was no basis to conclude they were employed.

At first instance, the primary judge found that the truck drivers were contractors for the relevant period that they operated their partnerships, owned their trucks, and contracted their services to ZG Operations. The primary judge reached this view applying the multifactorial test, emphasising the drivers’ provision of vehicles and provision of services via partnership arrangements as significant factors.

On appeal, the Full Bench of the Federal Court of Australia disagreed with the primary judge and unanimously held that, when viewed in totality, the relationship remained one of employment. One factor that weighed heavily with the Full Court was the exercise of superior bargaining power by ZG Operations.

In the High Court, the majority rejected the Full Court’s invocation of the disparity of bargaining power, finding that such considerations cannot alter the bargains that were struck between ZG Operations and the partnerships. The majority pointed to existing remedies within Australian law which deal with injustices arising from the disparity of bargaining power, such as sham or unfair contract provisions. On the basis that no claim had been made challenging the validity of the contracts between the ZG Operations and the partnerships (via sham contracting provisions or otherwise), the majority proceeded to interpret the contracts, finding that the drivers were individual contractors.

The finding that day-to-day instruction or expectations of ZG Operations in relation to the drivers wearing a uniform or displaying a company logo on their trucks (factors that weighed in favour of the Federal Court’s decision in assessing the drivers as employees) did not alter the contractual rights and obligations which characterised the relationship between the parties.

Unsurprisingly, in reaching this conclusion, the majority in Jamsek – Kiefel CJ, Keane J and Edelman J – followed the principles set out by the same majority in Personnel Contracting. Published moments earlier, Personnel Contracting makes it clear that it is erroneous for Courts to apply the multifactorial test by reference to how the parties have conducted themselves over the decades of their relationship. Instead, where the parties have entered into a comprehensive written contract, the various indicia in the multifactorial test only bear on the nature of their relationship to the extent that they are concerned with the rights and duties established by the parties’ contract.

For example, in Personnel Contracting, the majority considered whether the worker was subject to the control of Construct (the trading name of Personnel Contracting, which is a labour-hire company). In interpreting the contract, the majority found that the worker had no right to exercise any control over what work he was to do and how that work was to be carried out. Specifically, the majority referenced a clause in the contract which stated that the worked was obliged to “[c]o-operate in all respects with Construct and the [host company] in the supply of labour to the [host company]”. This duty, along with others, led to the majority concluding that the parties’ description of their relationship as principal and agent in the contract was not determinative.

What does this mean in practice?

The High Court’s ruling simplifies the analysis for determining whether a person is a contractor or employee in circumstances where the character of the relationship between the parties can be determined by the reference to terms of the written agreement.

Is the multifactorial test dead?

No.

As mentioned above, where the rights and duties of the parties are found exclusively within a written contract, the various indicia in the multifactorial test are still relevant. However, the indicia only bear on the nature of the parties’ relationship to the extent that they are concerned with the rights and duties established by the parties’ contract.

Importantly, the conduct of the parties is no longer relevant in applying the multifactorial test. Instead, the conduct of the parties is only relevant as per established contractual principles. For example, the subsequent conduct of the parties may be relevant to ascertain whether the terms of the original contract have been varied.

Do I need to review my independent contractor contracts?

Yes.

As mentioned above, the parties’ description of their relationship as principal and agent in the contract is not determinative. Instead, the terms of the contract when read as a whole must reflect the status of the relationship as principal / independent contractor.

Contract terms which may suggests a relationship of employment include:

• terms that fix the worker’s remuneration;
• terms that state a principal is a worker’s paymaster;
• terms which oblige the worker to perform work as directed by the principal or host; and
• terms which authorise a principal to terminate a worker’s engagement should they fail in any respect to obey directions.

As such, it is important that principals check contractors’ terms and conditions to ensure they could not be interpreted in favour of an employment relationship.

It is also important to review current practices with contractors to ensure that there can be no argument that their current contract is a sham, or its terms have been varied by conduct.

Are there specific implications for labour hire entities?

Yes.

The majority in Personnel Contracting found that “there is nothing in the tripartite nature of a labour-hire arrangement that precludes recognition of [a principal’s] contractual right to control the provision of [the worker’s] labour to its customers, and the significance of the right to the relationship between [the principal] and [the worker]”. In other words, although a host entity may supervise and direct every aspect of a worker’s work, if this subordination is attributable to the terms of the contract between the worker and the principal (i.e. via a term stating that the worker is obliged to perform work as directed by a host), this will suggest that a worker is subject to the control of a principal. This will weigh towards a Court finding that a worker is an employee rather than a contractor.

[1] [2022] HCA 2.

[2] [2022] HCA 1.

[3] [2021] HCA 23.

January 31, 2022

The start of 2022 has felt eerily similar to 2021 with many starting the New Year in self-isolation following the rise of COVID-19 infection due to the Omicron variant. While we anticipate that the next 12 months will be riddled with ongoing COVID-19 response action by employers, we also anticipate that employers will be faced with new challenges and opportunities in a year where industrial relations is likely to become a political hot-potato as we head into the federal election.

We’ve set out some of the key issues that employers will need to stay focused on in 2022.

The primacy of contract for contractors?

Following almost three years of uncertainty caused by the WorkPac saga, 2021 finally provided clarity over the meaning of casual employment. First with the commencement of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Amendment Act) in March and then with the delivery of the High Court’s judgment in WorkPac v Rossato [2021] HCA 23 (Rossato) in August. However, along with providing greater clarity, employers have been hit with further compliance obligations in relation to casual employees.

The Amendment Act introduced changes to the Fair Work Act 2009 (Cth) (FW Act) which have required employers to revise their casual employment contracts, review their enterprise agreements to assess any interpretation issues arising from their interaction with the new laws, and introduce processes to ensure compliance with the casual conversion provisions. The changes also required the Fair Work Commission (FWC) to vary the casual terms in 151 modern awards. These variations took effect on 27 September 2021.

In Rossato, the High Court found that primacy was to be accorded to the various contracts between WorkPac and Mr Rossato in characterising the employment relationship as casual.

Our 2022 insight: Although Rossato only determined the primacy of contract relevant to determining whether the employment relationship was one of casual or permanent, there is a question as to the impact (if any) the ruling will have on the High Court in determining the appeals of the two Federal Court decisions in CFMMEU v Personnel Contracting Pty Ltd[1] and Jamsek v ZG Operations Australia Pty Ltd[2] (Jamsek).

The appeals consider the correctness of the Federal Court’s finding that the relationship between the parties in those cases should be construed as one of principal and independent contractor (as opposed to employment). The appeals were heard consecutively on 31 August 2021 and 1 September 2021.

During the hearing of the Jamsek appeal, Justice Gageler raised the question of how the existing “totality of the relationship” test applied in determining whether a worker is an employee or independent contractor squares with Rossato.[3] In the discussion that ensued, Justices Gageler, Gordon and Edelman all indicated that the contract should be front and centre to the inquiry of the Court in determining the relationship between the parties. This suggests that there could be a shift in the established principles which apply to the employee / independent contractor dichotomy (or at least, a shift in the way the “totality of the relationship” test is applied) in the not too distant future. Keep an eye out for our update once judgment in these appeals have been delivered.

Embracing the RAT race

Except where made clear by public health orders (PHO), governments have largely left it up to employers to decide whether they introduce mandatory COVID-19 vaccination for employees (as well as customers and clients). The question has been difficult for employers to navigate given the competing Work, Health and Safety (WHS) obligations, individual/union claim risks and mixed guidance materials published by authorities.

Despite the confusion, many employers decided to implement, or began to implement, mandatory COVID-19 vaccination last year. Employers who have made this decision to mandate vaccines have done so to ensure compliance with WHS obligations and on the basis that the direction is both lawful and reasonable.

At a minimum, any direction that employees be vaccinated against COVID-19 (including by way of booster shot) must be:

• Based on WHS risk considerations;
• Implemented following consultation and the introduction of a COVID-19 vaccination policy;
• Reasonable in terms of the timeframe by which employees must be compliant; and
• Allow for any medical contraindication.

When requesting proof of vaccination status, employers must ensure compliance with relevant privacy laws, including by ensuring that a person’s vaccination status is treated as sensitive health information in accordance with the Privacy Act 1988 (Cth) and the employer’s privacy policy.

If employees have legitimate medical grounds to refuse vaccination directions, employers may, where possible, offer reasonable alternatives for workers falling within this category.

The Omicron variant has also increased the rate of infection across the community and therefore in the workplace significantly. This has resulted in a shift by Federal and State governments from the reliance on PCR tests to rapid antigen tests (RAT). This has resulted in a RAT race like no other as those who are symptomatic scramble to find a RAT.

Our 2022 insight: Employers will continue to face the conundrum of how to respond when an employee (or prospective employee) without legitimate medical grounds fails or refuses to be vaccinated. It is important that decisions made by employers as to disciplinary outcomes are made having regard to legal advice and on a case-by-case basis. There remains a myriad of legal risks associated with responding to an employee who has refused a vaccination mandate including a dispute application, general protections claim or unfair dismissal.

On the flip side, as employers begin to direct employees to return to the workplace (whether in accordance with a hybrid working system or otherwise), there may be instances where employees refuse to attend the workplace for various reasons. It is lawful and reasonable for employers to direct employees to return to their normal working arrangements. If an employee does not comply with such a lawful and reasonable direction, the employer may consider taking disciplinary action against the employee and/or decide that the employee no longer can fulfil the inherent requirements of their role. Either way, advice should be sought prior to taking the action.

Employers also need to review their COVID Safe Plans and WHS risk assessments as these are living documents which need to be updated to reflect the rapid pace in which PHOs are being varied and implemented.

R-E-S-P-E-C-T

In January 2021, Safe Work Australia published national guidance material on preventing workplace sexual harassment (Guidance Material). The Guidance Material advocates for a more proactive role of persons conducting a business or undertaking (such as employers) (PCBUs) in identifying, assessing and eliminating or minimising the risk of workplace sexual harassment.

In June 2021, the Australian Human Rights Commission (AHRC) published its report, ‘Equality across the board: Investing in workplaces that work for everyone’ (AHRC Report). The AHRC Report focused on the actions required of the most senior leadership of the ASX200 boards and executive management in preventing sexual harassment in the workplace.

On 2 September 2021, the Sex Discrimination and Fair Work (Respect at Work) Amendment Act 2021 (Respect@Work Act) passed Parliament.

Our 2022 insight: As more high-profile cases continue to emerge and applicants begin to utilise the new legal avenues available to them in light of last year’s legislative changes, we suspect that sexual harassment in the workplace will remain in the spotlight in 2022. Employers (and PCBUs more broadly) must take proactive steps to prevent and eliminate sexual harassment in the workplace. At a minimum, we recommend that PCBU’s:

• Require that executive teams review and revise current Workplace Behaviour Policies to ensure that they reflect the new legislative changes and focus on prevention of sexual harassment in the workplace;
• Ensure the Board of directors and senior executives implement governance measures to prevent and eliminate sexual harassment in the workplace. The Australian Institute of Company Directors has pointed out that sexual harassment is now recognised (and should be treated as) an important governance issue; and
• Deliver sexual harassment training to all employees and managers that not only focuses on explaining the legal terms but trains employees on how to actively prevent sexual harassment including by using active bystander techniques.

Increases to minimums

Despite the continuing economic uncertainty due to COVID-19, 2021 saw minimum wages under modern awards increase.

In June 2021, following the Annual Wage Review 2021, the FWC announced that it would be increasing the national minimum wage and all award wages by 2.5%. The increase to minimum award wages occurred in three stages, with the last increases coming into effect from 1 November 2021 (for those in aviation, tourism, fitness and a few retail sectors).

Our 2022 insight: although the increase only applies to employees who are paid the national minimum wage or minimum award wages, the increase will have broader ramifications for those employers who employ employees above the minimum wage. The 2.5% increase will become a benchmark for wages growth in enterprise bargaining and individual contract negotiations in the first half of 2022.

It’s all super!

In July 2021, the superannuation rate increased by 0.5% to 10%. The rate is legislated to continue to increase by 0.5% annually until it reaches 12% in 2025.

Our 2022 insight: it is important that employers check employment terms and conditions in place to ensure that there is a basis for reducing the income component of employees’ salaries by 0.5% and redistributing this to their superannuation funds (e.g. through an “all-inclusive salary” or “absorption” clause in the employees’ employment contracts). If not, we recommend that employers develop a plan to manage the introduction of the annual increases through contractual or administrative changes such as building the increase into planned pay rises. It is also important that employers consider any terms in an applicable industrial instrument that may affect its obligations regarding superannuation contributions.

Is compliance still key?

The Fair Work Ombudsman’s commencement of Court proceedings against major employers last year indicates that investigating large corporate underpayments will remain a priority for the regulator in 2022.

Our 2022 insight: check out our recent article on wage compliance and the issues employers need to keep in mind in 2022 here.

Election year

2022 is election year and we all know what that means for industrial relations – change.

Both major parties have hinted at what will form part of their industrial relations agenda if they were to form Federal Government in 2022 and we’ll provide further updates throughout the first quarter as we head into the Federal election.

Our 2022 insight: Last June, the Coalition signalled that it will push for the changes to the lifespan of greenfields agreements it removed from its diminished IR Omnibus Bill (which ultimately passed in the form of the Amendment Act). The changes to greenfields agreement provisions would see the maximum life of a greenfields agreement for a “major project” being extended from four to eight years.

If re-elected, it is likely that the Coalition would also press for the other residual parts of the IR Omnibus Bill that didn’t make the final cut, which include:

• More discretion in the BOOT assessment in approving enterprise agreements;
• Sunsetting of zombie agreements;
• Simplified additional hours for part time employees; and
• Flexible work directions.

If the Morrison Government’s religious discrimination bill does not get voted up (in one form or another) before the next election, this will no doubt also form part of its agenda if elected for another term.

In 2021, the Australian Labor Party (ALP) released its “Secure Jobs Plan” which focuses on a number of key areas, including:

• Job security, including by making job security an object of the FW Act, extending the power of the FWC to make orders for the minimum standards which apply to “employee-like” forms of work (such as gig economy work) and amending the FW Act to limit the number of consecutive fixed-term contracts an employer can offer so that they cannot exceed a period of 24 months (with exceptions in limited circumstances);
• Pay, including by introducing a portable entitlement scheme for workers in insecure work and introducing laws such that workers employed through labour hire companies receive no less minimum pay than workers employed directly;
• Casual employment, including by watering down the current definition of casual employment in the FW Act such that the focus on is on the absence of a firm advance commitment as to the duration of the employee’s employment only;
• Criminalising wage theft, however any law will not undermine existing state and territory wage theft laws (such as those in Queensland and Victoria); and
• Government, including by conducting an audit of employment within the Australian Public Service with a view to promoting more secure employment where temporary forms of work, such as outsourcing, short term contracts or “offshoring” are being used and ensuring that the Federal Government prioritises bids and tenders from companies and organisations that provide secure work for employees when purchasing or seeking goods and services.

The Australian Council of Trade Unions (ACTU) has signed off on a 33-day election strategy in support of the ALP’s Secure Jobs campaign. The strategy emphasises the importance of workplace activity and features the training of organisers and delegates and hundreds of workplace visits both before, and during, the 33-day union campaign.

Our 2022 insight: 2022 is set to be another jam-packed year for industrial relations and safety law. We look forward to keeping you across the key issues over the course of the year. Please reach out to our team if you have any questions.

[1] [2020] FCAFC 122.

[2] [2020] FCAFC 119.

[3] ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors [2021] HCATrans 139.

December 9, 2021

As Australia moves from a position of eliminating COVID-19 to living with COVID-19, governments across the country have implemented vaccination mandates as one of the levers to protect the community from COVID-19 transmission and to minimise the impact of infections that do arise.

These vaccination mandates, and the manner by which they have been implemented and supplemented by employer vaccination policies, have by no means been universally received, and much has been raised in challenge of them.

These challenges are largely resolved on technical points, adding to confusion for organisations attempting to navigate the noise.  This noise has been amplified by the recent decision of a 5-member Full Bench of the Fair Work Commission in the matter of CFMMEU & Anor v Mt Arthur Coal Pty Ltd.

Does the decision in Mt Arthur Coal mean the mandatory vaccination policies are unlawful?

Put simply, no.

In early October, Mt Arthur Coal introduced a policy requirement that all of its workers must be vaccinated against COVID-19 as a condition of entry to the mine.  Workers had until 9 November 2021 to provide evidence that they had received at least one dose of a COVID-19 vaccine.  Fifty workers who did not provide such evidence were stood down.  The Construction, Forestry, Maritime, Mining and Energy Union challenged the mandatory vaccination policy by lodging a dispute under the applicable enterprise agreement.

The question for the Full Bench was whether the mandatory vaccination policy was a lawful and reasonable direction.  The Full Bench determined that it was not in this case, for the reason that Mt Arthur Coal was found to have failed to consult with staff as required under the terms of the applicable enterprise agreement, and in accordance with general consultation obligations operative under workplace health and safety laws.

Notably, the Commission stated that, but for the failure to adequately consult, there were a range of factors in favour of the implementation of a company mandatory vaccination policy; which included:

1. It was directed at ensuring the health and safety of workers of the workplace, had a logical and understandable basis; and was a reasonably proportionate response to the risk created by COVID-19.
2. It was developed having regard to the circumstances at the workplace, including the fact (in that case) that workers could not work from home and came into contact with other workers whilst at work.
3. The timing for its commencement was determined by reference to circumstances pertaining to the local area at the relevant time.
4. It was only implemented after the employer spent a considerable amount of time encouraging vaccination.

Flowing from these observations, it may be taken that employer mandatory vaccination policies will be lawful and enforceable where they are:

1. Tailored to the risk factors and circumstances that operate in the particular workplace in which they will apply; and
2. Critically, subject to consultation before implementation.

In the context of introducing or updating a mandatory vaccination policy, consultation requires a business to provide its workforce with a reasonable opportunity to persuade the decision-maker in relation to the decision to introduce such a policy.  It does not require the workforce to agree to the policy or give the workforce power of veto.

Where these requirements are met, and the terms and implementation of a mandatory vaccination policy, or updated mandatory vaccination policy are lawful and reasonable, they will be legally enforceable.

Can employers collect vaccination information?

A critical requirement of an employer vaccination policy, as well as of public health orders creating mandatory vaccination obligations, is a requirement for affected employees to provide evidence of their vaccination status.

Information about an employee’s vaccination status is defined as ‘sensitive information’ for the purposes of the Privacy Act 1988 (Cth) (Privacy Act) and is accordingly afforded a higher degree of protection.

This higher protection means that an employer can collect evidence of an employee’s vaccination status where the collection is with the employee’s consent, and where the collection is reasonably necessary for one or more of the employer’s functions or activities, such as to ensure the safe performance of work.

The voluntary provision by employees of their vaccination status, provided that employees are notified of the purpose for which the information is collected and the ways in which the information may be used or disclosed, will be regarded as a collection with consent.

That consequences might flow from a refusal to provide consent for the collection of vaccination information will not, by itself, impact upon whether an employee has had a genuine opportunity to consent, or not.

Should employers hold vaccination information?

In another recent headline case, Virgin Australia Airlines undertook to destroy vaccination information that it had collected from its workforce following the commencement of proceedings by the Australian Licensed Aircraft Engineers Association alleging that the collection of individual healthcare identifiers (IHI) from Virgin Australia Airline employees breached the Privacy Act and could be misused by Virgin Airline employees.

In resolving the proceedings, Virgin Australia Airlines undertook that it would delete all proof of COVID-19 vaccination documents provided by employees that they hold and have verified, which was codified in an Order made by the Court.

So, does this mean that the collection of vaccination information is unlawful, and should employers proceed to destroy all vaccination information provided by employees?  No.

The undertaking given by Virgin Australia Airlines was made subject to the operation of requirements imposed by law, with laws varying from State to State and Territory on the extent to which employers are required to collect, record and hold particular vaccination information.

It is also important to be aware that the destruction of the vaccination information was at the undertaking of Virgin Australia Airlines, and not as a result of any decision made by the Court that the collection and holding of vaccination information including IHIs was unlawful.

Organisations would, however, be wise to only view, collect, record and/or hold the least amount of information possible.  A person’s COVID digital certificate, accessible via their Medicare account, does not include their IHI, however their immunisation certificate does. The handling and disclosure of IHIs is regulated in its own right under the Healthcare Identifiers Act 2010 (Cth) (HI Act). This is reflective of the even higher level of protection that is afforded to this information.

Section 26(1)(d) of the HI Act states that the use or disclosure by a person of an IHI, is prohibited unless a relevant exception applies. Where there is no such exemption, a person can be exposed to a criminal penalty – which could lead to fines or even a jail term of up to two years – and a civil penalty where the person uses or discloses information in circumstances that contravene the HI Act, and the person knows or is reckless as to those circumstances.

Given the particular sensitivity of IHIs businesses can and should redact this information at the time they collect a person’s vaccination information, to the extent that this is possible, and where this is not practicable, ensure that information containing a person’s IHI is stored securely.  Redacting may be as simple as asking a person to cover their IHI with a finger when snapping a photo, or it could otherwise be a request for an employee to crop their immunisation certificate to remove their IHI before sending to your business.

What should employers be doing now?

For the majority of staff who are vaccinated, the operation of public health orders and organisation policies requiring vaccination are relatively uncontroversial.  However, to mitigate against claims and challenges from the vocal few, it is important for organisations to turn their minds to the following key considerations:

• The requirement to view, collect, record and / or hold vaccination information varies from State to State and Territory. Ensure that your organisation is viewing, collecting, recording and / or holding vaccination information only as absolutely required;
• If a worker asks to have their IHI removed from any copy of the vaccination information securely held by your organisation, reasonable steps should be taken to do so, and substitute vaccination evidence provided where legally required to be held;
• If your organisation proposes to introduce a new or updated mandatory vaccination policy, ensure that there is consultation prior to implementation and enforcement;
• Don’t forget your COVIDSafe Plan – your organisation’s COVIDSafe Plan should be reviewed and updated to operate effectively alongside any mandatory vaccination public health order or policy, including by setting out any additional safety and hygiene measures for employees holding valid exemptions from vaccination requirements.

In all cases, get advice when situations of uncertainty arise or where your organisation is receiving pushback on its policy.

November 25, 2021

As business returns to a degree of normalcy and COVID recedes as the issue, wage compliance, a hot-button issue in the latter half of 2019, is likely to return to the fore.

Back then, it had become a critical issue for management teams and boards to ensure that they were auditing and assessing their wage and minimum entitlement obligations correctly. A range of prominent businesses and large corporates had been identified as having underpaid workers – in the main not because of any deliberate desire to do the wrong thing but because of inadvertence, a lack of good process or a genuine misunderstanding about the complex system of workplace regulation. Rightfully, no business wanted to be the next front-page story about wage underpayment, especially as the term “wage theft” became a political and public relations lightning rod that threatened brands and reputations – not to mention the potential for significant financial penalties.

Then the COVID crisis arrived, and the focus shifted rapidly. Not just for businesses but also for the Fair Work Ombudsman (FWO), the regulator who has within its remit various compliance activities, including bringing Court proceedings to ensure employers comply with workplace laws. The FWO identified that although it would continue to enforce the law, supporting businesses through the pandemic was its top priority. There was also a limitation on the FWO’s investigative capability because of COVID-induced health and safety risks.

But the issue never went away for the FWO. Recently, the Fair Work Ombudsman, Sandra Parker, identified that the number of large corporations under investigation for underpayments had risen to 70, and additional staff were being assigned to this task. So, with this in mind, employers need to refocus their attention on wage compliance.

The conundrum of compliance

As my colleague Steven Amendola has written in the Australian, if you’d ever harboured dreams of opening your own inner city cocktail bar, “good luck” figuring out under what Award you should pay staff, to say nothing of navigating the pages and pages of terms and conditions (assuming you picked the right Award). Our system of regulation is unbelievably complex and the intersection and overlap of the Award system is but one challenge.

Our system of award regulation was derived from a process in which I was heavily involved from 2008-09. Called “Award Modernisation”, the task was to reduce more than 1500 pre-modern awards down to a more manageable number – we arrived at 121. It was a herculean undertaking, and while it successfully reduced some of the administrative complexity created by the vast number of pre-modernised awards, it created its own new and “improved” complexity by establishing a modern award system that covered employers and employees based on descriptions of industries and occupations. It accepted that this new system would create overlap between awards – and then sought to fashion a solution by requiring employers to assess the “most appropriate” award for an individual employee having regard to the nature of their work and where it was performed.

The result? The determination of Award coverage was not just a problem that confounded smaller employers, but it also has at various times caused complexity for large and well-resourced corporate employers.

Add to that the reality that the Fair Work Commission, the body responsible for maintaining and amending the modern Award system, has been reviewing the system since 2014. This has seen many variations to Awards, including the establishment of detailed reconciliation and drafting obligations for annual salary arrangements in some Awards, and the expansion of the coverage of the “Miscellaneous Award”, an Award that requires an employer to consider and know whether the nature or seniority of the employee’s role, or the work they perform has traditionally been covered by an Award in order to determine its application to any employees.

Today, the window is rapidly closing for employers on this issue. The FWO’s 2020-21 annual report stated that it had issued more than 2000 compliance notices in the past 12 months, up by 113% from 2019-20. [Compliance notices are the administrative mechanism to correct wage and minimum entitlement compliance breaches where there is a reasonable belief of contravention]. The FWO recently started Court action against several major corporations for contraventions where these businesses had voluntarily disclosed. In addition, the criminalisation of deliberate or dishonest underpayment of employees are now features of Victorian and Queensland State laws.

Good Luck or Good Planning?

Ensuring compliance is not just a matter of having the right processes in place to ensure that payroll systems and record-keeping obligations are being met – although these are two critical steps. It is also about having the right guide to shepherd you through the sometimes winding and precarious path of wage compliance to ensure there are no missteps. It is critical to get the right legal advice from experts in the field.

A further option some employers are considering are applications to vary those same Awards that are causing them so much grief, or, alternatively, create new Awards that better meet their needs. The current application for a new Award for the on-demand delivery industry that has been sought by Menulog is a case in point. Additionally, there is the option of exploring whether creative solutions such as exemption rates for some modern awards (which were features of some Awards before 2010) and which would absolve an employer from needing to comply with various provisions within an Award where an employee was paid above a certain salary range, could once again be in-vogue.

Understandably, COVID sidelined many traditional employer-employee issues. But that situation is fast coming to an end, with all the evidence suggesting wage compliance will be back in the industrial relations agenda – and in the news – in 2022. Employers need to be prepared.

Michael Mead
Partner
+61 2 9169 8428
[email protected]