Insights & News

April 12, 2024

As we enter a period of brief reprieve from the Federal Government’s wave of reforms to the Fair Work Act 2009 (Cth) (FW Act), it is time to start looking at how the new provisions are being applied, and what the Fair Work Commission’s (FWC) decisions and commentary tell us about the real-world operation of the legislative reforms.

Likely to be of particular interest to many employers is the Commission’s treatment of supported bargaining authorisations (SBA) in relation to proposed multi-enterprise agreements.

To date, the FWC has already considered and approved one application for a supported bargaining authorisation, bought by the United Workers Union, the Australian Education Union and the Independent Education Union on 6 June 2023 (the same day the relevant reforms took effect), in applying to 64 employers across the childhood education and care sector (Childcare Application).

There is every reason to believe that the Childcare Application is just the tip of the iceberg.

Less than two months after the Commission rendered its decision in the Childcare Application, the Health Services Union and the Australian Education Union followed suite with an application seeking to bring 19 disability services employers in Victoria to the bargaining table.

So, what can employers expect if they are dragged into the orbit of multi-enterprise bargaining via a supported bargaining authorisation?

What is supported bargaining?

Introduced as part of the Government’s 2023 Secure Jobs Better Pay (SJBP) reforms and replacing the former low-paid bargaining scheme, supported bargaining works to assist employers and employees in undertaking collective bargaining.

The Explanatory Memorandum to the SJBP reform bill states that the supported bargaining stream is targeted at employers and industries who lack the skills, resources and power to bargaining effectively, with the focus being low paid industries including aged care, disability care and early childhood education.

Once an SBA is in force, an employer must participate in the bargaining process and cannot seek to commence independent bargaining.

The FWC is obliged to make a SBA if:

1. an application has been made; and
2. the FWC has considered the matters outlined in section 243(1)(b) of the FW Act and is satisfied that the matters support the application; and
3. at least some of the employees are represented by an employee organisation.

The factors for which the FWC must consider in accordance with section 243(1)(b) of the FW Act are:

• the prevailing pay and conditions within the relevant industry or sector;
• whether the employers have clearly identifiable common interests;
• whether the likely number of bargaining representatives for the agreement would be consistent with a manageable collective bargaining process;
• any other matters the FWC considers appropriate.

The FWC’s approach

As the provisions pertaining to SBAs have altered as a result of the SJBP changes, the Childcare Application provides a useful insight as to how the criteria in section 243(1)(b) are expected to be applied.

Pay / conditions in relevant sector

In the Childcare Application, the FWC considered that the meaning of ‘prevailing pay and conditions within the relevant industry or section’ indicated that the required assessment extended beyond the pay and conditions of the employees to whom the SBA will apply and includes an assessment of the entire relevant sector. As such, an applicant can be expected to provide evidence concerning the prevailing pay and conditions within the relevant sector.

The Childcare Application outlined the difference between the old expression, ‘the low paid’, and the new expression, ‘low rates of pay’ in the FW Act. The FWC considered that the difference in these expressions indicates that there is a distinction in the meanings intended. The expression ‘low paid’ refers to the general earnings of employees, while ‘low rates of pay’ refers to the payment for a defined period of work, or for pieceworkers, each completed task or unit of work.

It considered that ‘low rates of pay’ prima facie refers to the circumstance that employees are paid close to the relevant Award rates of pay for their classification, since this is the lowest legal rate of pay applicable to the employee. It further noted that it is likely a wage will not be considered a ‘low rate of pay’ where the award rate is relatively high.

In assessing the relevant pay and conditions in the Childcare Application, the FWC considered data about the average pay within the entire relevant sector. The FWC ascertained the average pay rates within the sector and compared this to the applicable award. Since a large proportion of the sector was paid close to, or at, the award rate, the FWC found that low rates of pay prevailed in the sector.

This indicates that in its assessment, the FWC will rely on generalised data and trends within a relevant sector regarding rates of pay as opposed to the rate of pay provided by the employer subject to the application.

As such, an employer who is contractually paying in excess of the award, or the entity operates in a manner such that the employee receives significant allowances and are therefore well above the minimum wage, may still be subject to an application.

Therefore, the FWC has indicated that, when conducting its assessment, it is not primarily concerned with pay and conditions provided by the employers subject to the application, rather it is concerned with the overall industry standard.

Common interests

The term ‘common interests’ was interpreted to have a wide application which extends to any joint, shared, related or like characteristics, qualities, undertakings or concerns as between the relevant employers in the Childcare Application decision.

Many factors may be deemed to be a common interest, however, they must be clearly discernible or recognisable in order to be ‘clearly identifiable’.

For example, in the Childcare Application, the overriding common interest was the fact that the employers all operated the same business, that being long day care businesses. The way in which an employer conducts themselves, and the type of operation of the business, therefore may be a relevant consideration in determining a common interest.

Other common interests may include the type of award and regulatory frameworks applicable to the employers, and the funding arrangements.

Since the FWC does not necessarily look towards the revenue streams or the financial performance of the bargaining entities as a common interest, smaller profiting entities can be subject to a SBA with a business who has greater profit margins.

Bargaining representatives

The third factor which the FWC will consider under section 243(1)(b) is the likely number of bargaining representatives and whether this is consistent with a manageable bargaining process.

The FWC considered that a ‘manageable’ bargaining process is one which is workable or tractable in the Childcare decision. The term ‘likely’ was interpreted to mean what is ‘probable’ to occur. This is because it is unlikely that the choice of bargaining representatives will be known at the time an SBA is made.

Relevant factors for the assessment include historical bargaining attempts, past bargaining representation at an application hearing, and similarities or diversity in views between the employers and employees regarding the prospect of multi-employer bargaining.

Any other matters

This requirement operates as a catch-all to allow the FWC to take into account any other relevant matters it deems appropriate.

In the Childcare case, a number of additional matters were taken into account.

Firstly, all the affected employers supported the application and did not raise any objections to the SBA sought.

Secondly, one of the objects to the FW Act is concerned with the promotion of gender equality. The FWC found that given that over 90% of the workforce in the early childcare education sector are female, and low rates of pay prevail in the sector, a SBA would improve the rates of pay of a female dominated workforce, thereby promoting gender equality.

The support required by the employers to engage in effective bargaining was another relevant matter.

The FWC considered that the lack of bargaining was a result of a large proportion of long day care operations being small, and thus did not have the management capacity or other resources, such as funding, to be able to engage in the bargaining process.

Since the employers required extra support in order to effectively bargain, and the FWC is empowered to assist pursuant to section 246 of the FW Act, this weighed in favour of the granting of a SBA.

What is to be expected?

Given that since July 2023 two applications have already been filed, (one of which has already been granted), it is reasonable to expect that SBAs will be utilised significantly in the future. This is a stark contrast to the previous scheme. In the 14 years the low-paid bargaining scheme was in operation, only 5 applications were made, with only one being successful.

What will be interesting is not just the number of further applications, but the extent to which the Commission exercises its powers to direct funding providers to attend bargaining meetings. In the disability and aged care sectors, many operators are often caught between the log of claims and grant funding outcomes. To ensure the outcome of the new bargaining stream delivers its stated objects, exercising this step will likely be necessary.

It is this aspect of the new bargaining stream which will be one to watch and an important lever for employers operating in sectors within the scope of the supported bargaining system to achieve reasonable outcomes whilst managing the pool of funds available to deliver the much needed services in these sectors.

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.

March 28, 2024

Back in March 2023, Australian Greens leader Adam Bandt put forward a Private Members Bill to enshrine a new Right to Disconnect as part of the National Employment Standards.

At just one and a half pages long, the Bill envisaged a blanket provision preventing employers communicating with employees outside of work hours absent an ‘availability allowance’, and subject to two narrow exceptions for emergencies or ‘genuine welfare’ matters. The Bill sank without a trace, as it should have.

Fast forward to February 2024, when the Government introduced “Right to Disconnect” provisions at the death of the major tranche of the Closing the Loopholes reforms. There had been no debate, it simply landed and was promptly passed into law, potential criminal sanctions and all (the removal of which is the subject of further amending legislation that is expected to pass shortly).

Of course, there are those who have lauded the introduction of a statutory Right to Disconnect and opined that in general terms, it won’t be a significant issue and not much will change when the new workplace right comes into effect on 26 August 2024 (or 26 August 2025 for small business employers and their employees).

But how true is that?

Certainly, the Fair Work Commission has an idea about the potential regulatory impacts as it contemplates the specific work before it – the development of a new ‘right to disconnect’ clause to be included in all modern awards by 26 August 2024.

On 12 March 2024, the President of the Commission issued a Statement noting that in the absence of information about the new Right to Disconnect provisions in the Explanatory Memorandum, the only guidance provided by the mover of the new provisions was that they are intended to “rebuild the boundary around workers’ personal time and create a safeguard for that time” and “of course, to reduce unpaid working time and wage theft”.

Rebuilding this invisible ‘boundary’ is not a minor aim but involves a re-imagining – or ‘un-bundling’ – of an array of working practices operating amidst a complex system of legislation, industrial instruments and contractual terms, bargained for and informed by a range of influences and developments, including relevantly, flexibility gains and of course, the technological advancements that have, at least in part, facilitated those gains.

Not much involved in that, surely?

The President’s Statement referred to analysis undertaken by Commission staff of existing modern award provisions that may potentially impact on the development of the new “right to disconnect” award term and accompanying written guidelines (which the Commission will also be required to produce as to its operation).

The list of modern award provisions that may impact – or be impacted by – the proposed ‘right to disconnect’ award term is interesting and expansive, reflecting the complexity of the task at hand, including:

• Overtime provisions and rest periods after overtime
• Reasonable additional hours
• Minimum payment periods
• Recall to duty provisions, including minimum payment periods
• On call
• Telephone Allowance
• Broken shifts or the requirement to work shifts continuously
• Span of hours
• Maximum daily hours
• Averaging of hours
• Changes to rosters

The analysis of these provisions reflects that things aren’t always as simple as they seem, for example:

Minimum payment periods

The RTD could impact the interpretation and application of minimum payment periods, particularly for work outside of regular hours.

Recall to duty

The right to disconnect may influence recall to duty provisions, for example by requiring guidelines and examples of when an employee can be asked to return to work, particularly outside of regular hours.

Broken shifts

The right to disconnect may impact broken shift provisions or provisions requiring work hours to be continuously, this may require consideration on when an employee is considered ‘off work’.

Span of hours

The right to disconnect could interact with existing span of hours provisions, potentially by limiting work communications to within these specified hours.

What is evident from the analysis of the potential interactions between the new right to disconnect term and existing modern award provisions is the potential for greater regulation of things that quite possibly were operating as intended and were not in need of further regulation.

As is apparent from the initial analysis set out in the President’s Statement, the devil will be in the detail in terms of what the right ultimately entails – a task that has been delegated to the Fair Work Commission to fill in the details within the space of six months, along with all the other activities that the Commission is also required to undertake during that same period (Modern Award Review 2023/24 and a similar variation of modern awards to include a new delegates rights clause too!).

It seems, there is no right to disconnect, insofar as the Fair Work Commission is concerned.

Moreover, the Commission is provided with jurisdiction to make orders (either for employees to stop refusing contact or for employers to be prevented from either requiring contact by the employee or from taking action against an employee who has refused contact).

Despite the existing protections in the Fair Work Act 2009 (Cth) relating to reasonable additional hours (and the circumstances in which an employee may refuse to work unreasonable additional hours), the inclusion of a statutory Right to Disconnect suggests that employers and workers cannot be trusted to work out an appropriate way to structure their working relationships and arrangements. So, they will now become heavily regulated instead.

The President of the Fair Work Commission’s Statement of 12 March 2024 can be accessed here.

Note: The final timetable for the variation of modern awards to include a “right to disconnect” term was published by the Fair Work Commission in a further Statement dated 26 March 2024. The draft award terms will be published by the Fair Work Commission for comment by 15 July 2024.

March 20, 2024

Direct care workers in the aged care industry have scored wage increases of up to 28.5% after the Fair Work Commission (Commission) handed down its final decision in the three stage Aged Care Industry Work Value Case.

The Aged Care Work Value Case arose from applications to vary the Social, Community, Home Care and Disability Services Industry Award, the Nurses Award, and the Aged Care Award (together, the Awards) with the intention of securing wage increases to rectify the historical undervaluation of aged care work.

The Stage 1 and 2 decisions of the proceedings implemented an interim wage increase of 15% for direct care workers (such as personal care workers, assistants in nursing and home care workers), having regard to findings concerning changes in the work of direct care employees in aged care represent a fundamental change in the work value.

The Stage 3 decision focused on whether any further wage adjustments are justified on work value grounds for direct care employees.

Ultimately, the Commission decided that there were “work value reasons’ for the minimum award rates of pay for such employees to be increased substantially beyond the 15 per cent interim increase determined in the Stage 1 decision.” These reasons included the fact that award rates of pay for personal care workers, home care workers and assistants in nursing had never been the subject of a work value assessment and thus, “invisible skills”  (such as interpersonal and contextual awareness, verbal and non-verbal communication, and emotion management) of associated with that work had not been taken into account in setting rates of pay, the historic gender based undervaluation of nursing work and the impact of the COVID-19 pandemic (and associated increased implementation of infection control and prevention measures in aged care workplaces), staff shortages and work intensification.

In short, the decision establishes a new classification structure under the Awards for personal care workers, nurses and home care workers and associated wage increases ranging from 13.3% (for employees currently classified as Level 5 Home Care Workers under the Social, Community, Home Care and Disability Services Industry Award) to 28.5% (for employees currently classified as Level 5 personal care workers under the Aged Care Award). The increases are inclusive of the 15% interim increase.

Without diminishing the value of “indirect care” employees, such as general, administrative and food service workers, the Commission noted that such workers do not perform work of equivalent value to direct care workers justifying equal rates of pay, and accordingly, concluded that rates of pay for indirect care workers under the Aged Care Award should be increased by 3%.

The operative date for these changes has not yet been decided, with the Commission setting out a timetable for determining these matters.

A summary of the decision can be found here.

February 22, 2024

The Fair Work Legislation Amendment (Closing Loopholes No.2) Bill 2023 was passed by Parliament on 12 February 2024, ushering in a raft of changes that will impact employers across the board.

While Kingston Reid will shortly publish a broader insight regarding the changes, one particularly topical inclusion is a new ‘right to disconnect’, instigated by the Greens. This follows in some European countries’ footsteps, giving employees the right to ignore phone calls and emails from their employer (and third parties such as suppliers and customers) after work hours without being penalised, provided this refusal is reasonable.

However, one change under the new laws that will be unwound before ever taking effect is the prospect of criminal penalties for employers breaching Fair Work Commission (FWC) “stop” orders relating to the right to disconnect – a mistake in the bill that the Government has since (on 15 February 2024) introduced a further amending bill to address, even before the substantive reforms come into effect.

In this insight, we take you through what you need to know about the new right to disconnect.

For Kingston Reid’s comprehensive coverage of the Closing Loopholes reforms, visit the Workplace Law Reform: “Closing Loopholes” section of our website, here.

A new right to disconnect

The new “right to disconnect” laws – which have, understandably, attracted enormous commentary and criticism, were a last minute inclusion resulting from lobbying by the Greens.

These changes come into effect 6 months after Royal Assent (or for small businesses, 12 months after that). At the date of publication, the Act has not yet received Royal Assent.

There are several components for employers to understand about the new right:

• the right – employees will now have a positive right to refuse to monitor, read or respond to contact (or attempted contact) from their employer or third party, where the contact relates to work and which is outside their working hours, unless this is unreasonable;
  When determining whether a refusal is unreasonable, the reasons for the contact, how it is made and level of disruption caused to the employee, the extent to which the employee is compensated for being available or working additional hours, the nature of the employee’s role and level of responsibility and the employee’s personal circumstances must all be taken into account;

• FWC powers – the FWC is empowered to deal with disputes about the right to disconnect, including making determinations about whether an employee’s refusal is unreasonable. This dispute resolution power includes a capacity for the FWC to make “stop orders”;
  Depending on the issues in play, these may prevent an employee from unreasonably refusing contact, an employer from making contact or requiring an employee to respond, or an employer from imposing disciplinary action as a result of refusing contact;Before going to the FWC, the parties to the dispute must attempt to resolve the matter at the workplace level. Once a dispute is referred to the FWC, the FWC must start dealing with it in 14 days;

• Awards and guidelines – the FWC is required to ensure that modern awards include a term providing for the exercise of an employee’s right to disconnect, and also to make written guidelines in relation to the right to disconnect laws;
• Exceptions – there are various but narrow exceptions to these laws, predominantly relating to defence, national security and covert or international operations of the Australian Federal Police. It is notable that there are no more general exceptions (including for high paid employees) or capacity for exceptions to be made by regulation.

What is the impact of the new right to disconnect?

These are far-reaching reforms, with lots to unpack.

At the forefront is the fact that the refusal of an employee will, where not “unreasonable”, be the exercise of a workplace right for the purposes of the existing general protections framework.

Employers will need to tread very carefully when taking management or disciplinary action against employees for performance or conduct issues which may be connected with the exercise of such a right. For example, when making promotion decisions, it will be important that an employee is not treated unfavourably because they had refused to monitor or respond to emails outside their working hours.

Of course, this type of issue can arise in various ways, and we should expect to see this becoming a common component of general protections complaints.

Equally, employers will need to keep careful watch of how these provisions are interpreted and applied by the courts (and the FWC). For example:

• what is an employee’s “working hours” – an expression not frequently used in the Act?
• to what extent will out of hours contact be regarded as inherently reasonable for highly paid or senior employees, or employees in particular sectors?
• how will the “reason for the attempted contact” be factored into the reasonableness of refusal, if the employee’s refusal of the contact means they never knew of the reason?
• what other factors will be regarded as of key importance?

To be sure, this will be a space to watch.

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.

February 7, 2024

Loss in productivity identified as reasonable business ground in employer’s decision to refuse a work from home request

The holiday break is a good time to reset and spend quality time with your nearest and dearest.  The perfect opportunity to make new memories with old friends and family.  It’s a time for awkward Santa photos, bowling slow balls for Nan in backyard cricket and carols led by Mariah Carey.  With this in mind, you would be forgiven for missing an interesting decision by the Fair Work Commission (FWC) in Gregory v Maxxia Pty Ltd [2023] FWC 2768 involving an employer’s decision to refuse a request for an employee to work from home.

Let us catch you up.

Background

The Employer provides salary packaging advice and assistance to employers.  The Employee was employed by the Employer as a Business Development Manager.  His employment contract required his attendance at the Employer’s premises, but he was permitted by the Employer to work from home during the COVID-19 pandemic.

In August 2023, the Employee applied for a flexible working arrangement (FWA) where he sought to work 100% of his working hours remotely.  The reasons for the application included the Employee’s parental responsibilities and his “inflammatory bowel disease” (which was supported by a letter from his doctor).  In response to the request, the Employer proposed that the Employee work 20% in the office until the end of September 2023.  The Employer suggested that the Employee then work 40% of his time in the office after September 2023 and offered him the ability to allocate his office days each week to accommodate the days he would have custody of his child, but the Employee rejected this proposed arrangement.

The Employee filed an application for the FWC to deal with a dispute pursuant to section 65B of the Fair Work Act 2009 (Cth) (Application) in respect of the request for a FWA in September 2023.

 The Decision

The Employer submitted that the decision to reject the request was on the basis of multiple factors, including for example:

• client expectations of service delivery and productivity;
• the Employee’s daily productivity at the time of the request was 50%, which was significantly below the requisite 80% target;
• it would be beneficial to observe and support the Employee in the office;
• the Employee’s tenure with the Employer was valuable and contributed to team culture, training and discussions for the benefit of his colleagues;
• fairness and consistency across the team in respect of remote work.

In considering the Employee’s reasons for requesting the FWA, the FWC determined that his medical condition was not covered as a “disability” for the purposes of s 65(1A)(c) of the FW Act. As a result, the FWC did not have jurisdiction to deal with the Employee’s Application on the basis of this ground.   However, the FWC confirmed that it did have jurisdiction to consider the Application on the basis of the Employee’s family responsibilities.

The FWC identified that, while the Employee had a reasonable basis for proposing the FWA for the week that he would have care of his child.  However, the FWC noted that the Employee was not the primary carer in the second week and that the Employer had made a genuine attempt to compromise with the Employee.  As a result, the FWC held that the Employer had reasonable grounds in refusing the Employee’s FWA request for 100% remote work.

 Takeaways

In making findings that the Employer had reasonable grounds for rejecting the FWA request Commissioner Platt held the following:

“I accept that it is desirable for there to be face to face contact within workforce team. I accept that a face to face presence would allow for observation, interaction and (if necessary) coaching to improve Mr Gregory’s productivity and provide him with greater support. I accept that Mr Gregory’s knowledge and experience could be more easily accessed by less experienced team members on a face to face basis.”

While each request for a FWA will turn on its distinct facts, it is apparent from the above that productivity and cultural factors may be sufficient to demonstrate reasonable grounds for refusing a request to work remotely.

The FW Act was amended in June 2023 to provide employees with further support in relation to requests for flexible working arrangements.  These amendments have resulted in further obligations on employers to undertake additional steps before making the decision to refuse a FWA (for example, before refusing the request, employers must meet with employees to discuss and consider alternative working arrangements with them).  As a result, it is important for employers to consider these obligations in relation to flexible work requests and carefully consider the reasons it provides for refusing a request.

If you require assistance in respect of any of the recent changes to the FW Act or flexible work arrangements, please let us know.

Around eight months have passed since the introduction of the intractable bargaining provisions into the Fair Work Act 2009 (Cth). These provisions create a process for the Fair Work Commission (FWC) to arbitrate enterprise bargaining disputes, and to facilitate the making of enterprise agreements, in circumstances where bargaining has become ‘intractable’ (the trusty Macquarie Dictionary says this means: “hard to deal with”).

So how did we get here? Where to from here? And what does this all mean?

How did we get here?

On 6 June 2023, the intractable bargaining provisions replaced the old schemes of issuing ‘serious breach declarations’ and ‘bargaining related workplace determinations’.

Under the old schemes, the FWC could make ‘serious breach declarations’ (i.e. where there were serious and sustained contraventions of a good faith bargaining order that significantly undermined the bargaining process), which then gave the FWC scope to make ‘bargaining related workplace determinations’ if negotiations remained unfruitful.

The language in the old schemes (think “serious and sustained”, “significantly undermined”, “exhausted all other reasonable alternatives to reach agreement” and “agreement… will not be reached”) created a high bar for applicants to meet in order to satisfy the FWC that a ‘serious breach declaration’ should be made.

The upshot is that the old schemes were not used and the FWC was never called on to make a ‘serious breach declaration’.

However, under the current intractable bargaining scheme, the new standard of ‘reasonableness’ significantly lowers the bar for employees, unions and employers to request the FWC’s intervention in making bargaining determinations.

The current law

The current intractable bargaining scheme is similar to its predecessor in that a ‘declaration’ comes first.

The FWC may grant an ‘intractable bargaining declaration’ in relation to a single or multi-enterprise agreement (excluding greenfield agreements), which then allows it to arbitrate a bargaining dispute, with the arbitrated outcome being an ‘intractable bargaining workplace determination’.

The FWC may grant an ‘intractable bargaining declaration’ if:

• an application has been made (noting that an application cannot be made until the later of 9 months after the nominal expiry date of a previous enterprise agreement or after 9 months of bargaining has elapsed);
• the FWC has dealt with the dispute under section 240 of the FW Act and the applicant participated in the process – section 240 allows the FWC to “deal with” a bargaining dispute upon application by a bargaining representative through mediation, conciliation, the making or recommendations or opinions, or arbitration (if consent to do so is provided);
• there are no reasonable prosects of the relevant enterprise agreement being reached if the FWC does not make a declaration; and
• it is reasonable to make the declaration, taking into account the views of all parties.

Notably, since the introduction of the intractable bargaining provisions in June 2023, it has been largely employers (not employees and unions) that have applied for ‘intractable bargaining declaration’.

Presumably, these employers found negotiations with union to be ‘intractable’ and then sought the FWC’s assistance in arbitrating a deal with more restrained wage and condition improvements (given the FWC must take into account the interests of all parties and the terms of an applicable enterprise agreement when making a determination).

It appears that the Greens and the Labour government have caught wind of this.

Further proposed changes – ‘no lose deals’ for Unions and employees 

Part 2 of the Closing Loopholes bill could be passed any day now.

The federal Government has signalled that it intends to accept an amendment proposed by the Greens to the intractable bargaining provisions, which provide that if an ‘intractable bargaining declaration’ is made, then any ‘intractable bargaining workplace determination’ made by the FWC cannot result in any term in the determination being ‘less favourable’ for an employee or any union than the terms of an applicable enterprise agreement.

Effectively, the proposed changes mean that once the FWC is arbitrating an intractable bargaining dispute, employees and unions cannot lose – they get to keep everything they currently have, and the FWC can only make a determination that improves upon those conditions.

The Coalition highlighted their concerns in a dissenting report included within the Senate Education and Employment Legislation Committee’s report following its inquiry in respect of the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 (published on 1 February 2024, reiterating the Victorian Labor Treasurer’s comments that the:

“… no less favourable test… removes the incentive for unions to reach an agreement as they know that they will be no worse off on a clause by clause basis as against a current enterprise agreement. The amendment also seems at odds with how bargaining works – that is, that it’s a package and during the course of bargaining trades offs are considered and made”.  

If introduced, the ‘no less favourable’ test returns us to a version of centralised wage fixing – akin to that of the 1980s and prior, where the Australian Industrial Relations Commission (the predecessor to the current FWC) had the power to arbitrate disputes which were notified by a union and as history showed, largely only resulted in improved conditions for employees and unions.

In the meantime, the FWC continues to grapple with the new intractable bargaining scheme introduced in 2023. Just this week, a Full Bench of the FWC held in United Firefighters Union of Australia v Fire Rescue Victoria (trading as FRV) [2024] FWCFB 43 that ‘agreed’ terms are those where there is a meeting of the minds or consensus, and terms that were acceded to during bargaining, but subject to a conditional reservation (i.e. approvals etc), are not ‘agreed’ terms, and parties should be able to resile from terms that were not definitely ‘agreed’.

Perhaps the only deviation from returning to 1980s industrial relations is that the crippling industry wide stoppages that were a feature of that period are unlikely to occur with these changes – because why would a union seek to take industrial action at all given the way the deck has now been stacked in their favour? They don’t need to convince their members of the virtues of taking industrial action to further their bargaining interests, and the corresponding loss of pay that results from taking protected industrial action during bargaining. Instead, they can look to the FWC and realise all of the gain, with none of the pain.

Quick takeaways

• Easier access to arbitrated bargaining outcomes means that employers need to revise their approach to bargaining and the traditional strategies that they may have used (where the threat of an arbitrated outcome was never very likely). This requires a renewed consideration of things like an employer’s internal communication strategy with employees, the timing around which an organisation will commence bargaining, and when to use the FWC’s s.240 bargaining dispute provisions.
• That said, applying for an intractable bargaining declaration does not automatically result in arbitration before the FWC. Instead, it could put pressure on the parties to come to the table and negotiate a deal. This was the case when Virgin Australia Airlines Pty Ltd made an application. The Australian Licenced Aircraft Engineers Association filed a statement that said “one matter remains unresolved” in bargaining (maximum redundancy payments). This prompted Virgin to put a revised agreement to the vote (presumably with the redundancy issue resolved) and they withdrew their application.

For further Kingston Reid commentary in relation to the making of the first intractable bargaining declaration under the current intractable bargaining scheme, please click here.

Some years ago, I had an experience during a conciliation at the Fair Work Commission (FWC) that left a bad taste in my mouth.

I was representing an employer in a conciliation, and the applicant was being represented by a paid agent. The conduct of the paid agent was so concerning that both my instructor and I spent most of the conciliation perplexed.

It was clear the applicant had no idea about the process they were involved in and had a severe misunderstanding of the legal principles at play. It was also very clear that the applicant was being pressured by their paid agent to accept a settlement, to ensure the agent would be able to collect their fee under the “No Win No Pay” scheme the applicant had agreed to. The agent also asked for the funds from the settlement to be paid into the agent’s bank account, and not the applicant.

“And there’s nothing we can do to stop what’s happening?” my instructor asked incredulously.

“No” I said, explaining the lack of regulation in this space.

The matter ultimately resolved, but it was concerning for both me and my instructor. In my experience, while employers are usually keen to resolve matters, they are less keen when it is blatantly obvious that a paid agent is not acting in the best interests of who they represent. We like to know that we are operating in a system that offers a fair process for all, regardless of size and bank balance.

Thankfully, I am not the only one with concerns about the misleading and unethical conduct by some paid agents and the FWC is finally responding in an attempt to address the issue.

Representation in the FWC

The FWC is designed to be easily accessible and informal, meaning individuals and businesses can represent themselves if they want. However, it is not uncommon for people involved in matters before the FWC to be represented by a union or employer association, or by a lawyer or paid agent subject to permission requirements in the Fair Work Act 2009 being met.

On one hand, lawyers are required to be admitted to the legal profession and are subject to regulation of qualifications, conduct, ethics and financial dealings as well as ongoing mandatory continuing professional development.

But paid agents are non-lawyers who charge a fee for their services of representing an individual in the FWC and do not have any qualification requirements, nor are they subject to any professional scheme that regulates their conduct, ethics, financial dealings or professional development.

The issue

If you do a quick Google search, you will find several sophisticated-looking businesses offering services as paid agents to disgruntled and former employees. These businesses usually offer free initial consults and services on a “No Win No Fee” basis and make lofty claims about their track records in the FWC. It is not hard to see why someone who may be vulnerable would sign up.

However, the reality is that lawyers and paid agents are vastly different when it comes to how they can be held professionally responsible and accountable for their conduct, thus setting the stage for a greater likelihood that the applicant who uses a paid agent will be taken advantage of. While not all paid agents would seek to do this, there is worrying evidence that suggests this is a widespread issue.

FWC takes notice

There are a growing number of cases where the FWC has found that paid agents have:

• demonstrated a lack of care and attention and the necessary expertise;
• acted contrary to the client’s instructions;
• engaged in misleading and deceptive conduct; or
• not acted in the best interests of who they represent.

Most recently, on 24 January 2024, President Hatcher delivered a scathing assessment of a paid agent company called Employee Dismissals. In his recommendation in Samuel Howell v Elite Elevators Corporation Pty Ltd [2024] FWC 206 (Howell v Elite Elevators), President Hatcher did not hold back in his damning description of Employee Dismissals’ conduct while representing Mr Howell, which included:

• providing incorrect and misleading information to Mr Howell about the FWC’s role and powers and the applicable process;
• the complex terms and conditions contained in the engagement agreement Mr Howell signed, particularly as they relate to the No Win No Fee arrangement;
• the false claims Employee Dismissals made about their ‘win rate’ of having dismissals “reversed”; and
• the way in which, post conciliation, Employee Dismissal directed Elite Elevators to make the settlement payment directly to them, and not Mr Howell, without him agreeing to this as part of the settlement or discussing this with him.

President Hatcher then went on to identify 30 other cases since 2020 in which the conduct of Employee Dismissals’ agents had been “problematic”, and concluded his recommendation by saying that:

“… on the basis of the above facts, my opinion is that. . . Employee Dismissals has engaged in misleading and unethical conduct in connection with its representation of Mr Howell as paid agent in this matter and has not acted in his best interests”.

A welcome announcement

In very welcome news (and no doubt as a direct and immediate response to the conclusion President Hatcher reached in Howell v Elite Elevators), the FWC announced on 30 January 2024 that it will establish a Paid Agents Working Group to look at this very issue.

President Hatcher will lead the Working Group, which also includes senior Commission Members and senior FWC staff.

Key Takeaways

Following President Hatcher’s recommendation in Howell v Elite Elevators, the stated purpose of the Working Group is to identify and guide the implementation of measures with the aim of ensuring that all paid agents appearing before the FWC:

• conduct themselves in an ethical and honest manner;
• act in the best interests of the parties they represent; and
• generally operate in accordance with standards that are broadly consistent with what would be expected of a lawyer in the same circumstances.

The Working Group will not look at any one matter in isolation and have indicated that they will consult with regular representatives involved in individual dispute matters before the FWC, as well as with law societies, peak bodies, and other interested parties.

The FWC has not provided any indication of what measures it is looking at or how long the process will take. At a minimum, the FWC should implement guidelines or require paid agents to adhere to protocols or undertakings as a condition of representation.

Whatever the outcome, I am not alone in welcoming President Hatcher’s formation of the Working Group as a step in the right direction and one which validates the concerns and frustrations that I and many of my colleagues and clients regularly express following interactions with paid agents.

It is comforting to know that the IR system within which we operate will not allow for vulnerable people to be taken advantage of, addresses unconscionable conduct, and holds people to account.

Since our last edition of Kingston Reidable in November 2023, several significant legal developments have taken place (even during the traditionally quiet new year period in January!).

Here we outline two key developments to keep a watch on over the coming weeks as we head into another year of significant workplace reforms.

Closing Loopholes (Part 2)

Unless you’ve been on a solo pilgrimage in some far-flung region of the world for the last few months (and if so, lucky you!), you will be well aware that Government introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 in September 2023, which included a raft of proposed changes to the Fair Work Act 2009 (Cth) (FW Act), intended to implement the majority of the Government’s remaining election commitments, together with the outcomes of the Jobs and Skills Summit held in September 2022.

After several months of intense debate over some of the Bill’s more contentious proposals, the Government split the Bill on 7 December 2023 and passed the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (CL Act), which included significant labour hire reforms, expanded union delegate rights and the introduction of a federal wage (and superannuation) theft offence, amongst others (check out our previous commentary here).

As we’ve indicated in our previous coverage of the CL Act, the first few months of 2024 will continue to present as a period for further change, as those aspects of the Bill which were not passed in December 2023 come back up for debate and resolution in Parliament, including:

• changes to the existing definition of casual employment(as well as the casual conversion provisions to allow for employee-initiated conversion);
• introducing a new ‘ordinary’ meaning of ‘employee’ and ‘employer’ (to return to the ‘multi-factorial test’ and overcome the effect of two decisions of the High Court from 2022[1], in which the High Court held that where a comprehensive written contract exists, the characterisation of the relationship between the parties should be determined by reference to the terms of the contract);
• increased protections for ‘employee like’ workers – including, for example, the setting of minimum standards for ‘employee-like workers’, such as workers in the gig economy and road transport industry, where those workers have lower bargaining power;
• changes to the defence to ‘sham contracting’ (misrepresenting an employment relationship as one of independent contracting) from a test of recklessness to reasonableness (liability will not arise if at the time of the misrepresentation, the employer reasonably believed the contract of employment was instead one for services);
• amended right of entry provisions to allow registered organisations to obtain an exemption certificate from the FWC to investigate underpayment of wages or other monetary entitlements;
• changes to bargaining and the multi-employer bargaining framework, including changes to to intractable bargaining workplace determinations;
• expansion of new workplace delegates rights to regulated workers; and
• increases to the maximum civil penalties that can be ordered for standard (and serious contraventions) of the civil remedy provisions in the FW Act,

 amongst others.

Just last week, the Senate Committee inquiring into the Bill tabled its report, which (given the splitting of the Bill), was confined to those proposals not passed as part of the CL Act in December 2023. The Committee received 178 submissions and conducted 7 public hearings, at which just shy of 200 witnesses gave evidence as part of the inquiry. Subject to some amendments, the Committee has recommended that the Bill be passed.

A “right to disconnect”?

In addition, the Government has signalled its intention to consider including provisions creating a ‘right to disconnect’, in order to secure Greens’ support for the Bill. It is presently unclear whether these anticipated provisions will appear in a similar form to the Fair Work Amendment (Right to Disconnect) Bill 2023 (Cth) tabled by the Greens back in March 2023.

In relation to the proposed ‘right to disconnect’, it’s also worth noting that this is also being considered by the Fair Work Commission as part of its 2023/24 Modern Award Review, currently underway.

At the request by Minister Burke (Minister for Employment and Workplace Relations) in September 2023, the FWC is presently reviewing modern awards in relation to four key areas, including awards that cover workers in the arts and culture sector, job security, work and care and also, making awards easier to use.

In the “work and care” stream of this review, a discussion paper prepared by FWC staff and released last week on 29 January 2024 considers the right to disconnect in the context of modern award terms, inviting comment on the question as to whether there are any changes (to modern awards) needed in respect of a right to disconnect, which are necessary to ensure modern awards continue to meet the modern awards objective. Submissions are due by 11 March 2024.

Stay tuned for our further commentary on the passage of the Bill (and the various reforms contained within it) over the coming weeks.

Costs in Anti-Discrimination matters

In November 2023, the Australian Human Rights Commission (Costs Protection) Bill 2023 (the Bill) was introduced into federal Parliament.

One might be tempted to think that a proposed law related only to legal costs is not much of an issue and really only important to lawyers. But think again. The way that legal costs can (or cannot) be awarded in matters – particularly those involving employees – is a very important issue which drives behaviour and indeed the level and type of claims made.

Prior to the Bill, the position was that discrimination claims (including sexual harassment claims brought under the Sex Discrimination Act) were subject to the usual orders as to legal costs. That is, if you win you get your costs paid, if you lose you pay the other side’s costs. This is very different to claims brought under the FW Act including claims in respect of the expanded sexual harassment provisions introduced last year, which are (except in very limited circumstances) free from costs orders. That is, everyone needs to pay their own costs, regardless of outcome.

One of the recommendations of the Respect@Work Report was that discrimination matters which go to the Court following the Australian Human Rights Commission (AHRC) process should have the same costs regime as the FW Act – that is, everyone pays their own way. This recommendation was based on a conclusion that the threat of paying the prohibitive costs of the other side stopped employees from bringing discrimination claims in the Court. This would make these claims consistent with treatment of general protections and sexual harassment claims that arise from the Fair Work Act.

Instead of adopting this recommendation, the Government has instead taken a different approach, proposing through the Bill to implement what they have called an “equal access” costs approach, meaning that while employees can apply to have their costs paid by the employer if they win, an employee will never be required to pay the costs of the employer if they lose.

While this may be called an “equal access” approach, the impact is anything but equal.

There are a number of potential impacts of this proposed change, including that it is unfair for employers which are not well resourced, it encourages unmeritorious claims and significantly impacts settlement discussions.

What does this mean for employers?

If the Bill passes, the impact of this change will, in our view, be twofold:

• it’s going to encourage claims which otherwise would not have been made; and
• secondly, it also will dramatically impact early settlement discussions as the employer will know that even if the case against them has no merit at all, there is a commercial benefit in financial settlement.

Traditionally, fewer cases have been brought by employees through the AHRC, as opposed to the State Tribunals and the Fair Work Commission. This Bill – if passed – looks likely to change that statistic.

Note: The Australian Human Rights Commission Amendment (Costs Protection) Bill 2023 (Cth) was referred to the Senate Legal and Constitutional Affairs Legislation Committee on 30 November 2023. The Senate Committee’s report is due on 9 February 2024.

[1] CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2

Are you complying with your Work Health and Safety duties?

There has been a growing trend of enforcement activity within the workplace health and safety (WHS) space across Australia in recent years.

According to data collected by SafeWork Australia, 2022 saw a total of 279 successful WHS prosecutions with aggregate fines totalling over $31M and an average fine of $116,840.

Amongst these 279 prosecutions:

• Victoria had 118 successful prosecutions with an average fine of $49,700;
• New South Wales had 58 successful prosecutions with an average fine of $235,700;
• Queensland had 58 successful prosecutions with an average fine of $56,020;
• Western Australia had 22 successful prosecutions with an average fine of $246,140;
• South Australia had 17 successful prosecutions with an average fine of $161,090; and
• Tasmania had 6 successful prosecutions with an average fine of $116,060.

These numbers have increased in 2023, notably across Victoria and New South Wales. Victoria saw a total of 153 successful WHS prosecutions with fines totalling just over $16M.

Further, New South Wales saw a total of 75 successful prosecutions with aggregate fines totalling $16.3M.

Both jurisdictions had a number of matters that were yet to be completed (as at the end of 2023).

WHS regulators are clearly increasing their enforcement activities and 2024 will see even higher rates of successful WHS prosecutions and larger fines imposed, based on the level of activity we are seeing.

It is also important to note the Work Health and Safety Amendment Act 2023 (NSW) that commenced in October 2023 saw a significant increase to maximum penalties across a range of offences under the Work Health and Safety Act 2011 in New South Wales, which suggests the average fine is likely to increase.

Further to this, while the average fine in Victoria is notably lower than that of other states, a current review of Victorian WHS legislation is being undertaken which looks to increase maximum penalties for WHS offences in Victoria.

Readers will also be aware of the Industrial Manslaughter provisions which have been enacted in nearly all jurisdictions.

This increased enforcement activity can be linked to the Australian Work Health and Safety Strategy 2023-2033 published by SafeWork Australia. This strategy represents a national vision for WHS, agreed to by the various state WHS regulators, which outlines targets that aim to achieve national WHS improvements and a goal of reduced worker fatalities, injuries and illnesses. One of the actions focuses on compliance and enforcement across WHS legislation and Regulations.

What does this mean for duty holders?

Duty holders must continue to be vigilant in ensuring that they are taking reasonably practicable steps to comply with their WHS responsibilities. They must be aware of the hazards and risks present at their workplace and the appropriate control measures to eliminate or reduce them. These control measures must ensure, so far as is reasonably practicable, the health and safety of their workers and other persons as to not expose them to a risk of death, serious injury or illness.

The duties extend to Officers of PCBU’s (Persons Conducting a Business or Undertaking) who must exercise due diligence to ensure that the PCBU has the appropriate systems and processes to comply with its safety duties.

Common risks that WHS Regulators are targeting include:

• Psychosocial risks;
• Vulnerable workers;
• Falls from height;
• Falling loads or objects;
• Working around moving plant;
• Appropriate plant use and adequate machine guarding; and
• Working on or near live electricity.

Enforcement alternatives

If a duty holder finds themselves faced with an alleged WHS contravention, there are other enforcement options available, such as Enforceable Undertakings (EUs). EUs provide an opportunity for a duty holder to engage with the state safety regulator in developing an agreed proposal to address the relevant breaches and implement significant work health and safety reform at their workplace to prevent future contraventions.

While an EU is a great enforcement alternative, they are becoming increasingly difficult to get. While they are difficult to get, they are not impossible, seen by the recent EU proposal by Fortescue Limited that was accepted by WorkSafe Western Australia in December 2023, the first of its kind under the recent WA harmonised style laws.

Given the current level of enforcement and compliance activity, we strongly urge businesses and their leadership teams to review their systems and processes and satisfy themselves that they are being effectively implemented in the workplace.

If you have any questions, please do not hesitate to give our WHS team a call to discuss.