Insights & News

April 18, 2024

In late 2023, the Federal Parliament passed the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) which, amongst other things, will criminalise wage theft when the relevant provisions commence in early 2025. Whilst non-payment of superannuation was initially excluded from the new wage theft provisions, a last minute deal with the Greens secured amendments to extend the new offence to unpaid superannuation.

As a result, superannuation entitlements for the vast majority of national system employees will have an additional layer of protection afforded to them by the new criminal offence. However, some narrow exceptions mean that a failure to pay certain amounts, in respect of certain employees, will not attract the criminal penalty in relation to superannuation.

Under the new wage theft offence, an employer commits the offence if:

• they are required to pay an amount to an employee – a required amount;
• the amount is not a required amount that is covered by an exception; and
• the employer engages in conduct which results in a failure to pay the required amount to the employee in full and on time.

Put simply, there are some required amounts that have been carved out of scope for particular employees and employers, including “…those who are covered by the FW Act only due to the States’ referral of powers to the Commonwealth”. For those, and as the Explanatory Memorandum describes it,[1] the provision ‘disapplies’ the wage theft offence in relation to certain specified entitlements. This includes superannuation contributions, long service leave payments and certain other payments in respect of specific leave – including but not limited to jury duty or emergency services leave.

Given the pace at which the Closing Loopholes reforms were passed, it is unsurprising that there is inconsistency in the publicly available commentary regarding the application of the new wage theft offence (some of which are unclear or even contain ‘blanket’ statements that superannuation payments fall outside of its operation).

However, for the vast majority of Australian employers and employees – superannuation contributions – (and other required amounts) are squarely within scope of the criminal wage theft offence.

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

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

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

[1] Paragraph 988 of the Revised Explanatory Memorandum to the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Cth).

April 17, 2024

We are now starting to see a flow of substantive decisions considering the operation of the intractable bargaining framework.

These new provisions represent one of the most fundamental shifts to the industrial relations landscape in decades, as there is now a realistic alternative to impasse or agreement – with a readily accessible pathway for the Fair Work Commission to determine bargaining outcomes. The Commission’s approach to its new powers is important for all employers who engage in enterprise bargaining to be across.

Special Counsel Brad Popple, Senior Associate Emily Strachan and Associate Marcus Topp consider these early developments and offer their predictions as to how they are likely to impact employers moving forward.

Intractable bargaining workplace determination provisions

The new intractable bargaining framework allows the Fair Work Commission to make an intractable bargaining declaration, in effect bringing bargaining to an end and setting the stage for the Commission to arbitrate bargaining outcomes, where it is satisfied that:

• it has dealt with the dispute through the existing bargaining dispute resolution processes under s.240 of the Fair Work Act 2009 (Cth) (the Act);
• that there is nevertheless no reasonable prospect of the parties reaching an agreement; and
• it is reasonable in all the circumstances to make the declaration.

Having done so, the Commission must substantively resolve bargaining by making an intractable bargaining workplace determination ‘as quickly as possible’ – although some post-declaration negotiating period can be afforded to the parties.

The “post negotiating period” assumes some significance, given that the workplace determination ultimately made by the Commission must include any “agreed terms” between the bargaining representatives as defined in section 274(3) of the Act.

Moreover, following the passage of the second tranche of “Closing Loopholes” reforms, an intractable bargaining workplace determination cannot include any term which is less favourable to any employee (or employee organisation) than a term of the existing enterprise agreement dealing with the same matter.

Early indications as to the Commission’s approach

There are some important questions of strategic significance in this framework, which the Commission is starting to grapple with.

1. When is bargaining “intractable”, and does this necessitate industrial action?

Again, the absence of any reasonable prospect of agreement being reached requires an evaluative assessment of all of the relevant facts leading to a rational improbability of agreement. These matters might, for example, include the duration of bargaining and number of meetings, the extent of any progress made, previous unsuccessful votes, and evidence by the parties as to their preparedness to make concessions.

As to the last of these matters, the Commission (at least to an extent) accepted that for bargaining to be intractable, it takes two to tango.

In Ventia[1], the Commission considered that an indication made by the union (which was resisting a declaration) that it may moderate its position on an important issue was relevant – even where this was only communicated in closing submissions at the hearing of the application.

In the same case, the Commission also considered it relevant that the union had not fully flexed the muscle of industrial action, with employees having engaged in only moderate forms. This was said to support the view that bargaining could not yet be regarded as intractable.

That said, a Full Bench in an application for declarations involving Cleanaway Operations Pty Ltd (Cleanaway) was prepared to conclude that bargaining was intractable, despite only 2 days of industrial action having been taken by employees[2]. The union there submitted that absent a declaration, there would be no alternative to further action.

In practical terms, employers are unlikely to defend an application for a declaration on the basis that further industrial action may test its resolve. Accordingly, it may be that this is a point only taken by union applicants, such that a de-facto requirement for substantive industrial action to have occurred exists only when declarations are sought by an employer.

Finally, the making of a declaration is subject to a statutory requirement that the Commission has dealt with “the dispute” (that is, the substantive issues at play in bargaining) through its dispute resolution powers. However, the Full Bench in Cleanaway was clear that this process need not have reached its conclusion (meaning that an ongoing s.240 process does not offer lasting protection against the making of a declaration).

2. When is a term agreed? And can terms be “un-agreed”?

The Act provides that an “agreed term” is one that the bargaining representatives agreed should be included in the agreement at any of 3 points in time:

1. when the application for the declaration is filed;
2. when the declaration is made; and
3. at the end of any post-declaration negotiating period.

When will such an agreement have been reached?

This is of course a fact-dependent inquiry, noting that bargaining participants will commonly indicate or agree that an individual “line-item” is resolved, whilst also acknowledging that bargaining is ultimately concerned with an interdependent package of terms such nothing is truly agreed until everything is agreed.

While the case involved the unique circumstance associated with public sector wage policy, the Full Bench in an application by the United Firefighters Union (UFU) acknowledged this industrial reality (along with the challenges in ascertaining the extent of “agreed terms” in the intractable bargaining framework)[3].

It stated that:

• “agreement” in this context is a looser concept than contractual commitments, and is akin to the notions of “arrangements or understandings” well known in competition law, and that as a consequence, parties are free to resile from these types of consensual dealings;
• it is “self-evident in industrial bargaining” that parties make concessions through “give and take” before a final package is approved, and this may not of itself indicate that all terms addressed up until a particular point should be included in the final agreement;
• where terms are conditionally agreed (that is, subject to a satisfactory overall package), they are not likely to be agreed for the purposes of the intractable bargaining framework; and
• the question of whether a term is conditionally agreed must be determined objectively by reference to the totality of the evidence of the bargaining process – and that an express statement that a term is agreed “in principle” or “subject to” the overall package will be strong evidence – but will not always preclude – a finding that the relevant term is agreed.

The UFU is currently seeking a judicial review of the decision in the Federal Court and so judicial guidance on these issues will be forthcoming.

A Full Bench of the Commission will also need to grapple with the extent to which bargaining representatives can resile from agreed terms, following the making of an intractable bargaining declaration in a different Cleanaway matter to that referred to above[4].

In that case, Deputy President Wright was prepared to permit a post-declaration negotiating period as a possibility to narrowing areas of dispute, after the employer put a proposed agreement out to vote on the basis that if it was not successful, all negotiated items would be withdrawn and up for renegotiation, meaning it would effectively start bargaining afresh without any agreed terms.

3. Can an enterprise agreement be made, even following a declaration?

What happens if, following an intractable bargaining declaration being made but prior to the making of a workplace determination, the employer puts an agreement to a vote of employees, who then endorse that agreement?

A recent Full Bench decision in ATRC[5] concluded (by majority) that this does not relieve the Commission of the responsibility to make a workplace determination – which will then supersede the freshly made enterprise agreement.

It must be observed that this decision involved the making of an industrial action related (rather than intractable bargaining) workplace determination, and the provisions are not identical. However, it would certainly be open for the Commission to take a consistent approach across both streams.

Given the statutory edict that intractable bargaining workplace determinations can only involve compromises on the employee side of the ledger if the bargaining representatives (as distinct from a majority of employees) agree, this may be highly significant for employees needing workplace change.

What does this all mean in practical terms?

Of course, a carefully considered bargaining strategy is fundamental.

But now more than ever, IR and ER practitioners need to ensure that these strategies are optimised for the circumstances at play. Very different approaches will be appropriate depending on (among other things) whether the business:

• requires existing restrictions or conditions to be moderated to suit operational requirements, as opposed to where the question is simply what additional benefits are to be offered;
• has productive working relationships with relevant union officials, as opposed to more fractured dynamics to navigate;
• is particularly susceptible to industrial action, or can “weather the storm” for a short or even moderate period; and
• is able to objectively demonstrate particular and compelling need for restrained outcomes, or simply needs to achieve the most commercially favourable outcomes possible.

Each of these matters will inform the formulation of a log of claims, the manner in which bargaining is conducted, how matters are to be agreed (or otherwise) along the way and what might be a trigger for escalation (including to the Commission for dispute resolution or declarations).

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

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

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

[1] Ventia Australia Pty Ltd v United Firefighters’ Union of Australia [2023] FWC 3041.

[2] Transport Workers’ Union of Australia v Cleanaway Operations Pty Ltd T/A Cleanaway Operations Pty Ltd [2024] FWCFB 127.

[3] Application by United Firefighters’ Union of Australia (259V) [2024] FWCFB 43.

[4] Transport Workers Union v Cleanaway Operations Pty Ltd [2024] FWC 91.

[5] Australian Rail, Tram and Bus Industry Union, Australian Municipal, Administrative, Clerical and Services Union v Australian Rail Track Corporation Limited [2024] FWCFB 152.

April 16, 2024

On 26 February 2024, the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 received Royal Assent and introduced further significant reform to the Fair Work Act 2009 (Cth), including new provisions to determine when a person is an “employee” or “employer” and an amended definition of “casual employee”.

The devil is in the detail when it comes to interpreting and applying these new definitions. David Perrozzi, Associate, explains how these changes are likely to impact employers.

Who is an “employee” and “employer”?

The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Closing Loopholes No. 2 Act) amends the FW Act to insert an interpretive principle that will apply when determining the meaning of “employee” and “employer”.

The interpretive principle provides that whether a person is an “employee” or “employer” of an individual is to be determined by ascertaining the real substance, practical reality and true nature of the relationship.

The real substance of the relationship will be determined by considering various factors, including:

• the totality of the relationship between the individual and the person;
• the terms of the contract between the parties; and
• how the contract is performed in practice.

These provisions are intended to unwind the settled position established by the High Court in CFMMEU & Anor v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting) and ZG Operations & Anor v Jamsek & Ors [2022] HCA 2 (Jamsek) – in which the Court ruled that the terms of a contract (where such terms have been genuinely and comprehensively documented) take primacy over the subsequent conduct of the parties when distinguishing whether a worker is an employee or an independent contractor.

Accordingly, these reforms mark the return to the multi-factorial test, where the reality of post-contractual conduct (how the contract is performed in practice) and the totality of the relationship must be considered when assessing whether an individual is truly an independent contractor or an employee.

When applying the new provisions, Courts and tribunals will likely have regard to the factors they routinely considered prior to the Personnel Contracting and Jamsek decisions, such as:

• the degree of control exerted by the principal over the manner in which the work is performed by the individual;
• how the individual is remunerated;
• the autonomy of the individual in determining their hours of work; and
• the allocation of risks and liabilities between the parties.

It is also worth noting briefly that the new definitions for ‘employer’ and ‘employee’ in the FW Act will stand in contrast to the Australian Tax Office’s Taxation Ruling 2023/4, which was updated in late 2023 to reflect the position taken by the High Court in the Personnel Contracting and Jamsek decisions in relation to the ‘ordinary’ meaning of an ‘employee’ for the purposes of pay-as-you-go tax withholding under the Taxation Administration Act 1953 (Cth) and for superannuation contributions under the Superannuation Guarantee (Administration) Act 1992 (Cth).

Individuals earning above the ‘contractor high income threshold’

An individual earning above a (yet to be determined) independent contractor high income threshold can ‘opt out’ of the new interpretive principle. The effect of ‘opting out’ is that the new interpretive principle would not apply to the relationship between the individual and the person who engages them. Instead, the nature of the relationship would predominantly hinge upon the terms of the contract (as set out by the previous High Court decisions).

The choice to opt out can be made before, on or after commencement of the provision. An individual who chooses to ‘opt out’ can later revoke that decision, in which case the new interpretative principle will apply to the relationship.

Definition of casual employment

The Closing Loopholes No.2 Act also amends the current definition of a “casual employee” in section 15A of the FW Act.

Under the new definition, an employee will only be a casual employee where:

• the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
• the employee is entitled to receive a casual loading or a specific rate of pay for a casual employee as outlined in a fair work instrument or their contract of employment.

This differs from the current definition of “casual employee” in the FW Act which gives primacy to the terms upon which employment was offered and accepted. Under the new definition, determining whether a firm advance commitment exists will also require a multi-factorial assessment of several factors, including:

• the real substance, practical reality, and true nature of the employment relationship, which may extend beyond contractual terms;
• whether there is an inability of the employer to offer or not offer work or an inability of the employee to elect to accept or reject work;
• having regard to the nature of the employer’s enterprise, it is reasonably likely there will be future availability of continuing work of the kind usually performed by the employee;
• comparison with permanent employees performing the same kind of work within the employer’s enterprise; and
• the presence of a regular work pattern for the employee (noting that a regular pattern of work does not of itself indicate a firm advance commitment to continuing and indefinite work).

Like the new definitions for employee and employer, this multifactorial assessment aims to capture the essence of the casual employment relationship beyond mere contractual arrangements.

Key takeaways

The Closing Loopholes No. 2 Act marks a significant change in the way employee relationships are defined and regulated and has the potential to increase the potential of ‘sham contracting’ and/or underpayment claims.

The new provisions will come into effect on 26 August 2024.

In preparation for the introduction of these provisions, we recommend employers:

• review their contractor agreement and casual employment contract templates to ensure they are drafted in a manner that clearly articulates the nature of the intended relationship between the parties, consistent with the new provisions;
• revisit (and re-introduce, if need be) their independent contractor versus employee (‘multifactorial’) checklist which can be used internally to assist contract managers and people leaders examine at any point in time during the contractual term whether an individual engaged to perform work is a genuine independent contractor or whether there is a risk that the arrangements in practice could meet the new employee definition;
• implement training on the new definitions in the FW Act for people leaders, to ensure awareness of these new definitions and how they will be interpreted;
• implement processes which require routine reviews of the relationship with individuals engaged as contractors to ensure the true nature and practical reality of the relationship has not changed over time; and
• prepare template contractor “opt out” notification documents which can be used to allow individuals earning over the “contractor high income threshold” to opt out of the new interpretive principle.

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.

Employees have always had rights to request flexible work arrangements under the Fair Work Act. However, changes to the flexible workplace arrangement regime came into effect in June 2023, which not only expanded employees’ rights to make such requests, but also opened the door to refusals being the subject of arbitration in the Fair Work Commission.

Special Counsel Shannon Walker revisits the key changes and the recent applications which the Commission has so far considered in detail under the new regime.

Key changes and new requirements

The previous regime

Previously, an employee could place a written request with their employer, setting out the flexibility requested (such as an earlier start time and earlier finish time), and what grounds allowed by the Fair Work Act 2009 (Cth) (FW Act) justified the request, (for example the employee had parenting or carer responsibilities, or a disability).

The employer was entitled to refuse the request on ‘reasonable business grounds’ and was required to set out in writing to the employee the reason for the refusal within 21 days of the request being made.

The new regime

While the essential elements remain the same, the following changes give employees additional grounds to make a flexible work arrangement request, place greater procedural requirements on employers when responding to such a request and give greater powers to the Fair Work Commission (FWC) to ‘deal with’ a dispute (including arbitration) in the event of a refusal:

• Grounds: Employees now have additional grounds to make a flexible working request, being pregnancy or if the employee (or a member of their immediate family or household) are experiencing family and domestic violence.
• Responsive Procedures: On receiving a flexible work request, and before refusing the request, the employer is obligated to have a discussion with the employee about the request and genuinely try to reach agreement with them on making changes to accommodate their circumstances.
  The employer must have real regard to the consequences for the employee if they refuse the request and can only refuse on ‘reasonable business grounds’.
  A note has been added to the FW Act to provide that the nature and size of the employer’s enterprise will be relevant considerations in determining what is a reasonable business ground for the particular employer.
• FWC Powers: If a flexible work arrangement is refused, the employee may now refer the matter to the FWC to deal with the dispute in a range of ways (including by arbitration). Importantly, the FWC can now make orders for the employer to provide the employee a written response (if they have not done so), determine whether the ‘reasonable business grounds’ are in fact reasonable and even make orders requiring the employer to grant the request.

Recent cases

So far, the FWC has not considered the new provisions in any significant detail, with only three applications thus far being the subject of arbitration.

Earlier this week, in the case of Shane Gration v Bendigo Bank [2024] FWC 717, the FWC published a decision in which it upheld the reasonableness of the employer’s decision to refuse a request.

In this case, the applicant had requested that he be permitted to fully work from home (rather than attend the office 2 days per week, as per the employer’s policy requirement). The request was made on the basis that he is a carer for his wife and school-age daughter in respect of whom he gave evidence that his wife was recovering from a serious foot injury and his daughter was diagnosed with ADHA, requiring uniformity in her daily routine.

A lack of evidence regarding the nature and extent of a ‘serious’ foot injury affecting his wife (coupled with evidence that she was able to undertake 15 ‘high intensity’ yoga sessions each week) did not assist his case. Ultimately, the FWC held that there was insufficient evidence to establish that the applicant’s wife had a ‘disability’ and the FWC concluded that the applicant was not a ‘carer’ (within the meaning of the Carer Recognition Act 2010 (Cth)).

Further, whilst the FWC was satisfied that the applicant did provide care and support for his daughter, the employer’s refusal to agree to a permanent (‘100%’) work from home arrangement was found to have been made on reasonable business grounds, having regard to the reasonableness and flexibility demonstrated by the employer in considering and responding to the applicant’s request, as well as the employer having been ‘very accommodating’ in respect of the applicant’s needs for an extended period.

The case of Jordan Quirke v BSR Australia Ltd [2023] FWCFB 209 is helpful in guiding employers on threshold issues in relation to a request.

In this matter, Ms Jordan Quirke lodged an application for the FWC to deal with a dispute relating to BSR Australia Ltd refusing her request for flexible working arrangements.

The dispute related to her written request made to her employer on 21 April 2023, requesting her part time hours be changed. In the FWC application, she cited that the reason for the request for flexible working arrangements was because she had a disability (citing anxiety, depression and insomnia) and that the employer had refused her request on 30 August 2023.

The FWC carefully scrutinised the evidence provided by Ms Quirke noting that she was not eligible to make the application because:

1. At the time of making the request she did not have 12 months of continuous service;
2. The written request sent to the employer did not set out any of the required ‘circumstances’ detailed in the FW Act (pregnancy, disability, parent, etc) as she failed to disclose that she had a disability in the initial written request. The FWC also remarked that while the applicant believed she suffered from a psychological disability, she provided no medical evidence of such a diagnosis;
3. The request was made before 6 June 2023, meaning the FWC did not (at that time) have jurisdiction to deal with a dispute involving a request for flexible working arrangements.

The FWC ultimately dismissed the matter on the basis that Ms Quirke had not made a request under section 65(1), and it therefore had no jurisdiction to arbitrate the matter.

Due to this conclusion, the FWC found it unnecessary to consider whether the employer’s refusal of Ms Quirke’s request for flexible working arrangements was on reasonable business grounds.

Although this case didn’t get the opportunity to provide us with insight as to the practical application of the FWC’s ability to deal with a dispute regarding a request for flexible working arrangements, it explores the strict eligibility requirements an employee must satisfy for an employer’s refusal to be reviewed by the FWC.

The practical implications

Moving forward, employers who receive a flexible work arrangement request must always first consider if the employee is eligible to make such a request. To make a request, employees must be a ‘national system employee’ and satisfy the continuous service requirement (12 months for permanent employees).

The employer must then look to whether any of the circumstances listed in section 65(1)(a) of the FW Act apply to the employee, including the updated circumstances of pregnancy and family or domestic violence.

Next the employer must turn their attention to whether the request made by the employee is in writing and sets out:

• the proposed changes to the working arrangements; and
• the circumstances that form the basis of the request,

as required by section 65(1)(a) of the FW Act.

Once the employer receives the flexible working request, they must respond to the request within 21 days notifying the employee of their decision to grant the request, amend the request or refuse the request.

An employer may only amend or refuse the request where they have first discussed the request with the employee and genuinely tried to reach an agreement to accommodate the employee’s circumstances, if that amendment/refusal was made on reasonable business grounds.

Reasonable business grounds for refusing requests are outlined in section 65(A)(5) of the FW Act and include circumstances where it would be too costly or impractical to accommodate the request.

A failure to respond within the time frame will be taken as a refusal of the request and allow the employee to proceed to the FWC.

If the employer refuses to grant the request, the employer must provide the employee with a written response setting out the reasons for the refusal detailing the particular business ground for refusing the request and explain how the business ground is relevant to the request. The written response must also either set out the changes the employer is willing to make to the employees working arrangement or state that there are no changes to the employees working arrangement that they are willing to make.

Finally, the Gration decision highlights the FWC’s willingness to accept an employer’s requirement for face-to-face attendance at the workplace. This includes for (oft-cited) reasons (including spontaneous collaboration, nuanced discussions, brainstorming, mentorship and development for other staff members, as well as attendances at ‘moments that matter’). In cases where the employer can clearly demonstrate how it has considered and attempted to accommodate the employee’s particular circumstances this will assist in establishing reasonable business grounds

Key Takeaways

Given the FWC now has powers to arbitrate a decision to refuse a flexible working arrangement, businesses should review what systems and process they have in place for receiving, reviewing and determining any such request, and ensure that in doing so, that they balance the needs of each of the parties.

People managers and supervisors should be trained to ensure they recognise what a flexible work arrangement request is, and the importance of genuinely considering and consulting with an employee on the request before implementing a decision.

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.

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.