Insights & News

November 22, 2023

Effective 12 December 2023, the Australian Human Rights Commission (AHRC) will be equipped with enhanced powers to investigate and enforce an employer’s positive duty under the Sex Discrimination Act 1985 (Cth) (SDA).

The AHRC’s expanded authority includes the ability to conduct inquiries, issue compliance notices, seek Court-ordered compliance, and enter into enforceable undertakings.

Key takeaways

• The positive duty represents a significant shift in how employers must approach unlawful conduct of a sexual nature and sex-based hostility in the workplace. Such a substantial shift demands a corresponding and thorough reassessment of existing preventive measures.
• Considering the common ground now shared by the AHRC and Safety Regulators, organisations should anticipate addressing comparable issues with multiple regulatory bodies.
• The proactive approach encouraged by the AHRC emphasises not just compliance but a genuine commitment to fostering respectful, inclusive workplaces. Tokenistic or artificial measures, such as basic online training for staff in the absence of other measures, will not meet the AHRC’s expectations.

Understanding the Positive Duty

Introduced in 2022 through amendments to the SDA, the positive duty requires employers to take reasonable and proportionate measures to eliminate unlawful behaviours. The positive duty goes beyond sexual harassment to include sex discrimination, sex-based harassment, the creation of a hostile workplace environment based on sex, and related acts of victimisation. The duty also extends beyond the actions of employees and contractors to encompass conduct by third parties, such as customers or clients. While it complements existing obligations under work, health, and safety laws, it does not replace and requires a holistic and comprehensive approach for compliance.

AHRC’s New Investigative Powers

The AHRC’s authority to commence an inquiry arises when there is a reasonable suspicion that an organisation is not complying with the positive duty. This suspicion can be triggered by various sources, including other government agencies, impacted individuals, unions or worker representatives, or media reports. In cases of non-compliance, the AHRC can provide recommendations, issue compliance notices specifying corrective actions, apply for court orders directing compliance, and enter into enforceable undertakings with organisations.

Compliance Guidelines and Principles

To assist employers in meeting their obligations, the AHRC has provided guidance material outlining seven standards and four guiding principles. These standards cover a range of measures employers should adopt to eliminate unlawful conduct. While each employer is expected to address all seven standards, what is deemed “reasonable and proportionate” will vary based on factors such as organisation size, resources, and the practicality and cost of implementing measures.

Industry-Specific Scrutiny

Notably, the AHRC has indicated particular scrutiny on industries such as mining, retail, and legal services. This emphasis underscores the AHRC’s commitment to ensuring that businesses across various sectors actively work towards creating environments free from unlawful behaviours. Employers within these industries are urged to pay special attention to the AHRC guidelines to align their practices with the evolving legal landscape.

Significant changes have occurred in work health and safety law over the last year. Amendments have been made and proposed to state and Commonwealth safety legislation meaning that jurisdictions are straying from what was originally a harmonised regulatory regime. As states and territories become less harmonised, compliance is becoming more complex for organisations with cross-jurisdictional operations. Victoria is now the only ‘non-harmonised’ jurisdiction in the country.

There have been some big changes, particularly in relation to psychosocial health and safety, penalties for breaches of health and safety legislation, prohibitions on contracts for indemnification from penalties, and increased regulatory activity.

Industrial manslaughter is now an offence in 5 state and territory jurisdictions. Two additional jurisdictions are considering or likely to introduce the offence shortly.

The team at Kingston Reid has prepared the following snapshot of recent changes and significant events across the country.

Model laws

The Model WHS Act forms the basis of the WHS Acts implemented across Australia except for Victoria.

The Model WHS Act was amended to significantly increase maximum penalties, to clarify the way in which Category 1 offences operate and to specifically set out that psychosocial risks must be eliminated or mitigated through the risk management clauses contained in the Model WHS Regulations.

Commonwealth

In mid-September, a wide range of amendments to the Commonwealth WHS Act, which applies mainly to the Federal Government and public authorities, were introduced, including prohibitions on insurance to cover WHS penalties and the addition of negligence as a fault element to the category 1 offence (which was historically concerned with recklessness).

The Federal Government’s “Closing Loopholes” Bill includes amendments to the Commonwealth WHS Act. The proposed amendments include the offence of industrial manslaughter, significant penalty increases for breaches and provisions relating to asbestos safety.

Queensland

The report on the review of Queensland’s WHS Act was published along with the Government’s response to the recommendations in the report in May 2023. Several changes to the Queensland WHS Act have been proposed. Significant changes include increased integration of health and safety representatives’ involvement in the performance of inspector and WHS permit holder functions, and increased recognition and participation of unions in safety matters.

A health and safety manager at the Queensland Museum was charged and pleaded guilty to a category 2 offence (an offence relating to a failure to comply with a duty resulting in exposure of a person to the risk of death or serious injury), following her failure to complete a risk assessment and implement controls relating to zoonotic diseases present at the Museum’s taxidermy department.

New South Wales

In October this year, the NSW Government formally committed to enacting a provision for the offence of industrial manslaughter.

This announcement followed NSW Work Health and Safety Minister Sophie Cotsis’ announcement of a 12-month “anytime, anywhere” inspector blitz campaign to combat the number of workplace fall incidents.

A bill was introduced which will triple the maximum penalty for category 1 breaches and increase all other WHS fines by 40%. The Bill also gives police powers under the WHS Act.

A PCBU charged with a category 1 offence was fined a record $2.025 million and a leading employee was also fined $101,250 in relation to the death of a worker in a woodchipper accident.

ACT

The ACT WHS Act was amended to include sexual assault incidents as notifiable incidents. Penalties will apply if PCBUs fails to notify WorkSafe ACT about an incident.

Codes of Practice dealing with psychosocial hazards and asbestos training were also made.

Victoria

WorkSafe Victoria has successfully prosecuted several breaches of the Occupational Health and Safety Act 2004 in respect of psychological risks. This was without any legislative change relating to the management of psychosocial risks.

Court Services Victoria was charged for failing to eliminate or mitigate health and safety risks for workers who were the subject of a toxic workplace culture, bullying and excessive workloads.

Tasmania

Following an inquest into the suicide death of four Tasmanian policemen, a coroner recommended that workers who are exposed to certain distressing incidents should automatically be referred to support providers for psychological assessment. The coroner also recommended mandatory six-monthly wellbeing screening for all serving officers.

South Australia

South Australia adopted the industrial manslaughter offence. Regulations regarding psychosocial risks were also introduced.

Western Australia

The WA Government launched its “Speak Up, Report It” campaign to address bullying, harassment and inequality in the key sectors of the Western Australian economy.

The Government also introduced a bill to adopt an ‘applied law approach’ to its mirror Rail Safety National Law legislation. If passed, the laws will automatically update in line with changes made to the Rail Safety National Law by the South Australian Parliament – the ‘author’ of the laws which other states and territories have agreed to adopt.

Northern Territory

The Northern Territory Supreme Court upheld the record breaking WHS fines of $960,000 imposed on a PCBU and $180,000 imposed on its director in relation to the death of a worker inside the strike zone of mobile plant.

The NT Government also made a new Code of Practice relating to tower cranes.

The fact is, many of us spend a rather large portion of our waking hours each week at work, meaning that our colleagues are often who we spend the most time with. Research shows that not only is work important in building social relationships, but those social relationships make us better at our work – it’s something to be encouraged. So, it’s unsurprising then that those social relationships have a tendency to carry on outside of the workplace (and working hours) – whether that’s at the pub on a Friday evening, ‘kicking on’ after a work function, or to keep the conversation going through social media chat groups.

Of course, the question for employers becomes what can be done when employees behave badly outside of what is traditionally considered to be the workplace. It’s a timely question that is worth revisiting following two recent decisions, as we move towards the festive season.

Whilst out of hours conduct may be a reason to terminate an employee’s employment (or take other disciplinary action), the employer will need to show that the conduct occurred “in connection with work” – a phrase which will be considered in a manner that is beneficial to the particular employee in question and involve a consideration of all of the circumstances including:

• the nature of the out of hours conduct (what happened and where did it occur)
• the circumstances in which the out of hours conduct occurred
• the purpose and nature of the employment (including the nature of the business, and role and duties of the employee concerned)
• the express and implied terms of the contract of employment
• the effect of the conduct on the employer’s business (or its effect on other employees of the employer)

Recent case law

Each of the following decisions, one of the High Court, and one of the Full Bench of the Fair Work Commission (FWC), both handed down in the last 3 months, consider the question of connection with work in some detail.

The proceedings in the High Court were to determine whether the employer was vicariously liable for the negligent act of one employee against a colleague. Central to the proceedings was the question as to whether the employee was acting in connection with his employment.

Both employees worked at a restaurant at the resort and their roles required them to live on site, where they shared a room in accommodation provided by the employer.

After work one evening, the employees went for a drink, returning to their room at about 1:00am. The employee left shortly afterwards for some more drinks, while the colleague went to bed. During the night, the colleague was woken up by the employee urinating on him in his bed. The colleague inhaled and choked on the urine, and suffered a cataplectic attack, caused by the emotional stress of the situation.

The High Court confirmed that an employer will be liable for the acts of employees committed in the course or scope of the employment, but needed to consider whether the employee was acting as a “stranger to his employer” and whether he was on a “frolic of his own”.

In deciding that the employee was not acting in connection with his employment, the High Court considered the points set out above, and importantly, that the behaviour engaged in by the employe was so far removed from the duties and his employer’s expectations of him that the employer could not be held liable.

In the second matter, the Full Bench of the FWC was required to consider an appeal of an unfair dismissal decision in which the employee had been reinstated to his employment notwithstanding that he had been an active participant in a Facebook group of current and former employees where offensive and pornographic material was shared.

While agreeing that an employee’s employment may be terminated for ‘out of hours’ conduct, the FWC considered that neither the composition of the Facebook group, (being employees or ex-employees), nor the offensive nature of the posts (although contrary to the employer’s policies and procedures), were enough to establish the requisite connection with the workplace. At the same time, the FWC was clear to admonish the employee’s behaviour, making clear that the type of material shared in the Facebook group “has no place at or in any workplace, regardless of the nature of the work or the constitution of the workforce”.

The FWC held that the employee’s conduct occurred outside of working hours and in a group set up for consenting friends and there was no evidence that his conduct had an impact at the workplace.

So, what does this mean for employers?

At first glance, the FWC decision to reinstate the employee, despite the “abject stupidity” of his behaviour, appears somewhat at odds with the employer’s positive duty to take reasonable and proportionate measures to eliminate sex discrimination and sexual harassment in the workplace.

Employers may have little control over employees’ conduct outside of the workplace or after working hours, including at end of year ‘after parties’, but they do have a responsibility for how that conduct impacts their work or the work of others.

If ‘out of hours’ conduct is spilling over into work time or otherwise causing disruptions to work that make it difficult for employees to do their jobs or work cooperatively, then employers will need to implement strategies to effectively manage those impacts and those relationships in light of these decisions and the employer’s legal obligations to ensure a safe workplace.

Current status

Since the “Closing Loopholes” Bill was tabled in Parliament on 4 September 2023 (purporting to close what the Government has described as “regulatory loopholes”), it has continued to capture broad public interest. Many of the changes proposed by the omnibus Bill are generating heated debate, such as:

• the Government’s foreshadowed “same job, same pay” amendments (allowing the Fair Work Commission to make orders requiring that “host” companies ensure that labour hire workers are afforded the same pay and conditions as employees engaged directly under an enterprise agreement that applies to the host), the criminalisation of “wage theft” and changes aimed at regulating “employee-like” workers (namely gig economy platform workers and road transport industry workers); and
• more surprising changes including new workplace rights for union delegates and changes to how employee status is determined (which would reverse the effect of the landmark 2022 High Court rulings in CFMMEU v Personnel Contracting[1] and Jamsek[2]).

(Kingston Reid has previously published a guide on the Government’s Bill, which can be accessed here.)

Facing resistance from the Senate crossbench, the Bill was swiftly sent off for inquiry by the Senate Education and Employment Legislation Committee which has, over the course of October, convened 6 public hearings and received over 170 separate submissions on various aspects of the Bill.

New single-issue bills

Amidst this process, some of the proposed changes have quietly found support with Senate cross-benchers David Pocock and Jacqui Lambie who, just two weeks ago, introduced four ‘single issue’ bills in the Senate in an attempt to expedite certain less-contentious aspects of the Closing Loopholes reform package.

These single-issue bills seek to:

1. broaden the functions of ASEA (the Asbestos Safety and Eradication Agency) to address and coordinate national action in relation to the increase in silicosis and other silica-related diseases in Australia;
2. improve protection against discrimination for employees who have been, or continue to be, subjected to family and domestic violence;
3. address an ‘anomaly’ in how the small business redundancy pay exemption operates where a business downsizes and becomes a small business employer due to insolvency or bankruptcy (which has a consequential impact on the redundancy entitlements of remaining staff); and
4. introduce a rebuttable presumption that post-traumatic stress disorder suffered by emergency (‘first responder’) employees covered by the Safety, Rehabilitation and Compensation Act 1988 (Cth) (such as employees of the Australian Federal Police, firefighters, ambulance officers and paramedics) was contributed to, to a significant degree, by an employee’s employment.

All of these single-issue bills were unanimously passed in the Senate on 9 November 2023, however, their course is being blocked by the Government in the House of Representatives. It appears unlikely that we will see substantial movement until early 2024.

Casual employees & other proposed alterations

In respect of the casual employee provisions of the Closing Loopholes Bill, some excitement has recently been generated by the prospect of a legislative “note” being included in the Bill to indicate that employees can be casual even when they work according to a regular and predictable pattern.

However, this is likely to be seen as cold comfort by employers, as the note is unlikely to offer comprehensive and unequivocal protection to employers and it remains to be seen what form the final legislation will take. This is bound to be a pressure point in further Parliamentary (and public) debate over the proposed new laws over the next few months leading into 2024.

At the same time, it looks increasingly likely that we will see further amendments to certain parts of the Closing Loopholes Bill potentially before the Senate Committee reports back. For instance, in relation to the Bill’s gig economy-related provisions, Minister Tony Burke has agreed for the new laws to clarify that gig workers are engaged as contractors (and not employees). Separately, Minister Burke has agreed to the exclusion of “service contractors” (who supply equipment and/or their own management services, as distinct from the sole provision of labour) from the operation of the Bill’s “same job, same pay” provisions. A revised Bill reflecting this (amongst other) changes is expected to be tabled in the House of Representatives next week (commencing 27 November 2023).

The Senate Education and Employment Legislation Committee’s inquiry report is due on or after 1 February 2024.

[1] [2022] HCA 1.
[2] [2022] HCA 2.

October 12, 2023

The Secure Jobs Better Pay amendments to the Fair Work Act 2009 (Cth) (FW Act) introduced a new set of provisions to deal with “intractable” bargaining (replacing the previous serious breach declaration provisions), which took effect in June 2023. Under that scheme, once the minimum bargaining period has ended (typically 9 months after the day bargaining starts, unless a later alternative date under s235(5) applies) and upon application by a bargaining representative, the Fair Work Commission (FWC) could make an intractable bargaining declaration if it is satisfied that the criteria outlined in s235(1) have been met.

Given the nature of the United Firefighters Union of Australia (UFU)’s application, the circumstances leading up to the FWC’s declaration were complex and protracted, dating back to when Fire Rescue Victoria (FRV) first absorbed functions of the Metropolitan Fire and Emergency Board and the Country Fire Authority in mid-2020.

From that time, an ‘interim’ agreement for operational staff was introduced whilst bargaining took place between FRV and the UFU for a new agreement. Whilst informal discussions commenced shortly after the transfer in July 2020, a notice of representational rights was not issued until April 2022, once the FRV had obtained government approval to commence formal bargaining.

In the intervening period however, ongoing discussions had been occurring between FRV and UFU including in relation to an ‘efficiencies’ allowance said to arise under Pillar 3 of the Victorian Government’s then-in-force 2019 Wages Policy (Efficiencies Allowance), which in effect would enable those covered under the agreement to share in cost savings obtained through agreed efficiencies arising from the absorption of both the Metropolitan Fire and Emergency Board and the Country Fire Authority.

Bargaining disputes between 2021 to 2023

During this period, several disputes were filed in the FWC and a number of conferences were conducted. Relevantly, a dispute was lodged by the UFU in respect of the efficiencies issue, which led to a series of conferences being conducted in late 2021 to enable the parties to engage in costing the proposed Pillar 3 efficiencies.

The UFU subsequently outlined its claim for the Efficiencies Allowance in a s739 application. However, before that application was heard, it filed a further (s240) dispute in relation to nine items (one of which was ‘wages and allowances’), leading to a further series of FWC conferences. After the Minister for Emergency Services intervened, the issue of the Efficiencies Allowance was ultimately left to be resolved by the parties through further bargaining.

The 2023 Wages Offer – an ‘unbridgeable’ distance

In March 2023, the FRV put forward its wages offer to the UFU, which included modest wage increases and a once-off payment, but not the Efficiencies Allowance as the Victorian Government did not authorise the FRV to do so, consistent with its new 2023 Wages Policy and Bargaining Framework which was introduced around this time.  On this point, the FRV’s position was that it had consistently maintained that wages and allowances were subject to Government authorisation and applicable Wages Policy.

As tensions escalated, the UFU purported to accept the FRV’s wages offer, but subject to the determination of the various efficiencies by the FWC at ‘no less than $117M”, which once determined (for the purposes of the allowance), should be backdated to the start of the proposed agreement. When FRV responded that it was unable to finalise bargaining, the UFU filed its application for an intractable bargaining declaration, in respect of which the FRV submitted that the distance between the parties on the issue of wages and allowances was ‘currently unbridgeable’, and as such, the application for a declaration was not opposed by FRV.

Statutory criteria for making a declaration

In order for the FWC to make an intractable bargaining declaration under s235 of the FW Act, it must be satisfied that:

1. it has dealt with the dispute about the agreement under s240 and that the applicant (in this case, the UFU) participated in the FWC’s processes in doing so;
2. there is no reasonable prospect of agreement being reached if the declaration is not made; and
3. it is reasonable in all the circumstances to make the declaration, taking into account the views of all the bargaining representatives for the agreement.

The FWC’s considerations

The decision sets out some useful observations on how the FWC will determine whether it can be ‘satisfied’ as to each of the abovementioned criteria. Importantly, it notes that for the purposes of applying section 235 of the FW Act, the FWC’s exercise of discretion is broader in relation to prescribed matters of ‘opinion, policy or taste’.

Whilst the first criterion set out above requires only a finding of fact, the second involves an evaluative judgment by the FWC as to whether there is ‘no reasonable prospect’ of agreement if a declaration is not made. Unpacking that double-negative, the FWC need not be convinced that agreement will never arise, but that it is rationally improbable to the point that there is not a reasonable chance of agreement. Crucially, the FWC has indicated that this state of satisfaction is unlikely unless there has been a protracted bargaining period and the parties have exhausted all reasonable efforts (noting in this case, the parties had attended a dozen or so conferences in the period leading up to February 2023 alone).

In relation to the third criterion, it is noteworthy that the FRV (and the Minister, intervening) agreed that bargaining had reached an impasse and supported a declaration being made. This feature of the proceedings (which is unlikely to be the status quo in other applications) is important, given that the views of all the bargaining representatives must form part of the FWC’s evaluative judgment as to reasonableness.

Contrast this with the first intractable bargaining declaration case brought by Virgin Australia Regional Airlines when, during the running of the case, Virgin agreed to further bargain with the relevant unions, thus effectively scuttling its own application. Of course, the likelihood in a contested application will be that there are strongly different views amongst bargaining representatives as to the status and utility of further negotiation.

In the present case however, and in the absence of an opposing view in relation to the UFU’s application, the FWC had regard to:

• the nature of the firefighting services provided by FRV, being critical to public safety;
• that bargaining had been occurring (albeit in various forms) for three years or so; and
• that the parties would be ready for any further arbitration to follow, as the dispute had already been programmed for hearing (for which the parties had commenced preparation),

and, having been satisfied of the necessary criteria (and not identifying any other matters weighing against), made its first intractable bargaining declaration, imposing a post-declaration negotiating period of two weeks, to enable the parties to further narrow the issues requiring arbitration.

Final Comments

Whilst it was not considered to be relevant in this case, the Full Bench did briefly address an important jurisdictional consideration for parties who find themselves inching towards a bargaining stalemate.

Firstly, it must be noted that (existing) s240 provides the FWC with a broad range of powers to assist bargaining representatives with any dispute that arises in bargaining that they are unable to resolve, which includes conducting conferences, mediation, conciliation, making a recommendation, expressing an opinion, or conducting arbitration (by consent). Further, applying to the FWC to deal with a dispute under section 240 (and participating in the resultant process) is a necessary step that must occur prior to applying for an intractable bargaining declaration under (new) s235.

In the UFU decision, the Full Bench has clarified the narrower operation of section 235(2) which requires the FWC to be satisfied that it has dealt with ‘the’ dispute, and not simply ‘a’ dispute under s240, confirming that the relevant bargaining dispute dealt with under s240 “must be the same as the dispute which is said to have caused bargaining to become intractable…”.

In light of the steps to follow the making of an intractable bargaining declaration, this is an important jurisdictional consideration that warrants close scrutiny (in respect of both s235 and s240 applications more broadly), particularly if various disputes have arisen in relation to a range of issues over a protracted bargaining period. For now, it remains to be seen whether bargaining representatives will attempt to cast their s240 nets more broadly when characterising the nature of ‘the’ dispute to be dealt with by the FWC with an eye on the prospect of making an application for an intractable bargaining declaration down the track, if necessary.

A final, practical issue that arises concerns how the FWC will evaluate any jurisdictional objection to a s235 application, as to whether or not it is, in fact, ‘the’ dispute that is said to have caused bargaining to have become intractable. Given the range of ways in which the FWC may deal with a dispute under s240 – some of which are confidential and/or without prejudice – it is unclear how the FWC might do so without requiring the parties to waive or otherwise impugn the confidentiality of those processes (short of having the relevant FWC Member form part of the Full Bench convened in the event such an objection is raised).

Given the active role being played by the FWC at present in relation to other high profile and protracted industrial negotiations, we may ultimately not need to wait very much longer for further guidance from the Full Bench on this front.

September 29, 2023

From 1 October 2023, significant changes to the Public Interest Disclosure (PID) regime in NSW come into effect.

The Public Interest Disclosures Act 2022 (NSW) (PID Act) completely replaces the Public Interest Disclosures Act 1994 (NSW) (1994 Act), creating significant changes aimed at enhancing protections for disclosers, streamlining reporting processes, and strengthening the framework for investigating disclosures of wrongdoing within NSW government agencies.

Here is what’s new:

Public Interest Disclosure Policies: While agencies were required to have a under the 1994 Act, the requirements for these policies under the PID Act are more detailed and prescriptive than previously.

Agency PID policies must now detail (amongst other things) the procedures for receiving, acknowledging, and responding to disclosures. The PID Policy must also identify nominated disclosure officers and their contact details. The content of a PID policy is prescribed by section 43 of the PID Act 2022.

While many agencies will likely amend their existing PID policy, the Ombudsman has helpfully prepared a model PID policy: available here.

Categories of Public Interest Disclosures: The PID Act sorts public interest disclosures into three categories:

Mandatory Public Interest Disclosures: these are disclosures about serious wrongdoing by a public official either in the course of their duties or under a legal obligation.

Witness Public Interest Disclosures: these disclosures involve providing information during an investigation of serious wrongdoing, whether related to a voluntary disclosure or not.

Voluntary Public Interest Disclosures: these disclosures are made voluntarily and must show or tend to show serious wrongdoing. Voluntary disclosures can be made anonymously.

Serious Wrongdoing is defined in the PID Act to include behaviour such as corrupt conduct, government information contraventions, serious maladministration, privacy contraventions, and substantial waste of public money. This definition is broader than that contained in the 1994 Act.

Who Can Make a PID: The categories of individuals who can make PIDs have been expanded. It includes not only employees but also those providing services or exercising functions on behalf of an agency, such as contractors, subcontractors, and volunteers.

Recipients of Disclosures: Under the PID Act, there is no “wrong” recipient for a disclosure. All public interest disclosures are made in the same manner. Recipients include the head of an agency, disclosure officers, managers, members of Parliament, and journalists. However, certain conditions must be met for disclosures to members of Parliament or journalists to be protected.

Protections for Disclosers: It is an offence to take detrimental action against a person who has made a disclosure if the disclosure was a contributing factor to the action. This threshold is lower than that of the PID Act 1994, which required that the action be “substantially in reprisal” for the disclosure.

Our 3 WISE tips

1. Agencies should ensure that their existing PID Policy is amended to meet the new requirements. While many agencies will have drafts in place ahead of 1 October 2023, it is also important to ensure that disclosure officers and others central to the operation of the PID Act are trained on the changes, in addition to staff more generally.
2. When considering the expanded definition of who can lawfully make a protected disclosure, agencies should consider those entities it contracts with to carry out services or functions on behalf of the agency and ensure they are advised of the changes to the PID Policy.
3. Finally, it is best practice to conduct an audit of your agency’s PID functions from time to time. This is the perfect time to do so to ensure your agency is implementing and maintaining procedures with respect to:
   • dealing with disclosures that are or may be voluntary PIDs;
   • providing information to the makers of voluntary PIDs;
   • assess and minimise the risk of detrimental action;
   • dealing with allegations that a detrimental action offence has been committed;
   • maintaining confidentiality and protecting the identity of the makers of voluntary PIDs;
   • taking appropriate corrective action in response to findings of serious wrongdoing or other misconduct;
   • record-keeping and reporting; and
   • establishing internal oversight of your agency’s compliance.

September 14, 2023

A person is protected from adverse action in relation to their workplace rights, even where those rights are contingent on accrual over time, or the occurrence of a future event or contingency. The much-anticipated decision of the High Court of Australia in Qantas Airways Limited v Transport Workers Union of Australia [2023] HCA 27 was handed down yesterday. While this is a significant decision and has generated a lot of publicity, it reinforces the importance of the unique factual circumstances in general protections litigation under the Fair Work Act 2009 (Cth) (FW Act), rather than significantly changing how the law has been interpreted to date. Importantly, the High Court’s decision does not mean that employers cannot make cost-based decisions about their workforce.

Rather, employers need to be clear as to who is making the ultimate decision and the basis for that decision, ensuring that prohibited reasons are not a substantive and operative factor in the decision-making.

The decision to outsource ground handling services

In November of 2020, Qantas Airways made a decision to outsource ground handling operations at 10 Australian airports. The effect of the outsourcing decision was that ground handling operations work (which had been performed by employees of Qantas Airways and Qantas Ground Services, a wholly owned subsidiary), would instead be carried out by third-party ground handling companies. Approximately 1,683 Qantas employees were made redundant as a result. The decision was implemented in 2021, at a time when Qantas Airways’ flying activity had greatly reduced, due to the COVID-19 pandemic.

The Union’s claim

The Transport Workers Union (TWU) filed an application on behalf of the affected employees in the Federal Court, arguing that Qantas’ outsourcing decision was made for a prohibited reason in contravention of the general protections provisions set out in the FW Act. The TWU argued that the decision was made for prohibited reasons, including to prevent the affected employees from exercising their future workplace rights to organise and engage in protected industrial action and enterprise bargaining. The employees of Qantas Airways were, at the time, covered by an enterprise agreement which had not nominally expired. While the Qantas Ground Services enterprise agreement had passed its nominal expiry date, no steps towards taking protected industrial action had been taken.

The Federal Court proceedings

It was necessary for Qantas Airways to prove that the outsourcing decision was not made for reasons that included a prohibited reason identified by the TWU. A single member of the Federal Court was not satisfied that Qantas Airways had done so. Qantas Airways then appealed to the Full Court of the Federal Court, and as part of its appeal argued that the phrase ‘prevent the exercise of a workplace right’ in section 340 of the FW Act does not extend to action taken to prevent the future exercise of workplace rights, where those workplace rights were not presently held by the employee concerned. The Full Court of the Federal Court rejected this argument and otherwise upheld the first instance finding that Qantas Airways had failed to establish that the prevention of industrial action was not a substantial and operative reason for making the outsourcing decision.

Appeal to the High Court

Qantas Airways appealed to the High Court of Australia. In support of its appeal, Qantas Airways made two key arguments:

• Firstly, that an employer does not ‘prevent’ the exercise of a workplace right by an employee within the meaning of s340(1)(b) simply by taking advantage of a ‘window of opportunity’ to take adverse action against an employee at a time when ‘architectural features’ of the FW Act (such as s417) operate to prevent the employee from exercising a workplace right (including by taking industrial action in response).
• Secondly, and more broadly, a workplace right must be presently in existence for the protections of section 340 to apply. A workplace right cannot be protected before it comes into existence.

Counter to this, the TWU argued that section 340 of the FW Act contemplates future rights and does not require a workplace right to exist, or be capable of immediate exercise, at the time of the alleged unlawful adverse action. The TWU argued that its construction was consistent with the purpose of the protections in the FW Act. The Minister for Employment and Workplace Relations, intervening, argued that the FW Act does not require that in order for a workplace right to exist it might be capable of immediate or unconditional exercise.

The High Court’s conclusion

The High Court has confirmed that the scope of section 340 of the FW Act will apply where adverse action is taken to prevent the other person exercising a presently held or future workplace right. Both of Qantas’ arguments were rejected, with a majority of the High Court (comprised of Chief Justice Kiefel and Justices Gageler, Gleeson and Jagot) determining that the text of section 340 does not require a workplace right to be held or to be capable of immediate exercise by an affected person at the time of the adverse action. Rather, all of the Justices found that section 340 is broad enough to encompass workplace rights at some future stage of the employment relationship, on the occurrence of an expected event, or on the occurrence of a contingency. Accordingly, the appeal was dismissed, and the findings made at trial (that the reverse onus had not been discharged) are undisturbed. Flowing from this, an individual may be found to have taken unlawful adverse action if they put an obstacle in the way of, (or seek to thwart), another person exercising a right that may arise at some future date, provided that the prevention of the exercise of the right was a substantial and operative reason.

While agreeing with those findings, the majority, (as well as Justices Gordon and Edelman in a separate judgment), drew a distinction between presently existing but contingent entitlements (such as annual or personal leave) and actions that are positively prohibited (such as taking unlawful industrial action), finding that the former is a ‘benefit’ to which a person is entitled under section 341, although the latter is not. Importantly, Justices Gordon and Edelman noted that there is nothing falling from the High Court’s ruling that suggests employers are prevented from considering the existence and terms of enterprise agreement in making decisions about the future. There is no legal or practical difficulty in allowing such a matter to be considered by a decision-maker. In his own judgement, Justice Steward observed that corporate decision-making is often the product of many motivations, causes, influences and processes of reasoning. Importantly, a mere appreciation of the possible future exercise of a workplace right at the time of taking adverse acting does not amount to a substantial and operative reason for taking adverse action.

What does this mean for employers?

Three key things may be taken away from yesterday’s ruling: Firstly, decisions relating to employment and workforce composition are not divorced from the commercial realities of operating a business. Secondly, while a decision-maker will likely be aware of (and in some cases should be aware of) the future rights and entitlements of employees, it will not be unlawful to make a decision which effects those rights and entitlements where all of the substantive and operative reasons for the decision are not the prevention of the exercise of those rights, or any other prohibited reason. Thirdly, it is important that a decision-maker can clearly and adequately articulate the reasons for their decision.

If future workplace rights were known to the decision-maker but did not form part of their substantive and operative reasoning, the decision-maker should be prepared to explain how this is the case. These things should provide comfort for employers, that despite the hype and attention, this decision does not restrict outsourcing decisions or other decisions about the composition of a workforce, including the use of labour hire. As you no doubt will be aware, the introduction of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (which is now subject to a Senate Committee Review due in February 2024), are likely to have a far more significant impact than the decision in Qantas Airways.

September 7, 2023

Under section 357(1) of the Fair Work Act (FW Act), an employer must not make representations that an employment relationship is an independent contracting arrangement. This is often called ‘sham contracting’. Engaging in sham contracting gives rise to civil penalties.

A defence to sham contracting is provided under section 357(2) if the employer proves (the burden of proof rests with the employer) that at the time of making the representation, the employer:

• did not know; and
• was not reckless as to whether,

there was an employment relationship.

What is proposed? A new defence

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill), if passed, will repeal the current defence and introduce a new one.

The proposed new defence will apply if the employer proves (the burden of proof remains with the employer) that at the time of making the representation, they “reasonably believed” that there was an independent contractor arrangement.

The Bill changes the defence from a subjective defence, based on an employer’s knowledge and recklessness, to an objective defence, based on an assessment of reasonableness.

The proposed legislative changes give the Courts wide discretion to determine whether an employer’s belief was reasonable.

The size and nature of the employer’s enterprise is the only mandatory consideration (which aligns with the FW Act’s objectives to acknowledge the special circumstances of small and medium sized businesses). Otherwise, a Court may consider “any other relevant matters”, examples of which include the following:

• the employer’s skills and experience;
• the employer’s industry;
• how long the employer has been operating;
• the presence or absence of a designated human resources or industrial relations team within the employer’s enterprise; and
• whether the employer sought legal or other professional advice about the proper classification of the individual and if so, acted in accordance with that advice.

The new test will only apply to representations made on or after the commencement of the Bill.

Why the change?

The Labor Government says that the current defence is not effective at deterring sham contracting, as it was far too easy for an employer to establish (the subjective defence) that they did not know the true nature of the engagement and did not act recklessly when making representations.

The new (objective) defence will require employers who have misrepresented employment as an independent contractor relationship to prove they “reasonably believed” that the employee was an independent contractor, not merely that they did not know and were not reckless as to an employee’s correct status.

What this means and what now?

If the changes are passed, then:

• Organisations (including labour hire providers) should carefully assess their independent contractor arrangements (including current arrangements which may expire, and be subject for renewal, after the Bill passes) to ensure they have a reasonable basis to classify independent contractors as such.
• Even if an organisation makes out the new defence (i.e. they prove that their belief at the time of the representation, which may be wrong, was reasonable), the employer may still be liable for other civil penalties and/or backpay in relation to contravening the National Employment Standards, modern awards or enterprise agreements. Again, a wholistic and careful assessment of independent contractor status is critical.
• Organisations, particularly medium to large organisations, should ensure their human resources team and other staff who engage employees or independent contractors, are aware of the fundamental differences between an independent contractor and an employee, and consider implementing training if necessary.
• The new defence does not alter the High Court’s position in ZG Operations Australia v Jamsek and CFMEU v Personnel Contracting for determining independent contractor status. As such, organisations should continue to ensure that their written contracts with independent contractors are fit for purpose.

Please get in touch with us if you would like to discuss the proposed changes and what they mean for you in further detail.

September 6, 2023

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (the Bill) has been introduced into parliament and proposes to make extensive and significant changes to Australia’s industrial landscape, including the nature of casual employment.

The Bill’s casual employment reforms propose to remove the focus on the employment contract and revert to the former test, which requires an employer to continuously consider the true nature of the employment relationship, even when a clear casual employment contract has been entered into with the employee.

The casual employment reforms are intended to come into effect on 1 July 2024. The Bill contains some controversial changes which are already being opposed by certain representative groups. This might make it less likely that the Bill will be passed quickly, however we still anticipate that the Bill will become law by the end of this year, leaving employers with limited time to prepare.

The key changes to casual employment are set out below.

The meaning of casual employment

The Fair Work Act currently defines a casual employee by reference to the terms of the employment contract, without consideration of the employment relationship in practice.

This definition was introduced to the Fair Work Act in 2021 to provide certainty to employers when employing casuals. The Bill proposes to revert to the previous test for casual employment that preceded the 2021 legislative reform, which involves reviewing how the employment relationship unfolds in practice, rather than in the terms of the contract.

The proposed definition of casual employment in the Bill states an employee will be a casual employee if there is no firm advance commitment to continuing and indefinite work and the employee is entitled to a casual loading.

This is the first time that the casual loading (which is traditionally contained in an industrial instrument), will be recognised in the Fair Work Act.

Whether there is a firm advance commitment to continuing and indefinite work will be determined by reviewing the real substance, practical reality and true nature of the employment relationship, including an assessment of whether:

• the employee has a regular pattern of work (with allowance for reasonable absences for illness, injury and recreation);
• the employer can decide not to offer the employee work and the employee can choose to reject work that is offered;
• the employer has full-time and part-time employees performing the same kind of work; and
• the work the employee performs for the employer is reasonably likely to be ongoing.

The basis of a firm advance commitment can be in the form of a contract, or in the form of a mutual understanding or expectation between the employer and the employee, which may be inferred from the conduct of the employer and employee.

Employee notification of conversion

In addition to the existing casual conversion framework, casual employees will have the ability to give an employer written notification of their ‘choice’ to convert to full-time or part-time employment after 6 months of employment (or 12 months for small businesses), if the employee believes their employment no longer meets the definition of casual employment.

Employers will be required to consult with the employee about their written notification and provide a response within 21 days of receiving the written notification to convert.

The ability of an employer to not accept an employee’s written notification will be limited to where:

• the employer considers the employment still meets the definition of casual employment;
• the employer would have to make substantial changes to the employee’s terms and conditions of employment to convert the employment to part-time or full-time without contravening the relevant Award or Enterprise Agreement; or
• conversion would result in non-compliance with the employer’s recruitment obligations under law.

Fair Work Commission to deal with casual employment disputes

An employee can refer a dispute in relation to a written notification or casual conversion to the Fair Work Commission if the dispute has not resolved through discussion with the employer. The Fair Work Commission will be able to initially deal with a dispute as it deems appropriate, including by mediation, conciliation, making a recommendation or expressing an opinion, and can arbitrate disputes that remain unresolved after the initial dispute resolution process.

Where the Fair Work Commission arbitrates a dispute, the Commission can make an order for the employee to remain employed as a casual employee, or to convert to full-time or part-time employment.

Importantly, a Fair Work Commission order for an employee to convert to part-time or full-time employment cannot be retrospective and will take effect from the beginning of the employee’s first full pay period after the order is made, or a later date if specified.

This means employers will not be required to remediate an employee’s NES entitlements (such as annual leave and personal leave entitlements), that they would have accrued if they had been employed as a part-time or full-time employee for any period prior to the order taking effect.

Misrepresentation of casual employment (sham casual contracting)

While the Fair Work Commission’s powers to make orders in respect of a casual employment dispute are limited to prospective orders, an employee, or prospective employee, will be able to make a general protections claim if they believe an employer has misrepresented an employment contract as a contract for casual employment, which are subject to the civil penalty provisions of the Fair Work Act.

An employer will need to discharge the reverse onus of proof to defend such a claim by proving that the employer reasonably believed the contract was for casual employment. The Fair Work Commission will have a broad discretion in considering whether the employer’s belief was reasonable.

Casual Employment Information Statement

Employers will be required to give a casual employee a copy of the Casual Employment Information Statement:

• before, or as soon as practicable after, the casual employment commences; and
• as soon as practicable after the employee completes 12 months of employment.

Employers will also need to give existing (“continuing casuals”) a copy of the Information Statement within 3 months of commencement.

Please get in touch with us if you would like to discuss the proposed changes and what they mean for you in further detail.