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13 June 2024
Annual Wage Review 2023-24
June 13, 2024

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

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

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

The Annual Wage Decision 2023-2024

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

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

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

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

Work to address historical gender undervaluation continues

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

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

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

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

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

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

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

Get ready to bargain…

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

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

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

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

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

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

 

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

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

The Facts

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

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

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

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

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

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

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

Decision

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

Peabody

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

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

Impacts

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

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

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

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

 

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

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

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

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

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

One example are the new rights for workplace delegates.

The legislative provisions

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

This included:

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

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

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

The model award term

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

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

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

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

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

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

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

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

Watch this space

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

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

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

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

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

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

 

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

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

Why the rift?

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

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

So why change now?

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

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

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

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

How can it work?

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

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

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

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

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

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

What can organisations do?

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

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

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

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

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

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

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

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

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

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

Key Takeaways

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

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

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

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

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

 

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

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

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

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

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

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

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

Voluntary membership and general protections

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

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

What do the cases say?

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

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

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

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

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

The key lessons from these cases are as follows:

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

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

Key takeaways:

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

 

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

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

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

 

Steven Amendola
Partner
+61 3 9958 9606
[email protected]
Peter Willink
Senior Associate
+61 2 9169 8457
[email protected]
Dylan Pietrocola
Lawyer
+61 2 9169 8423
[email protected]
18 April 2024
A quick look at the scope of the new criminal wage theft offence…
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).

 

Jane Silcock
Executive Counsel – Knowledge
+61 2 9169 8419
[email protected]
Laura Gillman
Paralegal
+61 8 6381 7062
[email protected]

 

17 April 2024
Early wayfinding in the intractable bargaining framework
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).

  1. 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.

  1. 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.

 

Brad Popple
Special Counsel
+61 3 9958 9613
[email protected]
Emily Strachan
Senior Associate
+61 2 9169 8417
[email protected]
Marcus Topp
Associate
+61 3 9958 9610
[email protected]
16 April 2024
Redefining the employment relationship (again)
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.

Shelley Williams
Partner
+61 7 3071 3110
[email protected]
David Perrozzi
Associate
+61 8 6381 7057
[email protected]

 

16 April 2024
Responding to flexible work arrangements – getting the expanded rights ‘right’

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.

 

Shannon Walker
Special Counsel
+61 8 6381 7054
[email protected]