The start of 2022 has felt eerily similar to 2021 with many starting the New Year in self-isolation following the rise of COVID-19 infection due to the Omicron variant. While we anticipate that the next 12 months will be riddled with ongoing COVID-19 response action by employers, we also anticipate that employers will be faced with new challenges and opportunities in a year where industrial relations is likely to become a political hot-potato as we head into the federal election.
We’ve set out some of the key issues that employers will need to stay focused on in 2022.
The primacy of contract for contractors?
Following almost three years of uncertainty caused by the WorkPac saga, 2021 finally provided clarity over the meaning of casual employment. First with the commencement of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Amendment Act) in March and then with the delivery of the High Court’s judgment in WorkPac v Rossato [2021] HCA 23 (Rossato) in August. However, along with providing greater clarity, employers have been hit with further compliance obligations in relation to casual employees.
The Amendment Act introduced changes to the Fair Work Act 2009 (Cth) (FW Act) which have required employers to revise their casual employment contracts, review their enterprise agreements to assess any interpretation issues arising from their interaction with the new laws, and introduce processes to ensure compliance with the casual conversion provisions. The changes also required the Fair Work Commission (FWC) to vary the casual terms in 151 modern awards. These variations took effect on 27 September 2021.
In Rossato, the High Court found that primacy was to be accorded to the various contracts between WorkPac and Mr Rossato in characterising the employment relationship as casual.
Our 2022 insight: Although Rossato only determined the primacy of contract relevant to determining whether the employment relationship was one of casual or permanent, there is a question as to the impact (if any) the ruling will have on the High Court in determining the appeals of the two Federal Court decisions in CFMMEU v Personnel Contracting Pty Ltd[1] and Jamsek v ZG Operations Australia Pty Ltd[2] (Jamsek).
The appeals consider the correctness of the Federal Court’s finding that the relationship between the parties in those cases should be construed as one of principal and independent contractor (as opposed to employment). The appeals were heard consecutively on 31 August 2021 and 1 September 2021.
During the hearing of the Jamsek appeal, Justice Gageler raised the question of how the existing “totality of the relationship” test applied in determining whether a worker is an employee or independent contractor squares with Rossato.[3] In the discussion that ensued, Justices Gageler, Gordon and Edelman all indicated that the contract should be front and centre to the inquiry of the Court in determining the relationship between the parties. This suggests that there could be a shift in the established principles which apply to the employee / independent contractor dichotomy (or at least, a shift in the way the “totality of the relationship” test is applied) in the not too distant future. Keep an eye out for our update once judgment in these appeals have been delivered.
Embracing the RAT race
Except where made clear by public health orders (PHO), governments have largely left it up to employers to decide whether they introduce mandatory COVID-19 vaccination for employees (as well as customers and clients). The question has been difficult for employers to navigate given the competing Work, Health and Safety (WHS) obligations, individual/union claim risks and mixed guidance materials published by authorities.
Despite the confusion, many employers decided to implement, or began to implement, mandatory COVID-19 vaccination last year. Employers who have made this decision to mandate vaccines have done so to ensure compliance with WHS obligations and on the basis that the direction is both lawful and reasonable.
At a minimum, any direction that employees be vaccinated against COVID-19 (including by way of booster shot) must be:
- Based on WHS risk considerations;
- Implemented following consultation and the introduction of a COVID-19 vaccination policy;
- Reasonable in terms of the timeframe by which employees must be compliant; and
- Allow for any medical contraindication.
When requesting proof of vaccination status, employers must ensure compliance with relevant privacy laws, including by ensuring that a person’s vaccination status is treated as sensitive health information in accordance with the Privacy Act 1988 (Cth) and the employer’s privacy policy.
If employees have legitimate medical grounds to refuse vaccination directions, employers may, where possible, offer reasonable alternatives for workers falling within this category.
The Omicron variant has also increased the rate of infection across the community and therefore in the workplace significantly. This has resulted in a shift by Federal and State governments from the reliance on PCR tests to rapid antigen tests (RAT). This has resulted in a RAT race like no other as those who are symptomatic scramble to find a RAT.
Our 2022 insight: Employers will continue to face the conundrum of how to respond when an employee (or prospective employee) without legitimate medical grounds fails or refuses to be vaccinated. It is important that decisions made by employers as to disciplinary outcomes are made having regard to legal advice and on a case-by-case basis. There remains a myriad of legal risks associated with responding to an employee who has refused a vaccination mandate including a dispute application, general protections claim or unfair dismissal.
On the flip side, as employers begin to direct employees to return to the workplace (whether in accordance with a hybrid working system or otherwise), there may be instances where employees refuse to attend the workplace for various reasons. It is lawful and reasonable for employers to direct employees to return to their normal working arrangements. If an employee does not comply with such a lawful and reasonable direction, the employer may consider taking disciplinary action against the employee and/or decide that the employee no longer can fulfil the inherent requirements of their role. Either way, advice should be sought prior to taking the action.
Employers also need to review their COVID Safe Plans and WHS risk assessments as these are living documents which need to be updated to reflect the rapid pace in which PHOs are being varied and implemented.
R-E-S-P-E-C-T
In January 2021, Safe Work Australia published national guidance material on preventing workplace sexual harassment (Guidance Material). The Guidance Material advocates for a more proactive role of persons conducting a business or undertaking (such as employers) (PCBUs) in identifying, assessing and eliminating or minimising the risk of workplace sexual harassment.
In June 2021, the Australian Human Rights Commission (AHRC) published its report, ‘Equality across the board: Investing in workplaces that work for everyone’ (AHRC Report). The AHRC Report focused on the actions required of the most senior leadership of the ASX200 boards and executive management in preventing sexual harassment in the workplace.
On 2 September 2021, the Sex Discrimination and Fair Work (Respect at Work) Amendment Act 2021 (Respect@Work Act) passed Parliament.
Our 2022 insight: As more high-profile cases continue to emerge and applicants begin to utilise the new legal avenues available to them in light of last year’s legislative changes, we suspect that sexual harassment in the workplace will remain in the spotlight in 2022. Employers (and PCBUs more broadly) must take proactive steps to prevent and eliminate sexual harassment in the workplace. At a minimum, we recommend that PCBU’s:
- Require that executive teams review and revise current Workplace Behaviour Policies to ensure that they reflect the new legislative changes and focus on prevention of sexual harassment in the workplace;
- Ensure the Board of directors and senior executives implement governance measures to prevent and eliminate sexual harassment in the workplace. The Australian Institute of Company Directors has pointed out that sexual harassment is now recognised (and should be treated as) an important governance issue; and
- Deliver sexual harassment training to all employees and managers that not only focuses on explaining the legal terms but trains employees on how to actively prevent sexual harassment including by using active bystander techniques.
Increases to minimums
Despite the continuing economic uncertainty due to COVID-19, 2021 saw minimum wages under modern awards increase.
In June 2021, following the Annual Wage Review 2021, the FWC announced that it would be increasing the national minimum wage and all award wages by 2.5%. The increase to minimum award wages occurred in three stages, with the last increases coming into effect from 1 November 2021 (for those in aviation, tourism, fitness and a few retail sectors).
Our 2022 insight: although the increase only applies to employees who are paid the national minimum wage or minimum award wages, the increase will have broader ramifications for those employers who employ employees above the minimum wage. The 2.5% increase will become a benchmark for wages growth in enterprise bargaining and individual contract negotiations in the first half of 2022.
It’s all super!
In July 2021, the superannuation rate increased by 0.5% to 10%. The rate is legislated to continue to increase by 0.5% annually until it reaches 12% in 2025.
Our 2022 insight: it is important that employers check employment terms and conditions in place to ensure that there is a basis for reducing the income component of employees’ salaries by 0.5% and redistributing this to their superannuation funds (e.g. through an “all-inclusive salary” or “absorption” clause in the employees’ employment contracts). If not, we recommend that employers develop a plan to manage the introduction of the annual increases through contractual or administrative changes such as building the increase into planned pay rises. It is also important that employers consider any terms in an applicable industrial instrument that may affect its obligations regarding superannuation contributions.
Is compliance still key?
The Fair Work Ombudsman’s commencement of Court proceedings against major employers last year indicates that investigating large corporate underpayments will remain a priority for the regulator in 2022.
Our 2022 insight: check out our recent article on wage compliance and the issues employers need to keep in mind in 2022 here.
Election year
2022 is election year and we all know what that means for industrial relations – change.
Both major parties have hinted at what will form part of their industrial relations agenda if they were to form Federal Government in 2022 and we’ll provide further updates throughout the first quarter as we head into the Federal election.
Our 2022 insight: Last June, the Coalition signalled that it will push for the changes to the lifespan of greenfields agreements it removed from its diminished IR Omnibus Bill (which ultimately passed in the form of the Amendment Act). The changes to greenfields agreement provisions would see the maximum life of a greenfields agreement for a “major project” being extended from four to eight years.
If re-elected, it is likely that the Coalition would also press for the other residual parts of the IR Omnibus Bill that didn’t make the final cut, which include:
- More discretion in the BOOT assessment in approving enterprise agreements;
- Sunsetting of zombie agreements;
- Simplified additional hours for part time employees; and
- Flexible work directions.
If the Morrison Government’s religious discrimination bill does not get voted up (in one form or another) before the next election, this will no doubt also form part of its agenda if elected for another term.
In 2021, the Australian Labor Party (ALP) released its “Secure Jobs Plan” which focuses on a number of key areas, including:
- Job security, including by making job security an object of the FW Act, extending the power of the FWC to make orders for the minimum standards which apply to “employee-like” forms of work (such as gig economy work) and amending the FW Act to limit the number of consecutive fixed-term contracts an employer can offer so that they cannot exceed a period of 24 months (with exceptions in limited circumstances);
- Pay, including by introducing a portable entitlement scheme for workers in insecure work and introducing laws such that workers employed through labour hire companies receive no less minimum pay than workers employed directly;
- Casual employment, including by watering down the current definition of casual employment in the FW Act such that the focus on is on the absence of a firm advance commitment as to the duration of the employee’s employment only;
- Criminalising wage theft, however any law will not undermine existing state and territory wage theft laws (such as those in Queensland and Victoria); and
- Government, including by conducting an audit of employment within the Australian Public Service with a view to promoting more secure employment where temporary forms of work, such as outsourcing, short term contracts or “offshoring” are being used and ensuring that the Federal Government prioritises bids and tenders from companies and organisations that provide secure work for employees when purchasing or seeking goods and services.
The Australian Council of Trade Unions (ACTU) has signed off on a 33-day election strategy in support of the ALP’s Secure Jobs campaign. The strategy emphasises the importance of workplace activity and features the training of organisers and delegates and hundreds of workplace visits both before, and during, the 33-day union campaign.
Our 2022 insight: 2022 is set to be another jam-packed year for industrial relations and safety law. We look forward to keeping you across the key issues over the course of the year. Please reach out to our team if you have any questions.
[1] [2020] FCAFC 122.
[2] [2020] FCAFC 119.
[3] ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors [2021] HCATrans 139.