Morrison Government proposes sweeping Fair Work reforms

After a year that has been something of a hellish rollercoaster for many businesses, a light has appeared at the end of the tunnel with the Morrison Government announcing that it intends to introduce legislation to make radical amendments to the Fair Work Act 2009 (Cth) (FW Act) on Wednesday.

These amendments come after several years of advocacy by employer groups and should, hopefully, provide some much-needed flexibility and certainty for businesses.

Details of what exactly the legislation will entail are yet to be released, however the government has announced some key areas of reform.

Casual employment to be overhauled

Among the most long-awaited changes proposed by the legislation is reform of casual employment; specifically, the legislation will stipulate that a person who is employed as a casual stays a casual, regardless of whether they end up working regular hours.

If a casual employee ever makes a claim for entitlements owing to a permanent employee, such as paid leave entitlements, then the legislation will also seek to compel a court to reduce the amount of those entitlements by the amount of any casual loading paid to the employee during their employment.

To balance this out, the legislation will also require employers to offer casual employees the opportunity to convert to permanent employment in particular circumstances.

This is in addition to the requirement under many modern awards that the employer must advise the employee of their right to request conversion to permanent, and indeed the legislation will expand this modern award entitlement to all casual employees.

Flexible part-time employment for some industries

Following protracted advocacy from industry groups, the legislation will propose to allow flexible part-time employment arrangements for employees engaged under specific modern awards, including the Retail Award and the Fast Food Award.

Under the proposed provisions, part-time employees will still need to have “core” hours agreed to under the terms of the relevant modern award, however they may enter into a separate agreement to work an additional number of hours outside of those core hours without attracting overtime loadings. The time that these additional hours are worked appears to be irrelevant, subject to any other provision of the relevant modern award that results in overtime being applicable.

Emphasis on compliance and enforcement

The proposed legislation will also increase penalties for non-compliance with the FW Act, increasing civil penalties and introducing a criminal offence of “wage theft”.

Penalties will increase by approximately 50% – from $13,320 to $19,980 for individuals, and from $66,600 to $99,900 for small businesses. Larger businesses will be liable to penalties of either $99,900 or “two times the benefit obtained”, whichever is the greater.

Penalties for “serious contraventions” by bigger businesses will also be increased, with offending corporations being liable to a fine of either $666,600 (unchanged) or “three times the benefit obtained”, whichever is greater.

Commensurate with this, the size of fines able to be imposed by the Fair Work Ombudsman through infringement notices will also increase by 50%.

The most significant change, however, is the introduction of a federal “wage theft” offence, which will expose offenders to fines of up to $1,110,000 or up to four years’ imprisonment for individuals, and fines of up to $5,550,000 for companies.

The Government has emphasized that these criminal offences will not apply to one-off incidents, inadvertent mistakes, or miscalculations, but the detail of the legislation on this point is not yet known.

Other areas of reform

The Government has flagged that the proposed legislation will include other reforms, including to streamline the enterprise bargaining process and further regulations affecting unions. However, the detail of these proposals is not yet known.

The legislation is intended to be introduced to Parliament on Wednesday, this being the second-last sitting day of 2020. Parliament is not scheduled to return until February 2021, and it will likely devote significant time in both the House of Representatives and the Senate to the debate of this legislation.

With this in mind, the legislation is not expected to pass until late February or early March 2021, giving businesses ample time to organize their affairs in response to the legislation. NRA Legal is able to support businesses through this process; to find out how we can help, please call 1800 572 679.