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Industrial Relations changes under the new government: What to expect for businesses
Following the recent Federal election, the new Labor government under Prime Minister Anthony Albanese is expected to introduce a raft of changes to workplace laws in Australia. Going into the election, Labor’s industrial relations policy focused on job security, targeting casual employment, labour-hire and gig work, and other forms of insecure work.
This article examines these anticipated changes in more detail focusing on the legislative amendments to the Fair Work Act 2009 (Cth) (Fair Work Act) that can be expected under the government-elect in the near future.
What changes to the Fair Work Act are expected?
The package of measures proposed by the new government will likely include amendments to the Fair Work Act that will:
- change the definition of casual employment;
- limit the use of fixed-term contracts;
- enshrine ‘secure work’ as an object of the Fair Work Act;
- extend the powers of the Fair Work Commission (Commission) to set minimum working conditions and entitlements to gig work and other ‘employment-like’ forms of work;
- enshrine the so-called principle of ‘same job, same pay’;
- automatically terminate ‘zombie’ enterprise agreements;
- introduce criminal offences for wage theft; and
- include a right to superannuation in the National Employment Standards (NES).
What will these changes mean for businesses?
Changes to enterprise bargaining
The new government has signposted plans to legislate an automatic termination date for ‘zombie’ enterprise agreements that predate the Fair Work Act. Under these agreements, base rates of pay must increase in line with the equivalent modern award, but other entitlements do not necessarily keep step accordingly, meaning covered employees may receive significantly lower entitlements overall.
Employers operating under such agreements will need to either bargain for new agreements or revert to modern award coverage, with potentially significant wage costs impacts involved in either scenario. Further, the Commission has signalled that ‘the clock is essentially ticking’ on older post-Fair Work Act agreements that provide significantly lower overall entitlements compared to the relevant award.[1]
More avenues to permanent employment
The government has said the amended definition of casual employment will revert to the common law test of whether there is ‘an absence of a firm advance commitment as to the duration of the employee’s employment or the days or hours the employees will work’. It has said that this will represent a ‘fair, objective test’, although no precise formulation for the new definition has yet been advanced.
The current definition in the Fair Work Act gives primacy to the rights and obligations agreed in the employment contract when determining whether an employee is a casual. The change may reopen the door to claims that a casual employee who works consistent hours on a regular roster is owed entitlements as a permanent employee, such as paid annual and personal leave.
The government also intends to limit the use of fixed term contracts, which it says represent another form of insecure work despite having legitimate commercial purposes. These arrangements will be limited to a maximum of two consecutive contracts for the same role or a maximum overall duration capped at 24 months, after which employees will likely be entitled to claim ongoing permanent employment.
Extended Commission powers in relation to modern awards and enterprise agreements
The inclusion of ‘secure work’ as an objective of the Fair Work Act will oblige the Commission to consider this aspect of employment when exercising its powers to determine national and modern award minimum wages, set or vary employment conditions modern awards, and approve enterprise agreements.
Extending the Commission’s powers to gig workers and other ‘employee-like workers’ will enable the Commission to set minimum standards for these kinds of workers, including for wages, hours of work and breaks, allowances, and overtime. These powers may also extend to independent contractor relationships, with potentially far-reaching consequences for many businesses.
More penalties and claims in relation to wage entitlements
The government intends to legislatively enshrine the ‘principle of same job, same pay,’ requiring labour-hire workers or independent contractors to be paid the same as permanent employees performing the same work within a workplace or business. The proposed amendments may give those kinds of workers a new avenue for making wage claims as well as potentially imposing penalties for businesses.
The introduction of criminal offences for wage theft in the Fair Work Act will make employers liable to heavy penalties for underpayments that are wilful or deliberate, or dishonest or reckless. The government has said that the new offences will not weaken those already existing under State laws.
The inclusion of superannuation entitlements in the NES will allow workers to claim unpaid superannuation amounts directly through the Commission and the Fair Work Ombudsman, rather than having to pursue such entitlements through the Australian Taxation Office.
What other developments are expected?
In the leadup to the election and in its time in opposition, the Labor government has signposted further IR changes in addition to those discussed above, including:
- introducing a Secure Australian Jobs Code to provide guidelines relating to employment conditions for taxpayer expenditure through government contracts;
- ensuring that the government is a model employer in relation to secure employment;
- consulting on portable entitlement schemes for employees in insecure work;
- implementing the recommendations of the Respect @ Work report; and
- abolishing the Registered Organisations Commission and the Australian Building and Construction Commission.
The nature and impacts of these measures will unfold over time during the new government’s term. Some will have further significant impacts on businesses in the retail and fast-food industries, especially the implementation of the Respect @ Work recommendations.
Takeaways
While not an election centrepiece as in the past, this bundle of measures will have significant impacts on the industrial relations landscape and employers are urged to consider the implications for their businesses straight away. Those operating under old enterprise agreements or employing substantial casual or labour-hire workforces should start planning for further changes in this space.
Paid Family and Domestic Violence Leave provisionally endorsed by Fair Work Commission
Unpaid family and domestic violence leave has been a feature of the National Employment Standards since 2018. Arising from the Fair Work Commission’s 4-yearly review of modern awards, the Australian Council of Trade Unions (ACTU) made an application to the Fair Work Commission for all modern awards to be varied to include an entitlement for paid Family and Domestic Violence Leave (FDV Leave).
Earlier this week, the Commission handed down its provisional view that all modern awards be varied to include a paid FDV Leave entitlement of 10 days.
The case for paid FDV leave
The Commission sought to analyse the prevalence, and impacts, of family and domestic violence on employees in Australia. The Commission adopted findings within the 2018 Family and Domestic Violence Leave Decision [2018] FWCFB 1691, which held that:
Employees who experience family and domestic violence often face financial difficulties as a result, such as relocation costs or become a sole parent; and may suffer economic harm as a result of disruption to workplace participation.
…
Employment is an important pathway out of violent relationships.
The Commission further assessed reports into the impacts of FDV Leave, such as Monash University’s “Safe, Thriving and Secure: Family Violence Leave and Workplace Supports in Australia” and Flinders University’s “Family and Domestic Violence Leave Entitlement in Australia: A Systemic Review”, ultimately finding:
The evidence supports a finding that paid FDV leave provides significant assistance to those experiencing FDV. Such leave helps individuals to maintain their economic security; to access relevant services, and to safely exit to a life free from violence.
In short, the Commission held that “FDV is a workplace issue that requires a workplace response” and that “the financial circumstances of employees who have experienced FDV may make it impracticable for them to access the existing unpaid entitlement.”
How will paid FDV Leave work?
The mechanics of the entitlement are yet to be determined. At this stage, the Commission has requested that the parties to the application (being the ACTU and several employer associations) provide submissions on the drafting of a model term.
However, in expressing its provisional view, the Commission has suggested that:
- Full time employees and, on a pro-rata basis, part-time employees will be entitled to 10 days paid FDV Leave per year;
- FDV Leave will accrue year-to-year, however, employees will only be able to accrue a maximum of 10 days FDV Leave;
- Employees will be able to access FDV Leave in advance of it being accrued; and
- FDV Leave will be paid at an employee’s base rate of pay.
The entitlement will likely not be available to casual employees.
Further, in expressing its provisional view, the Commission was not minded to expand the definition of family and domestic violence to include violence or abuse perpetrated by someone living in the same household but who is not a close relative or immediate family.
What this means for employers
This new leave entitlement means award covered employers will, once a determinative decision is made, need to begin accruing a FDV Leave balance to employees. Generally, this decision should serve as a reminder to employers to ensure their leave policies and procedures are up to date and compliant with requirements under the Fair Work Act and any applicable modern award.
Zombie agreements in the spotlight post federal election
The new Labor government has proposed to legislate the automatic termination of ‘zombie’ enterprise agreements that predate the Fair Work Act 2009 (Cth). The issue has remained a contentious one over a number of years and is regularly subject to consideration by the Fair Work Commission (FWC). A ‘zombie’ agreement is a term commonly used to describe enterprise bargaining agreements that have passed their nominal expiry date but continue to operate. These agreements have been under intense scrutiny because while base rates of pay must increase each year in line with the underpinning modern award, other entitlements such as penalty rates, overtime and allowances do not necessarily have to change.
Recently, the Fair Work Commission handed down a decision to terminate a ‘zombie’ agreement in the hospitality industry after it had been operational for more than two decades. Commissioner Hunt labelled it a ‘disgrace’ and said the “agreement provided no benefit to the employees at all” as it had deprived them of “payment for penalty rates for work performed at night, on weekends and public holidays”.
Considering this, employers operating under a ‘zombie’ agreement will have two options: bargain for a new agreement or revert to modern award coverage. When bargaining for a new agreement, employers should be aware that they must satisfy the ‘better off overall’ test. Essentially, this means that employees covered by the new agreement must be better off than what they would have been under the applicable modern award.
Decisions like the one outlined above, indicate that the sun is setting on outdated enterprise agreements, and it seems likely that the FWC will continue to rule in favour of terminating them. For businesses, this means that employers could potentially be exposed to a sudden increase in wages and other entitlements such as overtime, penalty rates, and allowances.
Victim of body shaming awarded $10,000 in damages
The Victorian Civil and Administrative Tribunal (VCAT) has found that a line manager’s comments about a subordinate’s body shape, even without intended sexual innuendo, constituted sexual harassment, and resulted in the subordinate sustaining post-traumatic stress disorder.
The former employee of Gumboots Australia Pty Ltd alleged that her line manager sexually harassed her at work between August 2019 and January 2020. The 35-year-old production coordinator claimed her line manager had slapped her on the buttocks on multiple occasions and once brushed his hand over her breast while she was trying on a product they were reviewing. Further, she alleged that during a garment fitting he asked her why her "upper body is so big but your bottom so skinny” and said her "bottom has no meat".
Despite the line manager’s dismissal after the worker lodged a sexual harassment complaint, she resigned shortly after due to stress caused by co-workers talking about what had occurred. Gumboots Australia Pty Ltd went into liquidation, but the worker made a claim that she was sexually harassed in contravention of section 93 of the Equal Opportunity Act 2010 (Victoria) and made that claim against her former manager directly.
In determining the claim, a Senior VCAT Member said the line manager’s comments about his subordinate’s body shape were “vulgar and inappropriate” and constituted conduct of a sexual nature. The Senior Member also outlined that a reasonable person would have been offended or humiliated by intimate actions such as being slapped on the buttocks and acknowledged the sexual harassment that the worker was subjected to caused significant stress and anxiety.
The worker had initially sought $110,000 in general damages, special damages, aggravated damages, and out-of-pocket medical expenses. VCAT determined multiple instances of sexual harassment had occurred, found that the line manager’s conduct had contravened section 93 of the Equal Opportunity Act 2010, and ordered him to pay $10,000 in general damages to the applicant.
Bus driver unfairly dismissed for asking customer to wear a mask
The Fair Work Commission has recently decided that a bus driver was unfairly dismissed for asking a customer to wear a mask.
The Respondent operates public busses on the Gold Coast under contracts with TransLink. At the time of the dismissal, mask-wearing was mandatory on public transport under Queensland Government public health orders. But the Respondent had a policy that frontline staff were not expected to enforce the mask mandate, which it said remained a police responsibility.
The customer had a mask under his chin and, when the Applicant asked him to wear it properly, claimed to have a medical exemption. When the Applicant asked again, the customer said “f*ck off Karen”, following which the Applicant insisted he get off the bus. The Respondent said this conduct breached the policy, posing safety risks due to the potential for customer aggression.
Commissioner Riordan found that the Applicant had not ‘enforced’ the mandate and had refused to drive the bus only after being verbally abused. The Commissioner rejected the Respondent’s ‘astonishing’ argument that the customer’s words were ‘rude but not abusive’ and found it had inappropriately ‘condoned’ the abuse.
Further, the Commissioner held that the conduct was still not a valid reason for termination even if it breached the policy, saying it was ‘incredulous’ that the Applicant had been dismissed for asking a passenger to comply with the mandate and the omnipresent public health advice. The Applicant was reinstated.
Director handed prison sentence for ignoring WHS complaint
A Queensland block-laying business has been fined $300,000 and its Director handed a prison sentence of four months’ jail wholly suspended for recklessly disregarding a worker’s safety concerns moments before a second worker fell and sustained serious impalement injuries.
The Company and its Director were found to have committed section 31 of the Work Health and Safety Act 2011 (Qld). Under this provision, a category 1 offence is committed where:
- a person has a health a safety duty; and
- engages in conduct that exposes an individual to a risk of serious illness, injury, or death without reasonable excuse; and
- the person is reckless as to this risk.
The Company was engaged to lay blocks at a site surrounded by excavations and featuring a very steep incline. The excavations included a 1.9 metre deep unbarricaded trench with an uncapped steel bar at the bottom.
The worker fell into the trench while traversing the path and was impaled on the steel bar. He was transported to the hospital where the bar was surgically removed.
A Workplace Health and Safety Queensland investigation found that the Company’s Director had directed the workers to retrieve materials from the lower area of the site and carry them up the path. Moreover, a co-worker of the injured worker had slipped and almost fallen into the trench minutes earlier and reported this to the Director. It was found that the Director had disregarded these warnings and had taken no action.
The Court held that both the Company and Director had engaged in conduct exposing individuals to the risk of death or serious injury without reasonable excuse and were reckless as to the risk.
The case is an important reminder to respond to reported hazards in accordance with established risk identification and management protocol.
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The Brief – Feb 2024
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