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5 Lesser Known Provisions of the Fair Work Act: Did you know?

2 November 2014

5 Lesser Known Provisions of the Fair Work Act: Did you know?

Kathryn Dent, Director and Margaret Chan, Associate

Fact 1: The Difference Between Award Coverage vs Award Application and Why it Matters?

Award coverage: an employee will be covered by a modern award if the award coverage clause provides for coverage of the type of role the employee is occupied in and this is supported by the classifications contained in the award (e.g. indicative roles indicate that the role occupied by employee would be covered). There is no way to contract out of award coverage and an employee’s role is either covered by the award, or not.

Award application: whether an award applies to an employee is a different question to award coverage. Where an award applies to an employee, the terms of the award will govern the terms of their employment together with the terms of their employment agreement. A modern award may not apply in a variety of situations, such as if the employee is a high income employee – that is, an employee earning over or above the High Income Threshold (currently $133,000 in the 2014/15 Financial Year) and who has received a Guarantee of Annual Earnings.

Put simply, award coverage is broader than award application and therefore not all employees covered by the award will have the award apply to their employment. This difference becomes particularly important in the context of Unfair Dismissal and determining whether a high income employee has the ability to bring an Unfair Dismissal claim before the Fair Work Commission (“FWC”).

An employee earning above the High Income Threshold may still fall within the FWC’s Unfair Dismissal jurisdiction if it can be established that their role was award-covered. The fact that the award may not apply to their employment does not preclude them from bringing a claim and will not be relevant (except that it may negate the need to consult in a genuine redundancy situation). However, if the employee has been provided with a Guarantee of Annual Earnings, then the award will not apply to their employment. This may be relevant if they are alleging that a breach of the award term (e.g. a failure to follow consultation provisions) by their employer makes their dismissal harsh, unjust or unreasonable. In such circumstances, the employer could defend the dismissal, by arguing that it had no obligations to abide by the award provision, since the award did not apply to the employee at the relevant time.

Fact 2: Replacement Employees – What you need to know

A replacement employee is one who is engaged to perform the work of another employee who is going to take, or is taking, unpaid parental leave. While the majority of employers comply with the requirement to inform the employee that their engagement to perform that work will be temporary (by for instance, advertising the role as a ‘parental leave contract’), employers also have an obligation to inform the replacement employee of other matters relating to the parental leave replacement role.

Section 84A of the Fair Work Act 2009 (Cth) (“FW Act”) provides that an employer must inform a replacement employee of the right of:

  • the employer and the employee taking parental leave to cancel the leave if the pregnancy ends other than by the birth of a living child or the child dies after birth;
  • the employee taking parental leave to end their leave early if the pregnancy ends other than by the birth of a living child or the child dies after birth, and return to their pre-parental leave position (i.e. the one occupied by the replacement employee) or an available position for which they are qualified and suited nearest in status and pay to the pre-parental leave position; and
  • the employer to require an employee taking unpaid parental leave to return to work, if they cease to be the primary caregiver.

Fact 3: Right of Entry -Your Rights 

Under the FW Act, a person – usually an officer of an industrial organisation (“Permit Holder”) who holds a Fair Work entry permit (“Entry Permit”) will be allowed to enter a workplace to investigate contraventions of the FW Act or hold discussions with employees whose interests it represents, or is entitled to represent. Prior to entering the workplace, written notice (“Entry Notice”) must to be given by the Permit Holder to the employer. This should be provided no less than 24 hours and no more than 14 days before the Permit Holder’s proposed visit, however less notice can be provided if an exemption has been granted by the FWC.

On attendance at the workplace by the Permit Holder, an employer has the right to request, and the permit holder is required to have available, their original Entry Permit issued by the FWC and a copy of the Entry Notice for inspection. When inspecting the Entry Notice, employers should ensure that it includes details of the:

  • premises to be entered;
  • day of entry;
  • organisation the Permit Holder belongs to;
  • section of the FW Act that authorises entry (this will depend on the purpose of entry and will generally either be for the purpose of investigating suspected contraventions (s 481) or holding discussions (s 484); and
  • details of the suspected contravention (if the permit holder is attending the workplace for the purpose of investigating suspected contraventions).

The Entry Notice must also include a declaration by the Permit Holder that they are entitled to represent the industrial interest of an employee at the workplace to whom the suspected contravention relates, or who is affected by the suspected contravention, and must set out the provision in their organisation’s rules that details the organisation’s right to represent the employee.

While at the workplace, the Permit Holder must abide with reasonable requests from the employer in relation to conducting interviews or holding discussions in mutually agreed rooms or areas, taking certain routes to this room or area and occupational health and safety. They must also act in a proper manner and not intentionally hinder or obstruct the work being carried out at the workplace. Failure by the Permit Holder to fulfil any of their obligations discussed above constitutes a contravention of a civil remedy provision of the FW Act, meaning that they may be liable to a maximum penalty of $10,200.

Fact 4: What happens when an enterprise agreement’s nominal expiry date passes?

If you have ever been employed under an enterprise agreement or had to negotiate one with your staff, you are probably familiar with the term “Nominal Expiry Date”. But what are its practical implications and what happens when the Nominal Expiry Date passes?

Practically, it is better to think of the Nominal Expiry Date as reminder or mechanism which triggers the parties to re-engage in, or at least consider re-engaging in, negotiations around the terms and conditions of employment going forward. This is also consistent with the fact that many of the FWC’s powers in relation to bargaining (e.g. applications for bargaining orders) are only enlivened in the absence of an enterprise agreement or where the Nominal Expiry Date of the previous agreement has passed.

While an enterprise agreement may have technically “expired” when the Nominal Expiry Date has passed, under the FW Act an enterprise agreement does not cease operating and governing the employment relationship between the parties until it has been varied, terminated or replaced. A new enterprise agreement also cannot start applying until the earlier agreement has passed its Nominal Expiry Date.

Employers should be careful not to confuse expiry of an enterprise agreement with termination of an enterprise agreement, as it is only in the event of the latter that any Award conditions (if one applies to the workforce) will resume their application, and thus they should continue to comply with the terms of the enterprise agreement until it ceases to operate at law.

Fact 5 – Individuals can be liable too if they’re “involved”

Individuals (particularly those in managerial or executive positions) can be liable for contraventions of any of the civil remedy provisions in the FW Act, if they are found to have been “involved in” the contravention. This might either be because the person has:

  • aided, abetted, counselled or procured the contravention;
  • induced the contravention (whether by threats or promises or alternative means);
  • been directly or indirectly, knowingly concerned in or party to the contravention by their acts or omissions; or
  • conspired with others to effect the contravention (section 550).

A similar provision also exists within part of the FW Act dealing with general protections, meaning that an individual may also be found to have contravened a general protections provision if they “advise, encourage, incite or take any action with intent to coerce, a second person to take action” that is in contravention of a general protections provision (section 362). As this section is not a civil remedy provision, this section does not in any way limit the operation of, or the liability of an individual under, section 550.

While it may not always be possible to avoid a claim being brought against an individual pursuant to this section, even when the individual exercises the utmost care in handling employment relations matters, the FWC has the discretion to reduce any penalty payable by an individual if they are of the view that any involvement in the contravention by the individual was not wilful.

Key Takeaways

  1. The sheer volume of the Fair Work Act 2009 (Cth) means that you are unlikely to know every section.
  2. The fast facts we have identified here will minimise legal exposure to penalties and compensation.
  3. If you are unsure about your obligations, particularly if you are encountering a situation for the first time, you should refer back to the relevant law and/or seek legal advice.
Posted in Strateg-Eyes.
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