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Australia Votes: What this means for workplace relations

18 August 2016

Australia Votes: What this means for workplace relations

Lyndall Humphries Senior Associate and David Weiler Associate

Following the second longest federal election campaign in Australian history, the country still had to wait another week before learning that Malcolm Turnbull and the Coalition would return to government. While workplace issues were the trigger for the double dissolution election (after the Australian Building and Construction Commission (“ABCC”) Bills and the Registered Organisations Bill were rejected multiple times by the Senate), the election arguably failed to give rise to any clear policy direction in this area, aside from the indication that one of the major parties is in favour of jobs and growth.

In this article we examine the position adopted by the Coalition during the campaign around key employment and labour law issues and look forward to what actions the Turnbull Government may take in relation to laws affecting Australian workforces. In doing so we are mindful of the difficulties of getting legislation passed with only a slim majority and in circumstances where the composition of the Senate and the voting intentions of various senators on workplace relations issues remain uncertain.

Areas to watch

Based on the Coalition’s formal policies and its positions adopted in the last sitting of Parliament, we have focused on the following key employment and labour law issues that could have a considerable impact on employers:

  • ABCC and Registered Organisations Bills;
  • protection of vulnerable workers;
  • penalty rates; and
  • paid parental leave.

Australian Building and Construction Commission

The ABCC is the former watchdog that was originally introduced by the Howard Government to monitor the construction industry and enforce workplace laws. After the repeal of WorkChoices and the introduction of the Fair Work Act 2009 (Cth) (“FW Act“), the body was renamed Fair Work Building and Construction (“FWBC”).

The major differences between the FWBC and the proposed ABCC would be the removal of certain safeguards on the coercive powers (for example, in relation to gathering information) of the agency. Currently, if the FWBC wishes to exercise its coercive notice powers (a breach of which can result in fines and potential jail time), it must seek the authorisation of a presidential member of the Administrative Appeals Tribunal (“AAT”). In order for it to grant such an authorisation, the AAT must be satisfied that other methods have failed. The proposed changes would allow the ABCC to authorise such notices itself and as a first resort. In addition, under the new ABCC, those in the construction industry would face higher maximum penalties for breaches of workplace laws than those in the general Australian workforce.

Registered Organisations

The other Bill that was a trigger for the double- dissolution election was the Registered Organisations Bill. Much of the impetus for what is set out in this Bill comes from the findings of the Royal Commission into trade union governance and corruption.

If this Bill is passed, it would establish a new regulator (the Registered Organisations Commission) in respect of registered unions and employer associations. The new body would expand the obligations imposed on officers of registered organisations around such things as the disclosure of material personal interests and transparency requirements in relation to financial management matters. It would also introduce higher civil penalties as well as potential criminal liability for serious breaches by officers of their statutory duties.

The fate of the Bills is uncertain. If the Coalition fails to gain support from enough cross- benchers, the Governor-General may convene a joint sitting of the Senate and House of Representatives to enable the two houses of parliament to vote together. However, as the Coalition has only a slight majority (76 seats) in the House of Representatives and at the time of writing appears unlikely to have sufficient numbers in the Senate, it is quite possible that neither of the Bills will be put to a vote.

Vulnerable Workers

A number of employment relationships have recently come under scrutiny because of the impact these relationships can have on vulnerable workers.

The franchisor/franchisee relationship was a high-profile media item leading up to the election. The issues that the media coverage brought to light raise questions regarding the interaction between workplace relations regulation and the franchising model.

Another topic around worker vulnerability is the situation of non-permanent residents subject to exploitation by unscrupulous employers. This was highlighted in the proceedings commenced by the FWO against a regional NSW roadhouse, which allegedly withheld government provided paid parental leave payments from a 487 visa holder. Following a complaint by the employee to the Department of Human Services that she had not received the payments, the employer allegedly produced falsified documents claiming it had paid the amounts. It was not until the FWO challenged the authenticity of these documents that the employer paid the employee the amounts owed. The employer recently admitted to the claims made by the FWO and consented to the relief sought. The matter is now proceeding to a hearing on the question of penalty.1

Government’s approach

During the campaign the Coalition promised to broaden the liability of franchisors by amending the FW Act “to make franchisors and parent companies liable for breaches of the Act by their franchisees or subsidiaries in situations where they should reasonably have been aware of the breaches and could reasonably have taken action to prevent them from occurring”. Based on the party’s platform, this would require franchisors to educate franchisees about workplace obligations and to have assurance processes in place.

While this proposal may sound compelling, it is unclear how this would work in practice as it will require the re-examination of company structures and legal liabilities between various entities. It is also questionable whether any such amendment would go beyond the current accessorial liability provisions of the FW Act.

Another response to the media coverage of these particular relationships is the proposed introduction of a new offence, which specifically covers circumstances where an employer pays the correct wages to an employee, but then forces the individual to repay a portion of these amounts back in cash.

“…the election arguably failed to give rise to any clear policy direction…”

Strengthening the FWO

In response to the risks facing vulnerable workers, the Coalition also promised during the election more resources and more power for the FWO to address cases like the one discussed above.However, it remains to be seen whether the pledged increase to the FWO’s funding by $20 million is a meaningful shift in resources. Not only has the Coalition not stated if this is an annual increase (as opposed to over two or three years), it fails to acknowledge that the regulator’s 2016-17 budget was cut by the previous government by approximately $17 million.2

In addition, the Coalition has foreshadowed that it may seek to increase the powers of the FWO by allowing it to compel individuals and companies it suspects of contravening the FW Act to produce information and answer questions. These powers are currently held by bodies such as the ACCC, the ATO and ASIC.

The Employment Minister Michaelia Cash has also announced that Professor Allan Fels will lead a new Migrant Workers Taskforce within the FWO to address the exploitation of migrant workers.

Bigger fines

To enforce these new protections, the Coalition has indicated that it will increase the penalties that apply to employers who underpay workers, and who fail to keep proper employment records. The party’s platform cites a possible figure of ten times the current maximum penalty of $54,000 for corporations, and $10,800 for individuals.

A new higher penalty category of “serious contraventions” may also be introduced by the Coalition, and will apply to any employer that has intentionally “ripped off” workers, regardless of the employer’s size.

Penalty rates

Reforms to penalty rates is an ongoing contentious issue. On the whole, employers and the business lobby want Sunday penalty rates to be cut from double time, to time and a half, and public holiday penalties from double time and a half, to double time. They argue that there needs to a sensible limit on the remuneration payable, otherwise businesses will close or reduce their hours. On the other hand, employees and unions defend the current system of penalty rates, arguing that penalty rates provide an incentive for people to work on weekends or at undesirable times, and that many people rely on the extra cash.

As part of the 4 yearly review of modern awards, the Fair Work Commission (“FWC”) is reviewing penalty rates in a number of awards in the hospitality and retail sectors. The penalty rates case, which is currently before the FWC, commenced in early 2015 and interested parties were able to make submissions. Labor took the unprecedented step of making a submission to the FWC, arguing against cuts to penalty rates, which was a first for any political party. The Coalition has declined to make a submission and has said it will accept the decision of the FWC.

The Coalition recently rejected Labor’s proposal for the Government and Federal Opposition to co-author a submission to the FWC during this term of parliament that emphasises the importance of penalty rates and advocates against any cuts. This position is consistent with the Coalition’s response to Labor’s first offer of a joint effort on penalty rates in the last parliamentary term. Although the issue of penalty rates featured in each of the major parties’ election campaigns, it is clear that the Coalition is firm on leaving the matter in the hands of the industrial umpire, rather than treating penalty rates as a critical agenda item in this parliamentary sitting.

Paid Parental Leave Scheme

As discussed in a previous edition of Strateg- eyes, in mid-2015 the Government proposed changes to the Paid Parental Leave Act 2010 (“PPL Act”) as part of its 2015-16 budget measures.

Under these proposed changes, an employee who is eligible to receive paid parental leave must notify the Government of any employer provided parental leave payments. If any such payments are being received, the employee’s paid parental leave would be reduced by the amount of those payments. This could mean that an individual would not be entitled to receive any paid parental leave under the paid parental leave scheme.

The proposed changes were originally scheduled to take effect on 1 July 2016 but did not pass through the House of Representatives before the election. Although this was not a major campaign issue, the Turnbull Government is publically committed to making changes to the paid parental leave scheme going forward. Whether the changes take the form of the changes already proposed, or the Turnbull Government puts forward some revised changes, remains to be seen.

Navigating the uncertainty

The new Parliament must sit no later than 7 September 2016. Going forward, employers will need to be vigilant in relation to any changes to workplace laws that may be introduced by the newly minted government and should take care when framing policies on the basis of legislative entitlements that may be subject to changes.

Key Takeaways

The Coalition has announced plans to:

  • re-establish the ABCC;
  • create a Registered Organisations Commission;
  • strengthen the powers of the FWO through increased funding and resources;
  • protect vulnerable workers;
  • introduce higher penalties for the underpayment of workers; and
  • make changes to the existing paid parental leave scheme.

1 Fair Work Ombudsman v Noorpreet Pty Ltd & Anor [Federal Circuit Court File No. SYG1368/2016].

2 FWO Budget Statement available at <docs.employment.>

Posted in Strateg-Eyes.
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