Here comes 2019: Changes to Remember

Rocio Paradela, Graduate Associate

With the start of the new year upon us and everyone slowly getting back to work, it’s time to reflect on what changes organisations need to keep in mind in 2019.

Fair Work Amendment (Casual Loading Offset) Regulations 2018

The new Fair Work Amendment (Casual Loading Offset) Regulations 2018 (Cth)1 came into force on 18 December 2018. These amendments are the direct result of the Full Court of the Federal Court of Australia decision in Workpac Pty Ltd v Skene2 (discussed in our previous blog) and seeks to address employers’ concerns that wrongly classified employees may be able to “double dip”.

Under the amendments, employers who have wrongly classified an employee as casual, may be able to offset the amount already paid as a casual loading to satisfy entitlements found to be owing to the employee under the National Employment Standard (“NES”).

The Regulation will only apply if all of the following conditions are met:

  • a person is employed on the basis that they are a casual employee;
  • the employer pays the employee an amount (the casual loading) that is clearly identifiable as an amount paid to compensate the employee for not having one or more relevant NES entitlements;
  • during all or some of the employment period, the person was in fact an employee other than a casual employee; and
  • the person makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements.

The new regulation applies to time worked both before and after 18 December 2018.

Modern Slavery Act

Following our blog on 15 October 2018, the Modern Slavery Act 2018 (Cth) has been passed by the Commonwealth Parliament and commenced on 1 January 2019, imposing new reporting requirements on employers.

Changes in Modern Awards

As part of the Fair Work Commission (“FWC”) four yearly review of modern awards, there have been several changes to some modern awards.

Termination Payments

A new termination payment clause has been included in some modern awards. This clause imposes a requirement that on termination an employer must pay an employee’s outstanding wages and other entitlements no later than seven days after the day the employment was terminated. Common modern awards that now have this clause include:

  • Clerks – Private Sector Award 2010;
  • General Retail Industry Award 2010; and
  • Banking, Finance and Insurance Award 2010.

Casual Conversion

On 1 October 2018, a model casual conversion clause was inserted in 84 modern awards (with others containing a modified clause or already having such a clause). This clause allows certain casual employees to request their employment be converted to permanent, provided they satisfy certain conditions. The employer can refuse to convert a casual employee to permanent status where the employer has consulted with the employee first, there are reasonable grounds to do so, and the refusal is put in writing within 21 days of the request being made.

Flexible Work

A new clause that supplements the flexible working arrangement provisions of the Fair Work Act 2009 (Cth) (the “FW Act“) has also been introduced into modern awards. In our blog of 2 October 2018 we explain the implications of this new clause.

It is worth noting that the FWC will no longer be required to conduct four-yearly reviews of modern awards as the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 20185 passed both houses of Parliament on 5 December 2018 and received Royal Assent on 11 December 2018.

Family and Domestic Violence Leave into NES

The Fair Work Amendment (Family and Domestic Violence Leave) Act 20186 took effect on 12 December 2018. The FW Act now includes the right for workers to take up to five days of unpaid family and domestic violence leave per year as part of the NES. This extends the right to all workers, beyond the coverage of the award system.

If you require any advice as to how these legislative changes may affect you or your organisation, please feel free contact People + Culture Strategies on (02) 8094 3100.


1 Fair Work Amendment (Casual Loading Offset) Regulations 2018 (Cth)
2 http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2018/2018fcafc0131
3 4 yearly review of Modern Awards
4 Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017
5 Fair Work Amendment (Family and Domestic Violence Leave) Act 2018

The Devil is in the Detail: New Model Term on Flexible Working Arrangements

Therese MacDermott, Consultant and Rohan Burn, Graduate Associate

As part of the four-yearly review of modern awards, the Full Bench of the Fair Work Commission (“FWC”) has recently published a provisional model term that supplements the flexible working arrangement provisions of the Fair Work Act 2009 (Cth) (“FW Act”) (the “Model Term”).

This follows the FWC’s decision in March 2018 where it rejected a major overhaul of the right to request flexible working arrangements on the basis that what was being sought would effectively remove the ability of businesses to determine how to roster labour.

While acknowledging there was a significant unmet employee need for flexible working arrangements, the FWC settled on an approach that would see a model term incorporated into modern awards that would “facilitate” arrangements and raise awareness of the right, rather than offering an avenue to challenge a denial of a request. Hence, the end result is a proposed model term that sets out the process an employer must follow if it is responding to a request and gives the FWC a degree of supervision over this process, but no decision-making role in relation to the underlying decision to refuse the request.

Further submissions relating to any award-specific issues will be made within the next two weeks. Subject to these submissions, it is the FWC’s provisional view that all modern awards should be varied to insert the Model Term. That provisional view will only be displaced in respect of any particular modern award if it is demonstrated that there are matters or circumstances particular to that modern award that do not necessitate the inclusion of the Model Term.

Flexibility requests under the FW Act

Under section 65 of the FW Act:

  • an eligible employee may make a written request for a change in working arrangements which sets out the details of the change sought and the reasons for the change;
  • the employer must give the employee a written response to the request within 21 days, stating whether the employer grants or refuses the request;
  • the employer may refuse the request only on reasonable business grounds; and
  • if the employer refuses the request, the written response must include details of the reasons for the refusal.

Under this scheme an employer’s decision to refuse a request for a flexible working arrangement is not subject to any review or appeal. As a result, the FWC is unable to deal with a dispute about whether an employer had “reasonable business grounds” for refusing the request unless the parties have agreed in a contract of employment, enterprise agreement or other written agreement that the FWC can deal with the matter.

What will change with the Model Term

The proposed Model Term will apply to all categories of employees who make a request under section 65 of the FW Act, and is not confined to parents and carers only.

Of particular importance for employers are the following process aspects:

  1. before responding to the request, the employer must discuss the request with the employee and “genuinely try to reach agreement” on a change in working arrangements that will reasonably accommodate the employee’s circumstances having regard to:
    1. the needs of the employee arising from their circumstances;
    2. the consequences for the employee if changes in working arrangements are not made; and
    3. any reasonable business grounds for refusing the request;
  2. the written response to the request must include details of the reasons for the refusal, including the business ground(s) for the refusal and how the business ground(s) apply;
  3. if the employer and employee cannot agree (at (1) above) on a change in working arrangements, the written response must:
    1. state whether or not there are any changes in working arrangements that the employer can offer the employee so as to better accommodate the employee’s circumstances; and
    2. if the employer can offer the employee such changes in working arrangements, set out those changes in working arrangements;
  4. if the employer and the employee reached an agreement (at (1) above) on a change in working arrangements that differs from that initially requested by the employee, the employer must provide the employee with a written response to their request setting out the agreed change(s) in working arrangements; and
  5. disputes about whether the employer has discussed the request with the employee and responded to the request (as required) are to be dealt with under the consultation and dispute resolution clauses of the modern award.

As a consequence, a dispute resolution clause can only be relied on in respect of a dispute about whether the employer has discussed the request with the employee and responded to the request, rather than the substantive decision whether to grant the request.

Implications

While the Model Term (for the most part) may already reflect the practices that organisations engage in, it does:

  • require employers to be mindful of the level of genuine deliberation and consultation they engage in with employees in responding to requests; and
  • increase the regulatory burden in administering requests.

It is also likely that organisations may find that, in the bargaining context, employees (or their bargaining representatives) seek to build on the Model Term and expand its scope to include disputes about whether an employer had “reasonable business grounds” to refuse the request within the dispute resolution clause.

PCS recommends that organisations update staff who are responsible for dealing with these requests (particularly line managers) about these proposed changes and any practices that may need to be revisited as a result of these changes.

Organisations should also consider the impact of these changes on employees who are not award covered and consider whether it will treat all employee requests in accordance with the proposed Model Term, or whether it will adopt different approaches for requests by award and non-award employees.

When is employment correctly characterised as casual?

Meriska Lourens, Associate

The approach to characterising casual employment was the subject of a recent determination of the Federal Court of Australia. This decision necessitates that organisations review their engagement practices around casual employment.

The Facts

The employee was a fly-in-fly-out truck driver and argued that he was a permanent full-time employee because his employment was continuous, predictable and determined in advance. On this basis he claimed to be entitled to payment for accrued annual leave when his employment was terminated.

The employer contended that:

  • it engaged the employee as a casual under its Agreement (making him ineligible for annual leave and other entitlements);
  • the employee was engaged by the hour and could choose when and where to work;
  • the Agreement described the employee as a casual; and
  • both it and the employee regarded his employment to be of a casual nature.

The Decision

The Court was asked to consider whether Parliament intended the words “casual employee” in the legislative provision granting the entitlement to annual leave to be used in their ordinary sense, their legal sense or a specialised non-legal sense.

Ultimately the Court found in favour of the employee and settled on a characterisation of “casualness” as involving an “absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work“.

The rationale for this is that employees who don’t have this firm advanced commitment will have the capacity to enjoy breaks from work when they choose, and therefore do not need to be guaranteed annual leave.

What a “no firm advance commitment” looks like

The Court outlined a range of indicia relevant to a characterisation of casualness, including:

  • irregular work patterns;
  • uncertainty;
  • unpredictability;
  • intermittency of work; and
  • unpredictability

Taking Stock

The decision has led employer groups to call for changes to prevent casual workers “double dipping” by claiming annual leave on top of a casual loading, and for a clear definition of “casual employees” in the legislation.

Unions have responded to the decision stating that there could be a sizable proportion of employees who have been incorrectly characterised as being engaged casually, and that those that have been in regular and predictable work patterns may be entitled to paid annual leave.

PCS recommends reviewing how your organisation engages with its casual workforce. It is risky for organisations to rely simply on the fact that an employee has been engaged on an hourly basis or that the applicable award or agreement provides for a definition of casual employment where this does not match the actual form and manner in which casuals are in fact engaged.

Updates to Victorian long service leave and labour hire legislation

Daniel McNamara, Graduate Associate and Rocio Paradela, Graduate Associate

Businesses that operate in Victoria need to be mindful of recent legislative changes in this jurisdiction. Two areas subject to change in Victoria are changes to long service leave entitlements and the new labour hire licensing framework.

Long Service Leave

The Victorian Parliament has passed new long service leave legislation, replacing the existing Long Service Leave Act 1992 (Vic) (the “LSL Act“). The provisions are likely to become operational later this year.

What are some of the major changes?

  • Employees will be entitled to take long service leave after completing seven years’ continuous employment instead of 10 years.
  • Both paid and unpaid parental leave will count as service (other than in the case of a casual or seasonal worker).
  • An employee can request to take long service leave for a minimum period of one day, although an employer may refuse such a request if the employer has reasonable business grounds to do so.
  • Continuity of service will not be broken where a casual or seasonal employee:
    • takes up to two years’ parental leave (whether paid or unpaid);
    • obtains the employer’s agreement in advance to an absence;
    • has a break which is impacted by seasonal factors; or
    • has been engaged on a regular and systematic basis and has a reasonable expectation of being re-engaged.

In addition, if an employee’s working hours have changed during the two years immediately before taking long service leave, the employee’s normal weekly number of hours is the greater of: the average weekly hours worked over the past 52 weeks (one year), 260 weeks (five years) or the last period of continuous employment.

Criminal liability has been established with respect to breaches of a number of obligations under the LSL Act. This includes where an employer takes adverse action against an employee because the employee is entitled to long service leave or other entitlements under the LSL Act.

The LSL Act also provides for accessorial liability of certain officeholders of a corporation where they are shown to have been knowingly involved in the commission of an offence by the corporate entity.

Labour Hire Licensing

Victoria is continuing the trend of other states, such as South Australia and Queensland, with the Labour Hire Licensing Act 2018 (Vic) (the “Licensing Act”) receiving Royal Assent on 26 June 2018.

What are some of the major changes?

Similar to labour hire licensing legislation in other Australian states, the core features of the Licensing Act include:

  • the mandatory licensing of labour hire organisations operating within Victoria;
  • the requirement of labour hire licensing organisations to meet a “fit and proper person” test to ensure that minimum standards are met;
  • penalties imposed on non-compliant labour hire organisations and on individuals/organisations engaging with non-compliant labour hire organisations; and
  • the establishment of a Labour Hire Licensing Authority (based in Bendigo) and the Office of the Labour Hire Licensing Commissioner.

A Federal labour hire system?

The Federal Labor party has promised, as an election pledge, to introduce a uniform federal scheme that would guarantee the same pay and conditions for labour hire workers as award-covered employees throughout Australia. In addition, under this model, labour hire organisations would need to demonstrate compliance with relevant workplace legislation (including the Fair Work Act 2009 (Cth) and tax, superannuation, WHS and immigration laws) in order to maintain a license.

If you require any advice as to how these legislative changes may affect you or your organisation, please feel free contact People + Culture Strategies on (02) 8094 3100.

Minimum wage up by 3.5% from 1 July 2018

On 1 June 2018, the Fair Work Commission (the “FWC”) handed down the decision in its annual wage review.

From the full pay period on or after 1 July 2018, the national minimum wage will be $719.20 per week (or $18.93 per hour). This represents an increase of $24.30 per week.

Following the decision, minimum wage rates in modern awards will be increased by 3.5% and a new national minimum wage order will be made with respect to award free employees.

What does this mean for employers?

  • Subject to the requirements of relevant modern awards, enterprise agreements and employment contracts, from 1 July 2018, employers must ensure that their full-time employees are paid at least $719.20 per week (or $18.93 per hour).
  • Employers must be aware of the award or agreement (if any) that applies to their employees and ensure wages are paid pursuant to it, noting that minimum wage rates in modern awards will be increased by 3.5%.
  • An employer who fails to pay wages in accordance with the national minimum wage order or requirements of a relevant award or agreement will be exposed to liability for breach of the Fair Work Act 2009 (Cth).

 

 

When is the ordinary turnover of labour an exception to the obligation to pay redundancy entitlements?

Daniel McNamara, Graduate Associate

In the recent case of United Voice v Berkeley Challenge Pty Ltd,1 the Federal Court found that a contracting business was not exempt from the redundancy pay obligations under the National Employment Standards (“NES”) in the Fair Work Act 2009 (Cth) (“FW Act”).

Background

  • The NES provides redundancy pay entitlements, but these are stated not to apply in circumstances where the employee’s employment is terminated due to the “ordinary and customary turnover of labour”.
  • In this case, the employer, Berkeley Challenge Pty Ltd (“Berkeley”), a part of the Spotless Group, conducted a contracting business that provided various services to its client, including cleaning and security services.
  • In 2014, Berkeley lost a contract that it had held for over 20 years with a Queensland shopping centre, and as a consequence decided to terminate the employment of 21 employees.
  • When the company declined to provide the affected employees with redundancy pay on the basis that the terminations were due to the “ordinary and customary turnover of labour”, the union representing the affected employees (United Voice) brought an action against Berkeley in the Federal Court seeking payment of the redundancy entitlements, among other things.

The Decision

During the proceedings, Berkeley claimed that it was an “ordinary and customary” practice within the Spotless Group to terminate the employment of employees in circumstances where the employing entity had lost a major contract.

The Federal Court rejected this argument on the basis that:

  • the exception only applies in circumstances where termination of employment is “both common, or usual, and a matter of long-continued practice”;2
  • in determining whether the exception applies, a Court will have regard to the established practices of the employer in question, which in this case was Berkeley, rather than the practices within the broader Spotless Group;
  • while it may have been customary for other entities in the Spotless Group to dismiss employees in circumstances where the employer lost a services contract, this was not the case for Berkeley; and
  • the terminations and redundancies were “uncommon and extraordinary” for Berkeley and not a matter of long-standing practice.

In coming to this conclusion, the Court considered the long-term employment of the affected employees, some of whom had worked for Berkeley for 21 years, and the 20 years that Berkeley had held this specific contract. As a result, the Court ordered that Berkeley provide the affected employees with redundancy pay in accordance with the NES.

Key takeaways 

  • The “ordinary and customary turnover of labour” does not operate as a blanket exception where on-going employment is dependent on the renewal of contracting arrangements.
  • The primary consideration is what has been the practices of the employer in question, rather than what has occurred within a broader group of related companies.
  • If an employer regards a redundancy situation as potentially coming within the “ordinary and customary turnover of labour”, legal advice should be sought to confirm that the established practices correspond to the requirements of the exception.

Superannuation amendments, creating super powers

Rohan Burn, Graduate Associate

The Federal Government has released an exposure draft of a new Bill on taxation and superannuation guarantee integrity measures. The Bill requires all employers to implement Single Touch Payroll (“STP”) reporting, grants the Australian Taxation Office (“ATO”) stronger enforcement powers, and sets out when new offences may have been committed.

STP reporting

Currently the STP reporting framework comes into effect from 1 July 2018 for entities with 20 or more employees. The STP is intended to facilitate the ATO in detecting, monitoring, and preventing the non-payment of superannuation. The technology enables and requires employers to provide the ATO with real-time reporting of superannuation and payroll information, such as withholding payments, employee wages, and superannuation contributions.

The Bill introduces additional reporting requirements, and will extend the STP rules to all employers from 1 July 2019. This will provide the ATO with greater visibility and address the “significant proportion” of superannuation guarantee non-compliance attributable to small businesses. This was one of the recommendations of industry and government reports in 2016 and 2017. The reports called for additional resources and powers for the ATO to ensure employer compliance with superannuation guarantee obligations and to recover unpaid entitlements.

New enforcement and compliance measures

The Bill gives the Commissioner of Taxation the ability to direct an employer to:

  • pay unpaid and overdue superannuation guarantee charge liabilities;
  • undertake educational courses relating to superannuation guarantee obligations; and
  • provide a court ordered security deposit for the payment of existing or future tax related liability.

The Bill also allows the Commissioner to disclose a current or former employer’s suspected non-compliance to an affected party.

Offences

With some exceptions, the Bill creates offences for the failure to comply with the directions set out above.

Notably, an employer is not exempt from administrative penalties and/or criminal liability even if it took all reasonable steps to comply with the direction to pay, if the employer cannot establish that all reasonable steps were also taken to discharge the liability before the direction was made.

Before issuing a direction to pay, the Commissioner of Taxation must consider the employer’s history of compliance with taxation laws, the steps the employer has taken to discharge or dispute the unpaid liability, and whether the amount is substantial, having regard to the size and nature of the business.

Key takeaways if the Bill is enacted

  • An employer may commit an offence if they fail to comply with the new powers of the ATO to give directions.
  • Employers may need to change their payroll software and/or management to report through STP.
  • Smaller employers should do a headcount on 1 April 2018. If they have fewer than 20 employees the STP rules will not apply until 1 July 2019. 
  • Submissions can be made on the Bill from 24 January 2018 until 16 February 2018.

 

Your time is limited: maximum term contracts and the unfair dismissal regime

 

Roseanna Smith, Graduate Associate

Many employers choose the flexibility of maximum term contracts when engaging employees for specific tasks or short-term employment, and assume that their time-limited nature means that they cannot give rise to an unfair dismissal claim. A recent decision by the Full Bench of the Fair Work Commission brings this into question.

A maximum term contract is a contract that states the latest point at which the employment contract is to expire, but it may also provide a right for either party to terminate the employment contract prior to the nominated date with notice. This distinguishes it from a “true” fixed term contract, where neither party has the ability to terminate the employment contract prior to the nominated expiry date.

The Fair Work Act 2009 (Cth) (“FW Act”) requires that an unfair dismissal application be based on a termination of employment at the initiative of the employer. This generally does not include where the employment comes to an end merely through the effluxion of time.

Until recently, the leading authority on maximum term contracts and unfair dismissal was a decision involving an employee who had been employed on successive maximum term contracts over a period of seven years, with an on-going expectation of renewal. The Australian Industrial Relations Commission found that an unfair dismissal claim could not be brought on the basis of the non-renewal of her contract, as the termination was simply due to the effluxion of time, and therefore was not at the initiative of the employer.

In December 2017, the Full Bench of the Fair Work Commission departed from this approach. The case involved an employee who had been employed on a succession of back to back maximum term contracts, with an expectation of renewal, spanning over four years. At the expiration of the employee’s last contract, the employer did not offer him another employment contract due to his alleged poor performance.

The Full Bench determined that the correct approach was to look at the entire employment relationship, rather than simply having regard to the termination of the last of a series of employment contracts.

As a consequence of this approach, an employee may be able to bring an unfair dismissal claim if they were employed on a maximum term contract where the nature of the arrangement suggests on on-going relationship. Where the time-limited contact reflects a genuine agreement between the employer and employee that the employment relationship would not continue after a specified date, then in the absence of any vitiating factors, representations or sham agreement, there is unlikely to be a termination at the initiative of the employer.

A “true” fixed term contract continues to be protected from an unfair dismissal claim at the expiration of the fixed term. But if the time-limited contract does not in truth represent an agreement that the employment relationship will end at a particular time, the factual circumstances need to be examined to determine whether any actions of the employer were the principal contributing factor resulting in the termination of the employment, and therefore could be regarded as being at the initiative of the employer.

Key takeaways

  • Employers should be aware that simply allowing an employment contract to expire does not automatically exclude an unfair dismissal application if the nature of employment relationship creates an expectation of an on-going arrangement.
  • Employers should make clear the manner in which a maximum term contract is being used, and discuss this with the employee to avoid creating any unrealistic expectations.
  • Maximum term contracts should not be used to disguise the true intention of the parties regarding the employment relationship, as this can give rise to the risk of the arrangement being seen as a sham.

 

Off the Record: significant penalties imposed on company and director for underpayment and failure to keep records

Cassandra Bujaroska, Graduate Associate

Background

The Federal Circuit Court of Australia has recently handed down a decision involving allegations of underpayment and inadequate record keeping in relation to a second-year apprentice employed by a plumbing company.

During the Fair Work Ombudsman’s (“FWO”) investigation of this matter the company admitted to the breaches and remedied the underpayment by providing the employee with $26,882.73 in back pay. However, the FWO still launched proceedings against the employer and a director of the company as joint respondents with respect to these breaches, seeking the imposition of civil penalties.

Employee records

The court was not required to determine whether the employee had been underpaid, as this was admitted by the employer. The judge did, however, make the following comments regarding the use of employee records in underpayment claims:

“Given the statutory requirements upon employers with respect to record-keeping…a Court would accept even the most slight and generalised evidence of an employee as to the hours of employment in circumstances where an employer does not produce appropriate records.”

The judge made reference to recent amendments to the Fair Work Act 2009 (Cth) regarding evidence in underpayment claims. Earlier this year, the FW Act was amended to provide that, in circumstances where an employer fails to keep appropriate employee records, and the employee brings an underpayment claim, the employer bears the onus of disproving any allegations made by the employee about the work performed by the employee or the payments made by the employer.

Key lessons for employers

  1. Underpayments and poor record keeping can result in significant penalties being imposed under the FW Act, both on the employing entity and any individuals who are involved in the contraventions;
  2. The FWO may still prosecute employers even though the employer admits and rectifies an underpayment; and
  3. An employer bears the onus of disproving any allegations of underpayment made by an employee.

If you require any assistance or advice regarding record-keeping requirements under the FW Act, please feel free to contact People + Culture Strategies on (02) 8094 3100.

First FWO prosecution for race-based underpayments

Therese MacDermott, Consultant

It is fairly well known to HR and legal practitioners that the extent of race based employment discrimination is not accurately reflected in the number of complaints lodged by individual workers. This makes the role of the regulator, in pursuing breaches of the Fair Work Act 2009 (Cth) (the “FW Act”) that are linked to race, a significant aspect of enforcement and compliance.

The Fair Work Ombudsman (“FWO”), since its inception, has assiduously prosecuted egregious underpayments and other conduct amounting to substantial non-compliance with core employment obligations.

In a recent case, following an audit of its work arrangements, an employer was found to have breached the FW Act in a number of respects, including by failing to pay the minimum award rates and other allowances for overtime, weekend work and public holidays and in relation to its record keeping obligations.1

The respondents admitted the underpayment and record keeping contraventions in relation to a number of its employees. However, the case proceeded on the outstanding issue of whether, in addition to the established breaches, the respondents had taken adverse action against particular employees because of their nationality or descent. Ultimately, the Court found that the employer contravened the prohibitions on discriminatory treatment in the FW Act. It held that the failure to pay particular workers correctly and other treatment was adverse action based on race.

In establishing the causal link between the treatment and the prohibited ground (in this case, race), many adverse action cases have turned on the state of mind or motivation of the decision-maker in order to ascertain the real reason for the decision-maker’s conduct. Many employers have been able to discharge the onus of establishing that a prohibited ground was not a substantial and operative factor for the treatment by establishing that the prohibited ground had nothing to do with the reasons the decision was made.

However, in this case, the Court did not accept that the second respondent (the decision-maker) was confused about the award obligations and concluded that the Malaysian national extraction and Chinese race of the employees in question was the substantial and operative reason. The Judge found that the employer failed to provide any convincing or credible explanations for the treatment consistent with the absence of race as a substantial and operative reason for the action.

This case is significant as it is the FWO’s first racial discrimination litigation. It is also a reminder to employers to ensure that decision-making within their organisations is not impacted by any prohibited grounds so as to bring into question compliance with the FW Act. Decision-makers must be able to provide credible explanations for the treatment of workers that is disassociated from any discriminatory treatment or other proscribed bases.


Fair Work Ombudsman v Yenida Pty Ltd & Anor [2017] FCCA 2299