UPDATE: Chocolate Factory Workers Given Golden Ticket by Full Federal Court in Leave Test Case

Daniel Anstey, Graduate Associate

Background 

Recently, Mondelez and the Commonwealth Government have sought leave to appeal the significant and contentious decision in Mondelez v AMWU [2019] FCAFC 138. On 21 August 2019, the Full Federal Court (“FFC”) handed down the long-awaited decision, refusing to grant the declarations sought by Mondelez and the Commonwealth Government that when a 12-hour shift worker is absent from a shift, 12 hours personal/carer’s leave is to be deducted from their annual leave balance.

The majority of Justices Bromberg and Rangiah (Justice O’Callaghan dissenting) held that regardless of shift pattern, all permanent employees are entitled to ten days of personal/carer’s leave payments in accordance with the base pay they would have received, had they been able to work on that “day”, as opposed to a notional number of average hours.

The impact of the decision can be seen when comparing two shift workers who both work 36 hours a week doing the same job for the same employer, where one works three 12-hour shifts, and the other works five 7.2-hour shifts.  The FFC’s decision means that although both employees work the same total weekly ordinary hours, the employee who works a 12-hour shift is entitled to take 10 “days” of personal/carer’s leave a year, equalling 120 hours, whereas the worker who works five, 7.2 hour shifts a week would only be entitled to 72 hours.

Key points from the majority decision:

  • A “day” in s 96(1) of the FW Act refers to the portion of a 24-hour period that would otherwise be allotted to work (a “working day”).
  • How many hours of leave a "day" will convert into will depend on how many ordinary hours were to be worked on the day the leave is taken.
  • The purpose of paid personal/carer’s leave is as a form of income protection for employees during the periods of illness, injury or unexpected emergency described in s 97.

Why is this attracting so much attention?

It has been common industrial practice for employers across industries, to accrue and pay personal leave as an hour-based entitlement, providing an entitlement to a total number of hours accruing per year.  For example, many employers have traditionally accrued and paid personal leave in a manner that would allow a full time employee to accrue a total of 76 hours personal leave per year, and this accrual would be reduced (and paid out) based on the number of hours the employee was absent from work.

Because the decision runs contrary to the practice of most employers, the change will likely require employers to:

  • Review their payroll systems to ensure that personal leave is accrued and paid out in a manner which aligns with the decision;
  • Audit and correct their employee records with respect to personal leave;
  • Determine and discharge any back-pay obligations which may have arisen as a result of the decision.

Leave to appeal

In announcing that the federal government was seeking leave to appeal, the IR Minister Christian Porter said that the decision has “sparked confusion and uncertainty around the way sick and carers leave entitlements should be calculated”.

He further stated that “employers and employees [previously] all understood that full-time staff who worked a 38-hour week were entitled to accrue 76 hours of personal leave each year, based on the number of ordinary hours they worked over a normal two-week period… That had been the situation that existed for decades”.

Porter, and the Australian Industry Group have further claimed that if the decision were to stand, it could cost businesses up to $2 billion annually.

The Minister’s strong statements may suggest that if an appeal is ultimately unsuccessful, there may be legislative change to give effect to the government’s stated position.

Strategies going forward

Given an appeal to the High Court has now been signalled, there will continue to be uncertainty into the immediate future as to whether the current decision (and the changes it would require) will be affirmed, or overturned.  While the prospect of a successful appeal does not of itself provide employers with a basis for inaction, employers will likely exercise caution before proceeding to implement material changes to their systems and employee records.

If your organisation requires advice on how to navigate these complexities, please feel free contact People + Culture Strategies on (02) 8094 3100.

WAIRC Full Bench limits the inclusion of prior overseas service when calculating long service leave

Roxanne Fisch, Executive Counsel

In a previous article, we wrote about the decision of Venier v Baker Hughes Australia Pty Ltd[1] in Western Australia, and its effect on long service leave entitlements when an employee has lengthy overseas service with related entities. The employee in that case was employed by various associated entities outside Australia before commencing work in Australia.

In summary, the decision at first instance interpreted the meaning of “one and the same employer” under the Long Service Leave Act 1958 (WA) (the “LSL Act WA”) broadly, finding that prior overseas service with an associated entity counts towards the employee’s length of continuous service with their Australian employer for the purpose of calculating their entitlement to long service leave.

That decision has subsequently been appealed, with the decision at first instance being overturned.[2] The decision on appeal turned on the meaning of the phrase “one and the same employer” in section 8(1) of the LSL Act WA. Notably, the legislation in WA is drafted in different terms to the prevailing legislation in other States, particularly in New South Wales and Victoria, which provide for continuous service with “related corporations”.

The appeal judgment considered at length the relevant principles of statutory construction and the history of amendments to the LSL Act WA in assessing the nine grounds of appeal and whether the decision at first instance should stand. The judgment also briefly considered the wording used in other States and noted that those States “which used the phrase 'one and the same employer' amended their legislation to provide that service with related or associated bodies corporate be included in the calculation of any entitlement to long service leave.” [at 42].

The appeal judgment found that the phrase “one and the same employer” should not be given a liberal interpretation and should be construed according to the statutory text which is paramount. It therefore found that the phrase is a reference to a single legal entity and that employment with a related body corporate is not an implied exception to the requirement that employment must be ‘for one and the same employer’. This means that continuous employment is employment served with a single employer, rather than extending it to related employers. The initial decision therefore went too far in its interpretation of the legislation by reading words into the Act to “fill the gap” in an effort to accord with entitlements in other States. It further found that there is nothing in the text of the LSL Act WA which evinces an intention to lift or pierce the corporate veil to find that a corporate body is in fact the employer, despite the fact that another company claims to be the employer.

In WA therefore, this decision indicates that there is no statutory right to have overseas service recognised with related bodies corporate for the purpose of calculating an employee’s long service leave entitlements.

Ultimately, the treatment of service in jurisdictions outside of Australia needs to be considered in the context of the relevant governing long service leave legislation. In the case of WA, this case stands for the proposition that only service with a single employer will count towards an employee’s length of continuous service for the purpose of their entitlement to long service leave. In other States, for example in NSW, in addition to the issue around the nature of the relationship between the employing entities, consideration also needs to be given to the territorial application of the provisions, which has previously been interpreted to mean that service with the employer must have a “substantial connection” with NSW at the time the entitlement to long service leave crystallises.

Given the idiosyncrasies which exist between the States it is imperative that employers assess each employee’s service according to the prevailing circumstances in question.

If your organisation requires assistance with this process, please feel free contact People + Culture Strategies on (02) 8094 3100.

[1] 2016 WAIRC 00210

[2] 2016 WAIRC 00843

 

Anonymous Tweeting Runs Foul of Obligation to Protect Public Sector’s Reputation

Joanna Knoth, Executive Counsel

Comcare v Banerji [2019] HCA 23 (7 August 2019)

The High Court has upheld an appeal by Comcare against a finding by the Administrative Appeals Tribunal (the “Tribunal”) that the termination of a public servant’s employment, for breaching the Australian Public Service Code of Conduct (the “Code of Conduct”) was unlawful.

Ms Banerji was employed by the Department of Immigration and Citizenship (the “Department”). During her employment, she published over 9000 tweets regarding matters relevant to the Department, using an anonymous twitter handle. The tweets were critical of the Department, its employees, its policies, Government and Opposition policies and members of Parliament.

The Tribunal found that "[s]ome of the tweets are reasonably characterised as intemperate, even vituperative, in mounting personal attacks on government and opposition figures". At least one tweet had been published during Ms Banerji’s working hours.

After investigating the matter, the Department found the tweets constituted a breach of the Code of Conduct and terminated Ms Banerji’s employment.

Ms Banerji subsequently lodged a claim for compensation under the Safety, Rehabilitation and Compensation Act 1988 (the “Compensation Act”) for an "injury" arising out of the termination of her employment.

This claim was rejected by Comcare on the basis that termination of Ms Banerji’s employment was reasonable administrative action taken in a reasonable manner. Accordingly, Ms Banerji was determined not to have suffered an injury within the meaning of the Compensation Act.

Implied freedom

The High Court noted that the Tribunal approached the matter on the basis that the implied freedom of political communication was a “personal right”, similar to the freedom of speech granted by the Constitution of the United States. The High Court held that this approach was incorrect, and that the implied freedom only extends as far as is necessary to preserve and protect the system of representative and responsible government mandated by the Constitution.  That is, the implied freedom of political communication is not a personal right, but rather a limitation on the power of the Parliament to make laws which impact on the freedom.  The Court specifically noted:

“ … Accordingly, although the effect of a law on an individual's or a group's ability to participate in political communication is relevant to the assessment of the law's effect on the implied freedom, the question of whether the law imposes an unjustified burden on the implied freedom of political communication is a question of the law's effect on political communication as a whole. …”

The High Court held that the freedom will not necessarily be breached even if a law significantly restricts the ability of an individual or a group of persons to engage in political communication. The High Court also rejected Ms Banerji’s argument that the anonymous nature of the communications excused her conduct, finding that damage to the Department could occur regardless of whether the author’s identity was exposed.

What does this mean for the Fair Work Act 2009?

To date, the general protection in the Fair Work Act 2009 prohibiting employers from taking adverse action against an employee because of their “political views” has not been tested.

While confined to its facts, the Banerji decision suggests that, if tested, the general protection will not extend to providing employees with an unfettered right to publicly express their political views, at least in circumstances where those views are inconsistent with the employee’s obligations to their employer.

However, employers should proceed with caution. The decision is not authority for the proposition that every employee who broadcasts political (or other) views that are inconsistent with their employer’s views can be dismissed. If an employee engages in such conduct, employers will need to consider all the relevant factual circumstances before deciding what, if any, disciplinary action is appropriate. Importantly, employers should ensure:

  • their contracts of employment and employment policies provide clear direction to their employees with respect to the conduct, including social media usage, that is not acceptable;
  • that conduct which is unacceptable to the employer (and therefore prohibited by the contract or policies) has a legitimate and reasonable connection to the employer’s business and the employee’s role; and
  • employees and all new-starters are provided with regular and comprehensive training with respect to those policies.

 

Dying for Change? Potential New Industrial Manslaughter Laws

Daniel Anstey, Graduate Associate

DYING FOR CHANGE – NEW INDUSTRIAL MANSLAUGHTER OFFENCES

Background

The recent and unprecedented jailing of a director in Queensland under newly-enacted offences in the Work Health and Safety Act 2011 (Qld), serves as a strong warning to organisations that the landscape has shifted when it comes to penalties for WHS offences.

In the wake of several highly-publicised workplace deaths there has been a strong push to introduce industrial manslaughter offences into WHS legislation across Australia. Alongside offences already in force in Queensland and the ACT, amendments are currently making their way through the Victorian and South Australian Parliaments. Although yet to confirm a position, NSW is the state with the highest occurrence of workplace deaths and is likely to follow suit.

Furthermore, Safe Work Australia’s Boland Report Review of the model WHS Laws and the Senate Inquiry into Industrial Deaths, both recommend the introduction of such offences.

Penalties

The Boland Report recommends that potential penalties for employers negligently causing death should be increased. This is certainly the case with the Victorian Government’s proposed law, with companies facing fines of up to $16 million and senior officers in breach their duty of care facing up to 20 years’ jail time.

Another recommendation of the Boland Report is a prohibition on insurance policies which purport to cover liability for monetary penalties under WHS legislation.

How can organisations protect against liability for industrial manslaughter?

Review your organisation’s WHS system and policies: The best way to protect your organisation and its senior officers from liability, is to ensure that your WHS policies and management systems are comprehensive. This will be particularly important regarding the liability of an organisation for the actions of its senior officers. An ability to demonstrate that an officer was engaging in conduct outside the scope of his employment may potentially save your organisation millions in penalties.

Review your workplace’s ‘WHS culture’: Poor work-place culture and attitude towards safety has been a large contributor to many of the tragic incidences of workplace deaths. Cutting corners and saving costs should never be allowed to take precedence over safety. Cultures and attitudes can be hard to change once ingrained in an organisation, and the example must be set from the top.

Ensure due diligence from directors and senior officers: As directors and senior officers with a duty of care to workers may be personally held accountable, they must be thorough with their due diligence to avoid potential prison time. This includes:

  • Having an active role in planning and implementing health and safety initiatives, or if this is not the officer’s role they should make decisions which allow for the appropriate measures to be taken.
  • Being aware of all officers who have WHS obligations, and whether relevant officers are adequately trained and qualified,
  • Ensuring that directors and senior officers understand the nature and extent of their WHS obligations, and ensuring that these obligations are met.
  • The collection of data and reports to guide WHS decision making in an organisation.
  • Frequently consulting and receiving feedback from workers on any WHS concerns they may have within the organisation.

Review incident response plans: While accidents may happen, to minimise legal implications, ensure that your organisation has clear processes in place for when an incident occurs.

Review insurance and risk allocation: As mentioned, the Boland Report not only recommends a significant increase in potential penalties, but also a prohibition on covering the risk through insurance. Make sure to be aware of any changes in this space to avoid severe financial consequences for your organisation.

Conclusion

Despite its harsh appearance, an offence of industrial manslaughter is intended to incentivise businesses with poor WHS cultures to improve and it is hoped it will be an effective deterrent to the kinds of practices that result in tragic workplace deaths.

If you require advice on how to prepare your organisation for these changes, please feel free contact People + Culture Strategies on (02) 8094 3100.

 

Switching Off – “The Right to Disconnect” from Work-Related Communication

Daniel Anstey, Graduate Associate

THE RIGHT TO DISCONNECT?

Most of us in 2019 have heard the clichéd aphorism that smartphones are “blurring the lines” between the workplace and the home, and many of us have experienced this ourselves to some degree. For the modern-day employee, it is becoming second nature to type out an email after dinner or to read “Microsoft Teams” messages while brushing your teeth.

Advances in smartphone technology, and the proliferation of innovative work-related apps have greatly improved the connectedness, productivity and flexibility of workplaces. However, it is becoming clear that being constantly connected in this way can come with a catch. Research has shown that workers who are “always on”, tend to have higher levels of stress and anxiety, and a worse quality of sleep leading to burnout and exhaustion. Indeed, it has been shown that the mere expectation of availability can increase strain for employees and their families, and negatively impact mental health.

The question also arises whether workers are being adequately remunerated for such after-hours work, potentially undermining the historical progress in reducing and limiting the maximum work week. It follows that regulation of the labour market has become more difficult, especially in terms of enforcing the National Employment Standards, calculating hours worked and extracting correct taxation.

But what can we do about it? Are we to all remain at the beck-and-call of the work email at all hours? Is the sanctity of the home and good old-fashioned peace and quiet doomed to fall victim to the indomitable rise of the smartphone?

What can the law do about this?

Several countries have begun to address these concerns by creating a new human right – the right to disconnect. France led the way in 2016 with the famous El Khomri law. Part of the Country’s reformation of its labour laws included a right for employees and unions to negotiate arrangements and policies on technology use outside of the workplace to protect employees’ personal and family time.

The changes have been immensely successful and been used as a model for similar laws subsequently implemented in Italy, Germany, Spain and the Philippines, with dozens more countries currently debating similar bills in Parliament.

Surprisingly, even in the city that never sleeps, the New York City Council is currently debating a bill which would go beyond the El Khomri law to prohibit companies with over ten employees from requiring employees to respond to after hours communications.

Although there has not yet been much discussion on the topic in Australia, it will surely be a matter of time before it is on the horizon, especially since the International Labour Organisation has recently recommended the implementation of such a right in their 2019 report Work for a brighter future – Global Commission on the Future of Work.

Enforcement issues?

While enforcement may be difficult, such laws will have served their purpose if they can change cultures and attitudes in workplaces and facilitate fruitful discussions to give employees what the ILO refers to as time sovereignty.

Differing methods of enforcement have been adopted in France, with some employers simply encouraging workers not to check emails after hours, and others going as far as setting their internal servers not to route emails to employees who are off work.

Concerns have been raised that legislating limits on around-the-clock communications may hurt a company’s bottom line. However, the ILO suggests that providing employees with greater time sovereignty may result in improved health and well-being which in turn may have a flow on effect to the productivity of an organisation.

International Bar Association (“IBA”) Annual Employment and Diversity Law Conference 2019 Copy

George Stent, Paralegal 

At the IBA’s recent Annual Employment and Diversity Law Conference, Founder and Managing Principal of People + Culture Strategies, Joydeep Hor was a guest speaker on the topic of Artificial Intelligence (“AI”) bias and data transparency in the legal workplace. Joydeep is Secretary of the IBA Diversity and Equality Law Committee, and he was joined by guest speakers from Latin America, Continental Europe and South Asia. Joydeep spoke to the difficulties that AI presents for managers and HR professionals in terms of the potential for inconsistent treatment, unequal opportunities and ultimately, unlawful discrimination, from the bias of AI in the workplace.

What is AI?

 AI refers to digital computers performing tasks that would usually be performed by “intelligent beings” such as people. At the conference, Joydeep described how AI achieves this by being similar to the neuron connections in the human body. These connections are called synapses and form a complex network. It is through this network that the brain receives and processes information enabling the human to learn. He explained that certain branches of AI work with “artificial neural networks”. It is these programs that imitate the functioning of the human brain. Information is then entered as input on one side, processed, and the result is output on the other side.

 Advantages and Opportunities of AI in the workplace

All businesses, including law firms are investing in AI technology. The Wall Street Journal estimates that spending on AI by companies will grow from $8 billion in 2016 to $47 billion by 2020 – which is an almost 600% increase. Joydeep attributes this increase to AI’s ability to optimise business processes by enhancing efficiency and automating time consuming administrative tasks. For example, in a legal context, AI is able to review contracts and undertake legal research almost instantly. One such software is “ROSS Intelligence”, which was used in a recent test where a partner at a law firm was able to find a matter that was identical to the firm’s case almost instantly, while his own research took ten hours. Joydeep and the panel noted that the research was not only efficient, but highly accurate.

However, at the conference, Joydeep questioned whether productivity control is automatically accompanied by greater effectiveness at the workplace. In making this point, Joydeep gave the example of the Henn Na Hotel, a hotel in Japan almost entirely staffed by robots. The hotel, shortly after opening, had to dump half of the robots due to them “annoying” the guests, not being capable of the jobs they were designed for, or creating more work for their human counterparts.

Risk of AI in the Workplace

 Joydeep also raised the impact that AI has on the hiring, firing and promotion decisions of HR professionals. AI has been introduced recently to screen CVs to find the best possible applicant. Joydeep therefore raised how the lack of transparency in recruitment decisions may cause a problem for employers. In illustrating this point Joydeep highlighted that the vast increase in data sources may result in employers not being aware of what information has been used to make recruitment decisions and therefore what risks may arise. This problem is compounded by the fact employers and work councils often do not understand the numerical codes according to which the algorithm acts. This may mean employers cannot guarantee that an AI system has not made a recruitment decision that does not carry a risk of a discrimination claim. Joydeep recommends that in order to prevent these claims from arising employers should monitor the data input at the very initial levels and regularly review the systems they use. He suggests that employers using AI should prepare themselves to explain why one applicant was hired and another one rejected.

 

Salaried Staff Shake-Up

Donna Trembath, Executive Counsel

Is your organisation ready for the new rules?

The Fair Work Commission (“FWC“) has decided to vary 22 modern awards to include stricter requirements for salaried employees.

Employers who prefer the administrative ease of paying annual salaries rather than award rates may be surprised by the new rules.

Which occupations and industries are affected?

The decision handed down on 27 February 2019 applies to 22 modern awards including a number of occupational awards, for example the Clerks Award and the Health Professionals Award. The affected industries include restaurants, hospitality, banking, finance and insurance, contract call centres, legal services, mining, salt, telecommunications, water, wool, broadcasting and recorded entertainment, local government, manufacturing, pharmacies, rail, pastoral and horticulture.

What are the new rules

The FWC is in the process of dividing the 22 relevant awards into “Category 1” (relatively stable hours) and “Category 2” (highly variable hours, or where significant penalty rates apply to ordinary hours).

Category 1 awards (including the Clerks Award) will receive the least burdensome model clause. Even so, subject to specified modifications for specific awards, it will require an employer who elects to pay an annual salary that is inclusive of overtime, penalty rates, allowances and loadings to:

  • detail the method by which the annualised wage has been calculated including specification of each separate component of the annualised wage and any overtime or penalty assumptions used in the calculation;
  • set outer limits on the number of penalty-rate attracting hours that an employee may be required to work each pay period or roster cycle (e.g. no more than 3 hours of work on a Sunday each week);
  • set outer limits on the number of overtime hours that an employee may be required to work each pay period or roster cycle (e.g. no more than ten overtime hours per week);
  • pay employees separately for hours not covered by the annual salary, at award rates;
  • conduct a reconciliation every 12 months (and on termination of employment) to calculate the remuneration that would have been payable to the employee under the award, and pay any shortfall to the employee; and
  • keep records of start and finish times and unpaid breaks, to be signed by the employee each pay period or roster cycle.

Category 2 awards will, subject to specified modifications for specific awards, receive a more onerous model clause under which an annual salary can only be provided if the employee agrees in writing. The employee will have the right to terminate the annual salary arrangement with 12 months’ notice and revert to award rates.

When will it take effect

The FWC is still finalising the changes and considering whether transitional provisions are needed. Written submissions are due on 27 March 2019.

Concerns for employers

Some of the criticisms of the new rules include that they are impracticable for small business, obviate the benefit of administrative simplicity which employers seek to obtain by paying an annual salary, and that salaries are often established having regard to market conditions rather than award-related matters.

While various employer parties submitted to the FWC that provisions that are too costly or burdensome will not be used, in our view annual salaries are here to stay. Employers should prepare to adapt to the changes as the FWC has come down firmly on the side of workers and preventing exploitation and wage theft.

Recommendation

PCS recommends reviewing how your organisation employs salaried employees and manages its award compliance and record keeping obligations. It is important that if you pay an employee an annualised salary where there is an underlying modern award, that you comply with the award’s strict requirements once they come into effect. Given other recent changes regarding failures to keep proper employee records, record-keeping requirements for all employees (including non-award employees) should also be reviewed. Please contact us to discuss further.

Breaking the silence: New whistleblower legislation

 

Rocio Paradela, Graduate Associate

The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 (Cth) passed both Houses of Parliament on 19 February 2019, and is now awaiting Royal Assent. This legislation aims to consolidate and broaden whistleblower protections for the corporate and financial sectors, and to introduce a whistleblower protection regime with respect to breaches of tax laws.

The events surrounding the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has put the spotlight on misconduct in these sectors, and on the role that whistleblowers may play in bringing such conduct to light.

The regime is relatively complex as it sets up a number of qualifying requirements for disclosures to be protected under the legislation.

Who is an eligible whistleblower?

Individuals who qualify for protection include current and former employees, officers and directors, contractors, suppliers, unpaid workers, family members of employees, and certain designated individuals in relation to superannuation entities.

What disclosures are protected?

Disclosures of information may qualify for protection where there are reasonable grounds to suspect that the information concerns misconduct, an improper state of affairs, conduct that could constitute an offence, or other prescribed circumstances. In addition, to qualify for protection disclosures need to be made to a relevant authority, a legal practitioner or an appropriate person (referred to as an “eligible recipient”). In the case of a corporate entity, this includes an officer or senior manager, or a person authorised to receive disclosures.

However, there is provision for certain public interest and emergency disclosures, and personal work-related grievances are on the whole excluded from the protections.

How will an eligible whistleblower be protected?

The legislation provides a number of levels of protections for whistleblowers. These include in relation to the confidentiality of whistleblowers’ identity, prohibitions on victimisation and detrimental treatment, immunity from liability in certain circumstances, and the capacity to apply for compensation.

The policy imperative

One area for employers to note in particular is that as a consequence of this legislation, certain entities (such as public companies, large proprietary companies and proprietary companies that are the trustee of a registrable superannuation entity) will be required to have a whistleblower policy in place. Failure to comply with this requirement is designated as a strict liability offence.

A policy must contain information about:

  • the protections available to whistleblowers, including the protections available under the legislation;
  • how and to whom an individual can make a protected disclosure;
  • how the company will support whistleblowers and protect them from detriment;
  • how the company will investigate disclosures that qualify for protection under the legislation;
  • how the company will ensure fair treatment of employees who are mentioned in whistleblower disclosures;
  • how the policy will be made available; and
  • any other prescribed matter.

Many of the provisions are designed to commence some months after Royal Assent is received. This gives organisations a window of time to examine their practices and to get an appropriate policy framework in place. Employers are also encouraged to consider appropriate training to deal with the new legislation, particularly for staff that are likely to be the designed recipients of disclosures within their organisation.

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.

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

It’s our secret: pay secrecy clauses in employment contracts

 
Rocio Paradela, Graduate Associate

It’s not uncommon for employers to prohibit employees from sharing details of their salaries. This type of prohibition is commonly referred to as “pay secrecy”. This practice is most often seen in sectors where discretionary incentives and bonus payments are common, such as the financial services industry.

Why does this matter?

In Australia, more than half of all employers commonly include pay secrecy clauses in their employment contracts. The concept of pay secrecy is linked to the gender pay gap. The gender pay gap currently sits at around 14.6% based on average weekly ordinary full-time earnings. This gap is largest when pay levels are secret, but almost non-existent when pay is transparent (for example, where an employer pays the minimum wage rate in accordance with the terms of an award).1

Last month the Labour opposition announced (as part of its election promise) that it will make Australian companies with more than 1,000 employees publicly report on the gender pay gap and also committed to changing the Fair Work Act 2009 (Cth) to prohibit pay secrecy clauses.

The pros and cons

There are competing arguments in this space. On the one hand, pay transparency, in theory encourages employees to be more competitive and can improve productivity and motivation. However, most employers discourage employees from discussing their pay, to avoid resentment amongst employees. The disclosure of pay disparities can create tension between employees and have an impact on overall culture. It can lead to reduced job satisfaction on the part of lower paid workers, and a focus on pay level can contribute to the impression that this is the only indicator of an employee’s worth to an organisation.

While many employers may see the worth of abolishing pay secrecy clauses as a tool to help reduce the gender pay gap, organisations will need to think about the broader impacts of removing pay secrecy clauses. Organisations will have to assess how the fact that workers might choose to disclose or not disclose their salary, could impact on the culture and morale of a work team or the organisation as a whole. If such amendments are implemented, organisations should turn their minds to developing an internal communication strategy to help guide behaviours and expectations around pay disclosures.

Interestingly, the recently published Interim Report of the Financial Services Royal Commission makes the link in a broad way between remuneration and workplace culture, showing that the way in which remuneration is structured can have a significant impact on a company’s overall culture.2

While removing pay secrecy clauses may be one strategy in closing the gender pay gap, employers should not rely on legislative changes as the only solution. Organisations can strive towards overcoming obstacles to gender equality identified in their businesses and ensure that employees are rewarded based on merit rather than personal characteristics that can give rise to allegations of discriminatory treatment. Organisations considering an open salary policy need to deliver a proactive and positive message on this point, and ensure they have defensible non-discriminatory pay practices that match this messaging.


1 Workplace Gender Equality Agency, Australia’s Gender Pay Gap Statistics, available at https://wgea.gov.au/sites/default/files/gender-pay-gap-statistic.pdf
2 Interim Report of the Financial Services Royal Commission, available at https://financialservices.royalcommission.gov.au/Pages/interim-report.aspx