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).

 

 

FWC decides on Family or Domestic Violence

 

Rohan Burn, Graduate Associate

The Fair Work Commission decision in March 2018 recognised that family and domestic violence “is an issue that impacts on workplaces and…requires specific action.”

As part of the four yearly review of modern awards, in July 2017 the Full Bench of the Fair Work Commission (“FWC”) formed the preliminary view that it was necessary to make provision for family and domestic violence leave, but that they were not satisfied that it was to include in all modern awards an entitlement to 10 days’ paid leave. However, the FWC did express the preliminary views that all employees experiencing family or domestic violence should have access to unpaid leave and that employees should be able to access personal/carer’s leave for the purpose of taking family and domestic leave.

Parties were then provided with the opportunity to make submissions before the decision was finalised. In March 2018 the Full Bench reconvened, and decided to provide five days unpaid leave per annum to all employees (including casuals). However, it deferred consideration of whether employees should be able to access personal/carer’s leave for the purpose of taking family and domestic violence leave.

While the exact wording of the new model term has not been finalised, the March 2018 Full Bench decision gives a good indication of the scope of the obligations.

Proposed model term

As it is currently framed, the model term will allow an employee experiencing family or domestic violence to take five days’ unpaid leave per annum if:

  • the employee needs to take some action to deal with the impact of family or domestic violence; and
  • it is impractical for the employee to do that outside their ordinary hours of work.

The leave will be available for full-time, part-time, and casual employees. Eligible employees will be entitled to the full five days’ leave from the start of each year, but the leave will not accumulate.

In applying for the new entitlement:

  • an employee will need to give notice to their employer as soon as practicable (which may be a time after the leave has started) advising the employer of the expected period of the leave;
  • an employee, if required by the employer, will need to provide evidence that would satisfy a reasonable person that the leave is taken for the specified purpose; and
  • employers will need to take steps to ensure that the employee’s information is treated confidentially (as far as it is reasonably practicable to do so).

How this entitlement will fit in with other rights and obligations

Once the drafting of the model term has been finalised, employers will need to amend their policies accordingly. Many employers may have been dealing with this type of leave entitlement already, as it has been incorporated in a range of enterprise agreements for some time, and often on more generous terms, including paid leave entitlements. There is also an existing obligation under the Fair Work Act 2009 (Cth) to consider requests for flexible work arrangements for those experiencing family or domestic violence, and those supporting someone in this situation.

Key takeaways

  • Once the term has been finalised, employers will need to review their existing policies to ensure it meets the new minimum set by the model award term.
  •  The inclusion of casuals within the scope of this new entitlement needs to be taken into account.
  • Whether employees dealing with family or domestic violence can avail themselves of forms of paid leave, such as personal or carer’s leave, remains to be determined.

 

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.

 

Doesn’t add up: no accrual of leave entitlements during a lockout

 

Roseanna Smith, Graduate Associate

The Fair Work Commission (“FWC”) has held that a lockout constituted an “excluded period” of service under the Fair Work Act 2009 (Cth) (“FW Act”), and consequently that the employees affected by such action did not accrue annual leave or long service leave during this period.

What is an “excluded period”?

The FW Act provides that a period of service is a period during which the employee is employed by the employer, but does not include an “excluded period”.

An excluded period is defined to include any period of unauthorised absence or any period of unpaid leave or unpaid authorised absence (other than certain specified categories).

When calculating leave entitlements, an excluded period will not be included in a period of service, although it does not break the employee’s continuous service.

In April 2017, after a year of enterprise agreement negotiations, an employer locked out its employees in response to notified industrial action that was to take the form of work bans and four-hour stoppages. A dispute then arose as to whether the lockout constituted an “excluded period”.

Annual Leave

The FWC decided that a lockout was an unpaid authorised absence, as it was an absence “that is endowed with authority or approval” by the employer. The FWC determined that it did not matter whether the employees who were absent “agreed or wished to be absent”; what is relevant is that the absence was authorised by the employer.

The FWC was of the view that because the FW Act expressly deals with the situation where employees are stood down as being included in a period of service, it considered that the legislature had turned its mind to the issue. Hence, if a lockout period was meant to be included for the purpose of calculating leave entitlements the legislature would have expressly included that within the FW Act provisions.

Long Service Leave

Both the relevant Modern Award provisions and the relevant state long service leave legislation (Long Service Leave Act 1992 (Vic) (“LSL Act”)), referred respectively to an “unbroken contract of employment” and “continuous employment”. The Modern Award and the LSL Act provided for exclusions when calculating long service leave, including “service interruptions”, such as industrial disputes. The Commission agreed with the employer that the ordinary meaning of industrial dispute included disputes arising from enterprise agreements and lockouts. Consequently, during the period of the lockout the accrual of long service leave was effectively paused.

The decision is significant because it highlights that the consequences of industrial action can extend to employee entitlements. It remains to be seen whether the decision will discourage industrial action by employees.

 

Key takeaways

  • The taking of industrial action, including by an employer in response to actions by employees, can have consequences for leave entitlements.
  • Certain actions may give rise to an “excluded period” and will not count towards the length of the employee’s service, but do not break the employee’s continuous service.
  • In the case of long service leave, industrial action may have an effect on the entitlement depending on the terms of the exclusions in the relevant state legislation and industrial instrument.

 

Not the norm: annual leave entitlements for nurses

 

Ellen Davis, Associate

When we think of annual leave we often think of four weeks as the norm, as well as an additional week for certain types of shiftwork. But in some cases, the base entitlement is higher, and it is also necessary to look carefully at which employees qualify under the shiftwork provisions.

For example, employees covered by the Nurses Award 2010 are entitled to five weeks’ annual leave, and those who are engaged in shiftwork are entitled to six weeks’ annual leave.

The Nurses Award

While the Nurses Award, like most other modern awards, adopts the National Employment Standards, it goes on to provide additional annual leave entitlements to employees covered by the Award.

Clause 31.1 of the Award provides:

a) In addition to the entitlements in the NES, an employee is entitled to an additional week of annual leave on the same terms and conditions.

b) For the purpose of the additional weeks annual leave provided by the NES, a shiftworker is defined as an employee who:

i. is regularly rostered over seven days of the week; and

ii. regularly works on weekends.

c) To avoid any doubt, this means that an employee who is not a shiftworker for the purposes of clause 31.1(b) above is entitled to five weeks of paid annual leave for each year of service with their employer, and an employee who is a shiftworker for the purposes of clause 31.1(b) above is entitled to six weeks of paid annual leave for each year of service with their employer.

Hence, an award or agreement may provide a more generous base entitlement than the NES, and define shiftwork for the purposes of that award or agreement in a particular way.

What does “regularly rostered” or “regularly works” mean?

There are authorities spanning through the different industrial tribunals and commissions which provide that an employee “regularly works Sundays and public holidays if they have worked at least 34 Sundays and 6 public holidays in a year”.1 While this decision was in the context of award and agreement free employment and the Full Bench has not yet had the opportunity to confirm that the above principle applies universally to all modern awards, it is expected that the Fair Work Commission would be guided by, and have little reason to depart from, the above principle in determining any dispute about the interpretation of “regularly works” or “regularly rostered”.

In the context of the Nurses Award, it would appear from the use of the words “regularly works weekends” that Saturday shifts would be included in the quota of 34 Sundays.

 

Key takeaways

  • Employers should check the specific wording of the award or agreement regarding annual leave entitlements.
  • In the case of additional leave entitlements for shiftwork, working a minimum of 34 shifts on Sundays per year tends to be the prevailing standard, but this can be varied by an award or agreement.
  • Employers who wish to minimise their additional annual leave costs could consider how they organise their rosters.

Is it all “strictly confidential”?

 

Cassandra Bujaroska, Graduate Associate

Scenario

It is Friday afternoon and one of your most senior employees, the manager of the sales team, comes to your office to officially give notice of their resignation. All appears to go smoothly, until, a few months later, you lose two of your firm’s major clients. Upon investigation, you discover that the senior executive accessed and stored confidential information on a USB before he resigned.

You need a game plan, but you are unsure how to go about it. What steps should you take? What are you legally entitled to do in these types of situations? What obligations do employees owe regarding confidential information post-employment?

What is confidential?

Any information that is not in the public domain, such as customers’ names and software programs, and trade secrets would fall under the definition of confidential information. Additionally, the case law in this area points to a number of factors that are relevant in determining whether or not information is considered to be confidential. Recently, the factors that a court will consider were summarised, and include the following1:

  • The extent to which the information is known outside the business;
  • The skill and effort required to collect the information;
  • The extent to which the business treats the information as confidential;
  • The value of the information to competitors;
  • Whether the information can be easily duplicated by others;
  • Whether the employee was informed that the information was confidential; and
  • Whether the usage and practice in the industry supports the confidentiality.

How does the law protect confidential information?

Employees owe a number of obligations to their employer regarding confidential information obtained in the course of their employment. For example:

  • an employee will have an implied contractual obligation to maintain confidentiality, an obligation which remains post-employment;
  • an employee may be subject to equitable obligations, including fiduciary duties to maintain confidentiality, and to act only in the interests of the employer;
  • if employed by a corporation, an employee will have an obligation under the Corporations Act 2001 (Cth) to not ‘improperly use the information to gain an advantage for themselves or someone else, or to cause detriment to the corporation’.2

The best way for an employer to protect its confidential information is to ensure that the employee has a written contract of employment that includes specific obligations with respect to confidential information.

For example, the contract should:

  • define confidential information;
  • impose express obligations (both during and post-employment) not to misuse confidential information; and
  • impose obligations to prevent misuse of confidential information by other parties, and to report any such misuse to the employer.

What to do if an employee breaches confidentiality

If an employee breaches his or her obligations with regards to confidential information, the employer may pursue a number of legal remedies, including:

  • an injunction to prevent any further breaches of confidentiality;
  • damages for breach of contract; or
  • an account of profits.

However, an employer will need to act quickly to ensure that these remedies remain available.

Key takeaways

  • Make express provision for confidentiality in employment contracts and in relevant workplace policy and procedure;
  • Expressly define what constitutes confidential information;
  • Regularly update what is confidential information as the business develops and where roles change;
  • Undertake training on confidential information, and make clear the consequences of improper use of such information; and
  • Act quickly with respect to any suspicion that any past or current employees have breached their obligations to keep information confidential.

Please contact People + Culture Strategies on (02) 8094 3100 if you would like assistance with reviewing or preparing confidential information policies, procedures or training.


Reed Business Information v Seymour [2010] NSWSC 790.

The Fair Work Commission gives Uber a Christmas gift: Drivers are not employees

 

Rohan Burn, Associate

In December 2017, the Fair Work Commission (“FWC”) dismissed an Uber driver’s unfair dismissal application on the basis that the applicant was not an employee and therefore not able to pursue this statutory remedy. This decision contrasts with a recent UK employment tribunal decision in which Uber drivers were found not to be self-employed, and were consequently found to be entitled to basic workplace rights.

Some caution needs be applied to taking this as a green light for gig-economy work arrangements as being beyond the scope of employment laws, as the applicant had no legal representation and it is a single member decision.

The FWC found the overseas decision to be of “no assistance” to the applicant because of the significantly more expansive definition of a “worker” in the United Kingdom. In the Australian context, there is no statutory definition of employment and a worker’s status is determined by reference to common law principles. This requires a multi-factorial analysis of the formal terms and actual work practices adopted between the parties. Deputy President Gostencnik did suggest the emphasis on a work-wages bargain and the current indicia that distinguish an employee from an independent contractor may be “outmoded” for participants in the digital economy.

The contractual relationship

Those unfamiliar with the specifics of Uber’s service agreements may be surprised that the respondent maintained Uber was in no way affiliated with providing transport services in Australia. Uber is self-defined as a technology company that provides a software application which enables a driver to accept a request from an Uber app user (a “Rider”). This acceptance creates a direct legal relationship between the driver and Rider that is independent of Uber and its affiliates.

The FWC agreed that Uber does not pay the driver for a service but rather charges the driver a service fee that is calculated as a percentage of the fees paid by the Rider. This was not “seriously challenged” by the applicant and this contributed to the absence of any work-wages bargain, as there was no obligation on the driver to perform a service and for Uber to pay for that service.

Indicia of worker status

At common law, a key indicium of an employment relationship is the amount of control over a worker. A major problem for the applicant in arguing that he was an employee of Uber was the “complete control” he had in the provision of his service to Riders. Part of Uber’s appeal to drivers is said to lie in their ability to determine when they work, for how long, and in what locations. Uber drivers also operate and maintain their personal vehicles, must wear their own clothes, and style how they interact with Riders.

The FWC found these factors outweighed the need for drivers to accept and meet Uber service standards aimed at protecting the Uber brand, ensuring customer satisfaction, and maintaining safety requirements. These standards are assessed based on the ratings that Riders give their drivers and Uber maintains the right to deactivate a driver’s account if, as in this case, those ratings are consistently poor.

Possible ramifications for your business

  • There is an increasing tension with the applicability of the traditional common law tests to modern labour markets.
  • The understanding of the parties and the description in the contract is not determinative of how the relationship will be characterised.
  • Developments in common law or legislative intervention may have ramifications that affect your organisation’s rights and obligations if employment relationships are seen to be inadvertently created.
  • Multiple factors must be taken into consideration to determine a worker’s employment status and PCS can assist employers to ensure their arrangements with “independent contractors” are genuine.

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.