“Like for Like” – A consideration of casual conversion

Erin Lynch, Director

The Fair Work Commission (the “FWC”) recently addressed the right to convert to permanent employment when an industrial instrument (in this case an enterprise agreement) provides such a right. Of particular interest was the FWC’s consideration of the right to convert on a “like for like” basis.1

The relevant term of the enterprise agreement provided that:

“… where a casual Transport Worker has been directly employed by Toll or engaged through a labour hire company to perform work for Toll on a regular and systematic basis for more than 6 months, the Transport Worker may elect to become a permanent Transport Worker, on a like for like basis, within the specific business unit at which the Transport Worker is engaged, in accordance with the Award.”

The employee claimed that he had a right to convert from casual employment to permanent employment on a “like for like” basis. Previously he worked Monday to Friday, normally commencing at 4.00am, and generally did an eight-hour shift. He wanted an equivalent position on a permanent basis.

The offer initially proposed by the employer was “made up of 4 hour, 5 hour and 6 hours shifts” and was communicated as amounting to “30 hours a week”. The employer asserted that this complied with the casual conversion clause of the enterprise agreement and the award.

The FWC ultimately concluded that the offer did not reflect the right conferred by the enterprise agreement to convert casual employment to permanent employment on a “like for like basis”.

It reached this conclusion on the basis that the phrase “like for like”:

  1. is to be interpreted “with a practical bent of mind” and in the manner which it was “likely to have been understood in the context of the relevant industry”2 ;
  2. requires a comparison between the nature and extent of the work previously performed by a casual employee with that of a permanent employee performing much the same work; and
  3. has to be applied to the facts and circumstances of each individual employee and the workplace in which the work is performed.

While it was held that mathematical precision is not required, the FWC accepted that it is a tool which assists in reaching an informed decision when comparing competing positions.

In this case, the nature and extent of the ordinary hours worked by the employee was a little less than eight ordinary hours per shift and about 34 hours per week. If you were to include ordinary hours together with overtime, the employee worked just over eight hours per shift and slightly more than 38 hours per week.

An offer of a position made up of “4 hour, 5 hour and 6 hour shifts” fell short, as in the casual role, the employee regularly worked Mondays to Fridays for periods in excess of six hours per shift. To meet the requirements of the enterprise agreement to convert employment on a “like for like” basis, the employee was entitled to a permanent full-time position.

In addition, the FWC added that the right to convert was not limited by what the employer may have be prepared to offer and it was “not merely a right to convert to a permanent position; it [was] also a right to convert to a permanent position on a “like for like basis”.”

This decision demonstrates that the FWC will adopt a fairly strict approach to interpreting casual conversion provisions in enterprise agreements (and potentially awards). Employers should be mindful when negotiating enterprise agreements, to avoid terms which may result in business outcomes that may not be sustainable.

We do note that in this case the employer did not argue that a permanent full-time position was not available for the employee and this could be relevant in other conversion situations.


1 Tomvald v Toll Transport Pty Ltd [2017] FCA 1208

2 Kucks v CSR (1996) 66 CR 182 at 184

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

Fair Work Act amendments enhance penalty provisions & impose new franchising obligations

Michael Starkey, Associate

Last week, the Federal Parliament passed amendments to the Fair Work Act 2009 (Cth) (the “Act”) which aim to protect “vulnerable workers” from exploitation by employers. The amendments follow a period of intense media scrutiny in relation to such workers, particularly migrant workers employed by franchise companies.

Serious contraventions

The amendments impose penalties of up to $630,000 for a corporation and $126,000 for an individual in respect of a new category of “serious contraventions” of the Act. A contravention of a civil penalty provision of the Act (for example, underpayment of wages) will be considered a “serious contravention” if:

  • the person knowingly contravened the provision; and
  • the person’s conduct constituting the contravention was part of a systemic pattern of conduct relating to one or more other persons.

These new penalty provisions also capture persons who are knowingly involved in a serious contravention.

Employers should bear in mind that the category of “serious contraventions” applies to all employers, not just franchisors.

Franchising obligations

The amendments create a new offence to capture franchisors and parent companies in the event that they fail to take reasonable steps to prevent contraventions within the franchise group. This means that franchisors will be directly exposed to liability for contraventions such as underpayments, even if they do not employ the workers in question themselves.

Other changes

Other changes introduced by the amendments include:

  • new powers for the Fair Work Ombudsman to require the production of evidence in relation to investigations; and
  • new prohibitions preventing employers from implementing cashback arrangements that require employees to spend their money in connection with their employment or prospective employment, where the requirement is unreasonable and the payment is directly or indirectly of benefit to the employer or prospective employer.

Given the nature of these amendments, we encourage all our clients to undertake workplace audits in relation to payment of wages, award compliance, and leave entitlements to identify any systemic issues (within their own organisations and any franchising group) and rectify them.

Please contact your PCS Team Member for further information and assistance.

“Don’t forget the public” – breadth of non-worker WHS duty

Ben Urry, Associate Director

When reviewing health and safety practices, businesses need to adopt a long-term view of the potential impact on non-workers. A business should not assume that their obligation to protect customers, visitors or members of the public is limited only to the particular point in time when the work was actually being undertaken.

Risks to health and safety may not manifest for days, weeks or even months after the work is performed, and if the work has the requisite causal connection to the creation of the risk, then a business may be exposed to criminally liability.

In a recent decision handed down by the Industrial Relations Court of South Australia, it was held that work, health and safety (“WHS”) provisions in the Work Health and Safety Act 2012 (SA) in relation to a “non-worker” (including the public at large) were not limited to risks in the workplace at the time the work was being undertaken.

In September 2014 a young girl was killed at the Royal Adelaide Show when she was thrown from an amusement ride. The ride had been certified as safe to use (by Safe is Safe Pty Ltd) 12 days prior to the accident.

Safe is Safe and its officer, Mr Hamish Munro (the “Defendants”), were subsequently charged under the Work Health and Safety Act 2012 (SA). The Defendants argued that the obligation to ensure, so far as is reasonably practicable, that the health and safety of other persons is not put at risk only existed while the work was being carried out (ie the period in which the inspection and issuing of the certificate occurred) and did not extend to the consequences or product of the work.

In rejecting these arguments, the Court held that it was the creation of the risk that constituted the offence, with the “risk” in this context simply meaning the possibility of the health and safety of the nominated class of persons being compromised.

The case is a timely reminder to businesses that the mere passage of time since the work was undertaken does not lessen the possibility of liability for any risks created.

How to minimise legal risks associated with labour contracting

Sam Cahill, Associate

Labour contracting can give rise to specific legal risks for a business that uses such an arrangement where non-compliance with employment obligations occurs. The Fair Work Ombudsman (“FWO”) has published a new guide that suggests certain steps businesses can take to minimize the legal risks associated with labour contracting.

What is labour contracting?

Labour contracting can be done in two different ways. The first way, which is commonly known as “labour hire”, is where a business (the “host”) engages a labour hire agency to provide workers – who are employed and paid by the labour hire agency – to perform work under the direction and control of the host business. The second type, which is often referred to as “outsourcing”, is where a business (the “principal”) engages a contractor to perform a certain task or function instead of having this task or function performed by its own employees. Under this arrangement, the work may be performed by the contractor’s employees or sub-contracted to another contractor business.

Legal Risks

The labour provider (often referred to as the contractor) – being the employer of the relevant workers – owes various legal obligations to its employees under the Fair Work Act 2009 (Cth) (“FW Act”) and any relevant Modern Award or Enterprise Agreement.

The host business is not immune from liability if a breach occurs. The FW Act provides that any party – including an individual or another business – who is “involved” in a breach of the FW Act is also taken to have committed the breach. This concept is known as “accessorial liability”. In the context of labour contracting, accessorial liability means that a host or principal business can be held liable for the failure of the labour provider to comply with its legal obligations.

Steps recommended by the FWO

In recent years, the FWO has sought to crack down on compliance issues arising with respect to labour contracting and other similar arrangements, and has relied on the accessorial liability provisions under the FW Act to establish liability on the part of a number of businesses.
Now, in a bid to improve understanding of these issues within the business community, the FWO has published its own guidance material on labour contracting. In short, the FWO suggests that a host or principal should take the following steps to minimise the legal risks associated with labour contracting and accessorial liability:

  • understand the pay and conditions that apply to the workers;
  • understand the workplace practices of a potential contractor (for example asking for information as part of the tender process);
  • ensure that the contract price negotiated is adequate to cover the wages and other entitlements for the relevant workers (keeping in mind that the contractor will also have overhead costs and will generally need to make a profit);
  • seek an undertaking from the contractor that it will comply with the FW Act (this can be done as part of the written agreement); and
  • require the contractor to notify or seek approval prior to engaging any sub-contractors.

Please contact us if you require any assistance regarding your labour contracting arrangements, including the implementation of the above recommendations.

Minimum wage up by 3.3% from 1 July 2017

On 6 June 2017, 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 2017, the national minimum wage will be $694.90 per week (or $18.29 per hour). This represents an increase of $22.20 per week from the current national minimum wage of $672.70 per week.

Following the decision, minimum wage rates in modern awards will be increased by 3.3% 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 2017, employers must ensure that their full-time employees are paid at least $694.90 per week (or $18.29 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 3.3%.
  • 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 a “crude” Facebook post is not enough to justify dismissal

Sam Cahill, Associate

The Fair Work Commission has recently handed down a decision that highlights the need for employers to take a measured approach to disciplinary action in relation to an employee’s use of social media.

The Facts

Mr Colby was employed as a travelling salesman with LED Technologies Pty Ltd (the “Company”). The Company has approximately 20 employees.

In August 2016, during work hours, Mr Colby posted the following comment on his private Facebook account:

“I don’t have time for people’s arrogance. And your [sic] not always right! your position is useless, you don’t do anything all day how much of the bosses c**k did you suck to get were [sic] you are?”

The Company became aware of Mr Colby’s Facebook comment and formed the view that it was directed at the Company and/or its employees. Later on the same day, the Company advised Mr Colby over the phone that his employment was terminated. By that time, Mr Colby had removed the comment from Facebook and clarified, via a further post, that he had posted his initial comment in support of his mother, as he was concerned that she was being mistreated at her place of work. Mr Colby’s mother did not work for the Company.

The Decision

The key issue for determination was whether the Company had a “valid reason” to terminate Mr Colby’s employment. Importantly, the Company dismissed Mr Colby because it considered that his Facebook comments were offensive and directed at the Company and/or its employees.

While Commissioner Gregory agreed that the post was “crude” and “immature”, he found that Mr Colby’s conduct did not provide a valid reason for dismissal, as there was no evidence to suggest that the comments were directed at the Company or any of its employees. The only plausible explanation for the comment was the one that was provided by Mr Colby. In reaching this view, the Commissioner stated that it is not sufficient that the employer believed that it had a valid reason for termination; the reason must be “objectively valid”.

Commissioner Gregory went on to find that the absence of a valid reason rendered the dismissal unfair, and ordered that the Company pay $6,238 in compensation to Mr Colby. In reaching this decision, the Commissioner also considered the fact that the Company failed to provide Mr Colby with an opportunity to respond to the reason for dismissal, while noting that this failure was most likely due to the Company’s small size and lack of expertise in human resource management.

Lessons for Employers

  1. Crude comments by an employee on social media will not automatically provide a valid reason for dismissal where a non-work related social media account is involved.
  2. Employers need to make enquires regarding the suspected misconduct (including online conduct) and the surrounding circumstances, to determine whether it constitutes a valid reason for dismissal.The absence of a valid reason for dismissal will usually render a dismissal unfair.
  3. Giving an employee an opportunity to respond is a crucial step in responding to allegations of misconduct and in providing an employee with procedural fairness.

“Not just in the mind” – WHS covers risks to mental health

Ben Urry, Associate Director

The traditional understanding of work health and safety ("WHS") is predominantly centred on the risk of physical injuries. Most cases that are reported, and most of the news headlines, focus on physical injuries or fatalities in “high risk” industries such as transport, construction, agriculture and manufacturing. The problem with this focus is it neglects a significant aspect of WHS that is on the rise, namely risks to psychological health or “mental wellbeing”. 

Two recent developments in Western Australia and Victoria attempt to “balance” this focus:

  • In Western Australia the risk of suicide and its management in the workplace lead the Western Australian Department of Mines and Petroleum to release a Bulletin last month dealing with suicide awareness in the resources sector ("Bulletin"). The Bulletin provides guidance on risk factors and methods for dealing with the risk of suicide in the workplace.
  • In Victoria WorkSafe Vic, in conjunction with the Department of Health and Human Services, announced a $50 million initiative called “WorkHealth” that will be launched in early 2018. WorkHealth is an online portal that provides strategies and guidance to Victorian employers in relation to improving mental health in the workplace, including self-assessments and the ability to link with similar businesses online. A link to the portal can be found here.

What is the risk?

Statistics from both the WorkHealth Initiative and Bulletin highlight just how extensive mental health issues in the community are, and why businesses should make improving the mental health of their workers a priority:

  • Around 20% of Victorians experience mental health concerns.
  • Non-high risk industries are often more affected. For example, creative industry workers in Victoria suffer the highest levels of depression and twice the number of suicide attempts as the general population.
  • As set out in the Bulletin, ABS statistics for 2015 indicated that suicide was the 13th leading cause of death, resulting in the loss of 3,027 lives. It was the leading cause of death among the 15-44 year age group.
  • Past survey data reveals that each year approximately 370,000 Australians think about ending their lives, with 65,000 suicide attempts.

Risks to mental health in the workplace might include such things as:

  • Workplace bullying, harassment or discrimination;
  • Restructures and redundancies, especially if handled poorly and creating ongoing uncertainty regarding job security;
  • Performance management and discipline processes that are not structured or implemented appropriately;
  • Interpersonal conflict between colleagues that does not necessarily amount to bullying but may involve strong differences of opinion or criticisms of personal beliefs or habits;
  • Excessive hours leading to fatigue, as tiredness can reduce emotional strength and resilience; and
  • Return to work processes following injury. This includes being kept away from work unnecessarily as for some people keeping occupied assists with mental health.

Risk and hazard assessments should include an analysis of risks to worker mental health, and the actions that are required to eliminate or minimise these risks. 

Psychological risk specific example – suicide

In the Bulletin a range of warning signs were identified as possible red flags for suicide risks in the workplace. These factors can be used as a guide (as they are non-exhaustive) and woven into risk and hazards assessments:

  • “Being withdrawn and unable to relate to co-workers;
  • Talking about feeling isolated and lonely;
  • Expressing fears of failure, uselessness, helplessness, hopelessness or loss of self-esteem;
  • Impulsivity or aggression;
  • Dramatic changes in mood;
  • Fragmented sleep or obvious tiredness;
  • Dwelling on problems with seemingly no solutions;
  • Speaking about tidying up affairs;
  • Threatening to hurt or kill themselves;
  • Talking or writing about death, dying or suicide;
  • Expressing no reason for living or sense of purpose.”

Dealing with risk of work-related suicides

In order to eliminate or minimise the risk, the Bulletin suggests that businesses should contemplate implementing health/wellbeing policies, providing access to employee assistance programs or other counselling, restricting access to possible means of suicide such as medications, pesticides and chemicals, and implementing appropriate training programs that incorporate elements of suicide prevention (for example, in conjunction with bullying/harassment training).

Lifeline 131 114

Beyondblue 1300 224 636

MensLine 1300 789 978

Government Initiative for young job seekers

Erin Lynch, Associate Director

The Turnbull Government has introduced the Youth Jobs PaTH (Prepare –Trial- Hire) internship programs.

To participate in the program a person must:

  • be 17 to 24 years old;
  • have been on Jobactive, Transition to Work or Disability Employment Services for six months or more; and
  • be on income support payments.

Under the program, young job seekers will be given the opportunity to gain employment and to move off government income support. The three elements of the program are designed to achieve this outcome.

Prepare – employability skills training. In this stage young people will be provided with training for up to six weeks in basic employability skills including teamwork, communication, personal presentation and interview skills.

Trial – internship placements. The “Trial” element of the program, will allow eligible young job seekers the opportunity to participate in an internship ranging from four to twelve weeks. The participants will attend a business for between 15 and 25 hours each week. During this period the job seekers will not be an employee of the business and any payment received is not considered remuneration. To encourage young job seekers and business alike to participate in the program, participants will be paid a fortnightly incentive payment of approximately $200 per fortnight and, under a Bill that is currently before the Senate, this will be paid in addition to government social security benefits. Businesses who take part will receive a payment of $1,000 to help cover the costs of hosting an intern.

Hire – “youth bonus” wage subsidies. Businesses will be eligible to receive a Youth Bonus wage subsidy of up to $10,000 if they employ a young job seeker under the age of 25 who has been in employment services for at least six months.In addition, young job seekers will be able to have their social security payments restored (without having to make a new claim or serve a waiting period) if they lose their job with a youth wage subsidy employer through no fault of their own within a prescribed time frame.

Labor, the Greens and the ACTU have not supported the program, arguing amongst other things, that the program “poses a serious risk to young people and inexperienced workers, and could also undermine Australia’s entire wage system with interns earning only $4 an hour – potentially dragging down pay and conditions for all workers”.

Will it work?

It is well known that young people struggle to gain employment. This appears to come about through a combination of inexperience and lack of applicable skills and on its face the Youth Jobs PaTH program has been developed to address some of those deficiencies, particularly with the Prepare and Trial elements of the program.

The Parliamentary Library’s Bills Digest suggests that “to the extent that it is closely regulated, participants are furnished with relevant training and labour market experience, and there is at least some prospect of employment as a result of the program participation, then it might reasonably be argued that the program is less exploitative than existing work experience and Work for the Dole arrangements for young people on income support”.

As with all work for the dole schemes, the challenge is to provide genuine work experience and to have the right incentives in place to encourage employers to offer these opportunities and for young people to see it as a chance to develop their employability skills and to show a prospective employer what they can do. Oversight of the scheme to avoid exploitation is also a factor.

Ultimately, the new initiative is designed to enable employers to help young job seekers develop the skills, values and behaviours expected in the workplace and make available genuine work experience for willing job seekers.

News Alert: FWC Cuts Penalty Rates

Jessica Anderson, Graduate Associate 

Background

In recent years, various employer bodies have made applications to the Fair Work Commission to vary the penalty rates provisions in a number of modern awards in the hospitality and retail sectors, including: 

In late 2015, the Productivity Commission made a recommendation that the Sunday penalty rates be lowered to the Saturday rate, creating a single “weekend” rate in certain sectors. The Productivity Commission contended that a reduction in Sunday rates would increase work opportunities for those who are available to work on Sunday as more businesses remain open on this day. 

Today, the Full Bench of the Fair Work Commission handed down the highly anticipated decision, ruling that Sunday penalty rates for hospitality and retail workers in these sectors will be reduced. The FWC has had the difficult task of balancing the interests of the unemployed versus the employed, as well as business operators and employers.

The decision

The decision as announced this morning is as follows: Sunday pay rates for full and part time hospitality workers will be cut from 175% of their wage to 150%. In the retail sector, Sunday rates will be reduced for full and part time workers from 200% to 150% of the standard rate. Saturday penalties remain unchanged. The Commission declared that the reduction in penalty rates will allow for increased trading hours and an increase in overall hours worked. As well, changes proposed to Sunday and public holiday rates will result in greater consistency in the hospital and retail industry awards. The FWC acknowledges that these changes will “inevitably award hardship to those affected, particularly those who work on Sundays”, and it will seek to assist these parties through transitional arrangements to mitigate any hardship. The Commission is seeking submissions on how best to implement these arrangements. 

The changes to be introduced

The following tables outline the relevant industry which is undergoing change, and the reduction in rates for employees of those industries. 

Sundays

Industry

Full-time and part-time workers

Casuals

Hospitality

175% – 150%

No change

Fast food level 1

150% – 125%

175 % – 150%

Fast food levels 2-3

No change

No change

Retail

200% – 150%

200% – 175%

Pharmacy 7am – 9pm only

200% – 150%

200% – 175%

Pharmacy pre 7am and post 9pm

No change

No change

Licenced clubs and restaurants

No change

No change

Public holidays 

The changes to public holiday rates will take effect from 1 July 2017. 

Industry

Full-time and part-time workers

Casuals

Retail and hospitality

250% – 225%

No change