practice area articles
By Cilla Robinson, Amanda Lyras, Rebecca Byun and Timothy Grellman
Back to International Employment Law
KEY DEVELOPMENTS FOR 2020
The decision of the Federal Court in May 2020, WorkPac Pty Ltd v Rossato  FCAFC 84 (Rossato), has again put issues surrounding casual workers in the spotlight. The decision has sparked immense controversy, and WorkPac has since sought leave to appeal the decision to the High Court.
Rossato is important for a few key reasons, including:
- Correctly classifying workers: Rossato reiterates a previous decision against the same employer, WorkPac Pty Ltd v Skene  FCCA 3628, that employers must correctly classify their casual workers. In Rossato, the Court applied the Skene decision in finding that stable, regular and predictable employment or 'a firm advance commitment' of employment are hallmarks of permanent employment, rather than casual employment.
- Double liability: Casual workers are not entitled to annual leave, personal leave, notice of termination or redundancy pay, and instead receive a 25% pay loading. Following Rossato, some casual workers may be entitled to both. This risk mostly arises in relation to long-term casuals who work regular and systematic hours and have an ongoing expectation of work. In such cases, a Court will consider whether the employee was, in fact, a 'true' casual. If they are not, as it was found in Rossato, the Court can order the employer to back pay the employee for all leave entitlements, despite a 25% casual loading having already been paid. This effectively allows such employees to 'double dip' on both leave entitlements and casual loading payments, exposing employers with a large casual workforce to significant liabilities if their casual workers are in fact found to be permanent employees.
This is a developing issue in Australia, and the High Court appeal will be watched with great interest. In the meantime, Rossato should act as a timely reminder to employers to continuously and critically assess their arrangements with casual workers to ensure that only 'true' casuals are engaged as such and to ensure their casual contracts incorporate appropriate clauses that can assist in addressing potential 'double dipping' liability.
Changes to annualised wage arrangements
Australia's national workplace tribunal, the Fair Work Commission, has introduced changes to the annualised wage provisions in 22 modern awards which took effect from 1 March 2020. The annualised wage provisions in modern awards allow for employers to pay employees an 'all-in salary', which in effect 'buys out' various entitlements under an applicable modern award (such as loadings and penalty rates) which an employee might have otherwise received if an all-in salary arrangement was not in place.
However, from 1 March 2020, employers who wish to use an annualised wage mechanism under a modern award to pay employees will be required to comply with more stringent record and time-keeping obligations. For example, employers would be required to:
- detail how the annualised wage has been calculated (specifying which award obligations are included in this calculation);
- specify the 'outer limit' of how many ordinary and overtime hours can be worked without requiring a payment higher than the annualised salary;
- conduct an annual review to ensure the employee was paid at least as much under the annualised salary as if they had simply been paid according to the terms of the relevant modern award; and
- keep a written record of all start and finish times, and of unpaid breaks, which is signed or acknowledged by the employee in each pay period.
While the above changes do not impact those employers who instead rely on a common law set-off clause to pay employees an annual salary (as distinct from a modern award, annualised wage arrangement), given the increased focus on wage compliance, employers should continue to ensure that, whenever an annual salary amount is used, such amount is high enough to offset any modern award entitlements which might otherwise arise in any given pay or roster cycle (for instance, during peak periods).
Under the Modern Slavery Act 2018 (Cth) ("MS Act"), corporations, partnerships, trusts and incorporated and unincorporated entities ("Reporting Entities") with a consolidated annual revenue of AUD100 million or more are required to publish a Modern Slavery Statement ("MS Statement") within six months of the Reporting Entity's first full financial year after 1 January 2019 (or nine months in respect of Reporting Entities with their first full financial year commencing 1 April 2019 or 1 July 2019 due to COVID-19) as follows:
|Reporting Entity's annual financial reporting period||First reporting period under the MS Act||Due date for MS statement|
|1 April 2019 to 31 March 2020||1 April 2019 to 31 March 2020||30 September 2020 (extended to 31 December 2020 due to COVID-19)|
|1 July 2019 to 30 June 2020||1 July 2019 to 30 June 2020||31 December 2020 (extended to 31 March 2020 due to COVID-19)|
|1 October 2019 to 30 September 2020||1 October 2019 to 30 September 2020||31 March 2021|
|1 January 2020 to 31 December 2020||1 January 2020 to 31 December 2020||30 June 2021|
MS Statements prepared by Reporting Entities will be published on a central register maintained by the Department of Home Affairs.
While there are no monetary penalties for breaching the reporting requirements, the Minister for Home Affairs has the power to request that an explanation be provided and that remedial action be taken, failing which the Minister has the power to publicly identify the Reporting Entity as non-compliant.
In September 2019, the Department of Home Affairs released the 'Commonwealth Modern Slavery Act – Guidance for Reporting Entities' ("MS Guidance"), which comprehensively sets out how Reporting Entities are to address the content requirements prescribed under section 16 of the MS Act. Section 16 of the MS Act requires a Reporting Entity to prepare and publish an MS Statement, which:
- identifies the Reporting Entity;
- describes the structure, operations and supply chains of the Reporting Entity;
- describes the risks of modern slavery practices in the operations and supply chains of the Reporting Entity and any entities that the Reporting Entity owns or controls;
- describes the actions taken by the Reporting Entity and any entity that the Reporting Entity owns or controls to assess and address those risks, including due diligence and remediation processes;
- describes how the Reporting Entity assesses the effectiveness of such actions;
- describes the process of consultation with any entities that the reporting entity owns or controls; and
- includes any other information that the Reporting Entity considers relevant.
KEY DEVELOPMENTS FOR 2019
Federal and state elections
Elections will be held federally as well as in New South Wales this year. According to the polls and political commentary, it is likely that the Labor party, will win these elections. The Federal Labor Party has set out plans for major workplace reforms. These include:
- introducing a definition of "casual" employment under the Fair Work Act 2009 (Cth) (“FW Act”), to protect workers who are working full-time hours but are not engaged as full-time employees;
- reforming labour hire laws, so that workers who are engaged through labour hire companies are entitled to the same pay as other workers performing the same job but engaged directly with principal companies;
- closing the gender pay gap by enshrining the principle of equal pay for work of equal value in federal workplace laws, including by improving the treatment of employees in industries with a predominantly female workforce;
- modernising the Industrial Relations Act 1996 (NSW) (“NSW IR Act”) to empower the New South Wales Industrial Relations Commission to set minimum rates of pay and conditions for gig economy workers; and
- reforming workers' compensation laws so as to ensure that "gig economy" workers are legally entitled to workers' compensation when injured while performing work.
In summary, an overhaul or significant amendments to the existing FW Act and NSW IR Act are anticipated to occur in 2019.
Increased casualisation of the workforce
The increased casualisation of the Australian workforce (i.e. the number of individuals engaged as "casual" employees) means that more workers are engaged without access to certain entitlements such as annual leave, personal/carer's leave and long service leave. This has prompted an increase in claims by employees alleging their "casual" engagement is a sham and that their true status is as a permanent employee.
In response, there have been calls to strengthen the rights of casual employees and on 1 October 2018, casual conversion rights and obligations for employees covered by modern awards were updated and a modern clause was inserted into 84 modern awards. Under the model clause, a regular casual employee who has worked a period of 12 months or more and in a pattern of hours on an on-going basis, which the employee could continue to perform as a full-time or part-time employee without significant adjustment is eligible to request conversion from casual to full-time or part-time employment.
KEY DEVELOPMENTS FOR 2018
Significant Changes to Penalty Rates
In February 2017, the Full Bench of the Fair Work Commission (Commission) cut penalty rates for Sundays and public holidays for employees covered by modern awards in the Retail and Hospitality industries. A gradual reduction of penalty rates commenced in July 2017 and will be in full effect by 2020.
New Legislation - Vulnerable Workers and Corrupting Benefits Offences
The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 came into force on 15 September 2017. The legislation is intended to hold franchisors and holding companies accountable for any breach of employment law by their franchisees and subsidiaries, and increase penalties for administrative and record-keeping failures.
The Fair Work Amendment (Corrupting Benefits) Act 2017 (Cth) came into force on 11 September 2017, which prohibits “sweetheart deals” between unions and employers. The legislation includes criminal and pecuniary penalties for breaches of the new provisions.
Shadow Legal Representation
The decision in the recent case of Stephen Fitzgerald v Woolworths Limited  FWCFB 2797 is likely to reduce the role of lawyers, and other representatives, in Fair Work Commission proceedings. The case held that employers may not always be able to rely on assistance from external legal representatives when initiating or defending proceedings in the Commission. This is a significant departure from current practice and the decision, if upheld on appeal/ applied as a precedent, will have significant ramifications for employers and employment lawyers alike.
Legislative Reform on the Horizon
On 30 January 2018, Opposition Leader Bill Shorten gave a speech advocating major changes to the Labor party's workplace policies. Mr Shorten highlighted the need for industrial relations reform and declared that the enterprise bargaining system is on "life support" due to the decrease in ratified enterprise agreements and the increase in enterprise agreement terminations by employers.
This suggests that workplace reform may be a key issue during the upcoming Federal election, perhaps including an overhaul or significant amendment to the existing Fair Work Act 2009 (Cth).
The Weinstein Effect
Women are increasingly inclined to speak out about sexual harassment and/or assault, including bringing a claim against the perpetrator and/or their employer. Employers are taking the opportunity to review workplace behavior policy and provide workplace training, in an attempt to eliminate gendered violence (and associated legal risk) before as well as in an effort to remediate historic problematic behaviours.
The Gig Economy
With the emergence of Uber, Deliveroo, Foodora and Air Tasker (amongst others), it is expected that it will only be a matter of time until the "gig economy" is upturned by legislative reform to classify workers as employees or "dependent contractors", rather than independent contractors.
In December 2017 the Fair Work Commission delivered the first decision in Australia assessing whether an Uber driver is an employee. The Commission found that for unfair dismissal purposes, an Uber driver was not an employee. The decision, however, expressly acknowledged the limitations of the established test for identifying an employment relationship and specifically contemplated legislative change.
KEY DEVELOPMENTS FOR 2017
Disruptive service providers
The challenges of regulating service providers and the manner in which employers engage with labour and service providers will continue to be a topic of interest and a source of heated debate in 2017. Legislative debate and policy changes are a likely outcome to address the rise of the gig economy, help equip employers with a means to flexibly engage independent workers, and other challenges to traditional models of worker engagement.
Important legislative amendments
- The Fair Work (Registered Organisations) Amendment Bill was passed in November 2016. It is anticipated that the Bill will become operational in the very near future.
- A key aspect of the Bill is to ensure stronger protections for whistle-blowers in organisations to ensure that they have access to remedies where a person takes, or threatens to take, a reprisal against them out of a belief or suspicion that they have made or may have made a disclosure of information.
- A person who takes a reprisal against a whistle-blower can be pursued for civil or criminal remedies.
Re-establishment of ABCC
- A Bill was passed on 30 November 2016 to re-establish the Australian Building and Construction Commission (“ABCC”).
- The main purpose of the Bill is to reintroduce the ABCC as the industry regulator and abolish the current Fair Work Building Industry Inspectorate.
- One of the main impacts of the new ABCC on the building industry is the introduction of the Building Code, which will be introduced in 2018.
- The Building Code includes new requirements for companies’ contractual arrangements including enterprise agreements to ensure they are Code-compliant. The Code will have retrospective impact on agreements in the building industry and will likely result in industrial unrest from impacted Unions, who will be more heavily regulated as a result of the introduction of the Code and the ABCC.
- These legislative developments form two parts of the most significant industrial relations reform in Australia since the creation of the Fair Work Act 2009.
Penalty rates in Australia
A recent penalties case in Australia has considered whether to reduce the penalty rates payable by employers under a number of hospitality and retail modern awards. This case arose from a push by employers to reduce weekend penalty rates to make labour costs more affordable for retailers. Although a decision has not yet been handed down, this case could have a significant impact on the penalty rates payable by employers in Australia under the relevant awards and will have a significant impact on employers in the hospitality industry. It is expected that a decision will be handed down in late December 2016, or early in 2017.
KEY DEVELOPMENTS FOR 2016
Australian Government’s amendments to the Fair Work Act
On 3 December 2015, the Senate referred an inquiry into the provisions of the Fair Work Amendment (Remaining 2014 Measures) Bill 2015 (the “Bill”) to the Education and Employment Legislation Committee for inquiry and issuing of a report by 4 February 2016.
The Bill amends the Fair Work Act 2009 in relation to:
- The payment of annual leave upon termination of employment;
- Taking or accruing leave while receiving workers’ compensation;
- The requirements for flexibility terms in modern awards and enterprise agreements and individual flexibility arrangements made under those terms;
- The transfer of business rules;
- The right of entry framework; and
- The Fair Work Commission not having to hold a conference or hearing to dismiss an unfair dismissal application.
WHS Act as a ‘national scheme’
Implementation of harmonised work, health and safety (“WHS”) legislation in Australia has not yet been finalised, however, investigations into ways in which the model laws could be improved have been ongoing since February 2004. As at January 2013, every jurisdiction apart from Victoria and Western Australia had introduced the model WHS legislation.
A comprehensive review of the model WHS laws was undertaken in 2016, which resulted in substantial amendments being made to the model WHS laws on 21 March 2016. At this stage, no jurisdiction has implemented any of these amendments.
Social Media Misuse
The dismissal of employees for alleged social media misuse is becoming increasingly common. There have been a number of decisions in the last few years in Australia dealing with this issue.
The cases have raised important questions about balancing an employer’s ability to control the social media activity of its employees against the rights of employees to engage in freedom of speech. The cases have tended to limit freedom of speech of the employee in situations where they have a public profile by virtue of their position, and their comments are not aligned with the interests of the employer. Principles derived from case law indicate that employers are likely to have good grounds to terminate when the comments are highly offensive, involve bullying or harassment, cause serious harm to the employer’s business and the obligations surrounding permissible use of social media in the workplace are clearly set out in a policy.