Welcome back for 2016!
What the early cases are already telling us in 2016 – the race for change is on. What are your competitors potentially doing that you are not? The Fair Work Act places multiple hurdles to change. Whether it be business necessity or not, those hurdles are now really being tested – with some notable successes. As such, to kick off the year we thought we would pull together a short list of those areas of success so that you can sense check whether you shouldn’t explore similar opportunities as well, if you haven’t already!
From the end of last year and continuing already this year, we are seeing three key areas where trends in the cases show that businesses are seeking to take advantage of opportunities for change and/or to break apart the (increasingly unaffordable) status quo:
1. Group Restructuring / Redundancy
- “Ordinary and customary turnover of labour” – the return of a forgotten employment model
For those in the business of contracting, where employees are needed and then surplus to requirements as contracts with customers come and go, this provides a much-forgotten exception to the payment of redundancy pay and accordingly is re-emerging as a favoured employment model. In recent times, Compass has been successful in pursuing this model, while Spotless has not. If this is something that applies to your organisation, it is worth thinking about how it can be utilised to your advantage.
See: Compass Group (Australia) Pty Ltd v National Union of Workers; United Firefighters’ Union of Australia [2015] FWCFB 8040 and CFMEU and others v Spotless Facility Services Pty Ltd [2015] FWCFB 1162
- The rise of “transfer of business” applications to prevent an enterprise agreement from transferring from one entity within a corporate group to another
This is a major issue to look out for in corporate group consolidations and intra-group transfers. Qantas and JetStar have been the leading protagonists in this space with a now developed pattern of success such that many others are now routinely trying as well.
See e.g.: Qantas Airways Limited; Ms Alicia Byron [2015] FWC 108
- The potentially deep implications of the High Court’s Quest decision for agency labour which signal caution!
At the end of last year the High Court emphatically found Quest’s “Odco” contracting practices to be sham contracts. There are now potentially significant implications for the use of these, and indeed even more orthodox agency labour, in arrangements where agency labour is being used on a regularised (rather than on a truly supplementary) basis.
See: Fair Work Ombudsman V Quest South Perth Holdings Pty Ltd & Ors [2015] HCA 45
2. Enterprise Bargaining
- Shift from “paid rates” agreements to a “minimum rate” model
The agreement approval decisions show that a step change in labour costs is out there and happening at an unprecedented rate – the decisions are now all about whether agreements are passing the “better off overall test”. The question it begs is are you thinking about your enterprise agreements as setting express wages, or should you be thinking of them like an award (ie. that agrees the minimum rates on top of which the company can make discretionary payments)? The way in which you use your enterprise agreements and the remuneration model you build on top of them is, for us, a consistently core theme which we think you should always have front of mind.
- The “Aurizon” effect: the avalanche of enterprise agreement termination applications
Whether as a legitimate tactical step in bargaining, or simply as a hygiene exercise, clearing the books of old agreements potentially gives you a clean slate to work with. Since Aurizon succeeded with the termination of its agreements, a wave of applications is coming through almost daily now to do the same. While success has been mixed, as we originally foreshadowed in our case note on the decision, it is the re-positioning of the proper law on the application that has really created the opportunity. After that it is only a question of organisational appetite.
See: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd [2015] FCAFC 126
3. Proactive Steps – the increase in support for employees in a changing world
- Workplace mental health – the transition to more well-round “wellbeing” assistance programs
There were a number of significant cases claiming mental health as a ground of harshness in unfair dismissal in late 2015. While there were different outcomes in each, the difference between success and failure turned in all cases on the organisation’s ability to identify, and capacity to assist, employees with mental health issues as part of the disciplinary or dismissal process. The benefits of more rounded “wellbeing” assistance programs (as opposed to simply crisis-based employee assistance programs) is now stark as a learning from those cases.
See: Vernham v Jayco Corporation Pty Ltd [2015] FWC 8185; Christopher Mulroney v Alfred James & Sons Pty Ltd T/A Alfred James Funeral Homes [2015] FWC 6215 and Michael Burke v Suncorp Group Pty Ltd [2015] FWC 3557.
- Investigation processes and outcomes are becoming more sophisticated
In a Federal Circuit Court decision in 2014, an unsophisticated investigation process was pulled apart and privilege waived over an investigation report. While we think that most people are getting it right now (see DP World), there are many who are not with potentially significant exposure in litigation (despite the High Court’s very reassuring decision to refuse special leave in the CFMEU’s most recent adverse action case in Endeavour Coal).
See: Bartolo v Doutta Galla Aged Services Ltd [2014] FCCA 1517 and Mark Kirkman v DP World Melbourne Limited [2016] FWC 605.
Our conclusions – lessons for 2016:
What the cases are telling us is that:
- the race for change is on – there is nothing like business and economic necessity to force the market to find a way no matter what the hurdles are that are placed in front of it;
- more and more of the hitherto unwinnable parts of the Act are being tested – and successfully so; and
- many employers have become alive to those opportunities and are now pursuing them with vigour – so now more than ever you need to be thinking the same way lest your competitors be already ahead of you in the game.
While we have already been speaking with many of you about the things which you are already exploring, hopefully this is additional good food for thought as the year gets underway! As always, we’d be happy to talk through the opportunities so please just give us a call!
Cheers,
Chris, Claire & the team.
