Welcome to FY21/22! While it may be that the Omnibus Bill was pretty much totally scrapped (except for the changes to casual employment), there are a myriad of changes that have either already happened or are about to happen as a result of continuing processes before the Fair Work Commission (FWC).
In this update, we canvass the key compliance changes that you will need to have either already ticked off or alternatively have in contemplation for when they land this year!
Annual Wage Review
The FWC has now awarded a 2.5% annual wage increase for award workers and the national minimum wage. Unlike last year, the increase is applicable from 1 July 2021 except for a limited list of the following covid-affected industries:
- General Retail Industry Award 2020: 1 September 2021;
- Air Pilots Award 2020, Aircraft Cabin Crew Award 2020, Airline Operations – Ground Staff Award 2020, Airport Employees Award 2020, Alpine Resorts Award 2020, Amusement Events and Recreation Award 2020, Dry Cleaning and Laundry Industry Award 2020, Fitness Industry Award 2020, Hair and Beauty Industry Award 2010, Hospitality Industry (General) Award 2020, Live Performance Award 2020, Mannequins and Models Award 2020, Marine Tourism and Charter Vessels Award 2020, Nursery Award 2020, Racing Clubs Events Award 2020, Racing Industry Ground Maintenance Award 2020, Registered and Licensed Clubs Award 2020, Restaurant Industry Award 2020, Sporting Organisations Award 2020, Travelling Shows Award 2020 and the Wine Industry Award 2020: 1 November 2021.
Unfair dismissal salary cap and high-income threshold – a new role for HIGs and IFAs??
In accordance with annual indexing, the new threshold for the purposes of determining eligibility to issue an unfair dismissal claim, has increased to $158,500 for FY21/22. Also, the maximum compensation payable for unfair dismissal claims has increased from $76,800 to $79,250 from 1 July 2021 onwards.
Given the concurrent implications in recent developments such as award coverage, annualised salaries, the reverse onus of proof in respect of record keeping and “wage theft” exposure, businesses should seriously consider the following for award-covered employees where they can despite these mechanisms previously not really being of much interest to business:
- for employees with base salaries above the threshold – agreed high income guarantees (which remove the application of all terms of an award);
- for employees with annualised salaries which are less than the threshold – wage increases under annualised individual flexibility agreements (which can remove the application of certain parts of the award such as overtime penalties).
While these mechanisms obviously have limitations, the opportunity to avoid record keeping in respect of salaried employees may finally now be worth your while, even if it is not entirely a silver bullet in all cases.
The National Employment Standards – “serious misconduct” in respect of sexual harassment
Part of the package of reforms to implement the Sex Discrimination Amendment (Prohibiting All Sexual Harassment) Bill 2021 (Cth) (see our update), is a proposal to extend the definition of “serious misconduct” to include sexual harassment. Given that the bill appears to have bipartisan support, this would clarify that such terminations of employment are permitted to occur without any obligation to pay notice under the NES.
While this may superficially seem to now endorse/encourage a whole new generation of “zero tolerance” approach to EEO and harassment breaches, we think that you still must take great caution with it for two key reasons:
- Unfair dismissal laws still apply – ie. there can never be anything such as absolutely zero tolerance.
- We continue to feel great trepidation in respect of how zero tolerance policies only encourage a “scalp” culture that can cause more harm than they cure – ie. zero tolerance policies in our experience only tend to divide employees who are then out for each other’s scalps, rather than enabling any resolution processes in particularly minor incidents to recover trust and confidence.
NB: While there are other proposals currently being made by various parties (such as the creation of paid pandemic leave and/or the extension of family and domestic violence leave), these sorts of issues are currently being advanced in the FWC within the award framework in any event.
Fair Work Ombudsman
There are two key matters to report in respect of changes implemented by the Fair Work Ombudsman (FWO):
- The FWO has updated the Fair Work Information Statement. As no doubt most of you would be aware, an employer is required to provide a Fair Work Information Statement to its employees before the commencement of their employment (or as soon as reasonably practical). A copy of the latest statement can be found here.
- From 1 July 2021, the FWO has also implemented new services for employers called the Employer Advisory Services (EAS). The EAS has been specifically designed for small businesses (employing less than 15 employees) that may be eligible to receive free legal written advice in respect of pay entitlements and award provisions (amongst other things). Further information about the EAS can be found here.
Modern Awards – coverage, COVID flexibilities, casual employment and loaded rates
A longstanding “sleeper” issue that finally burst into mainstream consciousness, is the significant number of developments in the FWC regarding Modern Awards.
In our view, the following are the hot issues to keep your eye on right now, together with their expected implications for you:
- Miscellaneous Award – as you may recall, last year the FWC significantly expanded the reach of this award relative to previous understandings. It is imperative that you continue to actively consider residual operation of this award in any of your workers who aren’t otherwise covered by your “main” award and who don’t hold degree-level qualifications (rather than simply assume that they are award-free).
- Professional Employees Award – what happened with the Miscellaneous Award currently looks to be at risk of happening again, albeit this time in respect of the Professional Employees Award. In the recent decision of Lingli Zheng v Poten & Partners (Australia) Pty Ltd  FWCFB 3478, a Full Bench of the FWC determined in allowing an unfair dismissal application that the Professional Employees Award should be reviewed to clarify uncertainties as to how far coverage goes. If coverage is extended beyond previously understood boundaries, this could trigger a “2nd wave” of significant annualised salary issues given that it is highly unlikely that working time records have ever been kept for this population.
- The FWC has extended the operation of “Schedule X” in the various Modern Awards until 31 December 2021.
- Additionally, this month the FWC has also called for the convening of reference groups to assess whether further changes need to be made in the context of the current lockdowns affecting Melbourne and Sydney. While we currently don’t know what those changes may entail, please keep an eye out for our special alerts on any further interim award flexibilities that may become available.
- While further flexibility will likely no doubt be welcomed by employers, for our part we have found that unions have only more vigorously contested stand downs and redundancies on the basis that it was unfair to the employee that those flexibilities were not used instead of the stand down or the redundancy. We therefore strongly recommend that you make sure that you are able to demonstrate that you properly considered the availability and practicality of those flexibilities before making any stand down or redundancy decisions.
- As a consequence of the Omnibus Bill, the FWC was directed to undertake a review of all of the modern awards to ensure their terms are consistent with the new definition of casual employment and the new NES requirements for casual conversion.
- In July 2021, the FWC ruled in Casual terms award review 2021  FWCFB 4144 that the following changes would be in force by 27 September 2021:
- old definitions such as “engaged and paid as such” would be removed in favour of the new statutory definition of what it is to be a “casual employee”. As a corollary, the old definition of a “long term casual” will also be updated;
- maximum time limits for the use of casual employees can remain (eg. 4 weeks in the case of the Teachers Award);
- awards can continue to require employers to inform employees that they are being engaged as casuals;
- award requirements for employers to give casual employees an estimate or guarantee of hours will be removed. As such, no such estimate or guarantees will need to be given;
- award terms that make casual employment a residual category (ie. those employees who are not full or part time employees must be engaged as casual employees), or which do not permit casual employment (eg. the Firefighting Award), will not be changed – this is a disappointing outcome in the face of obvious inflexibilities for those industries who still cannot engage casuals unless they make enterprise agreements;
- minimum engagement periods (eg. a minimum 2, 3 or 4 hours’ duty or pay in lieu) will not be disturbed. The surprising aspect of this part of the decision was that no employer party even contested that such terms contradict the new definition of casual employment in circumstances where it would (respectfully) seem to us that a minimum engagement period is the very expression of an impermissible firm advance commitment of work! Be that as it may, there are clearly a range of fairness considerations associated with being given a minimum duty (eg. not having a situation where the cost of getting to and from work was higher than the money actually earned during the rostered duty) that no doubt weighed on the mind of all concerned;
- given the broad consensus that there was no need to specify what casual loadings compensate for (eg. paid leave etc), and that the NES contemplates already that such specification need not be made in any event, the casual loading provisions will be left undisturbed. Similarly, application of overtime, shift penalties and allowances etc will also not be changed; and
- finally, the model clause for casual conversion will be updated in accordance with the NES as will any existing award provision which is not consistent either (eg. in a positive step for employers, the Manufacturing Award provision will change as per the NES).
- The overriding implication for employers with respect to casual employment is that you must review all your casual employees and either offer conversion or provide a notice refusing conversion by 27 September 2021. To that end, if you haven’t already, we recommend in the strongest terms that you:
- Update your casual contract templates to reflect the new provisions of the Act and the Awards above.
- Review all the working arrangements of your casual employees and either offer engagements going forward on the new contracts or provide a notice as to conversion or not.
Award flexibility – hospitality and retail sectors
- In a bid to simplify pay arrangements, last year the Minister requested the FWC make temporary changes to the modern awards applicable in industries that were hit the hardest by the COVID-19 pandemic, namely the General Retail Industry Award 2020, the Hospitality Industry (General) Award 2020, the Restaurant Industry Award 2020, and the Registered and Licenced Clubs Award 2010. You can read the Minister’s statement here. By December 2020, President Ian Ross agreed to consider the Minister’s request that certain changes should be made to the relevant awards, such as inserting loaded rates into awards for distressed industries.
- Some of these changes have recently been implemented, for example, the Commission has varied the Retail Award, enabling employers and employees to make temporary or continuing changes to an employee’s regular pattern of work, without such work attracting overtime penalties. Such changes need to be made by agreement and recorded in writing including through an exchange of emails, text messages and other electronic means. A copy of this determination can be accessed here.
- Further, through an application lodged on 26 July 2021, it has been requested that the Commission varies the Hospitality Award so that higher-paid workers’ overtime and penalty payments would be rolled into loaded rates, to simplify payments for businesses. It is intended that this loaded rate will then be paid for all hours worked instead of certain penalty rates (such as penalty rates for Saturday and Sunday work). On 27 July 2021, the Commission issued a statement stating that its provisional view is that the Application has merits and therefore it is likely that these changes will be implemented shortly. A copy of the Commission’s statement can be found here.
- You can stay up to date in respect of these changes to the relevant four awards, via this webpage.
Enterprise Agreements: “genuine agreement”, acceptable undertakings and nominal expiry dates – are we now in largely in the final throes of just returning to centralised wage fixing?
Unless you are in an industry that is seriously exposed to industrial action (eg. construction or maintenance), the following evolving developments continue to lead us to question whether there is any utility at all in negotiating enterprise agreements – which in turn leads us to query whether business is quite genuinely being consigned to once again being at the mercy of centralised wage fixing (NB: we don’t say that as a political statement – it just seems to us to be an inevitable corollary of the following):
- The enterprise agreement must be “better off overall” for every single working possibility rather than just for what employees realistically work. To that end, if one needs to understand every aspect of the award to validate every beneficial eventuality, why not just pay under the award?
- The ever more inflexible application of the approval requirements by the FWC notwithstanding the vote of employees to approve an agreement – in the recent case of Application by the Commonwealth Bank  FWCFB 3635, a Full Bench developed its line of authority further that any undertakings must be wholly consistent with every aspect of the explanation given to its employees (ie. the CBA was offering pay increases which were subject to incentive achievement criteria, but also said in one (too simplistic) statement that pay increases would be guaranteed rather than that incentive increases would be guaranteed subject to achievement of the relevant criteria). While in theory this outcome appears to be laudable, we respectfully query whether the conclusion can be reached, that thousands of adult employees were so seriously misled that they would have voted differently – which was all caused by one errant statement among the many which are always made by all parties in what are always hotly contested bargaining campaigns. To get the agreement approved, the FWC ruled that any undertaking could only be acceptable as having been “genuinely agreed” if all pay increases were guaranteed. While the CBA made the undertaking, one has to wonder whether the cost and pain of the whole experience was just too much to bother to go through all over again only to be challenged on some new and different ground if the union lost the popular vote again (ie. if the agreement gets overturned because a union doesn’t like the result and intervenes even when your employees have otherwise voted for it, why bother?).
- No certainty – in the recent case of CFMMEU v Hully Foundations  FWCFB 3659, a Full Bench majority found 2-1 that the CFMMEU could appeal to have an enterprise agreement overturned even if it had been offered the opportunity to intervene in the original proceedings, but didn’t take up that opportunity. Together with the Federal Court’s decisions in the One Key Workforce cases, it would seem that even if you think that you have an approved agreement, you are still liable to have all that certainty stripped away and exposure to backpay claims many years later. If this kind of certainty is unavailable then you only seem to be putting yourself at risk if you make enterprise agreements in a manner that is not approved by a union (contrary to the actual scheme of the Act, which provides that enterprise agreements are made directly with employees).
A final thought to leave you with – is putting on PPE before a shift “work” that the employee is paid for or just a step in being ready for work like travel to and from the workplace?
In the case of Jay Seo v Bindaree Food Group Pty Ltd  FWCFB 2691, a Full Bench of the FWC found that the putting on and taking off of PPE in the meat industry is “work” for the purposes of payment under the relevant Award. However, the Full Bench also said that it wasn’t suggesting that donning safety glasses and a high-vis vest was the same thing. Unfortunately, there is an ever- increasing trend towards anything expressly or impliedly being “required” by an employer as constituting “work” – although the difference in principle is, it would respectfully seem, difficult to discern in circumstances where one could just as easily say that travel to and from a place of work is just as much “required” by an employer every day.
To that end, is it that it isn’t just the above formal safety net issues that are in play, but rather that work practices are also very much now in play, so we can only urge you to also closely look at all the ways in which you engage with your employees to determine how any time for service, work, training, washing up, travel, medical appointments etc is being treated for pay purposes, in also keeping on top of what could be (given this precedent) the next frontline in “wage theft” claims this year.
We hope you have enjoyed our Q4 update, and please do not hesitate to contact us if you have any questions or would like to discuss these issues further.