Q4 Update: Casuals, Annual Review, Award Changes, Jobkeeper, IR Reform and more


Posted By and on 2/07/20 at 4:36 PM

It is hard to believe that the end of another financial year is upon us and the back half of FY2019/20 has certainly been like no other. The advent of COVID-19 and its impact across society and the economy has presented a number of unique challenges for employers in the face of a rapidly changing regulatory environment.

However, as the curve generally continues to flatten and government restrictions start to ease across Australia (perhaps with the exception of the 10 Melbourne postcodes that have now been locked down), many businesses are now planning or beginning to progress back to their ‘new normal’ as we emerge from the pandemic (unless you are in Victoria?!!). In the midst of this silent virus, one could also be forgiven for perhaps missing some of the other important developments in the workplace relations and safety space in recent months.

In this Q4 update, we’ve recapped some of the big-ticket items as we close out an unprecedented financial year.

Annual wage review

The Fair Work Commission has now confirmed a 1.75% annual wage increase, however, the annual award wage increase will be implemented via a three-stage process depending on the extent to which sectors have been affected by COVID-19. The implementation will be staggered as follows:

  • For workers covered by ‘Group 1’ Awards: 1 July 2020;
  • For workers covered by ‘Group 2’ Awards: 1 November 2020; and For workers covered by ‘Group 3’ Awards: 1 February 2021.

Workers covered by ‘Group 1’ Awards are from sectors least affected by the pandemic and constitute 25% of non- managerial award reliant workers. This includes workers covered by the following Awards (amongst others): the Banking, Finance and Insurance Award 2020; the Health Professionals and Support Services Award 2020; the Educational Services (Schools) General Staff Award 2020 and the Educational Services (Teachers) Award 2010.

Workers covered by ‘Group 2’ Awards are from sectors moderately affected. This includes (amongst others): the Building and Construction General On-site Award 2010; the Clerks—Private Sector Award 2010; the Educational Services (Post- Secondary Education) Award 2020; the Manufacturing and Associated Industries and Occupations Award 2020; the Miscellaneous Award 2020; the Professional Employees Award 2020; the Road Transport and Distribution Award 2020; the Storage Services and Wholesale Award 2020 and the Hospitality Industry (General) Award 2020.

The remaining workers (35% of those award-reliant) covered by ‘Group 3’ Awards are in heavily affected sectors which includes (amongst other Awards): the Commercial Sales Award 2020; the Fast Food Industry Award 2010 and the General Retail Industry Award 2010.

The new national minimum wage will be $753.80 per week, or $19.84 per hour and will take effect from 1 July 2020.

Rossato – an unusual case!

The implications of the Full Court of the Federal Court’s decision in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato) continue to occupy the minds of many of our clients with casual workforces, and not just those operating in the realm of labour hire.

Whilst Rossato had a number of unusual characteristics, including that WorkPac prosecuted the Rossato case on the basis that the central finding of the Court in Skene was correct and that the ‘essence of casualness’ was the lack of a firm advance commitment of work (meaning that the case was perhaps over before it even began!), until this area of law is overturned by the High Court or we see legislative changes, these decisions will continue to create unwanted challenges for Australian businesses, and potentially significant liabilities for the back payment of wages and leave entitlements arising from the engagement of their casuals.

In short, the Full Federal Court determined that Mr Rossato was not a casual employee for the purposes of the Fair Work Act 2009 and the relevant enterprise agreement because the ‘essence of casualness’ was missing. Please click here to read our earlier update on the Rossato case.

A key takeout from Rossato was that the Court found that WorkPac was not entitled to use the casual loading or other payments to set off the permanent entitlements – in effect, allowing Mr Rossato to ‘double dip’. This was despite set-off clauses contained in each engagement with respect to the casual loading that had been paid to Mr Rossato, and legal principles that have typically enabled a party to recover from the other because of a mistake or to avoid unjust enrichment.

We are continuing to assist many of our clients to heed as many of the lessons from the Rossato and Skene cases that they can and rectify as much as possible with respect to their casual engagement models and existing casual workforces.

It’s worth noting that WorkPac has recently sought special leave to appeal Rossato to the High Court. Further, the Federal Government has also indicated some preparedness to consider a legislative response to dealing with the issues raised by Rossato and Skene, particularly in the context of the current pandemic. Both will take time, neither are guaranteed to change the current law of the land.

In the meantime, employers should (if they haven’t started already!) review their contracts of employment to significantly beef them up, as well as monitor each casual employee’s situation regularly and consider whether there is a firm advance commitment being made to casual employees. This now needs to be an ongoing process.

If you would like to talk through any of the recommended mitigation strategies off the back of the Rossato and Skene cases, please get in touch with us.

Award modernisation

The Fair Work Commission has extensively varied existing awards as a result of the 4 yearly review of modern awards over 3 tranches in 2020.

On 4 February 2020, the first tranche of the extensively varied Awards commenced. The second tranche commenced on 4 May 2020.

On 18 June 2020 the first of a smaller group of tranche 3 awards began operation (as COVID-19 resulted in tranche 3 awards being divided into five categories).

The first category of tranche 3 comprising of 18 varied awards, commenced operation from 18 June 2020. To find out which awards have been varied, and to access the new versions of the awards, go here.

In light of the varied awards over any of the 3 tranches in 2020, there may have been changes to a range of penalties, allowances and other entitlements under the award that may affect the circumstances of an industry or occupation. For instance, the variations may have changed the classifications of your employees, changed which award applies to a specific sector in your business or the rates or entitlements payable to certain employees.

If you have any questions or concerns about what the changes mean for your business, or about what specific changes have occurred in your industry or specific award/s, please feel free to reach out to us.

COVID-19 variations to Awards

The Award Modernisation process has perhaps been overshadowed by the temporary variations to certain modern awards due to the impacts of COVID-19, which saw additional schedules included into a number of awards to provide further flexibility in the workplace to contend with the ever changing environment due to the pandemic.

Schedule I provisions related to award flexibility during COVID-19, including operational flexibility in varying and reducing ordinary hours of employees and the ability for employees to take twice as much annual leave at half pay.

Schedule X provided for additional measures, including unpaid pandemic leave, where employees were entitled to take up to 2 weeks’ unpaid pandemic leave if advised to self-isolate and therefore were prevented from working.

It’s important to keep in mind that these provisions were always temporary and cease operation on 30 June 2020. The Fair Work Commission has stated it will not propose to extend the operation past 30 June 2020 on its own motion, but other parties were able to make an application to extend the period of operation for these temporary provisions beyond this date. For example, ACCI and Ai Group are seeking an extension of the provisions in the Clerks – Private Sector Award 2020.

First Jobkeeper dispute

Given the expedited drafting of the Jobkeeper legislation and rules (please click here to read our detailed summary on the Jobkeeper legislation and what it means for employers), surprisingly there have been very few rulings in the new Jobkeeper dispute jurisdiction.

One of the first decisions (Leonie McCreedy v Village Roadshow Theme Parks Pty Ltd [2020] FWC 2480) handed down by the Fair Work Commission in the JobKeeper dispute jurisdiction concerned an employee’s unreasonable refusal of a request to take annual leave.

In short, Village Roadshow issued a letter to employees, including Ms McCreedy, requesting that all employees with an annual leave balance of greater than 10 working days take 2.5 days per week of annual leave. Ms McCreedy refused to take leave, stating she was not being unreasonable in refusing, as she considered it to be her “hard-earned annual leave” and the significant depletion adversely impact her future leave opportunities.

One of Ms McCreedy’s submissions was that Jobkeeper was not intended to help large-scale employers draw down employees’ annual leave balances, but the Commission emphasised the size of the employer is irrelevant. Ms McCreedy also submitted that she had planned to use her accrued leave balance for several planned holidays, including a six-week trip to Europe in 2021 but this had not yet been entered on Village Roadshow’s payroll system or otherwise approved by Village Roadshow.

The Commission ultimately ruled in Village Roadshow’s favour finding that Ms McCreedy had been unreasonable in her refusal to take annual leave. In particular, Commissioner Hunt found:

Ms McCreedy made incredibly unsympathetic, and in my view, belligerent and unwarranted attacks on VRTP, despite the JobKeeper provisions being available for all eligible employers, small or large…

 The test is not…whether VRTP has acted reasonably or unreasonably; it is whether Ms McCreedy has unreasonably refused the request of VRTP…

 In all the circumstances, and noting that Ms McCreedy anticipates requiring only four days’ annual leave for her proposed holidays in September and October 2020, I consider that her refusal of VRTP’s request is unreasonable…”

 Commissioner Hunt made orders that Ms McCreedy not continue to refuse the request made by Village Roadshow. This decision provides employers with some clarity on what could be regarded as an “unreasonable” refusal to follow an employer’s reasonable direction. To access the full decision click here.

Stand down & personal leave

A number of you would have been following the Qantas stand down and leave litigation but to briefly recap Qantas stood down approximately two-thirds of its 30,000 employees in response to COVID-19. Qantas argued that stood down employees could not access their accrued personal leave, carers’ leave or compassionate leave, but could still use accrued annual leave and long service leave.

On the other hand, the Unions challenged Qantas’ interpretation, arguing that s525(b) of the Fair Work Act 2009 states an employee is taken to not be stood down during a period when they are authorised to be absent, meaning employees are entitled to take personal or compassionate leave under the NES, as it is an authorised absence.

Justice Flick considered two important purposes to stand down provisions under the Fair Work Act 2009 including that the stand down provisions were to:

  1. provide “financial relief” to an employer from paying wages where the employer has no work for the employee to usefully perform; and
  2. protect employees from termination of their

In that context, Justice Flick stated that “if there is no work available to be performed by the employee, there is no income and no protection against that which has been lost”.

Justice Flick ultimately held that employees could not access their paid personal, carer’s or compassionate leave while lawfully stood down as to allow so would go against the very purpose of stand down provisions.

For employers, the decision clears up any prior confusion about whether their employees were entitled to access personal, carer’s or compassionate leave during a stand down. To access the full decision click here.

Uber Eats decision

In April 2020, a Full Bench of the Fair Work Commission unanimously held that an Uber Eats delivery driver (Ms Gupta) was not an employee. Please click here to read our earlier update and insights on the FWCFB decision.

Unless or until overturned, we see the decision having wider implications for the gig economy more generally as it essentially now maps out the blueprint for how gig economy businesses and platforms can ensure that they do not put themselves at risk of non-compliance with workplace laws.

The TWU is appealing the decision to the Federal Court, basing their submissions to appeal on the majority finding that Ms Gupta was not carrying on a business of her own but ultimately still finding that she was not an employee.

It will be interesting to see if the appeal is successful, and something we will continue tracking for our clients that operate in the gig economy or utilise non-standard working arrangements and/or gig economy providers.

To access the full decision click here.

Workplace manslaughter offences – are you ready?

Victorian businesses face new workplace manslaughter laws under the Occupational Health and Safety Act 2004 (Vic) commencing on 1 July 2020. The new workplace manslaughter laws in Victoria do not introduce any new duties but they do introduce significant consequences in terms of sizeable penalties for businesses and potential imprisonment for officers who engage in negligent conduct in breach of statutory OHS duties, causing death.

Given the hefty maximum financial penalties and imprisonment terms that may be imposed for these offences, its  critically important for businesses and their leaders to be across the detail of this development.

Recently, the District Court of Queensland handed down judgment on sentencing in R v Brisbane Auto Recycling Pty Ltd & Ors [2020] QDC 113 which involved the first Australian corporate entity to be convicted of an industrial manslaughter offence under the WHS Act 2011 (Qld).

Please click here to read our earlier update. Post 1 July 2020, Victorian safety regulator investigations into fatal incidents will consider whether the elements of workplace manslaughter offences are satisfied and may lead to prosecution of these serious offences.

Criminalising wage theft

Although the world has been hit with the COVID-19 pandemic, at the top of the agenda beforehand was ‘wage theft’ – including its criminalisation.

The Victorian Wage Theft Bill 2020 has now passed the State’s Upper House making it Australia’s first legislation making it a criminal offence to deliberately underpay employees. The legislation was passed on 17 June 2020, despite some serious opposition from the Coalition.

Penalties include fines of up to $1 million for business and up to 10 years’ jail for offending employers. Along with the legislation, there has been a new team of inspectors introduced at the State Wage Inspectorate with wide investigative powers.

The new laws in Victoria, which will not come into force until 1 July 2021, have been criticised for creating a regulatory overlap with the Federal Government’s proposed introduction of national laws that create a criminal offence for the worst cases of underpayment.

IR reform?

Although the circumstances in which Winston Churchill coined the phrase ‘never let a good crisis go to waste’ were a bit different, in a similar vein Prime Minister Scott Morrison has indicated that he has been heartened by the constructive approach that employers and unions had taken in working with the government during the pandemic.

Off the back of this, the Industrial Relations Minister Christian Porter will now chair working groups with the aim of producing a ‘practical reform’ of our IR system as we know it to help grow jobs as the economy emerges from the COVID-19 pandemic.

Prime Minister Morrison unveiled the process as a key component of the government’s ‘Jobmaker’ policy agenda and the working groups will cover five key areas including: award simplification, enterprise agreement making, casual and fixed- term employment, greenfields projects, plus compliance and enforcement in areas such as wage underpayment.

The groups will include employers, unions and other groups, and work through until September 2020.

Whilst the degree of consensus remains unknown at the time of writing (we are not holding our breath!), it would appear that there are some unique opportunities to make some progress at developing solutions that could make significant improvements to an overly complicated award system, rigid enterprise agreement making process and addressing the casual employment predicament in the wake of Rossato / Skene. In exchange, we expect that unions and employees will be wanting more certainty around defining ‘gig workers’ (and their associated legal rights) as well as seeking further proactive steps to address the recent trends in large-scale wage underpayments, particularly by big business.

There are some interesting times ahead on the workplace relations and safety fronts and we look forward to continuing to work closely together as your businesses emerge from the crisis and transition back to their ‘new normal’ as we embark upon the new financial year.

Contact us

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.

KHQ Lawyers - Michael Cochrane

Michael Cochrane Principal Solicitor

Michael draws on more than 10 years of employment and industrial law experience, together with his corporate background, to provide advice and support focused on delivering strong commercial outcomes... Read More

Chris Gianatti

Chris Gianatti Director

Chris worked for a number of years with Corrs before moving in-house to Telstra as HR Legal Counsel for the “Factory” (covering Telstra’s back of house operations including the field... Read More