why 2020 will spark mass reform in industrial relations.

This year has been a tumultuous year for HR and now we are set for material change in our IR system across five areas of reform:

  • Casuals
  • Award simplification
  • Enterprise agreement making
  • Compliance and enforcement
  • Greenfields agreements

The consultative groups who are working through this reform will work over the next three months with a view to legislating changes to the Fair Work Act in early 2021. 

This is big - we haven’t seen changes of this magnitude since 2009. 

Recently, we were very lucky to be joined on one of our HR webinars by Phillip Willox, Partner and Kathryn Bellion, Head of Employee Experience, from King and Wood Mallesons. 

They delivered a session titled ‘Employment 101 – legal update’ and shared with our attendees how we can navigate some of the very complicated issues facing our organisations.  

With their permission, I would like to share with you some of my key takeaways from the session. 

  1. Wage theft 
  2. Modern awards
  3. Scrutiny of casual employment 

Wage Theft 
This seems to be the catch-all phrase, supported by some media hype to cover organisations who have underpaid their employees, regardless of whether they have self-disclosed the error or have been intentional.

We have seen a myriad of examples of this from Masterchef host, George Calombaris’ underpayment scandal which subsequently resulted in the closure of his business to major employers such as Bunning’s, Woolworths, Qantas and Coles self-disclosing their errors. 

In all cases the organizations have underpaid award rates, penalty rates, casual loadings, overtime and other allowances.
Fair Work has made it abundantly clear, organisations regardless of size, can not claim ignorance of the rules or administrative error. There is no leniency in any circumstance and there will be an increased focus on auditing.  

The repercussions of this are significant. Not only from the public naming and shaming damage to your brand but financially the amount of back pay can be staggering.  There is also the matter of criminal prosecution for some repeat offenders and Directors can even be held to criminal charges.

The Victorian legislation “the Workplace theft bill“ was passed recently with the federal legislation close on its heels. The key takeaways here are that you must:

  • Audit your own employees’ wages and all  payments regularly.
  • Review all classifications and pay rules.
  • Ensure you have a system in place to cross check and audit any changes to awards. 
  • Do not assume that just because you work on individual employment contracts that you are safe. 
  • Ensure that payroll does not round up or down as this can be cumulative. 

Award reviews and annualised salaries

In March 2020, at the completion of the four year award simplification review period - which seems to have taken considerably longer - we have landed on 19 new model clauses in 19 modern awards.  Although the process is designed to simplify, there is still some debate as to whether these new updates have made it even more complex than before. Part of the new reform are significant record keeping compliance obligations.

Organisations may believe that they don’t need to refer to the award as they are paying “above award “on individual contracts but the reality is that organisations do make mistakes.   

The rule of thumb in the case of Fair Work is the onus of proof is on the employer. You must provide accurate records to demonstrate the annualised salary is fair and you have taken into consideration base pay, over time, penalty rates and allowances in the event a case is raised against you.

An interesting observation was made by Phillip, in that many employers think that contracts are “set and forget” and they are not. They need to be reviewed at least yearly and upon any changes of employment conditions. 

You could chose to follow the award, implement an EBA or establish a common law contract which details all aspects of the award provisions but if you chose to use your own employment contract which is based on an annualised salary the lessons are:

  • Make sure you keep records of employees’ overtime and potential allowances and penalties.
  • Make sure you have reconciled what they would get under an award as opposed to the annualised salary and make sure is fair. 
  • Revisit the contracts at a minimum once a year or on any changes to employment circumstances.

Include an off-set clause which will state that the annualised salary is inclusive of, for example, penalties, reasonable overtime, allowances. 

Casualisation 

I’m sure we have all been watching the casualisation issue closely since the Federal Court released its decision in the Rossato case on 20 May. I believe Workpac will be taking the appeal to the high court. The many class actions raised now have shed further light on an already hot topic for HR. 

The old “engaged as a casual and paid a casual loading accordingly” is no longer going to be acceptable in a contract unless there is expressed agreement and certain characterisations of employment are detailed. 

The argument still stands that if somebody does the same hours each week for extended periods and has an advance commitment to work, are they truly a casual worker? Is the nature of casual merely intermittent in nature, on call or with no further commitment that the week in front of you? 

Without the right characterisation, employees who have been regular casuals, regardless of the payment of casual loading would be eligible for leave payments. ‘Double dipping’ is the term often used. 

The legal definition of casual seems to raise some debate and this debate will go on for some time but in the interim in order to protect your company you must:

  • Consider the correct characterisation of employment at engagement - i.e. no commitment beyond the week, changes of hours and days, changing nature of work or location.
  • Draft an effective off-set clause in the contract to avoid “double dipping”.
  • Manage their working hours.
  • Ensure you check in regularly with operations to ensure they are true casuals.
     

about the author

Jeannette Lang - HRP General Manager VIC/TAS/SA

Jeannette has over 20 years experience as a senior HR leader. With a strong network (nationally and internationally) of HR practitioners she is focussed on the placement of senior and executive HR professionals.

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Comments

  • 24/09/2020 Felicity
    I love learning
  • 24/09/2020 Felicity
    I am looking forward to all the information

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