Summary of New IR Legislation

10 December 2020

Tom Earls provides a summary of some of the main changes proposed in the Federal government’s new Industrial Relations legislation, introduced on 9 December 2020.

The Federal government announced its long awaited workplace relations reform package on 9 December, setting the scene for industrial relations to be at the forefront of the political agenda coming into 2021.

The following is a brief summary of the proposed legislation. While some of the changes will be a welcome relief for employers, it is important to note that the proposed changes are not ‘one way’ changes. There are a number of elements proposed that will significantly impact business and which will also significantly impact compliance and risk profiles, not least being the introduction of criminal offences relating to certain underpayments of wages and increased penalties for non-compliance.

The proposed legislation will be subject no doubt to intense scrutiny before the Senate and more broadly across the political landscape, meaning the final form (if any) is subject to change. There is no specific time set for the commencement of this legislation.

If the legislation is passed, businesses will need to carefully consider this legislation and review their systems and procedures. We will keep ACA members informed if/when this may occur.

Fair Work Amendment Bill

The Federal Industrial Relations Minister, Christian Porter, introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) into the House of Representatives on 9 December 2020. If passed, this bill will bring significant changes to the Fair Work Act 2009 (Cth) (the Act) and related legislation.

Casual Employees

Definition of Casual Employees

As a means to combat uncertainty arising from the recent Workpac litigation, the Bill proposes a statutory definition of casual employment. The definition is based upon whether, at the time of offering employment, the employer makes a firm advance commitment to continuing and indefinite work.

Casual Conversion

The Bill also introduces a statutory obligation for employer to offer regular casuals the right to convert to permanent employment, with residual rights for the employee to request conversion in certain circumstances where the employer has not offered conversion to the employee and where the employee has not accepted an offer to convert.

New Casual Fair Work Information Statement

Although all employees must receive a Fair Work Information Statement, the Bill will create a separate variant for new casual employees, which will set out casual-specific rights.

Casual Loading

Importantly, the Bill introduces a provision to confirm that if an employee is paid a casual loading but is later found to be a permanent employee, the court would generally offset the casual loading paid to the employee against the value of permanent entitlements found owing (e.g. paid leave, notice of termination, redundancy pay).

Sunsetting old agreements

Importantly, the Bill proposes to ‘sunset’ all agreements that were made either prior to the Act coming into effect, or during the period 1 July 2009 and 1 January 2010 (when modern awards came into effect). This is the first time that such a broad sunset provision has been proposed. For clients still covered by previous agreement, this may have a significant impact on their working arrangements.

Enterprise Agreements

Better Off Overall Test (BOOT)

In assessing the BOOT, the Bill clarifies that the Fair Work Commission (FWC) consideration will generally be limited to existing patterns of work, kinds of work or types of employment (or in the case of Greenfields Agreements, it is reasonably foreseeable). The FWC will also be required to give significant weight to the views of employers, employees and bargaining representatives.

The Bill allows for certain agreements to be approved if they do not pass the BOOT when taking into account the views and circumstances of interested parties, the impact of COVID-19 and the extent that it is in the public interest.

National Employment Standards Precedence Clause

Each agreement must include, or will be deemed to include, a term providing that where there is an inconsistency between the agreement and the NES, and the NES provides a greater benefit, the NES provision will apply to the extent of the inconsistency. The FWC will no longer consider whether an agreement is in breach of the NES.

Voting for casuals

Only casual employees who work during the access period will be entitled to vote on an agreement or variation.

Termination of an Enterprise Agreement

At least three months to have passed since an agreement’s nominal expiry before a unilateral application to terminate an agreement may be made.

Greenfields Agreements – up to eight year agreements for Major Projects

For Greenfields agreements relating to major projects (i.e. total capital expenditure reasonably likely to be at least $500 million, or a Ministerial declaration has been to that effect), the nominal expiry date can be up to eight years from operation. If the nominal expiry date is more than four years, the agreement must include a term providing at least annual increases to employees.

Submissions before the Fair Work Commission

The capacity for unwelcome interference by non-parties or bargaining representatives will be significantly restricted, with the FWC’s general powers to inform itself being restricted in the agreement-making process to publicly available information, submissions from volunteer bodies and submissions, evidence and other information from the employer, employees, bargaining representative, Unions covered by the agreement, or various Ministers.

Compliance and Enforcement

The Bill introduces new methods of calculating penalties for breaches of the Act. For underpayment of wages, the Court may assess penalties either on the basis of an expanded pecuniary penalty scale which would, for a corporation, be up to $99,900 per remuneration related office or, in the case of businesses that are not small businesses, up to twice the value of the underpayment (whichever is the greater).

A new provision has been inserted to prohibit the advertisement of employment at a rate less than the national minimum wage.

Small Claims

The Bill also increases the depth of the small claims jurisdiction by increasing the limit to $50,000. A court can now make an order for the costs of a filing fee in relation to the small claims jurisdiction. The Bill also provides for a conciliation and arbitration with the FWC for small claims.

Criminalising Underpayments

Importantly, the Bill introduces a criminal offence for engaging in a dishonest and systematic pattern of underpayment for one or more employees. This applies to both individuals and body corporate. The penalty for an individual could include jail time.

Transfer of Business

The Bill excludes from the definition of a transfer of business where an employee, before termination of the employment with the first employer, seeks to be employed by the new employer who is an associated entity of the old employer at their own initiative. This will allow employees to voluntarily transfer to different employment instead of redundancy.

Modern Awards

The Bill provides additional flexibility for part-time employment but only for nominated awards. Under the flexibility, an employer and a part-time employee may agree to a standing agreement to permit working above their normal hours without the payment of overtime, something that presently requires a separate written agreement. Regrettably, at this stage the Clerks – Private Sector Award 2020 is not a nominated award, although it may be included by regulation.

The Bill also extends certain COVID-19 directions for a period of two years in relation to specified modern awards.

Tom Earls is a Founding Partner of Adelaide-based Fair Work Lawyers. The information contained here is general in nature and does not constitute legal advice. Each circumstance is different and requires consideration of a variety of matters. Clients should seek legal advice in relation to any particular circumstances.