Changing gears for a winning culture

There is plenty of research out there that tells us that the 1900’s command and control approach to management just doesn’t work in the modern world where change is constant and people want answers and results now.

If we are going to get true employee engagement and high performance with today’s and future generations, we need to fundamentally change the management model to one based on leadership and values-based behaviours that deliver trust and inspiration rather than just process control and risk management which really only deliver compliance. This is what study after study tells us.

It means business leaders need to change gears and in doing so reimagine their business culture and language from:

  • human resources to human beings
  • risk control to trust
  • process control to relationship optimisation
  • management to leadership
  • tasks to behaviours
  • outputs to outcomes
  • compliance to engagement
  • command to inspiration
  • structure to flexibility
  • reactive to resilient

It is a big adjustment and it is easy to fall back into the traditional management norm that has been drummed into us for all those years.

That is why it is so important to have a clear vision about where you are going and clear values and behaviours that say how you are going to go about doing that and then holding everyone accountable for modelling those every day, most importantly yourself.

Be prepared to challenge and be challenged, listen to what your people have to say and learn from that. It is amazing what a difference it can make to performance, engagement, innovation and wellbeing.

Ready to change gears?

 

What might the new casual conversion provisions mean for business?

As part of the 4 yearly review of modern awards, the Fair Work Commission has decided to insert casual conversion provisions into the 85 modern awards that currently do not have provisions of this sort.

These provide a right for casual employees engaged on a regular and systematic basis to apply for conversion to full-time or part-time employment subject to a number of conditions as follows:

  • a qualifying period of 12 calendar months;
  • a qualifying criterion that the casual employee has over the qualifying period worked a pattern of hours on an ongoing basis which, without significant adjustment, could continue to be performed in accordance with the full-time or part-time employment provisions of the relevant award;
  • the employer must provide all casual employees (whether they become eligible for conversion or not) with a copy of the casual conversion clause within the first 12 months after their initial engagement; and
  • a conversion may be refused on the grounds that:
    • it would require a significant adjustment to the casual employee’s hours of work to accommodate them in full-time or part-time employment in accordance with the terms of the applicable modern
      award, or
    • it is known or reasonably foreseeable that the casual employee’s position will cease to exist, or
    • the employee’s hours of work will significantly change or be reduced within the next 12 months, or
    • on other reasonable grounds based on facts which are known or reasonably foreseeable.

Please note that, at this point in time, awards have not been varied and the decision is therefore not operational.

Where this decision differs from  casual conversion provisions that are already in other modern awards is that:

  • the qualifying period is commonly 6 months rather than the 12 month period stated in the new decision
  • the relevant awards have a statement that an employer “must not unreasonably refuse” a request for conversion but there is no reference to the sorts of circumstances that might reasonably justify refusal (as set out in the new decision)
  • there are some variances in procedural requirements between the old and the new
  • existing casual conversion provisions continue to have force.

So what does it all mean?

Regardless of the industry you are in, every employer who has casual employees working regular and systematic hours over a prolonged period of time should review those arrangements and consider whether the past/existing working pattern and foreseeable future working pattern would justify conversion to full-time or part-time employment.

There is also a concern that, while an employee in a small business (less than 15 employees) is not eligible to make a claim of unfair dismissal until they have completed 12 months service (or 6 months in the case of larger businesses), there could be a spike in General Protection/Adverse Action claims where an employee exercises or intends to exercise their right to request casual conversion and perceives that they are disadvantaged because of that request or intention (eg in reduction of hours, variation of shifts to interrupt a regular working pattern or even discontinuation of employment). There is no qualifying period for these types of claims so employers beware.

The final point that we wish to make here is that security of employment is a significant issue in our community today and that is a key factor in attracting and retaining good people who’ll do a good job for you. If you want a great business, trust them and give them that security.

Fair Work changes from 1 July 2017

There are a number of changes that have come into being from 1 July 2017 as a result of the 2016-2017 Annual Wage Review which increased the National Minimum Wage and award rates by 3.3% and other decisions made by the Fair Work Commission.

The Fair Work Ombudsman has produced an up to date set of Pay Guides for all modern awards which can be accessed here.

These guides have also factored in the first phase of reductions in penalty rates that have occurred in a number of retail and hospitality industry awards but please note that unions have appealed that decision and these proceedings commenced in the Federal Court this week.

Additionally, the following flow on increases have occurred.

The High Income Threshold

The new High Income Threshold is $142,000 per annum.

Employees who accept an employer guarantee of annual earnings of greater than this amount do not have access to the unfair dismissal jurisdiction.

This also raises the maximum compensation that can be awarded in an unfair dismissal case to $71,000 (6 months’ wages).

Fair Work Information Statement

Under National Employment Standards, all new employees must be provided with a Fair Work Information Statement which explains a range of workplace rights and where to go for assistance with those.

This has been updated and the new version that must be provided to new employees from 1 July 2017 can be accessed below.

Fair-Work-Information-Statement – 010717

Penalties for Fair Work Breaches

The maximum penalties for breaches of the Fair Work Act 2009 and modern awards have been increased to:

  • For corporate entities, $63,000 per offence
  • For individuals, $12,600 per offence

It should be noted that, in legislation currently before the Parliament (which is now in recess), these penalties are targeted to increase tenfold.

 

Ridgeline HR educating young people on workplace rights

This morning, we ran the first of our “Your Workplace Rights” briefings for secondary students and first up were Year 10 students at Melba College about to go out on work experience.

The briefing covered pay and conditions, National Employment Standards, Modern Awards and Enterprise Agreements and the roles of the Fair Work Commission and the Fair Work Ombudsman. The presentation included links to online information resources, tools and calculators that anyone can use to be better informed about their rights, entitlements and obligations.

This pro bono service has been launched for all Maroondah secondary schools as part of our contribution to improving community wellbeing in the City of Maroondah.

Penalty rates decision to be phased in

The Fair Work Commission has announced transitional arrangements for implementing the recent decisions to reduce penalty rates for work on Sundays and Public Holidays across a variety of awards.

Sunday penalty rates

The reductions in Sunday penalty rates are being phased in in annual instalments over 3 to 4 years depending on the award and are timed to occur on 1 July at the same time as any increases in award wages occurring from the Annual Wage Review process. The schedule for each award is as follows.

Fast Food Industry Award 2010

Full-time and part-time employees – Level 1 only

1 July 2017: 150 per cent > 145 per cent

1 July 2018: 145 per cent >135 per cent

1 July 2019: 135 per cent >125 per cent

Casual employees (inclusive of casual loading) – Level 1 only

1 July 2017: 175 per cent > 170 per cent

1 July 2018: 170 per cent > 160 per cent

1 July 2019: 160 per cent > 150 per cent

Hospitality Industry (General) Award 2010

Full-time and part-time employees

1 July 2017: 175 per cent > 170 per cent

1 July 2018: 170 per cent > 160 per cent

1 July 2019: 160 per cent > 150 per cent

Casual employees – unchanged at 175% including casual loading

General Retail Industry Award 2010

Full-time and part-time employees

1 July 2017: 200 per cent > 195 per cent

1 July 2018: 195 per cent > 180 per cent

1 July 2019: 180 per cent > 165 per cent

1 July 2020: 165 per cent > 150 per cent

Casual employees (inclusive of casual loading)

1 July 2017: 200 per cent > 195 per cent

1 July 2018: 195 per cent > 185 per cent

1 July 2019: 185 per cent > 175 per cent

Pharmacy Industry Award 2010

Full-time and part-time employees

1 July 2017: 200 per cent > 195 per cent

1 July 2018: 195 per cent > 180 per cent

1 July 2019: 180 per cent > 165 per cent

1 July 2020: 165 per cent > 150 per cent

Casual employees (inclusive of casual loading)

1 July 2017: 225 per cent > 220 per cent

1 July 2018: 220 per cent > 205 per cent

1 July 2019: 205 per cent > 190 per cent

1 July 2020: 190 per cent > 175 per cent

Public Holiday penalty rates

This decision effects the above 4 awards plus the Restaurant Industry Award 2010.

In all of these awards , the penalty rate for work on a public holiday is changed with effected from 1 July 2017 to

Full-time/part-time:  225%

Casual:  250%

One of the reasons given for phasing in the Sunday penalty rate cuts over such a prolonged period was that “take home pay” orders would not be an available option for workers whose take home pay was reduced as a result of implementation of this decision. The FWC’s rationale is that annual wage increases will significantly, if not totally, offset reductions in penalty rates.

This is likely to be a factor in future Annual Wage Reviews.

It is understood that some unions may seek judicial review of the penalty rates decision and, should that occur, it is possible that implementation could be further delayed.

 

Fair Work Commission hands down 3.3% wage increase

The Fair Work Commission today issued its decision in the 2016-2017 Annual Wage Review.

As we predicted, the decision came in at 3.3% (about midway in our predicted range of 3 – 3.5%).

That takes the Federal Minimum Wage to $694.90 per week, or $18.29 per hour with effect from 1 July 2017.

This constitutes an increase of $22.20 per week to the weekly rate or 59 cents per hour to the hourly rate based on a 38 hour week.

The increase will also apply to modern award rates effective from 1 July 2017.

In the decision summary, the Panel stated: “In previous Reviews, the Panel has accepted that if the low paid are forced to live in poverty then their needs are not being met and that those in full-time employment can reasonably expect a standard of living that exceeds poverty levels. While we have not departed from that position, we acknowledge that the increase we propose to award will not lift all award-reliant employees out of poverty, particularly those households with dependent children and a single-wage earner. However, to grant an increase to the NMW and award minimum rates of the size necessary to immediately lift all full-time workers out of poverty, or an increase of the size proposed by some parties, is likely to have adverse employment effects on those groups who are already marginalised in the labour market, with a corresponding impact on the vulnerability of households to poverty due to loss of employment or hours.

The level of increase we have decided upon will not lead to inflationary pressure and is highly unlikely to have any measurable negative impact on employment. It will, however, mean an improvement in the real wages for those employees who are reliant on the NMW and modern award minimum wages and an improvement in their relative living standards.”

Employers need to review employees’ wages to ensure that they continue to receive at least what they would be entitled to under the relevant award.

Those who have enterprise agreements in place need to check whether the agreement provides for passing on of the Annual Wage Review decision or whether they need to adjust wages because wages provided for under the Award will fall below the new award rates from 1 July 2017.

 

New bill set to raise Fair Work penalties by 900%

The federal government recently presented the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 to parliament and it is expected to pass into legislation with bipartisan support.

This bill has far reaching consequences with the proposed changes to the Fair Work Act 2009 including:

  • Introducing a higher scale of penalties for ‘serious contraventions’ of prescribed workplace laws up from $54,000 to $540,000 per offence for a corporation and from $10,800 to $108,000 per offence for an individual
  • Increasing penalties for record-keeping failures.
  • Making franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries where they knew or ought reasonably to have known of the contraventions and failed to take reasonable steps to prevent them.
  • Expressly prohibiting employers from unreasonably requiring their employees to make payments (e.g. demanding a proportion of their wages be paid back in cash).
  • Strengthening the evidence-gathering powers of the Fair Work Ombudsman to ensure that the exploitation of vulnerable workers can be effectively investigated.

Particular attention is also being given to exploitation of migrant workers so businesses need to ensure that visas are in order and any work limitations are complied with.

Ridgeline HR offers a range of services to support businesses in getting compliance right and minimising risks internally and across franchise groups and supply chains.

Fair Work Ombudsman’s new “Record My Hours” App

The Fair Work Ombudsman has released a new “Record My Hours” app to enable workers to automatically record their hours of work using geofencing technology.

In essence, what happens is the worker enters the location of their workplace and the app will automatically track and record the hours that they spend in that location.

The Fair Work Ombudsman has done this to tackle a problem that they commonly encounter in investigating underpayment of wages complaints and that is the employer’s failure to maintain or produce adequate or accurate records.

Between 1 July 2016 and 31 December 2016:

  • 64% of the court cases initiated by the Fair Work Ombudsman involved an element of alleged record keeping or payslip violations and
  • 347 infringement notices with on the spot fines ranging from $540 to $2,700 were issued for record keeping and payslip contraventions.

Employers should ensure that they are doing the right thing with payslips and record-keeping to ensure legal compliance, minimise risks of fines and, of course, because that is all part of looking after your people.

Information on pay slip and record keeping requirements is available here.

Myths in employing young people a target in 2017

In a recent media release, the Fair Work Ombudsman, Ms Natalie James, announced a 2017 campaign to address widespread underpayment of young workers across Australia. Here is part of what she had to say including commentary on 10 myths that the Fair Work Ombudsman’s officers commonly come across.

Ms James says that in 2017 her Agency will have a particular focus on proactively checking that employers of young workers are doing the right thing.

“Young workers can be vulnerable, so we place high importance on checking and treat cases of their rights being contravened more seriously, which means we are more likely to pursue enforcement action,” Ms James said.

Between July 2011 and June 2016, the Fair Work Ombudsman received more than 27,000 requests for assistance from young workers and recovered over $18 million for young workers who had been short-changed.

Ten common young worker myths the Fair Work Ombudsman encounters are:

MYTH 1: Paying low, flat rates of pay for all hours worked is OK if the worker agrees.
FACT: Minimum lawful pay rates are mandatory. In many jobs, penalty rates must be paid for evening, weekend, public holiday and overtime work.

MYTH 2: Lengthy unpaid work trials are OK.

FACT: Unpaid trials are only OK for as long as needed to demonstrate the skills required for the job. Depending on the nature of the work, this could range from an hour to one shift.

MYTH 3: Employees don’t need to be paid for time spent opening and closing a store or for time spent attending meetings or training outside their paid work hours.

FACT: If a meeting or training is compulsory, then it is work. Employees must be paid for all hours they dedicate to work and this includes time spent opening or closing a store. For example, if an employee is required to be at work at 7.45am to prepare for an 8am store opening, they need to be paid from 7.45am. 

MYTH 4: Employers can make deductions from an employee’s wages to cover losses arising from cash register discrepancies, breakages and customers who don’t pay.

FACT: Unauthorised deductions from an employee’s pay are unlawful. Deductions can be made only in very limited circumstances. 

MYTH 5: Employees are obliged to buy store produce such as clothing or food.

FACT: Employers cannot require staff to purchase store produce. This includes any items for which the worker may receive a staff discount. For example, an employer cannot require workers to purchase the particular clothing stocked in a retail outlet.

MYTH 6: Unpaid internships are OK for all inexperienced young workers looking to get a foot in the door.

FACT: Internships can only be lawfully unpaid when they are a requirement of a course at an authorised educational or training institution, or an approved programme of work under Social Security Legislation.

MYTH 7: Employers can pay young workers as ‘trainees’ or ‘apprentices’ without lodging any formal paperwork.

FACT: Employers must negotiate and lodge a registered training contract for an employee in order to lawfully be able to pay trainee or apprentice rates. An employer cannot pay an employee trainee rates just because they are young or new to the job.

MYTH 8: Paying employees with goods such as food or drink is OK.

FACT: Payment-in-kind is unlawful. Employees must be paid wages for all work performed.

MYTH 9: If a worker has an Australian Business Number (ABN) they are an independent contractor and minimum pay rates don’t apply.

FACT: Having an ABN does not automatically make a worker an independent contractor. Fair Work inspectors apply tests of fact and law to determine whether a worker’s correct classification is as an independent contractor or an employee. Whether an employer has labelled a worker as a contractor and required them to obtain an ABN may not be relevant.

MYTH 10: Pay slips aren’t mandatory – employers only need to give employees pay slips if they ask for them.

FACT: Employers must give all employees a pay slip within one working day of pay-day. Employers can give employees paper or electronic pay slips, such as a link sent via email.

There are no surprises here for us at Ridgeline HR because we also encounter misunderstandings like these in the course of our work.

 

Protecting against accessorial liability

The Fair Work Ombudsman has been very active in pursuing individuals who it believes have reasonably been a party to contraventions of minimum wages and conditions whether overtly in action or by omission or failure to exercise due diligence.

Investigations into cases involving large businesses such as Coles and Woolworths and Myer who contract work out to other entities which do not meet their compliance obligations have been undertaken from the perspective that the principal in the supply chain should have known and acted to prevent the non-compliance even though it was not the actual employer.

This raises questions about who might be considered an accessory to a contravention and here is what the Fair Work Ombudsman recently had to say about that.

Section 550

Under section 550 of the Fair Work Act; a person who is involved in a contravention of the Act is held responsible for that contravention. A person is involved in a contravention if they:

  • have aided, abetted, counselled or procured the contravention; or
  • have induced the contravention, whether by threats or promises or otherwise; or
  • have been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
  • have conspired with others to effect the contravention.

What does this mean for individuals?

Anyone who is found to be involved in a contravention of the Act can be personally liable for compensating employees and paying penalties imposed by the court. The Fair Work Ombudsman has used this provision to hold company directors personally accountable for the actions of their companies. This effectively means that liquidating a company is no guarantee of avoiding the consequences of non-compliance with the Act.

But section 550 can extend to anyone involved in a contravention. This can include human resources and payroll officers, line managers, accountants and advisors.

What does this mean for companies?

If a company, as the employing entity, contravenes the Act: that company is automatically responsible for that contravention and may have penalties imposed by a court. But under section 550 a company that is not the employing entity, may be found to be involved in a contravention and may also have penalties imposed by a court.

This is important for companies to consider especially in their supply-chain and procurement processes. Effectively it means that companies cannot outsource their non-compliance. For example if one company contracts another company to supply cleaning staff; and those cleaners are underpaid: both companies may be held accountable by a court. 

This has broad implications for businesses that use outsourcing, franchise arrangements or complex supply-chains. The full scope of section 550 in these types of arrangements has not been settled by the courts, however, the Fair Work Ombudsman is determined to take action to ensure a culture of compliance is established and maintained broadly across all businesses.

You should also note that fines of up to $10,800 per offence can be imposed on individuals and up to $54,000 per offence can be imposed on companies.

What you need to do

Firstly, if you are an employer, ensure that you are aware of and comply with your own obligations as an employer and that these are properly documented in employment contracts/letters of offer etc.

Secondly, if you contract work out to another party, verify that that contract enables the other party to be capable of meeting its employment compliance obligations and that that other party actually does so.

Thirdly, if you are an internal HR Manager or other Manager, ensure that you have processes in place that genuinely test whether work contracted out is conducted in accordance with employment obligations (ie people are contracted and paid appropriately). This needs to be more than having the contractor just tick a box

Fourthly, if you are an external business advisor, ensure that the advice that you provide is competent and, if you are not confident of your competency in employment matters, engage a delivery partner to provide that competency.

Ways that we can help

Ridgeline HR has been providing just that sort of advice since we started in 2000. We have done this with hundreds of clients across all sorts of industries throughout Australia. We have serviced the members of an industry association and the clients of accounting firms for many years and we have been recognised by federal government agencies in the past for our expertise.

We now also offer a supply chain education and audit service which in essence involves us auditing supply chain participants’ compliance and advising them on any areas that they need to fix. This proactive approach to assuring downstream compliance provides a simple and practical approach to managing the risk of accessorial liability.

If you are interested in exploring ways in which we might be of assistance in these areas, call Peter Maguire on 0438 533 311 or email peter@ridgelinehr.com.au