Does that termination pass the 3 tents test?

Does that termination pass the 3 tents test?

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Does that termination pass the 3 tents test?

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One of the most challenging things that a small business owner might have to do from time to time is to dismiss and employee for misconduct. Often, that decision is tempered by a fear of the employee making an unfair dismissal claim. What if there was a simple test that might help you to sort through whether dismissal is the right course of action. Here is one that we use.

Having worked in the field of HR fort over 40 years, there have been hundreds of occasions when I have had to terminate employees or support employers through the process of terminating employees for misconduct.

In doing so, we need to consider fairness from a couple of angles:

  • Substantive fairness which requires that the action taken would not be harsh, unjust or unreasonable and
  • Procedural fairness which is about ensuring that due process has been followed and the principles of natural justice have been complied with

A process that I use to consider the substantive fairness of an action is to assess them against the “3 tents” namely:

  • Content: what actually happened, ensuring that you are aware of the facts of events that have given rise to consideration of action?
  • Intent: was the action or dereliction of duty or other offence deliberate or was it due to a misunderstanding or a heat of the moment thing and is it in or out of character for the individual concerned?
  • Extent: what was the effect of the action or dereliction of duty or other offence on the business and/or employees and/or other parties?

Of course there are the procedural elements to attend to as well but ensuring that the action that you propose will stand up to the “3 tents test” is a good start. One other piece of advice – if you have a situation where you think you might have to terminate an employee for misconduct, get professional advice before you go further. You might also need to stand them down with pay while you do that and work through the process. If you need a hand, give us a call on 0438 533 311. 

 

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Are workplace changes for the better?

Are workplace changes for the better?

Latest News & Events

Are workplace changes for the better?

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A newly released report from the Australian Human Resources Institute tells us that most employers are mostly positive about many of the significant changes to workplace laws that have been introduced in the past few years. Does that come as something of a surprise?  

 

About this report

The Australian Human Resources Institute has just released a report titled “Recent Employment Legislation: What do Employers Think?” . It sets out the findings of a study that it conducted this year via a survey of 600 employers and 6 subsequent focus groups relative to reforms introduced through the Albanese Government’s  Fair Work Legislation (Secure Jobs, Better Pay) Amendment Act 2022 and the Closing Loopholes Acts of 2023 and 2024.

The reforms covered included:

  1. Respect at work
  2. Flexible working
  3. Fixed-term contracts
  4. Casual employment
  5. The right to disconnect
  6. Prohibition of pay secrecy clauses
  7. Wage theft.

What were the key findings 

Interestingly, much of the commentary centred on the perception that having these things legislated forced organisations to review their policies and practices. In other words, they did it because it was a compliance issue.

And then, when they did review them, they found that there were some real positives. For example:

  •  58% said that legislating the right to disconnect had increased employee engagement and productivity levels
  • 77% said they employ casual staff and 68% said they would be more likely to engage casual staff as a result of the changes to the rules on casual employment
  • 71% of employers reported a positive impact from legislation of the limitations on fixed term contracts resulting in more permanent employment.
  • 75% of employers support the addition of reproductive health as a protected attribute in anti-discrimination laws 
  • 48% of employers say they would like to see the right to request flexible working arrangements extended to all employees (not just those currently protected such as parents and carers and those with a disability or those over 55 or those experiencing domestic violence)

Our thoughts

Based on those findings, you would have to conclude that the Albanese Government’s reforms in these areas have been overdue and necessary and have been good for employee engagement and productivity.

The proportion of employers who say they support extending “the right” to request a flexible working arrangement to all employees does seem to be at odds with all of the media talk about employers implementing back to the office mandates.

It is also interesting in the context of the Victorian Government’s proposed legislation to mandate a right to work from home for 2 days per week on Victorian employers and the pushback that there has been against that legislation. 

Then there is the recent case of Westpac refusing a request for a flexible working arrangement and losing the argument in the Fair Work Commission.

Flexible working is here to stay and so we need to adapt……to the degree that is practicable and sometimes it won’t be.

If you need someone to talk through the issues and options for your business, we would be happy to help.

Please call us on 0438 533 311 or email enquiries@ridgelinehr.com.au if you want to explore how we might be of assistance with any issues like this in your business.

 

 

 

CONTACT US

Ridgeline Human Resources Pty Ltd
ABN : 24 091 644 094

enquiries@ridgelinehr.com.au

0438 533 311

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Court clarifies annual salary rules

Court clarifies annual salary rules

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Court clarifies annual salary rules

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 For many years, businesses have been paying people on an annualised salary basis using set off clauses in common law contracts to compensate for and set off monetary award entitlements against over award remuneration.  And, a long as people ended up better off overall than they would have been if the award was applied literally, that all seemed fair enough but is it? The Federal Court begs to differ. So what does that all mean?

 

About this case

This decision by the Federal Court arose from proceedings initiated by the Fair Work Ombudsman and a class action for employees in relation to alleged underpayment of wages by Coles and Woolworths. 

At issue was the question of over how long a period could an employer rely on a set-off provision in an employment contract to effect set-off of and compensation for award entitlements such as minimum wages, allowances, overtime and shift loadings and penalty rates.

In Coles case, the relevant period in the contract was 12 months and in Woolworths it was 6 months. 

There have been cases in the Fair Work Commission where annualised wage arrangements have been inserted in modern awards but the door had always been left open in the related decisions for another gateway via common law contracts.

The General Retail Industry Award 2020 which applies in this case doesn’t have an Annualised Wage Arrangements clause but it is quite specific on this issue in that it states: “Wages must be paid for a pay period according to the number of hours worked by the employee in the period or they may be averaged over a fortnight”. This “averaging” element is consistent with other arrangements across different industries where RDOs and averaging of wages is commonplace.

The judge in this case made the decision that employees have to be paid for hours in the pay period in which they worked them. That invalidated the arrangements that Coles and Woolworths relied on for people to work additional hours in some pay periods and set off the overtime and penalty payments applying to those hours against above award remuneration on other pay periods for up to 6 or 12 months.

So they now each have another considerable set of underpayments of wages to deal with, something that unfortunately happens far too often. 

Record keeping requirements 

A secondary issue that arose was in relation to Coles and Woolworths being found to have not complied with their record keeping obligations.

Specifically, Fair Work Regulations provide that an employer must maintain records of overtime hours worked and the starting and finishing times of overtime hours if a penalty rate of loading applies to those hours.

 It is quite common for people to believe that, if you are on salary, you don’t have to record your working hours. The judge made it clear that having a set-off clause does not exempt employers from other obligations under legislation and regulations and so Coles and Woolworths were obliged to maintain these overtime records and were in breach for not doing so.

The judge’s decision in this regard is consistent with Annual Wage Arrangement clauses where they exist in modern awards in that they require the keeping of records of starting and finishing times and breaks and annual reconciliations of actual hours and remuneration against what entitlements under the award would otherwise have been (ie but for the Annualised Wage Arrangement).

The decision also puts the two employers in a difficult situation in resolving underpayment claims if they don’t have clear records of the days and times that relevant employees actually worked pay period by pay period.

Other considerations

 Firstly, I would note that these major retailers have been trying to find a way around penalty rates for many years going back to WorkChoices which preceded the Fair Work era. The issue resurfaced again recently when employers made application to the Fair Work Commission to have the General Retail Industry Award 2020 varied to provide for a standard loading on minimum rates in compensation for overtime loadings and penalty rates.

The Albanese Government responded with a commitment to outlaw removal of overtime loadings and penalty rates from modern awards by legislation from 1 July 2026.

So the wagons really are circling around these entitlements in government, in the courts and in modern awards.

What do we learn from all of that? 

A few thoughts:

  1. You need to ensure that, if an employee is covered by a modern award or an enterprise agreement, the employee receives their full entitlement to wages, allowances, penalty rates and overtime loadings and any other monetary benefit as per that instrument in every pay period (subject to any averaging arrangement or other variation allowed for in the instrument).
  2. If there is significant variation in different pay periods in the hours of work of an employee who is on an annualised salary (or flat weekly or fortnightly or monthly wage), it is critical that you maintain records of the hours and do the reconciliations to ensure that the employee is not disadvantaged and that you have the evidence to support your position in the event of an underpayment claim.
  3. If you are using set-off clauses in common law contracts, you need to get these reviewed in the context of this decision and the difference that makes in their legal application.
  4. There are a variety of reasons why it is good practice to have accurate records of your employees’ actual (as opposed to notional or contractual) working hours, some of which are legal ones like the ones that have been cited in this case. So, if you aren’t doing that, it is something for you to look at.
  5. You might also find that it is just as easy to pay people an hourly rate and comply with the award in relation to additional payments for extra hours as and when those situations arise.

If you need someone to talk through the issues and options for your business, we would be happy to help.

Please call us on 0438 533 311 or email enquiries@ridgelinehr.com.au if you want to explore how we might be of assistance with any issues like this in your business.

 

 

 

CONTACT US

Ridgeline Human Resources Pty Ltd
ABN : 24 091 644 094

enquiries@ridgelinehr.com.au

0438 533 311

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Is the sky falling on salaries?

Is the sky falling on salaries?

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Is the sky falling on salaries?

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There has been a lot of noise from employer bodies and conservative media about the Albanese government’s decision to legislate protections of penalty rates and overtime loadings but will it really mean the end of salaries as we know them and will that mean reduced flexibility and productivity as they claim? 

The issue

The Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025 was introduced to Parliament last week.

It proposes amendments which would have the effect of:

  • ensuring that the specified penalty or overtime rates in modern awards cannot be reduced; and
  • closing loopholes in the modern awards safety net that allow employers to “roll up” penalty and overtime rates into a single rate of pay that doesn’t fairly compensate award-reliant employees for remuneration they would have otherwise received.

The employer reaction

A couple of headlines about the federal government legislation to protect penalty rates caught my eye:

– HR Daily: “Penalty rates Bill a “backwards step” for employers”; and
– Dynamic Business: “Labor blocks business flexibility with new penalty rate laws”

Sounds like life will get tougher for employers, doesn’t it?

The truth

No, it won’t……..other than for businesses which were planning on reducing costs by reducing workers’ wages via cuts in penalty and overtime rates.  

Employers are already required by law to ensure employees are paid at least what they would be entitled to under any applicable industrial instrument ie a modern award or enterprise agreement.  

That includes penalty rates and overtime loadings. You can’t contract out of them but you can repackage them in individual flexibility agreements, common law contracts or enterprise agreements provided that employees are better off financially than they would be if the award was literally applied.

The amendment actually notes that it is about: “a single rate that doesn’t fairly compensate award-reliant employees for remuneration they would have otherwise received.” So it is saying you can’t pay people less than they would be entitled to under all of the monetary provisions of the award that covers them.

The explanatory memorandum to the bill also states that individual flexibility agreements and enterprise agreements are still available for compensating for setting off entitlements like overtime and penalty rates subject to satisfaction of the Better Off Overall Test ie the employee has to be better off under the agreement.

What it all means

This has been triggered by an application from an employer association to have an award varied to allow for exclusion of penalty and overtime rates via a flat fixed overboard payment.

Sadly, there are countless cases of employers underpaying workers by implementing just these sorts of arrangements via contracts or agreements which do not adequately compensate them based on the work that they do, when they do it and the conditions in which they do it.

This legislation will just make the obvious obligations that employers already have irrefutable and strengthen the case of wage theft prosecutions for employers who don’t comply.

It won’t reduce flexibility or productivity – it will just preserve what are already legal rights but it will be legislatively explicit now. 

Please call us on 0438 533 311 or email enquiries@ridgelinehr.com.au if you want to explore how we might be of assistance with any issues like this in your business.

 

 

 

CONTACT US

Ridgeline Human Resources Pty Ltd
ABN : 24 091 644 094

enquiries@ridgelinehr.com.au

0438 533 311

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Is this the death knell for labour hire?

Is this the death knell for labour hire?

Latest News & Events

Is this the death knell for labour hire?

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Does the Fair Work Commission Full bench decision on “same job, same pay” and Regulated Labour Hire Arrangement Orders pose a threat to viability of labour hire providers?  

“We are satisfied that the evidence does not establish that the work of employees of OS Production and OS Maintenance involves the provision of an identifiable and discrete service to BMA as distinct from the supply of the labour of those workers to work in or as part of the business of the BMA.” 

And, with those words, a Full Bench of the Fair Work Commission determined that 2,200 labour hire workers working on 13 Queensland mining sites should get an average wage increase of about $30,000 per annum.

About “Same Job, Same Pay”

The Albanese Government introduced the Same Job Same Pay legislative changes specifically to combat organisations which had enterprise agreements with high wages and outsourced their labour requirements to reduce labour costs. They did so by using a labour hire organisation to employ their workers rather than directly employing them.

The “Same Job, Same Pay” amendments enable applications to be made to the Fair Work Commission to have the terms of the host’s enterprise agreement apply to the labour hire workers.

What that means is that, if such an application is successful, labour hire becomes a much less attractive commercial option as the host would be charged by the labour hire provider for the wages of labour hire workers at the same level that they would have to pay if they employed these people directly plus the labour hire provider’s on costs and service fees and profit margin.

Does this mean the end of labour hire?

Absolutely not.

“Same Job, Same Pay” only.affects circumstances where the labour hire firm’s customer has an enterprise agreement that would cover employees doing the same sort of work as the labour hire workers.

So for the vast majority of businesses, this is nothing to worry about – you can still use labour hire if you want to.

However, there is no question that businesses in the space that the “Same Job, Same Pay” changes are designed to address played a key role in the growth of labour hire as an alternative labour sourcing option.

So labour hire businesses which are heavily invested in that space are likely to feel the full impact of this decision.

Please call us on 0438 533 311 or email enquiries@ridgelinehr.com.au if you want to explore how we might be of assistance.

 

 

 

CONTACT US

Ridgeline Human Resources Pty Ltd
ABN : 24 091 644 094

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Changing the mindset on flexible working

Changing the mindset on flexible working

Latest News & Events

Changing the mindset on flexible working

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Is it possible for the parties to the current proceedings in the Fair Work Commission re a model working from home term in modern awards to do other than treat it as a contest between employers and workers?

Sadly, the answer is “no”. Our workplace relations system is designed to be driven by conflict –  by claims and counter claims by employer associations and unions based on opposing ideologies and traditional and political views on how they should represent their constituents in industrial proceedings.

And the Fair Work Commission itself and its members are firmly positioned as the arbiters in that contest as is intended under the Fair Work Act 2009.

What all of that means is that our systems and the positioning of the key parties involved are not conducive to collaboration or to partnering in long-term strategic change. Every case is a transaction in conflict and that is one of the reasons why we have a productivity problem in this country.

So how is that going to deal effectively with issues like “working from home”?

The irony

The COVID pandemic changed the landscape completely because lots of people were not allowed to go to work – they had to work from home if they were going to work at all.

Those circumstances gave rise to some innovative changes to award provisions which allowed employers and employees some additional flexibilities around arrangements with hours of work and use of leave entitlements.

These included temporary options of:

  • varying ordinary hours to operate up to 10.00 pm enabling people to arrange their working hours around their parenting responsibilities and
  • employees being able to schedule their meal and rest breaks to times that suited them rather than the specific times prescribed in the award and
  • being able to utilise annual leave to cover more time off work but at a proportionately reduced pay rate 

Of course, once the COVID lockdowns were over, these flexibilities were removed from awards without any real consideration of whether there might be a case for retaining them.

That was a pity and an opportunity missed because the pandemic lockdowns gave employees the experience of working from home and many liked it and that fundamentally changed how we think about work as part of life. 

So what now?

The Fair Work Commission was tasked last year with undertaking a “Work and Care” review of modern awards and the consideration of “working from home terms in modern awards” is a step in that process.

It is being reported that, as we move further on in time from the pandemic closedown period, more and more employers are demanding more and more workers to return to the office – in some cases full-time and in others for typically 2 or 3 days per week.

The flip side to that is that study after study shows that a majority of people want some flexibility in their working arrangements and, for those whose jobs can be done from home, that is commonly desirable for them. It has become a sought after attribute in employers’ offerings to the labour market.

If you believe the media, employer groups are now advocating the abolition of penalty rates in return for flexibility in hours of work, something which the Federal Government has already pledged to override by protecting penalty rates through legislative change.

It is a bit of a mystery why we don’t simply revisit how the FWC dealt with working from home arrangements during the pandemic – they did do some practical things that seemed to work like allowing an employee and employer to agree to an arrangement of ordinary working hours outside the span of hours in the Award where an employee wants that and the employer is happy to accommodate it. Sure, you might need to make some adjustments to protocols around the right to disconnect in the individual’s case but it really shouldn’t be that hard. 

Some employees have a statutory right to request a flexible working arrangement

Employers now have additional obligations and exposures in relation to requests for flexible working arrangements for workers who have a statutory right to request a flexible working arrangement. These are people who have 12 months service with an employer and:

The odds are that many of your employees fit under one or more of those categories.

Employers now have to genuinely consider and consult with workers about requests for flexible working arrangements, there are strict procedural requirements and timelines involved and a worker who is not happy with an employer’s refusal of their request can take the matter to the Fair Work Commission for mediation, conciliation or arbitration. 

Awards have already been modified to specifically provide for disputes over requests for flexible working arrangements to be dealt with in accordance with dispute settlement provisions in awards.

One of the concerns that employers could have is whether insertion of a working from home clause in Awards would result in in expansion of the right to have a dispute with an employer dealt with by the Fair Work Commission to all award-covered employees rather than just those in the categories that have a statutory right as noted above. Logically, it would have that effect.

So what does all of this mean?

Flexible working and working from home are here to stay.

Employers who continue to resist that will find themselves not just challenged to find and retain the people that they need in a competitive labour market where flexible working is a valued commodity, but will also likely be challenged in the FWC and possibly other jurisdictions to justify that resistance on “reasonable business grounds”.

There are organisations which are more than happy to offer flexible working arrangements because they see the value in them for employees, they equip their organisations with the tools and leadership skills to manage people in those flexible arrangements, they hold people accountable for their performance and behaviour and they actually see improvements in productivity. That is what the future workplace should look like.

So the question that you need to answer for your business is “Do you really want to engage in a tug of war that you can’t win?” 

Please call us on 0438 533 311 or email enquiries@ridgelinehr.com.au if you want to explore how we might be of assistance.

 

 

 

CONTACT US

Ridgeline Human Resources Pty Ltd
ABN : 24 091 644 094

enquiries@ridgelinehr.com.au

0438 533 311

PARTNER LINKS

TELL US WHAT YOU NEED HELP WITH