Heads UP – workplace relations under a Labour Government

We recently posted an article on the likely effects of the proposed move from a “minimum wage” to a “living wage” – see that here

So what else is Labour planning to do if it wins power at the next federal election. Get ready because there is a lot on their agenda and here is just a sample of what’s coming if they win.

These are extracts from the ALP National Platform document titled “A Fair Go For Australia” along with a little commentary from us.

10 days paid domestic violence leave

“Labor supports the right of every worker to a safe home, community and workplace. Labor stands against family violence. Labor will introduce 10 days paid Domestic Violence leave as a universal workplace right in the National Employment Standards.”

Last year, the Fair Work Commission and the Australian Government respectively varied modern awards and National Employment Standards to provide for 5 days of unpaid leave to deal with family and domestic violence. At around the same time, New Zealand legislated for 10 days paid domestic violence leave.

26 weeks parental leave on full pay

“Labor’s goal is for parents to have access to 26 weeks of paid parental leave, as the internationally recognised best-practice benchmark, and the goal of 26 weeks at full pay plus superannuation through a combination of government and employer contributions.”

Currently, under National Employment Standards, parental leave is for 52 weeks without pay and people can access up to 18 weeks of parental leave pay at the rate of the national minimum wage.

Flexible working arrangements for caring responsibilities

“Labor will ensure the right to request changes to working arrangements to meet caring responsibilities, including an effective right of review for unreasonable refusals of their requests, is equitable for all workers and maximises access of workers to arrangements that suit their needs.”

Modern awards have recently been varied to provide a right of review for “unreasonable refusals of their requests”. That right currently does not apply for workers not covered by modern awards.

A national long service leave scheme

“Labor will work with State and Territory governments to achieve a national minimum standard for long service leave to form part of the National Employment Standards. “

Currently States have different schemes with different entitlement levels. The construction industry has long had contributory long service leave schemes (Coinvest in Victoria) and the Victorian Government has recently legislated to have similar schemes apply across some other industries (contract cleaning, security and community services). under Coinvest, leave accrues at the rate of 13 weeks for 10 years service. Elsewhere in Victoria it accrues at the rate of 13 weeks for 15 years service. If there is to be a common scheme, it would have to be a contributory scheme whereby employers pay into a fund from day 1 of employment rather than only incurring a real long service liability when an employee completes 7 years service as is currently the case for most industries and occupations. Long service leave would effectively become a reward for workforce participation rather than “long service”. Coinvest contributions are currently 2.7% of wages paid.

Gender Pay Equity

“Labor will take measurable action to address the gender pay gap and will ensure that the equal remuneration provisions in the Fair Work Act deliver for low paid women. Labor will make gender pay equity an object of the Fair Work Act. Labor will establish a statutory Equal Remuneration Principle, to guide the Fair Work Commissions consideration of whether feminised industries are paid fairly. Labor will establish a new Pay Equity Panel within the Commission led by a new Presidential Member with specific expertise in gender pay equity, and fund the Commission to establish a Pay Equity Unit that will provide expert research support during equal remuneration matters, and more generally. Labor will shine a light on pay inequity, including by updating Parliament each year on Australia’s progress in closing the gender pay gap, by requiring companies with more than 1000 employees to report their gender pay gap, and by prohibiting the use of pay secrecy clauses.”

What we can expect here in the Fair Work Commission is probably a series of work value cases to deliver wage increases for industries with high levels of female employment such as aged care and child care among others. The additional reporting requirement will be another stimulus for businesses to progress gender pay equity in real terms. The prohibition on pay secrecy clauses will probably not have great significance.

Portability of entitlements

“Labor will work with State and Territory Governments, employers and unions to facilitate and establish the portability of entitlements including through industry-wide schemes.”

There is no further detail in the ALP document on this item. There is currently a portable entitlements fund in the construction industry for businesses which have an enterprise agreement, most commonly (albeit not exclusively) with one of the construction unions. Perhaps something like that is what they have in mind. To give you an idea of what that might mean. current rates of contribution to Incolink are:

Weekly Contribution Rates Per Worker

Redundancy Contribution – $80.00
Portable Sick Leave (PSL) Insurance Contribution – $1.54*
Income Protection & Trauma (IPT) – $23.05*

Penalty rate cuts to be reversed

“Labor understands penalty rates compensate workers for working excessive or unsociable hours. Labor will reverse the cuts to Sunday and public holiday penalty rates, and will amend the Fair Work Act so awards cannot be varied to cut workers’ take home pay.”

The penalty rate cuts made by the Fair Work Commission in various retail and hospitality awards will be reversed. There is currently an ability for the Fair Work Commission to make take home pay orders. The way that it phased in cuts to penalty rates so that they were offset against annual wage review increases was designed to minimise the impact of the cuts. It sounds like Labour is proposing to legislate against any reduction in award monetary entitlements.

Greater controls on sham contracting and casualisation

“Labor will strengthen the laws that prohibit sham contracting. Labor will set an objective test in legislation for determining when a worker is a casual.”

We suspect that the sham contracting issue might be addressed by making government, principals in supply chains, head contractors, holding companies and franchisors legally responsible for downstream compliance. It is also likely that there will be greater limitation on the use of casuals where employment is regular and systematic. Perhaps this might take the form that is currently in some modern awards where, on completion of 6 months service, a casual employee must be specifically offered the opportunity to convert to full-time or part-time and the employer must comply with the employee’s election.

A national labour hire regulation scheme

“Labor will protect labour hire workers by establishing a national labour hire licensing scheme to regulate the labour hire industry and ensure that minimum legal standards are met. Labor will also legislate to guarantee that labour hire workers receive the same pay and conditions as directly employed workers doing the same work. Labor will not accept the abuse of fixed term contracts of employment.”

Queensland, South Australia and Victoria already have legislated labour hire regulation schemes so the transition to a federal scheme won’t make a lot of difference assuming it provides much the same in the way of obligations and regulatory powers. The requirement for labour hire workers to be paid the same as directly employed workers will be a disincentive cost wise for businesses to use labour hire. The abuse of fixed term contracts is probably related to cases like Workpac v Skene where a nominally casual employee was engaged on back to back contracts for 6, 12 and 12 months.

Fair Work coverage of gig workers

“Labor is committed to ensuring that the Fair Work Act provides appropriate coverage and protection for all forms of work and that gig economy platforms and other working arrangements are not used to circumvent industrial standards, or to undermine workers’ rights to collectively organise and access their union.”

There have been concerns in the last few years about potential exploitation of workers through gig economy arrangements where people are paid significantly less than what they would earn if paid under modern awards.

Note: this is just a sample of the items noted in the ALP policy document. There is much more in relation to union representation and participation, enterprise bargaining, the abolition of the Australian Building and Construction Commission and the Registered Organisations Commission and many other matters. The full document can be accessed here.

From “minimum wage” to “living wage” means what?

The Australian Labor Party has announced that, if and when elected, it intends to change the Fair Work Commission’s annual wage review process to deliver a “living wage” – what people need to earn to have a reasonable prospect of not living in poverty.

So what does that all mean?

It will mean that the quantum of annual wage increases will go up in the transition period, something that Labor says they will ask the Fair Work Commission to consider. Essentially this question amounts to how long that transition should be, taking into account a number of factors including affordability for businesses.

How long might that be?

We have had a bit of a hint from the ACTU in their claim to this year’s Annual Wage Review – they have asked for 10.7% over two years. This is significant because the history has been that claims have been made on a year by year basis with no forward projection.

There have been a variety of issues such as the transition to modern awards and variations to penalty rates in which the Fair Work Commission has decided to transition changes in stages, generally over three to four years.

No doubt, a Labor Government would want the transition completed during its term of office so that it can say that it delivered on that promise at the next election.

Given all of the above, our guess is that it will be two to three years.

How much will it be?

Last year, the increase was 3.5% and it was 3.3% in the previous year.

In making those decisions, the Fair Work Commission also noted that those on the lowest rungs of award wages remained at risk of poverty.

Logically, if those people are to be given a living wage, the increases will need to be larger than they have been.

The ACTU’s claim of 10.7% over two years is quite modest compared to their claims in recent years.

So what should you expect – probably in the range of 4% to 5% in each of the next two to three years.

Will they flow on to award rates?

Some of the reporting on this issue has claimed that Labor has said that increases resultant from the transition from a minimum wage to a living wage will not automatically flow on to award wages.

We don’t see how that flow on can be avoided for the simple reason that the minimum rate for the lowest classification in many awards is in fact the national minimum wage. You couldn’t have an award safety net that provided less than the national minimum or living wage.

Then to maintain the relativities in classification structures in modern awards, you would have to flow on the increases just as has happened year on year in annual wage reviews.

So we should be expecting that to happen.

Now let’s just wait and see what happens at the election and beyond.

Note: this article does not constitute professional advice and it is simply the personal opinion of the author based on the available evidence and is designed to provide some balanced and reasoned information for people to think about.

Fresh thinking for old challenges

We recently launched our new Better Workplace Projects and we are getting terrific feedback on the impact like:

“The session was excellent – great buy in from everyone and really positive feedback afterwards.”

“The team and I loved the session and felt very positive and inspired”.

Why are they having this impact?

It’s fresh thinking for old challenges!

We look at what drives people engagement and high performance through a positive psychology lens where the focus is on how we use our strengths to improve rather than just how we fix the problems.

We also reinvent the performance management process to provide a positive and continuous development experience that gets people engaged, aligned and accountable.

In our interactive Better Workplace Project Introductory Workshops, we introduce you to the best practice models that underpin the methodology and have an open conversation with you about how these might be used to address the people and culture challenges and opportunities and deliver high performance in your organisation.

For a small investment of $800 plus GST and a couple of hours of your time, we can help you to get started or step up on that journey to a Better Workplace.

Our Better Workplace Project Introductory Workshops are delivered by our Practice Leader, Peter Maguire, who has consulted to hundreds of organisations on people and culture strategy and practice. Peter has an extraordinary breadth of experience with clients in public, private and NFP sectors and in a wide range of industry and people culture settings. He is also a former Investors in People Assessor and has presented internationally on HRM best practices.

Dealing with family and domestic violence

Over the past few months, there has been a succession of changes in provisions of modern awards and the Fair Work Act relative to family and domestic violence. In this article, our aim is to provide you with a sense of how they come together and what that means in terms of your legal obligations and how to manage those.

Early this year, the Australian Institute of Health and Welfare (AIHW) released a report “Family, domestic and sexual violence in Australia 2018” which told us that:

 

Family and domestic violence is the most significant social and welfare issue that we have in Australia and we can all do something about that.

Introduction of “Leave to deal with family and domestic violence” in modern awards 

The significance of this issue is such that the Fair Work Commission deemed it necessary to insert “Leave to deal with family and domestic violence” provisions in all modern awards. In essence, this provides an entitlement of up to 5 days of unpaid leave per annum for employees regardless of their employment status ie whether they are full-time, part-time or casual, they are entitled to the full 5 days each year.

An employee may take unpaid leave to deal with family and domestic violence if the employee:

(a) is experiencing family and domestic violence; and

(b) needs to do something to deal with the impact of the family and domestic violence and it is impractical for the employee to do that thing outside their ordinary hours of work.

That leave entitlement for award-covered employees came into effect on 1 August 2018.

Extension of entitlement to non-award employees

On 12 December 2018, the Fair Work Amendment (Family and Domestic Violence Leave) Act 2018 took effect and essentially extended the modern award entitlement effective from that date.

So effectively that means that all employees now have access to this entitlement as follows:

 Entitlement to unpaid leave

An employee is entitled to 5 days’ unpaid leave to deal with family and domestic violence, as follows:

(a) the leave is available in full at the start of each 12 month period of the employee’s employment; and

(b) the leave does not accumulate from year to year; and

(c) is available in full to part-time and casual employees.

So our take on that in implementation is:
  1. For existing award-covered employees and those who are subject to an agreement that incorporates the award, the entitlement takes effect from 1 August 2018
  2. For award-covered employees and those who are subject to an agreement that incorporates the award and who commenced employment after 1 August 2018, the entitlement takes effect from their date of commencement.
  3. For existing non-award employees and those who are subject to an enterprise agreement that doesn’t incorporate an award, the entitlement takes effect from 1 December 2018.
  4. For  non-award employees and those who are subject to an enterprise agreement that doesn’t incorporate an award and who commenced employment after 1 December 2018, the entitlement takes effect from  their date of commencement.
  5. All employee have the entitlement to 5 days per annum regardless of their employment status ie whether full-time, part-time or casual.

Interaction with new rules on Flexible Working Arrangements

We recently reported on these new rules.

Two of the categories of workers who have entitlements under these rules are:

  • employees experiencing family or domestic violence; and
  • employees caring for family members experiencing family or domestic violence.

Accordingly, we can expect that eligible employees like these might well seek both leave to deal with family and domestic violence and flexible working arrangements. Alternatively, because the leave is unpaid, people might be more likely to seek flexibility in working arrangements that allow them to maintain their income while varying their hours of work to meet their personal or family needs.

If these matters cannot be resolved at workplace level, they may well end up in the Fair Work Commission via the disputes resolution clause in a modern award or enterprise agreement.

Additionally, while these rules on flexible working arrangements technically apply only to award covered employees, it should be expected that they would be regarded as a procedural and fairness benchmark for dealing with requests from non-award employees.

Care should be taken to ensure that any workplace policies on any of the above are reviewed to reflect current minimum standards and benchmarks.

We will publish an article soon on what employers can do to genuinely and positively influence the incidence and impact of family and domestic violence and why you should be doing that. Stay tuned!

$1 million in wage underpayments in horticulture

The Fair Work Ombudsman has just released a report into investigations that it has been conducting into workplace relations compliance in the “Harvest Trail” or horticulture industry. The particulars are:

  • 836 investigations, involving 444 growers and 194 labour hire contractors across all states in Australia and the Northern Territory.
  • $1,022,698 in underpaid wages and entitlements was recovered for 2,503 employees
  • More than 50% of the businesses investigated were found to have breached workplace laws
  • 150 formal cautions to employers were issued along with 132 infringement notices and 13 compliance notices and 7 Enforceable Undertakings were entered into.
  • 8 employers have been prosecuted for serious alleged breaches with four actions involving labour hire contractors. Of these, 6 matters have now been finalised resulting in over $500,000 in penalties.
  • 70% of employers employed people working in  Australia on visas.

One of the questions that the Fair Work Ombudsman is now considering is that of the effect of consumer buying behaviour on compliance levels in the industry. Further research and consultation with stakeholders is planned on this subject.

This is another area where the procurement behaviour and practices of major retailers of fresh produce must come under review if such initiatives are to have any meaningful impact on producer compliance and fair payment of horticultural workers.

FWC increases casual penalty rates in retail award

The Fair Work Commission has varied the penalty rates payable to casual employees in the retail industry for work performed on Saturdays and after 6.00 pm on weekdays.

The variations are being introduced in phases with the first increases taking effect from 1 November 2018.

The increases for weekdays after 6.00 pm are:

(i) From 1 November 2018 to 30 September 2019

A penalty payment of an additional 30% loading will apply for ordinary hours worked by a casual employee after 6.00 pm (inclusive of the casual loading).

(ii) From 1 October 2019 to 29 February 2020

A penalty payment of an additional 35% loading will apply for ordinary hours worked by a casual employee after 6.00 pm (inclusive of the casual loading).

(iii) From 1 March 2020 to 30 September 2020

A penalty payment of an additional 40% loading will apply for ordinary hours worked by a casual employee after 6.00 pm (inclusive of the casual loading).

(iv) From 1 October 2020 to 28 February 2021

A penalty payment of an additional 45% loading will apply for ordinary hours worked by a casual employee after 6.00 pm (inclusive of the casual loading).

(v) From 1 March 2021

A penalty payment of an additional 50% loading will apply for ordinary hours worked by a casual employee after 6.00 pm (inclusive of the casual loading).

The increases for Saturdays are:

(i) From 1 November 2018 to 30 September 2019

A penalty payment of an additional 40% loading will apply for ordinary hours worked by a casual employee on a Saturday (inclusive of the casual loading).

(ii) From 1 October 2019 to 29 February 2020

A penalty payment of an additional 45% loading will apply for ordinary hours worked by a casual employee on a Saturday (inclusive of the casual loading).

(iii) From 1 March 2020

A penalty payment of an additional 50% loading will apply for ordinary hours worked by a casual employee on a Saturday (inclusive of the casual loading).

For further information, go to the General Retail Industry Award 2010 and see Clause 29.4 Penalty Payments.

Or, if you need a hand, give us a call on 0438 533 311.

New termination of employment provisions in awards

The Fair Work Commission has varied the majority of modern awards (89 of them) in respect of their termination of employment provisions.

Under these awards, from 1 November 2018:

  • If an employee who is at least 18 years old does not give the period of notice required, then the employer may deduct from wages due to the employee under this award an amount that is no more than one week’s wages for the employee. By extension, that means that no deduction can be made for an employee who is less than 18 years of age.
  • The employer must pay an employee their final entitlements no later than 7 days after the day on which the employee’s employment terminates.

Please note that many other awards do not have these provisions.

A number of awards provide that “If an employee fails to give the required notice the employer may withhold from any monies due to the employee on termination under this award or the NES, an amount not exceeding the amount the employee would have been paid under this award in respect of the period of notice required by this clause less any period of notice actually given by the employee.” That is the amount that can be deducted is not limited to one week’s wages.

Then there are some awards that have their own peculiar provisions such as the Real Estate Industry Award 2010 under which an employee is required to give just one week’s notice of termination of employment and the employer can make a deduction from final pay in relation to any part of that week not provided or worked.

If you are not sure of which award covers your employee(s) or what the termination of employment provisions are for your people, check out the list of modern awards here or give us a call on 0438 533 311.

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.

 

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.