Are modern awards too complicated?

The award modernisation process provided a wonderful opportunity to really simplify workplace relations compliance and the abilities of both employers and employees to understand the rules of employment in Australia and in their industry and in their particular circumstances.

It was successful in reducing thousands of federal and state awards to 122 modern awards which is great.

However, it has done little to simplify the actual content of awards or to get consistency between different awards which could apply side by side in a business. In fact, the process has failed miserably in really “modernising” awards…….and, as for the 4 yearly review which commenced in 2013/14, the government amended the legislation to get rid of that requirement as the Fair Work Commission really couldn’t start the second one before they finished the first…….and the first one is still going.

In the recent George Columbaris underpayment case, his supporters have blamed the complexity of the Restaurant Industry Award 2010 as a factor in non-compliance. That doesn’t hold any water in our view for a business of that size (especially as George has a long history of campaigning against penalty rates so he obviously knew about them) but there is no question that it is true in small businesses.

Most people open a business with the best intentions and want to do the right thing. As their businesses grow, they need people and that’s when they are confronted by the complexities of our workplace relations system. We help them deal with these complexities every day and, even though we do (and are better at it than most), we are challenged from time to time in understanding just what an award clause really means.

To illustrate the point of the complexity, let’s go a step beyond the restaurant industry into the construction industry which, by the way, is really important because of our reliance on infrastructure to drive the economy. Here is a little sample of what you’ll find in the Building and Construction Industry On-site Award 2010:

  • For weekly employees, minimum wages are seemingly prescribed in Clause 19.1 for each classification level
  • However, when we look further there are at least 3 and up to 8 allowances that have to be added to work out the ordinary time rate
  • To find out what a Level 1 or Level 2 etc is, I have to go to Schedule B (if I knew that was there) to read the descriptors for each classification level and work out where my employee(s) fit
  • Then there are a stack of other allowances and special rates that could apply and they are dealt with in different ways eg
    • some are a % of the hourly standard rate per hour,
    • some are a % of the weekly standard rate per week,
    • some are a % of the weekly standard rate per day,
    • some are a % of the hourly standard rate per day
    • and I have to go to the Definitions clause to find out what the Standard Rate is and
    • there are a variety of other allowances dealt with in different ways
  • There are fares and travel allowances of at least $17.43 per day that employees get for attending work (yes, just for turning up) and they also get them on RDOs and in calculating annual leave loading
  • There is an Industry-Specific Redundancy Scheme which (among other things) provides that an employee who voluntarily leaves (yes, resigns) after having served a year of employment is entitled to a redundancy payment of up to 8 weeks’ pay
  • This clause also provides that an employee who is terminated by the employer for reasons other than “misconduct or refusal of duty” after just 1 week of service is entitled to a redundancy payment of 1.75 hours per week of service – so you put someone on for a trial for a couple of months, they are not up to the job and you have to pay them extra on termination for failing to meet performance expectations.

That is just a snapshot but illustrates how ludicrous it is to expect a small business owner who knows excavators (not employment law) to comply.

It also shows how patently unfair some of these conditions are.

These are the issues that the award modernisation should be dealing with – simplification and fairness in a modern workplace.

That unfortunately is not happening because the players are still living in the last century – we won’t get a different outcome using the same old tired IR process which created the award complexity problem in the first place…….and that is why the first four yearly review is still going with little to show in the way of “modernisation”.

Next we are going to propose a different way of

Lots of changes from 1 July 2019

It seems that the pace of change in workplace relations keeps accelerating just like it does in other aspects of business and life.

Part of our role is to keep you informed about changes in your responsibilities as an employer so here are the “heads ups” on what’s changed from 1 July 2019 and a few other things that you need to be aware of.

Increases in national minimum wage and award rates

The Fair Work Commission increased the National Minimum Wage (for award-free employees) and award rates by 3% effective from the commencement of the first full pay period commencing on or after 1 July 2019. More information available at the Fair Work Ombudsman who publish pay guides and have a pay calculator tool.

Increases in unfair dismissal and high income thresholds

The high-income threshold under the Fair Work Act 2009 has increased to $148,700 (employees who earn more than this and are not covered by an award or have signed a high income declaration are not eligible to make unfair dismissal claims).

Also the maximum payout for unfair dismissal claims (which is equivalent to 26 weeks’ pay)has increased to $74,350.00.

Superannuation contribution cap

The maximum superannuation contribution base will increase from $54,030 to $55,270 per quarter meaning that the maximum contribution per quarter under the Superannuation Guarantee (9.5% of ordinary time earnings) from 1 July 2019 is $5,250.65.  

Portable long service leave for some industries

The Victorian “Long Service Benefits Portability Act 2018” comes into effect from 1 July 2019.

From that date, workers in the community services, contract cleaning and security industries will be entitled to portable long service leave for all service in the industry regardless of how many employers they might have or for how long they work for an individual employer in the industry. This is funded by an Employer Levy to apply to the Portable Long Service Benefits Scheme as follows:

  • 1.65% for community services
  • 1.80% for contract cleaning
  • 1.80% for security

For more information, see our earlier article

Reductions in Sunday penalty rates in some awards

The final set of reductions in Sunday penalty rates which have occurred over the past few years in various hospitality and retail awards take effect from 1 July 2019. The awards are:

  • Fast Food Industry Award 2010
  • Hospitality Industry (General) Award 2010
  • General Retail Industry Award 2010
  • Pharmacy Industry Award 2010

All of the details can be accessed here.

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 2019 and instructions on how to issue it can be accessed below.

Fair Work Information Statement 2019

Other stuff

There have been other recent changes and more coming on a range of employment matters including:

The Bottom Line

With all of this change, you want to ensure that you have access to competent professional advice on workplace relations and compliant employment contracts, policies and procedures.

We are of course happy to help. If that is something that you want to explore, please contact us.

Hoping you have a great 2019/2020 year.

Labour hire licensing starting

The Victorian “Labour Hire Licensing Act 2018” partially came into operation on 29 April 2019.

The first step in this is that labour hire firms wanting to operate in Victoria have to get a licence within 6 months (ie by 29 October 2019).

When the Act comes into full operation, it will be an offence for a labour hire firm to operate without a licence and also for a business which hires an unlicensed labour hire operator.

If you currently use labour hire services, you should enquire as to whether they are intending to obtain a licence and validate their eligibility to legally operate before 29 October 2019.

If you provide people to work inside businesses in any way, you should also investigate the question of whether your business qualifies as a labour hire operator under the Act.

Further information can be obtained from the Labour Hire Authority.

Portable long service leave coming on 1 July 2019

The Victorian “Long Service Benefits Portability Act 2018” comes into effect from 1 July 2019.

From that date, workers in the community services, contract cleaning and security industries will be entitled to portable long service leave for all service in the industry regardless of how many employers they might have or for how long they work for an individual employer in the industry. This is funded by an Employer Levy to apply to the Portable Long Service Benefits Scheme as follows:

  • 1.65% for community services
  • 1.80% for contract cleaning
  • 1.80% for security

Employers in these industries are required to register with the Portable Long Service Benefits Authority within 3 months (ie by 30 September 2019).

Each quarter, January, April, July and October, registered businesses are required to lodge a quarterly return to the Portable Long Service Authority.

The quarterly return will include information about:

  • all workers who have worked for the business during that quarter
  • the ordinary hours they have worked
  • the pay they received during the quarter

The first quarterly return will require businesses to register all workers for the first time.

When a quarterly return is lodged, the levy must be paid at the same time.

The levy is calculated based on the worker’s ordinary pay.

Further information for employers on registration, returns and levy payments can be accessed here.

Existing employees who transition to the portable scheme will preserve their existing eligible service and entitlements. In these circumstances, an employer will be able to obtain a refund of levies paid in respect of that worker relative to that period of eligible service that comes after transition.

Information obtained in part from https://www.vic.gov.au .

FWC awards 3% wage increase

Today, the Fair Work Commission handed down the Annual Wage Review 2018-2019 decision.

That is to increase the national minimum wage and award wages by 3% effective from 1 July 2019.

The new National Minimum Wage will be $740.80 per week, or $19.49 per hour.

The increase is fully absorbable against overaward payments ie if you are paying employees base rates of more than 3% above award and you are also paying other entitlements under the relevant award and National Employment Standards, you can fully absorb the increase.

If you have an enterprise agreement or contract of employment that stipulates that wages will be adjusted in line with annual wage review or variations in award rates, you will need to pass these increases on.

If you are paying award-covered employees on an annualised salary basis or on an overaward payment that is intended to set off any monetary award provisions, you should review the arrangement to ensure that it remains above award once the new rates take effect.

Anyone requiring assistance in dealing with the issue is welcome to contact us for support.

Leverage relationships for results

If people are your greatest asset (as is so often said to be the case), why is it that so few organisations actually put people at the centre of their business strategy and activity?

Why? Because for the past thirty years, Australian businesses have generally been focused on risk management and process control and more recently metrics as the drivers for managing people.

The philosophy has been about efficient process,  delegation of responsibility, compliance and consequences for non-compliance.

But that is hardly engaging, is it? And, while you certainly need to have efficient processes and appropriate policies in any business, it won’t really deliver a high performance culture, will it?

So what can you do differently?

Use the relationships between people in your business as the driver for improvements.

You do this by understanding and getting buy in to the inter-dependencies between people and here are a few examples:

  • When you have someone new start, identify the key people that this new starter will interact with in their role and introduce them to what these relationships look like by getting them to ask three questions of each of these people: What is your role? What do you rely on me for? What do I rely on you for? That will help the new person to settle in so much faster and effectively because they understand where they fit in the relationship sense.
  • When you set up a project, map the inter-dependencies between project team members and other stakeholders by answering those same 3 questions. That is a great aid to project planning and execution.
  • When you are resolving conflict between people, explore the inter-dependencies (ie what do I rely on you for and what do you rely on me for).  Then determine what is working well and celebrate it and identify what can be improved and commit to a plan together to deliver those improvements. By focusing on the professional inter-dependencies and partnering in the improvement plan, you move beyond the blame game to effective shared solutions.    

These are just a few of the ways that we leverage the power of positive relationships in Helping PEOPLE in BUSINESS.

Time to review that contract?

Over the past couple of years, there have been lots of changes in employment conditions and related legislation, regulations and modern awards.

Do you have a regular review of your employment documentation to ensure that your employment contracts and HRM policies and procedures are consistent with current workplace relations requirements?

Can you demonstrate as an employer that you are responsibly exercising your duty to provide your people with compliant wages and conditions of employment?

Here are just some of the things that have come in over the past year and you need to cover off:

  • New leave to deal with family and domestic violence provisions in modern awards and National Employment Standards
  • New casual conversion provisions in modern awards
  • Variations to flexible working arrangement obligations in modern awards
  • Variations to penalty rates for evening and weekend work in modern awards in some industries
  • Variations to termination of employment provisions in many modern awards
  • A new Victorian Long Service Leave Act 2018 in November 2018 (and a new Long service Leave Benefits Portability Act 2018 taking effect for some industries in 2019)
  • Federal regulation on employment contract content required in casual employment to avoid double dipping on casual loadings and leave entitlements
  • Every year, there is an adjustment to the national minimum wage, award rates and various other benchmarks and a new Fair Work Information Statement is published.

In this area, we are “Helping PEOPLE in BUSINESS” by keeping abreast of these changes and reviewing employment contracts and HRM policies and procedures to address them.

If you need a hand, please feel free to give us a call on 0438 533 311 or email enquiries@ridgelinehr.com.au

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.

Getting the balance right with casual employment

There has been a lot of activity around casual employment over the past year or so – in the courts, in the Fair Work Commission and in regulation by the Federal Government.

What we aim to do in this article is to dispel some of the myths that create confusion and concern and to offer advice on practical tips for “getting the balance right with casual employment”. In doing that, we do have regard to the recent developments in:

  • The Workpac v Skene case wherein the Court awarded annual leave payments to a nominally casual employee
  • Casual conversion provisions introduced to modern awards
  • Regulation by the federal government to limit the ability for a nominally casual employee to be awarded annual leave payments

Is this really a casual employee?

The classic casual is someone who is required to work on an irregular or limited tenure basis.

It might be as a shop assistant in the lead up to Christmas or in hospitality or security at events like the Australian Open or the Melbourne Grand Prix ie the job only exists for a limited time.

It might be someone who is on a relief roster and is called in as needed or someone whose work hours vary in line with their availability while they are still at school or university.

Or it could be someone who is called upon as projects come online and they come in and perform certain tasks on the project and then stop being employed when they finish the tasks.

All of those are true casuals.

If the role is really a continuing one with reasonably consistent and predictable hours of work and it continues that way month after month, that creates an expectation for the employee that they will have continuing employment. So it isn’t really casual, is it?

That is essentially what the judgement in Workpac v Skene said.  The employee concerned was on back to back contracts and fly in fly out rosters with pre booked accommodation for two and a half years and had no indication that that pattern would not continue indefinitely.

The pros and cons of hiring continuing workers as casuals

The first point here is that, in a competitive labour market, limiting engagement options to casual distinctly limits your ability to find the best staff for your business. People are generally unlikely to leave secure employment to take on a casual job.

There are those who believe that engaging workers as casuals is safer and cheaper when, in reality:

  • the 25% casual loading applying under modern awards is a lot more expensive than the paid leave entitlements a full-time or part-time employee gets
  • you still have to pay the superannuation guarantee
  • casuals accrue long service leave and, where they work in an industry with a portable long service leave fund, are entitled to employer contributions into that fund just as full-time and part-time employees are
  • casuals have the same access to the unfair dismissal, adverse action, industrial dispute, bullying and discrimination and WorkSafe and WorkCover jurisdictions as continuing employees do

Where it is really (or potentially) a continuing employment arrangement, one advantage of engaging someone as casual is that you don’t technically have to provide notice of termination because that is notionally compensated for by the casual loading.

Another might be that, if there is some fluctuation in hours of work, that can be more easily managed if the employee is engaged as a casual.

The question is, when you look at all of the elements set out above, what’s the best option having regard to your overall business needs?

How you hire a casual

One of the main reasons that the judgement in the Workpac v Skene case was to award annual leave entitlements was because the employment contract did not specify the amount of the casual loading ie it didn’t specify how the entitlement to annual leave that a continuing employee would have was set off by the casual loading.

In response, the Federal Government’s regulatory change provides some relief from so called “double dipping” of casual loading and annual leave payments but stipulates that there must be an employment contract that includes that specification.

There is  an obligation to provide a Fair Work Information Statement on first engagement as a casual…..and there is the obligation to provide a casual with a copy of the Casual Conversion clause in any award that was varied last year to provide that right.

So ensure that you do all of this in writing before the employee starts and get professional advice if you aren’t sure on what to include or writing isn’t your strength.

Dealing with casual conversion

Last year, a casual conversion clause was included in most modern awards which did not already have one.

This provides the right for an employee who is engaged regularly and systematically as a casual for 12 months to request conversion to full-time or part-time employment.

The employer has to provide casuals with a copy of the casual conversion clause and, if a request is made, has to respond within 21 days in writing.

If the employer refuses the request which can only be done in quite limited circumstances, the employee has the option of taking the matter to the Fair Work Commission. for conciliation and arbitration. 

Our advice is to be proactive in satisfying the obligation to offer casual conversion by:

  1. Providing any new casual employee with a copy of the casual conversion clause from the relevant award on engagement or in the onboarding process.
  2. When it becomes clear that the employee is going to continue in employment on a regular and systematic basis for a period of at least 12 months, remind them in writing of the opportunity to convert to full-time or part-time, spelling out the options and what they each mean for the employee (eg if I stay casual, this is what I get, and, if I convert to full-time, this is what I get).
  3. Require the employee to nominate in writing which of the options they want to take up.
  4. Confirm in writing the agreed arrangement going forward and implement it in practice.

One other option you could consider is to tell casuals when you engage them that, if they get through their probation period or at some point up to reaching twelve months’ employment, they will be offered full-time or part-time employment as applicable. You would do this if you wanted to secure employees who had proven themselves to be productive and a good fit during their initial period of engagement. 

Note: there are a number of awards which already had casual conversion clauses requiring the employer to offer conversion after six months regular and systematic employment. These include building and construction, manufacturing, quarrying and trades industries among others. Check the clauses in the modern awards applying in your business to be sure.

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!