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Ready or not, here it comes! 2018 brings a new wave of employment developments

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12 Feb 2018

What is on your agenda for the coming year?

Employers should get ready for what looks to be another fast-paced year filled with employment law developments. In the lead up to an election year next year, employment matters are squarely in forefront of political debate. In our first article for the year we review a number of updates and/or pending legislative amendments as part of the next wave of employment and industrial law regulations about which you should be aware.

  1. Proposed law to target employers who fail to pay superannuation to employees

On 24 January 2018, the Commonwealth Government released an exposure draft bill, titled Treasury Laws Amendment (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018 (“the Bill”) which proposes to strengthen the integrity of the system for mandatory employer superannuation contributions. If enacted, the Bill would broaden the Single Touch Payroll reporting requirements such that these requirements would apply to all employers in Australia, regardless of the number of employees. Furthermore, the Bill will provide the ATO with the following additional powers:

  • Where the ATO is satisfied that there has been a failure to comply with a superannuation guarantee obligation, or to pay a charge, the ATO will be able to issue directions to employers to comply with the obligation or to enter a course of education. Failure to comply will be subject to administrative or criminal penalties (including up to 12 months of imprisonment).
  • ATO will be permitted to disclose to an employee information regarding the employer’s failure to comply with superannuation obligations, a reasonable suspicion that there has been a failure to comply the employer’s obligations and/or any actions that the ATO have taken in relation to such a failure or suspected failure. 

The Bill is open for public consultation and submissions are due by 16 February 2018.  We will continue to keep our clients updated in relation to any changes in this area.

  1. Crushing Union Corruption

On 11 September 2017, the Fair Work Amendment (Corrupting Benefits) Act 2017 took effect and introduced new provisions into the Fair Work Act 2009 (Cth). The changes were in response to recommendations of the Royal Commission into Trade Union Governance and Corruption. The changes are set out as follows:

  • Prohibiting giving, receiving, or soliciting corrupting benefits

These provisions prohibit a person from dishonestly providing, requesting, receiving or soliciting, corrupting benefits with the intention of influencing an officer or employee of a registered organisation in performing their duties.

Individuals who breach these rules face possible penalties of up to 10 years imprisonment and/or fines of up to $1.05 million. Companies face possible fines of up to $5.25 million.

  • Prohibiting the payment of cash or ‘in kind’ payments to relevant employee organisations

These provisions make it a criminal offence for:

  • an employer to provide, offer or promise, a cash or an ‘in kind’ payment to relevant employee organisations (or certain related parties)
  • a relevant employee organisation to request, receive or agree to receive a cash or ‘in kind’ payment from an employer.

Individuals who breach these rules face possible penalties of up to 2 years imprisonment and/or fines of up to $105,000. Companies face possible fines of up to $525,000.

  • Requirements for bargaining representatives and employers when negotiating an enterprise agreement, to disclose financial links or benefits they may receive from the proposed agreement.

It is a requirement that employers or employer organisations and unions that are bargaining representatives for a proposed enterprise agreement, disclose certain financial benefits that they (or certain related parties), will (or could) receive because of a term of the proposed agreement.

The disclosure must be set out in a document with details of the relevant financial benefit (a 'disclosure document'). Where an organisation is making this disclosure, they must give the document to the employer(s), who must also give it to the relevant employees. Where an employer is making the disclosure, they must give it to the employees who will be covered by the enterprise agreement.

In addition, a new bill titled Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017 was introduced into Parliament at the end of last year. If enacted, the bill will amend the FWA to:

  • create “prescribed offences” that would automatically disqualify an offender from being an official of a registered organisation;
  • allow the Federal Court to stop people who repeatedly are in contempt of court, or who contravene industrial laws, and who are otherwise “not a fit and proper person” from holding office;
  • make it an offence when a person continues to act as an official once he or she has been disqualified;
  • allow the Federal Court to cancel the registration of an organisation on a range of grounds including corrupt conduct by officials, repeated breaches of industrial law or the taking of “obstructive” unprotected industrial action;
  • allow the Federal Court to suspend the rights and privileges of an organisation (or part of it) where officers or member are acting in a manner inconsistent with the rights and privileges of registration;
  • expand the grounds on which the Federal Court may order remedial action to deal with governance issues in an organization;
  • allow the Federal Court to appoint an administrator to an organization; and
  • introduce a public interest test for amalgamations of registered organisation, which will take into account each organisation's record of compliance with industrial laws.
  1. Abandonment of employment clause

As part of the 4-yearly review of modern awards, the Full Bench of the Fair Work Commission made the decision to remove abandonment of employment clauses from six modern awards which are to be replaced once a suitable provision has been determined.

The decision follows an earlier decision of the same Full Bench in the matter of Bienias v Iplex Pipelines Australia (“Iplex”) where the Full Bench overturned a decision that found that clause 21 of the Manufacturing and Associated Industries Occupations Award 2010, if read as effecting an automatic termination of employment in specified circumstances, is not a term permitted or required to be included in a modern award.

The Full Bench stated in Iplex that clause 21 of the Award does not have the effect of automatically terminating employment. In particular, they were of the view that clause 21 merely sets out that an employee’s absence from work for a continuous period exceeding three working days for which there is no consent by the employer, and where the employee fails to notify the employer, is on first impression, an indication that the employee has abandoned the employment. However, this does not give rise to an automatic termination of employment. The Full Bench then emphasized that the employer must take the positive step of concluding that it is not satisfied that the employee was absent for reasonable cause before deeming the provision operates. Notwithstanding this, the Full Bench further explained that even if the employee is deemed to have abandoned his employment within the meaning of the clause, it did not mean that the employment is at an end. In order to do so, the employer must take the additional step of terminating the employment and if the employer does not do so the employment continues.

As part of the Review, the Full Bench accepted submissions from the parties that there would be utility in modern awards including a provision, which identifies procedures to be followed in the event that there is an extended and unexplained absence from duty on the part of the employee. Specifically, this would include steps the employer might take to attempt to consult with the employee about reasons for the absence before taking action against the employee. In this regard, the Australian Manufacturing Workers’ Union proposed a replacement clause wherein a worker would receive no pay for the period of unexplained absence, an employer could take no action against a worker until it had made every effort to seek an explanation, and – in the event no explanation was provided – an employer could not impose a termination date within three months of first day's absence.

The Full Bench said it did "not necessarily endorse" the substitute clause, "however we set out the proposal because it is broadly indicative of the type of provision which might be a permissible replacement for the current clause 21".

The Full Bench invited parties to file proposals for a replacement provision for the six awards.

We of course will continue to keep our clients updated on any progress or amendments to Modern Awards in relation to the abandonment of employment clauses as they become available. It is useful however to note the commissions remarks regarding the operation of the current abandonment clause and their view that it does not automatically give rise to the termination of employment, as a result of what we commonly consider as abandonment.

  1. Casual conversion clause

As part of the Fair Work Commission’s 4-yearly review of modern awards, the Australian Council of Trade Unions (“ACTU”) applied for the inclusion of a model casual conversion clause in all modern awards. The FWC accepted that the unrestricted use of casual employment without the safeguard of a casual employment clause, may operate to undermine the fairness and relevance of the safety net. Accordingly, the FWC developed a model casual conversion clause with the following key features:

  • A casual employee will be eligible to request to convert to permanent employment only if they have worked a regular pattern of hours for their employer over a period of 12 calendar months;
  • Employers may only refuse such requests on reasonable grounds (e.g. the conversion would require a significant adjustment to the casual employee’s hours of work, or it is known or reasonably foreseeable that the casual employee’s position will cease to exist); and
  • Employers are required to provide all casual employees with a copy of the casual conversion within 12 months after commencement.

The FWC also stated that an employer’s refusal to accept a conversion request should be made only after consultation with the employee, that an employee should receive written notice and reasons for the refusal, and should be entitled to access the modern award’s dispute resolution procedure to challenge a refusal.

The conversion clauses will be included in the 85 modern awards that do not already contain a clause of this nature. 

  1. Changes to casual and part-time entitlements in some awards

On 12 December 2017, the Fair Work Commission varied certain overtime rates and minimum shift entitlements for casual and part-time employees in several modern awards. These changes applied from the first full pay period on or after 1 January 2018.

The changes are different for each modern award and will affect employers and employees differently. The modern awards affected by the change include:

  • Fast Food Award;
  • Hair and Beauty Award;
  • Hospitality Award;
  • Passenger Vehicle Award;
  • Pastoral Award;
  • Rail Award;
  • Registered Clubs Award;
  • Restaurant Award;
  • Retail Award;
  • Social and Community Services Award; and
  • Wine Award.

In summary, the decision introduces overtime rates for casual employees in many of these awards. This will mean casual employees will receive overtime rates for each hour of work in excess of the ordinary hours in a day or a week, and in some cases outside the span of ordinary hours. In addition, the decision also changes how part-time hours can be worked in some awards, providing greater flexibility in rostering working hours. Part-time employees will also now have “guaranteed hours” which are the number of hours of work they will be provided and paid each week or per roster cycle. 

If you employ employees covered by any of the above awards, we advise that you review the changes and ensure your business is complying with the obligations in the Award. Employers should also carefully review their rosters and rostering practices to account for the new entitlements.

If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to an employment law issue this year, please do not hesitate to contact us. Otherwise, we wish all our readers all the best for a successful and productive 2018!

This alert is not intended to constitute, and should not be treated as, legal advice.