New year, new law

Welcome back to all our readers and best wishes for 2020!

With the New Year comes changes to legislation. It is also a perfect time to reflect on the matters the business would like to achieve in the coming year and how best to align your people with those goals.

In our first article for the year we set out the key new changes and pending legislative amendments as part of the next wave of employment and industrial law regulations.

1. Whistleblower Legislation

As many of our readers are aware, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (“the Whistleblower Act”), which amended the Corporations Act 2001 came into effect in July 2019. However, the Whistleblower Act required public companies, large proprietary companies and proprietary companies that are trustees of registrable superannuation entities to implement Whistleblower Policies by 1 January 2020.

Even though the requirement to introduce a Whistleblower policy is not compulsory for all companies, we recommend all companies consider implementing a policy in their workplace as all businesses must still comply with the legislation and understand their obligations under the Whistleblower Act. In November 2019, ASIC released Regulatory Guide 270 whistleblower policies, which sets out what a whistleblower policy should contain to comply with the requirements of the Whistleblower Act.

In addition, an effective workplace policy should be backed by training so that employees (specifically, managers and supervisors who will be classified as a recipient of a disclosure) have a clear understanding of steps to follow at a practical level. Training is also essential in determining how a disclosure will be investigated and dealt with so that there is no inadvertent breach of the legislation. It should be noted the penalties for breach of the Whistleblower Act are very significant.

2. Annual Salary changes in Modern Awards

As discussed in our article last year, on 4 July 2019, the Fair Work Commission finalised its decision in relation to the incorporation of new ‘annualised wage arrangement’ clauses in many Modern Awards. These clauses will replace the existing annualised salary clauses in the modern awards already containing an annualised salary clause. The new terms will also be inserted into three modern awards (Pastoral Industry Award 2010, Horticulture Award 2010 and Health Professionals and Support Services Award 2010) which have not previously had an annualised salary clause.The new annualised salary provisions introduce a number of compliance requirements on employers requiring them amongst others to:

1. advise employees in writing (e.g. within their contracts) of the award provisions that are satisfied by the annualised wage – i.e. specifying which of each component of minimum rates, allowances, overtime/penalties and annual leave loading are satisfied by the annualised salary; and
2. advise employees in writing and specify (e.g. within their contracts) the outer limit of ordinary hours that would attract award penalty payments, and the outer limit of overtime hours the employee may be required to work without being entitled to an additional payment, such that:
   1. the employer needs to forecast the maximum ordinary hours an employee might work on a weekend or after hours that would otherwise attract a shift penalty;
   2. the employer needs to forecast the maximum hours the employee might be required to work over and above ordinary hours that would otherwise attract overtime pay, and if the employee works in excess of these forecasts, shall be paid an additional sum over the weekly/fortnightly/monthly remuneration imagined by the annual salary; and
   3. at the end of each 12 months from the commencement of the annualised wage arrangement (or at the employee’s termination) to compare the annualised wage paid against the actual remuneration that would have been payable to the employee under the award. Where there is any shortfall, the employer must pay the outstanding amount within 14 days; and
   4. keep records of the starting and finishing times and unpaid meal breaks of each employee, for the purpose of complying with the comparison obligation described above.

These new requirements as proposed in the decision, for some industries, will reflect practices already implemented whilst for others, will appear oppressively onerous. To that end, we note that the Commission has already begun publishing the future awards in draft, set to commence operation in March 2020. However, these draft future awards contain annual salary clauses that do not, at this stage, mirror the Commission’s decision.

Specifically, the draft future awards do not incorporate the requirement that employers advise employees in writing and specify the outer limit of ordinary hours that would attract award penalty payments or the outer limit of overtime hours the employee may be required to work without being entitled to an additional payment. Furthermore, they do not compel employers to keep records of the starting and finishing times and unpaid meal breaks of each employee.

Nonetheless, it should be noted that these draft future awards have not yet been finalised and may yet incorporate all the requirements as set out in the Commission’s decision.

Accordingly, we strongly recommend employers not to delay and consider undertaking the following:

• Identify whether employees are covered by a modern award;
• If the employees earn an annual salary, whether the salary term and contracts of employment comply with the proposed new award clauses;
• Implement time and attendance recording procedures; and
• Implement mechanisms to conduct annual reviews to ensure compliance with the award pay requirements.

In addition, employers should review their current contracts of employment for employees who are in receipt of annualised salaries and be prepared to implement contract variations for affected staff to maintain compliance.

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 ensure they are complying with the minimum entitlements in the Award.

3. Wage Theft

Last year, the Morrison Government announced the potential introduction of criminal sanctions to help reduce deliberate and systematic wage theft of Australian employees. In September/October 2019, feedback was sought from the community and specifically in relation to the penalty regime which will include jail terms and fines for most serious offences. It is likely this will continue to be a topic of discussion this year.

In addition, the Fair Work Ombudsman continues to take a strong stance against underpayment of employees. In this regard, many companies continually fail to properly classify workers, pay overtime, penalties and/or meet superannuation contribution obligations. Wage exploitation particularly remains a serious problem for migrant workers, young workers and for those on working visas and in certain industries.

2019 saw many restaurants (including restaurants owned by well-known celebrity chefs) and businesses in the hospitality industry come into the spotlight for significant underpayment issues. A number of large publicly listed companies (such as Woolworths, Sunglass Hut and so on) had self-reported to the Fair Work Ombudsman after they also discovered they had underpaid a substantial portion of employees in their business.

The Fair Work Ombudsman has made it clear that businesses will no longer be given leniency for failing to have their house in order, even where they self-report underpayments. It seems clear that the identification of underpayments and record keeping obligations will continue to be a major focus for the Fair Work Ombudsman throughout 2020.

Businesses, both big and small, need to take note of their obligations under the Fair Work Act 2009 (Cth), and their applicable modern award. The level of potential liability for repayments and civil penalties and the current prospect of criminal prosecution is very real and can be extremely costly. Accordingly, there is no better time to consider getting your house in order and ensure your business is complying with all wage and employee entitlements and obligations.

4. Understanding Confidentiality Provisions

Employment contracts often contain confidentiality provisions that prevent an employee from disclosing information obtained during their employment after their employment has ended. The scope of confidentiality clauses can be very broad and can effectively prevent ex-employees from disclosing or discussing aspects of their former employment. Most often the issue arises when ex-employees go to a competitor and the former employer wishes to prevent the employee from using the confidential information. However, it has far broader application.

In a recently decision, the Full Court of the Federal Court of Australia in Crown Resorts Limited v Zantran Pty Limited [2020] FCAFC 1 (“Zantran Decision”) considered whether confidentiality obligations prevent a litigant from speaking with potential witnesses if such statements may divulge confidential information subject to such confidentiality clauses, even in circumstances where the information is directly relevant to the litigation and could be given by the witness in court.

The specific issue in the Zantran Decision was whether Zantran’s legal representatives should be permitted to speak to the relevant employees to obtain witness statements or outlines of evidence and to obtain relevant documents regarding their criminal prosecution and conviction. In this regard, Zantran sought an order for the employees to be relieved of their contractual obligation of confidence owed to Crown Resorts Limited.

Accordingly, on appeal, the Full Federal Court determined that even though the courts were authorised to enforce obligations upon litigants and lawyers to approach cases in a way that best promotes efficient, timely and cost effective resolution of disputes, this did not mean that the Court had the power to relieve people of their enforceable obligations solely to create a more convenient running of litigation.

Effectively, this has meant that the Crown Resorts Limited employees will be permitted to give evidence at Court but Zantran would not be able to obtain witness statements prior to hearing.

Consequently, this decision demonstrates the breadth of contractual confidentiality obligations and establishes that former employees are not able to speak to third parties in any circumstances unless compelled by a Court or competent authority to do so. 

In summary

As we look over the year that was, and forward to 2020, employers should be taking time to consider what the above matters mean for their businesses while ensuring that they have implemented the changes necessary to make certain they are compliant going into a new year.

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 2020!