Major changes to IR laws – what you need to know

On 9 December 2020, the Attorney General tabled a new bill (the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020) which proposes significant changes to the Fair Work Act 2009 (Cth) and related laws.

While the amendments are intended to be effective by March 2021, many of the changes (particularly regarding enterprise agreement making) are being resisted by the ACTU and the Opposition. It is therefore expected that concessions will be needed in this area for the Bill to pass the Senate.

Key areas of IR reform in the Bill include:

• Casuals: clarifying casual employment and providing a statutory right for conversion to permanent after 12 months, as noted in our newsletter last week ‘The Casuals Conundrum Resolved?’.  
• Enterprise agreements: simplifying the Better Off Overall Test (BOOT), implementing a 21-day approval deadline for enterprise agreements and a new eight-year life span for certain Greenfields Agreements.
• Modern Awards: enhancing part-time work flexibilities for industries impacted by COVID-19 (e.g. retail and hospitality).
• Underpayments: introducing substantial penalties for underpayments and new mechanisms for compliance (also see our recent newsletter).

Casual employees

As noted in our newsletter, changes to casual employment include:

• a new statutory definition of casual employment which will apply to casual offers made before, on or after the start of the new laws;
• mechanisms designed to prevent “double dipping” where employees incorrectly characterised as casuals receive both the 25% casual loading and paid entitlements only available to permanent employees;
• a statutory right to casual conversion, which is currently found in many Modern Awards. 

Importantly for employers, offers to convert to permanent employment need not be made if there are reasonable business grounds not to make the offer and these reasonable grounds are based on facts which are then known or reasonably foreseeable (e.g. the position will cease to exist within the next 12 months).

Enterprise agreements

Streamlining approval

The Bill seeks to simplify the enterprise agreement making and variation process through changes that include:

• Only allowing votes from casual employees who worked during the voting access period.
• Replacing the pre-approval requirements with a requirement that employers take reasonable steps to ensure employees are given a fair and reasonable opportunity to decide whether or not to approve a proposed agreement.
• Requiring the FWC to approve agreements, as far as practicable, within 21 working days
• Limiting the parties who can intervene at the approval or variation stage, unless exceptional circumstances exist.
• Requiring an NES interaction clause in an enterprise agreement.

Key changes to the BOOT

Important changes to the BOOT require that the FWC must:

• Only take into account patterns or kinds of work, or types of employment, that employees are currently engaged in or are reasonably foreseeable, not those that are hypothetical or not reasonably foreseeable;
• Have regard to the overall benefits (including non-monetary benefits) employees would receive under the agreement (for example flexible working arrangements and time off in lieu arrangements); and
• Have regard to views expressed by employers and employees and their bargaining representatives.

Other amendments include:

• Expanding the circumstances in which an enterprise agreement that does not pass the BOOT may nevertheless be approved by the FWC.
• Requiring applications to terminate enterprise agreements not be made within three months of their nominal expiry date.
• Extending the timeframe that employers must give employees a notice of employee representational rights from 14 days to no later than 28 days.
• Enterprise agreements approved prior to the commencement of the FW Act and prior to the commencement of Modern Awards will automatically expire on 1 July 2022.

However, with objections from the unions and Labor, the Attorney General has announced that a number of concessions will be made in this area to ensure that the Bill is passed.

Greenfields agreements

Greenfields agreements may be made for a duration of up to 8 years for projects of over $500 million, and projects between $250 million and $500 million, by ministerial discretion. These agreements will need to include defined annual wage increases over the term of the agreement.

Modern Awards and Part-time Flexibilities

Part time flexibility provisions are to be included across identified Modern Awards (including the Retail, Hospitality, Commercial Sales and the Vehicle Repair, Services and Retail Awards) which are “distressed sectors” most adversely affected by COVID-19.

The Bill allows such employers and part time employees whose ordinary hours of work are at least 16 hours per week, to make “simplified additional hours agreements” which allow the employee to work additional agreed hours at ordinary rates of pay.

The Bill also replicates some of the JobKeeper flexibilities, so that employers covered by the identified Modern Awards may give directions to an employee about their duties and location of work. These flexibilities are to be available for a period of 2 years from the passage of the Bill.

Underpayments

As noted in our recent newsletter, the Bill introduces a new criminal offence for dishonest and systematic wage underpayments and increases the value and scope of civil penalties and orders. 

This includes a fifty per cent uplift to the ordinary penalty rates for breaches of the sham contracting provisions and remuneration related breaches, and a new penalty calculation method for remuneration-related breaches by companies based on the benefit they obtained from the contravention.

The Bill seeks to enable employees to more easily recover entitlements by increasing the cap for small claims from $20,000 to $50,000 and enabling the Federal Circuit Court and the Magistrates Court to refer small claims to the FWC for conciliation, and arbitration by consent.

Other

The Attorney-General has written to the President of the FWC requesting consideration of how best to insert loaded rates into the Retail, Hospitality, Restaurant and Registered & Licensed Clubs Awards. Employer and employee representatives are to be involved in the review process, which is to be completed by the end of March 2021.

The Attorney-General has also announced that the Fair Work Ombudsman will be given the ability to provide authoritative advice on request. The Ombudsman must not fine businesses that rely on that advice and remediate any identified error. 

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).