Pub­li­ca­tions

Mod­ern Award changes 2018 / 2019- Impli­ca­tions for employers

Employ­ers face the con­stant chal­lenge of try­ing to keep up with the pace of change to the indus­tri­al rela­tions land­scape. 2019 will prove to be no exception. 

Fol­low­ing the Fair Work Com­mis­sion (FWC) four-year­ly review of Mod­ern Awards, there have been a wide range of changes to some key Mod­ern Awards, includ­ing some that have the poten­tial to cre­ate seri­ous impli­ca­tions for Aus­tralian employers. 

In par­tic­u­lar, some changes have cre­at­ed pos­i­tive oblig­a­tions on employ­ers when end­ing or alter­ing an employee’s employ­ment. This arti­cle out­lines cer­tain key changes to the pos­i­tive oblig­a­tions on employ­ers and dis­cuss­es some impor­tant impli­ca­tions. That is to say, employ­ers will need to take proac­tive steps to com­ply, fail­ure to do so leav­ing them exposed to a claim that they breached the applic­a­ble Mod­ern Award. This poten­tial­ly car­ries sig­nif­i­cant penalties.

Casu­al Conversion

The FWC has deter­mined that all Mod­ern Awards should now con­tain a mod­el clause for casu­al con­ver­sion. This means that cer­tain casu­al employ­ees, will have the right to request that their employ­ment be con­vert­ed from casu­al to per­ma­nent employ­ment. This change is only applic­a­ble to per­sons defined in the Mod­ern Awards as reg­u­lar casu­al employ­ees’ and aims to com­bat the wide­spread use of reg­u­lar and ongo­ing casu­al employment. 

As of 1 Octo­ber 2018, reg­u­lar casu­al employ­ees’ may request that their employ­ment be con­vert­ed to full time or part time employment.

Reg­u­lar casu­al employ­ees are casu­al employ­ees who have in the pre­ced­ing 12 months, worked a pat­tern of hours on an ongo­ing basis which, with­out sig­nif­i­cant adjust­ment, the employ­ee could con­tin­ue to per­form as a full time employ­ee or part time employ­ee under the pro­vi­sions of the Mod­ern Award.

Where agree­ment on casu­al con­ver­sion is reached with the employ­er, the con­ver­sion is to take place with­in the next pay cycle unless oth­er­wise agreed.

There are lim­it­ed grounds for refusal of such a request. An employ­er can only refuse such a request on rea­son­able grounds (after con­sul­ta­tion with the employ­ee). Those grounds include where:

• it would require a sig­nif­i­cant adjust­ment to the casu­al employee’s hours of work to be engaged as a full time or part time casu­al (mean­ing that the employ­ee was like­ly not a reg­u­lar casu­al employ­ee’ to begin with);

• it is known or rea­son­ably fore­see­able that the reg­u­lar casu­al employee’s posi­tion will come to an end with­in the next 12 months (for exam­ple, project based work); 

• it is known or rea­son­ably fore­see­able that the hours of work that the casu­al is required to per­form will be sig­nif­i­cant­ly reduced in the next 12 months; or

• it is known or rea­son­ably fore­see­able that there will be sig­nif­i­cant changes in the days or times of the employee’s work hours in the next 12 months which can­not be accom­mo­dat­ed in the hours the employ­ee is avail­able to work. 

Each of these grounds of refusal must be based on fact and must be pro­vid­ed to the employ­ee in writ­ing with­in 21 days of the request being made. A refusal by an employ­er may ground a dis­pute which may ulti­mate­ly be referred to the Fair Work Com­mis­sion for resolution.

The mod­el term also man­dates that employ­ers must pro­vide all casu­al employ­ees with a copy of those pro­vi­sions with­in the first twelve months of their first engage­ment to per­form work or by 1 Jan­u­ary 2019 for exist­ing casu­al employ­ees at 1 Octo­ber 2018.

The fed­er­al gov­ern­ment is set to announce the inclu­sion of casu­al con­ver­sion rights in the NES as part of broad­er changes impact­ing casu­al employ­ees. The pur­pose of this change is to pro­vide non-award casu­al employ­ees with the right to request casu­al con­ver­sion, how­ev­er, it is uncer­tain as to whether the NES will repli­cate the mod­el award clause draft­ed by the FWC.

Ter­mi­na­tion Payments

On 1 Decem­ber 2016 the FWC issued a deci­sion deal­ing with the pay­ment of wages on ter­mi­na­tion of employ­ment. At the time, only 36 of the 122 Mod­ern Awards con­tained an express pro­vi­sion pro­vid­ing for the pay­ment of wages and oth­er amounts owing to an employ­ee on the ter­mi­na­tion of their employ­ment. Of those Mod­ern Awards with a pay­ment on ter­mi­na­tion clause, the pro­vi­sions were gen­er­al­ly inconsistent. 

In Decem­ber 2016 the FWC also expressed a pro­vi­sion­al view” that each Mod­ern Award should con­tain a pro­vi­sion for the pay­ment of wages and oth­er amounts owing to an employ­ee on ter­mi­na­tion of employ­ment. On that basis, the FWC cre­at­ed a mod­el pay­ment on ter­mi­na­tion of employ­ment clause for all Mod­ern Awards.

Gen­er­al­ly speak­ing, all Mod­ern Awards now have a pro­vi­sion for the pay­ment of enti­tle­ments upon ter­mi­na­tion of employ­ment with­in a spec­i­fied time frame. The time­frame for pay­ment varies for some exist­ing Mod­ern Awards (for exam­ple, the Nurs­ery Award 2010 now pro­vides for pay­ment of all Award and NES enti­tle­ments with­in 7 days of the last day of work and the Aged Care Award 2010 pro­vides for pay­ment no lat­er than the final day of the for­mal notice period). 

The FWC deter­mined in July 2018 that unless an appli­ca­tion for vari­a­tion was made by an affect­ed par­ty by 10 August 2018, then those Mod­ern Awards that did not con­tain a pro­vi­sion for pay­ment of wages upon ter­mi­na­tion of employ­ment (being some 86 Mod­ern Awards), would be amend­ed to include the mod­el term. The mod­el term came into effect on 1 Novem­ber 2018

The new mod­el term means that under most Mod­ern Awards, employ­ers must pay employ­ees any amount owed to them under their rel­e­vant Mod­ern Award and under the NES, with­in sev­en days after the day on which the employ­ment ter­mi­nates (unless an appli­ca­tion is made to the FWC). 

This change has the poten­tial to cre­ate impli­ca­tions for employ­ers at ter­mi­na­tion, par­tic­u­lar­ly when the amounts payable to the employ­ee are in dis­pute. For exam­ple, there may be a dis­pute about whether a ter­mi­na­tion was mas­querad­ing as due to poor per­for­mance when it is being claimed it was due to redun­dan­cy (with redun­dan­cy pay­ments being claimed by the sacked employee). 

If at the date of ter­mi­na­tion, there is a dis­pute about the wages owed or amounts to be deduct­ed then employ­ers may approach the FWC seek­ing an order defer­ring the oper­a­tion of the Award pro­vi­sion, where the applic­a­ble Mod­ern Award is one which con­tains such a mod­el term. For employ­ers who can­not or choose not to avail them­selves of such a pro­vi­sion, then there is a poten­tial risk that fail­ure to pay Award or NES enti­tle­ments with­in the spec­i­fied time frame will con­sti­tute a breach of the rel­e­vant Mod­ern Award and NES and result in penal­ties for employers.

Flex­i­ble Work

Many employ­ers are famil­iar with the flex­i­ble work pro­vi­sions in the Fair Work Act 2009 (Cth) (s65), how­ev­er, as from 1 Decem­ber 2018, flex­i­ble work is now a mod­el term in all Mod­ern Awards. Under the mod­el term, employ­ers must actu­al­ly have a dis­cus­sion with employ­ees who make a request and try to come to a gen­uine agree­ment. The oblig­a­tion to dis­cuss did not exist under the Act. Employ­ers must also pro­vide a writ­ten response explain­ing any grounds for refusal of the request. 

This may have impli­ca­tions for organ­i­sa­tions who do not have an exist­ing flex­i­ble work pol­i­cy that cre­ates a stan­dard­ised approach across the organ­i­sa­tion, par­tic­u­lar­ly where there is incon­sis­ten­cy in grounds for approval and rejection. 

Of par­tic­u­lar con­cern for employ­ers who do not have a sophis­ti­cat­ed process for address­ing flex­i­ble work requests is the poten­tial for Gen­er­al Pro­tec­tions claims. Often employ­ees request flex­i­ble work arrange­ments due to fam­i­ly respon­si­bil­i­ties and an incon­sis­tent approach to flex­i­ble work requests may result in employ­ees per­ceiv­ing a deci­sion as dis­crim­i­na­to­ry. This could expose an employ­er to a Gen­er­al Pro­tec­tions claim. 

To mit­i­gate this risk, employ­ers should ensure that the rea­son­able busi­ness grounds are doc­u­ment­ed clear­ly and there is lit­tle room for doubt that they are objec­tive in the circumstances.

Con­clu­sion

These new mod­el terms cre­ate var­i­ous oblig­a­tion for employ­ers includ­ing to con­sult with employ­ees and ensure that pay­ment upon ter­mi­na­tion is man­aged with­in a strict timeframe. 

Some Mod­ern Awards already con­tain terms sim­i­lar to the mod­el terms and are not impact­ed, so employ­ers should be care­ful to check each Mod­ern Award on a case by case basis. 

There is a dis­pute res­o­lu­tion term in Mod­ern Awards. Alleged fail­ure to fol­low cer­tain Award terms may give rise to a dis­pute and par­ties may refer the mat­ter to the FWC under the dis­pute res­o­lu­tion mod­el term. Unless oth­er­wise agreed by the par­ties, the Act itself does not appear to allow an employ­ee to dis­pute the mer­its of rea­sons for deci­sions con­cern­ing flex­i­ble work­ing arrange­ments (and an exten­sion of unpaid parental leave), only the valid­i­ty of the process.

To pre­pare and improve process­es in response to the above changes, we rec­om­mend that employ­ers be aware of their pos­i­tive oblig­a­tions and engage in process improve­ment to ensure that each time­frame is met. This will help avoid dis­putes and poten­tial liability.