The Fed­er­al Gov­ern­ment Announces Pro­posed Work­place Rela­tions Reforms

On 9 Decem­ber 2020, the Fed­er­al Gov­ern­ment intro­duced the Fair Work Amend­ment (Sup­port­ing Australia’s Jobs and Eco­nom­ic Recov­ery) Bill 2020 (the Bill) to Par­lia­ment which will seek to imple­ment reform to sev­er­al major ele­ments of Aus­trali­a’s indus­tri­al rela­tions laws. This arti­cle pro­vides a high-lev­el overview of some of the key points of the Bill.

New arrange­ments for casu­al workers 

  • Casu­al employ­ment defined

The Bill intro­duces a def­i­n­i­tion of casu­al employ­ment into the Fair Work Act for the first time; that def­i­n­i­tion will draw on estab­lished com­mon law prin­ci­ples and focus on the nature of the offer of employment.

  • Enti­tle­ments and offsetting 

In sit­u­a­tions where causal employ­ees are mis­clas­si­fied, the Bill pro­vides an off­set­ting mech­a­nism to pre­vent employ­ers hav­ing to pay an employ­ee twice for the same enti­tle­ment. In this regard, the Explana­to­ry Mem­o­ran­dum states: In the event that an ongo­ing employ­ee is mis­clas­si­fied as casu­al, the Bill enables casu­al load­ing amounts to be off­set against claims for leave and oth­er enti­tle­ments in cer­tain cir­cum­stances, to address any poten­tial for dou­ble dip­ping’ when recog­nis­ing the employee’s cor­rect clas­si­fi­ca­tion.

This pro­posed amend­ment fol­lows the deci­sion in Work­Pac Pty Ltd v Rossato [2020] FCAFC 84, which con­firmed that employ­ees cat­e­gorised and paid as casu­als” with reg­u­lar and sys­tem­at­ic work­ing pat­terns might be enti­tled to receive the paid leave enti­tle­ments of a per­ma­nent employ­ee. We note that the High Court has recent­ly grant­ed spe­cial leave to appeal this decision. 

  • Con­ver­sion to per­ma­nent employment 

In addi­tion, the Bill impos­es a statu­to­ry oblig­a­tion on employ­ers to offer casu­al employ­ees, who have been employed for at least 12 months and have a reg­u­lar pat­tern of hours, con­ver­sion to full time or part time employ­ment, unless there are rea­son­able busi­ness grounds for not doing so. The Bill pro­vides a non-exhaus­tive list of what might con­sti­tute rea­son­able grounds for decid­ing not to make such an offer, such as that the employ­ee’s posi­tion will cease to exist in the peri­od of 12 months after the time of decid­ing not to make the offer, or that the hours of work which the employ­ee is required to per­form will be sig­nif­i­cant­ly reduced in that period. 

Enter­prise bar­gain­ing and the BOOT

The Bill seeks to pro­vide an eas­i­er and faster process for mak­ing and approv­ing enter­prise bar­gain­ing agree­ments. That is, as the Explana­to­ry Mem­o­ran­dum explains, The [Fair Work Com­mis­sion] will no longer be required to be sat­is­fied that the terms of an enter­prise agree­ment do not exclude the safe­ty net pro­vid­ed by the NES and instead, the agree­ment must include a term which explains the inter­ac­tion between the NES and enter­prise agree­ments.

In assess­ing enter­prise agree­ments, the Bill intro­duces a list of mat­ters to which the Fair Work Com­mis­sion (FWC) is to have regard when deter­min­ing whether an enter­prise agree­ment pass­es the Bet­ter Off Over­all Test (the BOOT). By way of sum­ma­ry, the FWC:

  • will be required to only have regard to pat­terns of work, or types of employ­ment, that are cur­rent­ly engaged in or are rea­son­ably fore­see­able (in oth­er words, not those that are hypo­thet­i­cal or not rea­son­ably foreseeable);
  • may have regard to the over­all ben­e­fits (includ­ing non-mon­e­tary ben­e­fits) an award cov­ered employ­ee would receive under the agree­ment when com­pared to the rel­e­vant mod­ern award; and
  • must give sig­nif­i­cant weight to views of the employer(s), employ­ees, and/​or their bar­gain­ing rep­re­sen­ta­tives regard­ing whether the agree­ment pass­es the BOOT

In addi­tion, in lim­it­ed cir­cum­stances, the FWC will be per­mit­ted to approve agree­ments which may not pass the BOOT after tak­ing into account fac­tors such as: the views and cir­cum­stances of the employer(s) and employ­ees, the impact of COVID-19, and whether approval is in the pub­lic inter­est. This pro­vi­sion will be auto­mat­i­cal­ly repealed after two years from the date of commencement. 

Where prac­ti­ca­ble, the FWC will be required to approve enter­prise agree­ments with­in 21 work­ing days. 

Com­pli­ance and Enforcement 

The Bill has sought to deter non-com­pli­ance with Aus­trali­a’s indus­tri­al rela­tions laws by increas­ing the penal­ties award­ed to non-com­pli­ant busi­ness­es and mak­ing eas­i­er for employ­ees to recov­er under­pay­ments. Specif­i­cal­ly, the Bill intro­duces a num­ber of new mea­sures including:

  • crim­i­nal­is­ing dis­hon­est and sys­tem­at­ic wage under­pay­ments – this includes impris­on­ment of up to 4 years and/​or a fine of $1.11 mil­lion for an indi­vid­ual and a fine of $5.55 mil­lion for a body corporate;
  • increas­ing the val­ue of civ­il penal­ties and orders that can be imposed on non-com­pli­ant busi­ness­es. For exam­ple, large com­pa­nies who have com­mit­ted a remu­ner­a­tion-relat­ed con­tra­ven­tion will be penalised based on a mul­ti­ple of the val­ue of the ben­e­fit’ obtained by the company;
  • pre­vent­ing busi­ness­es from adver­tis­ing job oppor­tu­ni­ties with pay rates below the min­i­mum wage;
  • increas­ing the small claims cap from $20,000 to $50,000 in the small claims division;
  • con­fer­ring upon the Fed­er­al Cir­cuit Court and mag­is­trates courts the abil­i­ty to refer small claims mat­ters to the FWC for con­cil­i­a­tion and con­sent arbitration.

Next Steps

Not sur­pris­ing­ly, some aspects of the Bill are con­tentious and already attract­ing sig­nif­i­cant debate. We will track the progress of the Bill through Fed­er­al Par­lia­ment, par­tic­u­lar­ly in the Sen­ate. It will be inter­est­ing to see what parts of the Bill ulti­mate­ly sur­vive that process. 

The notion of enter­prise agree­ments that do not pass the BOOT test being approved (albeit on a lim­it­ed basis) is caus­ing much con­ster­na­tion and being com­pared to the removal of the No Dis­ad­van­tage Test in the first phase of Work­Choic­es. Even against the back­drop of the chal­lenges posed by the Covid-19 pan­dem­ic, it seems like­ly this pro­posed reform will not end up in the final legislation.