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  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.
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.