Industrial relations reform bill introduced by Federal Government

In brief 3 min read

On Wednesday, the Federal Government introduced the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 (the Bill) into Parliament. This omnibus Bill aims to reform five areas of industrial relations which have been the focus of the IR reform roundtables held by the Federal Government this year.

How does it affect you?

• Businesses should follow the progression of the Bill to determine which changes will potentially be implemented in 2021.
• The provisions of the Bill provide more certainty for businesses with a casual workforce that were affected by the WorkPac v Rossato decision.
• The Bill introduces wage theft provisions for employers. If these provisions are passed, it will be crucial that employers get on top of any underpayments within their businesses.
• There will be greater flexibility to implement enterprise agreements in all industries and simplified award provisions in some industries.

Background

Key stakeholders from employer, industry and employee groups have been participating in the IR reform roundtables since June 2020. The aim of these roundtables has been to reach consensus about potential IR policy and legislation reform. They have focused on five areas:

1. award simplification;
2. enterprise agreement making;
3. casuals and fixed-term employees;
4. compliance and enforcement; and
5. Greenfields agreements for new enterprises.

The Bill aims to address these five areas of focus, as well as address the uncertainty created by the controversial WorkPac Pty Ltd v Rossato decision.¹ In this decision, the court held that incorrectly classified casuals who perform regular and indefinite work may be entitled to the entitlements of permanent employees and that casual loading cannot be used to set off these unpaid entitlements. The Bill may undergo several rounds of amendments before it is voted on in 2021.

Proposed provisions in the Bill

The key changes contained in the Bill can be broken down into the five focus areas:

Casual and fixed-term employees

• It will insert a statutory definition of a casual employee. A person will be considered a casual employee of an employer if 'an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person' and the person accepts the offer on that basis.
• In determining whether the employer makes no advance commitment to 'continuing and indefinite work', regard must be had to whether:
  • the employee can elect to accept or reject work;
  • the employee will work only as required;
  • the employment is described as casual employment; and
  • the employee will be entitled to a casual loading or a specific rate of casual pay.
• A regular pattern of hours will not indicate a firm advance commitment and the subsequent conduct of the parties after an offer of employment is accepted will not be able to be used to assess whether a person is a casual employee.
• Employers will be allowed to offset any loadings already paid to casuals against future claims for other permanent employee entitlements such as sick leave or annual leave.
• Employers must make an offer to a casual employee to convert to permanent employment if the employee has worked for the employer for 12 months and has worked a regular pattern of hours on an ongoing basis for the past six months. Employers do not have to make an offer if there are reasonable grounds not to do so and they must not reduce or vary an employee's hours of work or terminate their employment in order to avoid this obligation.

Enterprise agreements

• The Fair Work Commission may approve an enterprise agreement that does not pass the better off overall test if it is satisfied that it is appropriate to do so, taking into account all of the circumstances including:
  • the views and circumstances of the employees and employer;
  • the impact of COVID-19 on an enterprise;
  • the extent of employee support for the agreement; and
  • whether the approval is in the public interest. 

Agreements approved under this provision would be limited to two years' duration.

• Introducing a 21-day limit for the Fair Work Commission to determine an application to approve an enterprise agreement, unless there are exceptional circumstances.

Compliance and enforcement

• Implementing criminal charges for employers who engage in wage theft by dishonestly engaging in a systematic pattern of underpaying employees. Individuals may be subject to fines up to $1.11 million and imprisonment for four years. Companies could be fined up to $5.55 million.
• Higher civil penalties for underpayments will also be implemented.
• Increasing the small claims cap from $20,000 to $50,000 so that more employees can recover their entitlements through the small claims process.

Award simplification

• Part-time employees who work at least 16 hours per week in the retail, trade, accommodation and food services industries would be allowed to make a simplified additional hours agreement with employers to work extra hours at their usual rate of pay.
• Employers will also be able to give employees reasonable flexible work duties directions and flexible work location directions for two years after the Bill commences, as long as the direction is a necessary part of a reasonable strategy to assist in the revival of the employer's enterprise.

Greenfields agreements

• The Fair Work Commission will be able to approve longer-term Greenfields agreements for up to eight years, for major projects valued at more than $500 million or for projects valued at more than $250 million if the Minister makes a declaration that approval can be sought.