Employment and Safety: Key employment changes from 1 July 2023 and other developments

The latest issues, decisions and proposed changes impacting business and workplace risk 6 min read

Key employment changes from 1 July 2023

By: Veronica Siow, Eden Sweeney and Courtney Ferguson 

Upcoming changes 

Employers should be aware of the key changes that come into effect from 1 July 2023, including increases set for each of the:

• National Minimum Wage;
• award minimum wage;
• superannuation guarantee rate;
• maximum superannuation contribution base; and
• high income threshold.

There are also a number of changes to the Paid Parental Leave scheme.

National Minimum Wage

The National Minimum Wage is increasing by 8.6% to $882.80 or $23.23 per hour for a full-time employee. These changes apply to employees who are not covered by an industrial instrument such as a modern award or enterprise agreement. The increase applies from the first full pay period starting on or after 1 July 2023.

Award minimum wage

For employees covered by a modern award, all minimum award wages are increasing by 5.75%. The increase applies from the first full pay period starting on or after 1 July 2023.

From 30 June 2023, minimum wages for some employees working in aged care are increasing by 15%. This increase applies from the first full pay period starting on or after 30 June 2023 to eligible employees covered by the:

• Aged Care Award 2010;
• Social, Community, Home Care and Disability Services Industry Award 2010; and
• Nurses Award 2020.

Finally, in its recent Annual Wage Review Decision 2022-2023, the Fair Work Commission acknowledged that:

• a return to maintaining the real value of modern award minimum wages and increasing them in line with the trend rate of national productivity growth is possible in future reviews; and
• the Fair Work Commission will focus on addressing potential gender undervaluation of work in modern award minimum wages rates in relation to female-dominated occupations and industries in future reviews or other Commission proceedings.

Superannuation guarantee contribution rate

From 1 July 2023, the new superannuation guarantee contribution rate is 11%, up from 10.5%, and will progressively increase to 12% by July 2025.

Maximum superannuation contribution base

From 1 July 2023, the maximum super contribution base is $62,270 per quarter, up from $60,220 last year.

High income threshold in unfair dismissal cases

From 1 July 2023, the high income threshold in unfair dismissal cases is $167,500, up from $162,000 and the compensation limit will be $83,750, up from $81,000 for dismissals occurring on or after 1 July 2023.

Employers beware: pending changes to the employee records exemption 

By Tegan Ayling and Lawrence Mai

Following the release of the Privacy Act Review Report (the Report), it remains unclear whether the employee records exemption in the Privacy Act 1988 (Cth) will be retained or amended.

If the exemption is removed or amended in some form, employers may need to implement significant changes to their existing employee records handling practices.

Considering the employee records exemption

The Report contains 116 proposals to amend various aspects of the Privacy Act. One of the proposals looks at whether the employee records exemption should be removed or at least curtailed to some degree.

As a refresher, the employee records exemption allows an employer to handle and deal with personal information about its employees without being subject to the Privacy Act in certain circumstances.

Based on industry submissions, a significant driving force for change stems from the increasing concern that employers are collecting, using and disclosing personal information in a world where that information can be highly sensitive, particularly following the COVID-19 pandemic and the growth in hybrid working arrangements, and data breaches are increasingly more common.

The Report concluded that further consultation with relevant stakeholders (including employers and employee representatives) is needed to determine what, if any, changes are appropriate.

How does this affect employers?

Given the importance of collecting and maintaining personal information to manage employment relationships and comply with obligations, removing the exemption would require employers to assess their current processes and implement measures to ensure compliance with the Privacy Act.

Limiting the scope of the exemption may give rise to unintended challenges for conventional HR practices, particularly when considered in conjunction with other proposals such as a new right for individuals to erase stored personal information about themselves. In the context of employee records, this could create unprecedented issues in, for example, ensuring health and safety obligations are met or maintaining accurate records necessary to defend any potential employee claims.

There are also challenges in using existing workplace laws to enhance privacy protections as an alternative, particularly if employees will gain additional workplace rights relating to their employee records.

Next steps

The Government will formalise its response to the Report following the closure of the consultation period on 31 March 2023, including by confirming which of the proposals will be implemented through legislative reform. The employee records exemption is one to watch out for to ensure that employers understand the impact of any changes and their obligations going forward.

When service outside NSW counts towards long service leave: the decision in Wipro Ltd v NSW

By Andrew Wydmanski and Courtney Ferguson 

Wipro Ltd v NSW [2022] NSWCA 265

In Wipro Ltd v NSW [2022] NSWCA 265 the NSW Court of Appeal has clarified the approach to calculating long service leave in NSW, mirroring the Victorian position set out in Infosys Technologies Ltd v State of Victoria [2021] VSCA 219. Importantly, the decision clarifies that the assessment of whether there is a 'substantial connection' to NSW should be undertaken for the relevant period over which the service occurred, rather than retrospectively.

Key takeaways

• Where an employee undertakes a discrete part of their service overseas, it will not count towards their long service leave accrual unless a substantial connection to NSW can be demonstrated.
• 'Substantial connection' to NSW should be assessed with reference to the period of time over which the service occurs rather than retrospectively at the end of employment.
• Various factors may be relevant in assessing the substantial connection to NSW, for example, whether the employment began in NSW or whether the employee was directed to work outside of NSW. Importantly, the court noted these circumstances are not exhaustive.

What does this mean for your organisation?

• Each case of employees working outside NSW should be considered on their own facts (rather than a 'one size fits all' approach).
• Factors that may be relevant in deciding if the necessary 'substantial connection' existed at the time include where the contract was made and whether an employee was directed to work interstate or overseas (although a court may consider other issues).
• Employers should review their approach to calculating long service leave, particularly if there are any employees working interstate or overseas.

Background

This decision concerned Mr Deepak Rawat's entitlement to long service leave in NSW. Mr Rawat was employed by Wipro Limited, an information technology consulting company based in India and registered in Australia as a foreign company. He had been employed for 10 years, 8 months and 22 days in total, comprising 5 years, 11 months and 20 days in India and 4 years, 9 months and 2 days in NSW.

Mr Rawat was an Indian citizen who was hired in India and served the latter part of his employment in NSW under a Deputation Agreement. This arrangement was fairly common in the organisation and employees who wished to be deployed overseas could apply via an expression of interest.

His Deputation Agreement stated that long service leave did not apply as the employee was expected to return to India, and upon his resignation he received a service-based payment under the Indian Gratuity Act, including for the period he had worked in NSW.

Issue

The key issue for determination was whether Mr Rawat's service in India counted towards his entitlement to long service leave under the Long Service Leave Act 1955 (NSW).

Decision

The Court of Appeal held that Mr Rawat's initial period of service in India was a discrete period that lacked a substantial connection with NSW at the relevant time and accordingly, Wipro Limited was not obliged to pay Mr Rawat long service leave.

FWC orders reinstatement for employee who breached 'complex' and 'obtuse' IT policy

By Sarah Lunny and Lara Duggan

Eptesam Al Bankani v Western Sydney Migrant Resource Centre Ltd [2023] FWC 557

The Fair Work Commission (FWC) has ordered reinstatement of an employee who breached the terms of an IT policy, finding that the employee's dismissal was harsh and unjust in circumstances where the terms of the policy were 'legalistic, obtuse and unsuited to the particular workforce'.

Key takeaways

• This decision serves as a reminder to employers that employee policies, procedures and manuals must be accessible, understandable and reasonable, and have a clear connection to the way that work is actually performed.
• It may be more difficult to justify disciplinary action where an employee has not complied with a policy that is long-winded, complex or not adapted to the workplace.
• Employers should take active steps to ensure that employees read and comply with policies, including providing training and resources to help employees understand their obligations under policies.

Background

The applicant was employed by Western Sydney Migrant Resource Centre Ltd (WSMRC), a not-for-profit organisation providing support services to refugees. Under a contract with another not-for-profit organisation, WSMRC was engaged to provide specialised and intensive services to refugees classified as having high or complex needs. Under the contract, WSMRC was required to maintain client records for at least 7 years and was prohibited from destroying client records. WSMRC's Procedure Manual contained similar obligations.

As part of her role, the applicant was provided with a mobile phone to take emergency calls from clients with high or complex needs. Before taking a period of annual leave and leaving the emergency mobile phone with a colleague to manage, the applicant erased all messages and call records from the phone. WSMRC summarily dismissed the applicant because of this conduct, finding that she had breached WSMRC's obligations relating to maintenance of client records, including the obligations in the Procedure Manual.

The applicant brought an unfair dismissal claim, claiming that she had not been aware of the obligation to preserve client records and had never received any training or direction about deleting client data. WSMRC alleged that the applicant knew about the obligation to maintain client records under the Procedure Manual, relying on the fact that the applicant had previously acknowledged that she had read and understood the Procedure Manual.

The decision

While the FWC found that the applicant's failure to comply with the obligation to maintain client records did constitute a valid reason for dismissal, the FWC ultimately decided that her dismissal was unfair, including because:

• the Procedure Manual was lengthy, complex and unsuited to WSMRC's particular workforce. In particular, the FWC commented that:
• the Procedure Manual was 'legalistic' and 'obtuse'; and
• the requirements outlined in the Procedure Manual bore little connection to the way work was performed in practice, with the FWC referring to WSMRC's actual practices regarding mobile phone use as 'haphazard';
• there was 'very little evidence' that WSMRC took any steps to ensure that its employees 'actually read and understand' the Procedure Manual;
• WSMRC had failed to make it clear that a single breach of the Procedure Manual would be regarded as serious misconduct; and
• the applicant's reasons for breaching the Procedure Manual were rational and plausible, and the consequences of the breach were not serious.

The FWC determined that the Procedure Manual was not applied and enforced consistently, reasonably or fairly in the applicant's case, such that WSMRC's decision to summarily dismiss her was 'clearly harsh and unjust'.

Leave is ordinary hours for overtime triggers

By Simon Dewberry and Georgia Permezel 

EPI Capital Pty Ltd (AM2022/8): Clerks – Private Sector Award 2020 [2023] FWC 841

A recent decision of the Fair Work Commission provides further guidance on whether a period of leave or other authorised absence from work is part of the employee's ordinary hours of work for the purpose of determining whether overtime rates are triggered.

Key takeaways

• The Commission decided that an employee's leave or other authorised absence from ordinary hours is part of the employee's ordinary hours for the purpose of determining whether, on a day or in a week, overtime rates are triggered.
• Employers should consider whether their practices are consistent with this decision.

Context

EPI Capital Pty Ltd applied to the Fair Work Commission for the Clerks—Private Sector Award 2020 to be varied on the grounds that the overtime provisions were ambiguous or uncertain. The issue was whether a period of leave or other authorised absence from work is part of the employee's ordinary hours of work for the purpose of determining whether overtime rates are triggered.

The Commission considered a similar issue in TWU v Jetstar [2017] FWC 2535.^[1] In that matter, the enterprise agreement provided for overtime where the employee 'works' for longer than their rostered shift period or an average of 38 hours per week. The Commission determined that 'works' meant performing duties and therefore a period where the employee was absent on leave did not count.

In Officeworks v SDA [2021] FWCFB 6063, the Full Bench considered overtime triggers in the context of an enterprise agreement that provided for full-time employees to be rostered to work 152 ordinary hours over no more than 19 days in a four week cycle. The overtime provisions in the agreement provided for an entitlement to payment at overtime rates where the employee worked in excess of the 19 days in the four week cycle. The Full Bench decided that it was not necessary that the employee had actually worked on 19 days in a roster cycle for overtime rates to be payable on the 20^th day. Any day of leave or other authorised absence was to be taken as a day worked.

The Fair Work Ombudsman's position on the issue is that paid leave counts as ordinary hours. In an article published on the issue, the Ombudsman gives the following example:

• Jack works 38 hours each week, from Monday to Friday.
• On Wednesday Jack was sick, and took a day of paid sick leave.
• Paid leave counts as ordinary hours of work. This means that Jack’s sick leave counts towards his maximum hours for the week.
• It also means that when Jack’s employer works out how much annual leave he accumulated this week, the sick leave needs to be included.

Decision in EPI Capital

The Commission decided that an employee's leave or other authorised absence from ordinary hours is part of the employee's ordinary hours for the purpose of determining whether, on a day or in a week, overtime rates are triggered. This is consistent with the position the Fair Work Ombudsman takes to the issue.

The Commission gave the following example in respect of the weekly maximum ordinary hours trigger for overtime rates:

• An employee's ordinary hours are fixed at 38 per week:
• worked on Monday to Wednesday for 10 hours per day; and
• Thursday for 8 hours.
• The employee is absent on annual leave on a Wednesday and works for 4 hours on the Friday that week, at the employer's direction.
• The employee's 10 hour absence on leave on Wednesday counts as ordinary hours for the purpose of determining whether the employee has worked 38 ordinary hours that week, and therefore whether overtime is triggered by the 4 hours worked on Friday.
• Because the 10 hour absence on leave on Wednesday counts as ordinary hours, the 4 hours worked on Friday must be paid at overtime rates.

The Commission gave the following example in respect of the daily maximum ordinary hours trigger for overtime rates:

• Under the award, the daily maximum ordinary hours is 10, meaning any time worked in excess of 10 hours in a day is overtime.
• On the Wednesday:
• the employee is absent on personal leave for 4 hours;
• the employee works for 6 hours; and
• at the employer's direction, the employee works a further one hour.
• The 4 hours of personal leave and 6 hours of work constitute 10 ordinary hours that day.
• The additional one hour of work is in excess of the daily maximum ordinary hours, and therefore must be paid at the relevant overtime rate.

Application

Awards and enterprise agreements generally provide for overtime rates of pay when an employee's hours of work exceed daily or weekly ordinary hours limits. Consequently, we recommend that employers consider whether their practices in respect of calculating ordinary hours triggers for overtime rates are consistent with the EPI Capital decision and the position taken by the Fair Work Ombudsman.

Changes to modern awards – annual leave during shutdown periods

By Veronica Siow and Lawrence Mai 

Employers need to comply with new rules when directing their employees to take annual leave during temporary shutdown periods under 78 modern awards.

Background

Following the Fair Work Commission's (the Commission) four-yearly review of the modern awards in December 2022, a new model term has been introduced into 78 modern awards that have pre-existing shutdown provisions including the Clerks – Private Sector Award 2020, Miscellaneous Award 2020 and Professional Employees Award 2020. The full list of impacted modern awards can be found in Attachment A of the Commission's decision.

Prior to these changes, the shutdown provisions in the 78 modern awards meant that employees who had not yet accrued sufficient paid annual leave to cover the shutdown period could be put on unpaid annual leave which had the practical effect of being stood down without pay. The Commission's view was that those provisions facilitated in effect a 'back door' to unpaid annual leave, and were inconsistent with the Fair Work Act 2009 (Cth) (the FWA) and therefore an inappropriate term within the modern awards.

Under the new model term, employers are only permitted to direct their employees to take paid annual leave during temporary shutdown periods (eg Christmas or New Year) with the aim of bringing the 78 modern awards closer to the true objectives of the FWA.

How does this affect employers?

From 1 May 2023, employers must comply with the new model term which varies the existing shutdown provisions in the following ways:

• Employers must provide employees with 28 days' written notice of a temporary shutdown period (or any shorter period as agreed between the parties);
• If employees are engaged after the 28 days' written notice has been issued, the employer must give those employees written notice as soon as reasonably practicable after their engagement;
• Employers may only direct employees to take a period of paid annual leave and a direction of this nature must be in writing and reasonable;
• If employees have not yet accrued sufficient annual leave to cover the temporary shutdown period, employers and employees may enter into a written agreement for the employee to take either unpaid leave or paid annual leave in advance.

In circumstances where employers and employees (with insufficient paid annual leave) are unable to reach an agreement, employers will need to consider other alternatives such as whether the employee can continue to work through the shutdown period or whether the requirements of a stand down are likely to be met.