The Australian Government introduces major Industrial Relations reform through the new Omnibus Bill
On Wednesday 9 December 2020, the Australian Federal Government introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (“the Bill”). If brought into law by Parliament, the Bill will affect five key areas of industrial relations law: casual employees, modern awards, enterprise agreements, greenfields agreements and compliance with Fair Work laws.
The Bill proposes a new definition of ‘casual employee’ in the Fair Work Act 2009 (Cth) (“FWA”) through the proposed s 15A(1). Under the proposed statutory definition, a person will be considered a casual employee where an offer of employment 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”. This definition reflects recent case law which has defined the term ‘casual employee’ (WorkPac v Skene [2018] FCAFC 131 (“Skene”), WorkPac v Rossato [2020] FCAFC 84 (“Rossato”)).
However, the Bill also makes amendments to the entitlements of employees wrongly classified as casual workers. Under the precedents established by Skene and Rossato, these employees can currently recover entitlements (such as annual leave) that they would ordinarily not receive due to their casual classification. As a result, many employer groups argued this created a situation of ‘double-dipping’, as casual employees were entitled to both casual loading as well as entitlements received by part-time and full-time employees. The proposed s 545A of the FWA would change this, giving the Court the power to reduce a claim amount by an amount equal to a proportion of the entitlements already paid through casual loading.
Further, the Bill introduces s 168M to the FWA, which covers ‘simplified additional hours agreements’. These agreements would apply to certain award covered part-time employees that work at least 16 hours per week, allowing those employees to enter into agreements with their employers to work additional hours at ordinary rates as opposed to overtime. This provision aims to target the trend of offering additional hours to casual employees as opposed to part-time employees, given that employers often need to pay overtime rates to part-time employees who work beyond their ordinary hours of work.
The Bill also proposes reforms to the application and operation of the better off overall test (“BOOT”). The proposed s 189(1A) would allow the Fair Work Commission to approve enterprise agreements that do not pass the BOOT, where the agreement is not contrary to public interest and it is appropriate to do so, taking into account the views and circumstances of employees and employers, the impact of COVID-19 and the extent of employee support for the agreement. Whilst s 189 of the FWA already provides the Fair Work Commission with the ability to pass agreements that do not pass the BOOT, it does so only in ‘exceptional circumstances’; often where there is a ‘short-term crisis’. The new subdivision significantly relaxes this test, and thus increases the number of agreements caught under the BOOT exception.
For greenfields sites (new sites with no prior industrial regulation) the Bill also proposes to increase the maximum nominal duration of an industrial agreement from four to eight years, to reduce the risk that an agreement expires before major infrastructure projects are finished.
Lastly, the Bill criminalises wage theft on a federal level. This follows recent legislative reform in Victoria and Queensland to criminalise wage theft on the state level. The proposed s 324B states that an employer commits an offence if the employer dishonestly engages in a systematic pattern of underpaying one or more employees. The new offence would attract a maximum penalty of 4 years’ imprisonment and/or penalty of up to $1.1 million for individuals and $5.55 million for a body corporate. For an employer to be found to have committed an offense for underpaying its employees, the employer must be dishonest in underpaying its employees. Thus, it does not cover administrative errors made by employers that often result in significant underpayments to employees.
Given COVID-19 has introduced a significant challenge for employers in retaining employees, the Federal Government is acting quickly to ensure that employers have more certainty and flexibility in their employment arrangements. However, the Bill has already received some backlash from trade unions for stripping away the rights of employees, especially with the changes to the application of the BOOT test and the entitlements of wrongly classified casuals.
For more information on these articles or any other issues involving labour and employment matters in Australia, please contact Michael Harmer (Partner) of Harmers Workplace Lawyers at michael.harmer@Harmers.com.au or visit www.harmers.com.au.
