What the latest Fair Work Bill means for your organisation

Bryn Tardent-Powell

11 December 2020    |   

The Federal Government has recently released the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020. It is crucial that organisations understand what these potential changes entail, as they will need to plan accordingly should the Bill be passed into law.  Below we’ll be summarising the proposed changes and what they mean for Australian employers. Criminalising underpayments Dishonest and systematic underpayment of employees will be criminalised. Individuals can be subject to a maximum penalty of $1.1 million and/or imprisonment for up to four years. Meanwhile, corporations can face a maximum penalty of $5.6 million per contravention.  Significant increase in maximum penalties for underpayments The Bill will also significantly increase the maximum value of the penalties for “remuneration-related contraventions”, like underpayments and making unlawful deductions. Not only will base penalties increase by up to almost $100,000, but the maximum value of the penalty may now also be a multiple of the underpayment, if that exceeds the maximum base penalty.  The Fair Work Commission will also be empowered to conciliate and arbitrate small underpayment recovery claims.  Casual employment There are various changes to casual employment under the Bill. These are: New definition A new definition of casual employee will be added to the Act. It essentially says that a person is a casual employee if they accept employment without a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.  Conversion to permanent employment Furthermore, casual employment can be converted to permanent employment. Unless an exception applies, employers will be required to make an offer to a casual employee to convert to permanent employment if: the employee has been employed for 12 months;  during at least the last 6 months, the casual employee has worked a regular pattern of hours on an ongoing basis; and the employee could continue to work those hours without significant adjustment. Casual employment information statement The Fair Work Ombudsman will be required to prepare a new Casual Employment Information Statement. Employers must give this statement to casual employees when they start their employment.  Casual loading “double-dipping” The Bill contains new sections intended to fix the outcome of the Workpac double-dipping cases. A court must set off an identifiable casual loading against any entitlements owed by the employer to an employee if: the employment was described as casual employment, but the employment was actually permanent employment (like in the Workpac cases); and the employer pays an identifiable casual loading to compensate the employee for not having those entitlements (e.g. leave). Simplified additional hours agreements for part-time employees The Bill introduces a new concept for part-time employees called simplified additional hours agreements. This concept’s purpose is to allow some part-time employees to agree to work more than their contracted hours without the employer having to pay overtime.  This will apply to part-time employees who are contracted to work, on average, more than 16 ordinary hours per week, but only if one of the following awards apply to them: the Business Equipment Award 2020; the Commercial Sales Award 2020; the Fast Food Industry Award 2010; the General Retail Industry Award 2020; the Hospitality Industry (General) Award 2020; the Meat Industry Award 2020; the Nursery Award 2020; the Pharmacy Industry Award 2020; the Restaurant Industry Award 2020; the Registered and Licensed Clubs Award 2010; the Seafood Processing Award 2020; and the Vehicle Repair, Services and Retail Award 2020 While the premise is to “simplify” the process, there’s still a myriad of technicalities involved, and many employers may actually prefer the flexibilities that exist in the relevant awards. Miscellaneous Flexible work directions For two years, employers will be allowed to give “flexible work directions” to employees that the employees work different duties or at different locations. The direction must be reasonable in the circumstances and will be effective if it is a necessary part of a “reasonable strategy to assist in the revival of the employer’s enterprise”. Enterprise bargaining There will be some changes to enterprise bargaining that are intended to make the bargaining process easier and make the agreement approval process in the Fair Work Commission faster and less technical. The proposed changes include: giving employers longer to provide the notice of employee representational rights (28 days); the preapproval steps that employers must take to ensure that employees understand the enterprise agreement before they vote will be simplified under an overarching requirement that employers “take reasonable steps to ensure that the relevant employees are given a fair and reasonable opportunity to decide whether or not to approve the agreement”; controversially, provide additional, limited circumstances in which the Fair Work Commission may approve an enterprise agreement that does not pass the better off overall test (BOOT); when considering whether an enterprise agreement passes the BOOT, the Fair Work Commission may only consider rosters that are reasonably foreseeable to be worked, not hypothetical rosters that it is not reasonably foreseeable that employees will ever work; the Fair Work Commission will be required to approve agreements, as far as practicable, within 21 working days; all enterprise agreements must include a term that explains the interaction between the National Employment Standards; franchisees will be able to ask its employees to vote to opt into a single-enterprise agreement that covers other employers in the franchise; and greenfields enterprise agreements for major projects can have a nominal term of up to eight years. Zombie agreements So-called “zombie agreements”, which are collective agreements made before January 1, 2010,  will cease to operate on July 1, 2022. How should businesses be managing the proposed changes? While the Bill is still not yet law, organisations need to prepare for the introduction. Dealing with awards and rules can be challenging, and the introduction of these amendments will likely create a new set of challenges. Keeping up to date with these developments is crucial to understanding what these changes entail and what their impact on operations may be.  Companies can start preparing for the changes by doing a workforce audit. Take a look at your current staff and see whose employment may be affected by the new provisions. Create an action plan and determine further steps or process changes needed to comply once these laws are passed.  It’s also vital to take a look at your business requirements and take the Bill into account. Consider how it will affect your staff management practices moving forward.  Automation will be essential for managing these rules within your organisation. For instance, the casual information sheet could be easily included in the documents you send to new hires during your onboarding process. Most importantly, award interpretation software will be essential when ensuring that these new rules are applied. From creating employee schedules to payroll processing, a system that checks employee conditions against the relevant legislation in real-time will be the only feasible way for Australian businesses to keep up with rapidly changing and increasingly complex award entitlements.  The changes proposed in the Bill may be challenging to navigate, and we’re here to help. If you’re a current Tanda user, we have measures in place to ensure a smooth transition for when these are implemented. If you’re a business that wants to ensure compliance with these rules as you manage your workforce, sign up for a free trial of the system.

The Federal Government has recently released the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020. It is crucial that organisations understand what these potential changes entail, as they will need to plan accordingly should the Bill be passed into law. 

Below we’ll be summarising the proposed changes and what they mean for Australian employers.

Criminalising underpayments

Dishonest and systematic underpayment of employees will be criminalised. Individuals can be subject to a maximum penalty of $1.1 million and/or imprisonment for up to four years. Meanwhile, corporations can face a maximum penalty of $5.6 million per contravention. 

Significant increase in maximum penalties for underpayments

The Bill will also significantly increase the maximum value of the penalties for “remuneration-related contraventions”, like underpayments and making unlawful deductions. Not only will base penalties increase by up to almost $100,000, but the maximum value of the penalty may now also be a multiple of the underpayment, if that exceeds the maximum base penalty. 

The Fair Work Commission will also be empowered to conciliate and arbitrate small underpayment recovery claims. 

Casual employment

There are various changes to casual employment under the Bill. These are:

New definition

A new definition of casual employee will be added to the Act. It essentially says that a person is a casual employee if they accept employment without a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. 

Conversion to permanent employment

Furthermore, casual employment can be converted to permanent employment. Unless an exception applies, employers will be required to make an offer to a casual employee to convert to permanent employment if:

  1. the employee has been employed for 12 months; 
  2. during at least the last 6 months, the casual employee has worked a regular pattern of hours on an ongoing basis; and
  3. the employee could continue to work those hours without significant adjustment.

Casual employment information statement

The Fair Work Ombudsman will be required to prepare a new Casual Employment Information Statement. Employers must give this statement to casual employees when they start their employment. 

Casual loading “double-dipping”

The Bill contains new sections intended to fix the outcome of the Workpac double-dipping cases. A court must set off an identifiable casual loading against any entitlements owed by the employer to an employee if:

  1. the employment was described as casual employment, but the employment was actually permanent employment (like in the Workpac cases); and
  2. the employer pays an identifiable casual loading to compensate the employee for not having those entitlements (e.g. leave).

Simplified additional hours agreements for part-time employees

The Bill introduces a new concept for part-time employees called simplified additional hours agreements. This concept’s purpose is to allow some part-time employees to agree to work more than their contracted hours without the employer having to pay overtime. 

This will apply to part-time employees who are contracted to work, on average, more than 16 ordinary hours per week, but only if one of the following awards apply to them:

  1. the Business Equipment Award 2020;
  2. the Commercial Sales Award 2020;
  3. the Fast Food Industry Award 2010;
  4. the General Retail Industry Award 2020;
  5. the Hospitality Industry (General) Award 2020;
  6. the Meat Industry Award 2020;
  7. the Nursery Award 2020;
  8. the Pharmacy Industry Award 2020;
  9. the Restaurant Industry Award 2020;
  10. the Registered and Licensed Clubs Award 2010;
  11. the Seafood Processing Award 2020; and
  12. the Vehicle Repair, Services and Retail Award 2020

While the premise is to “simplify” the process, there’s still a myriad of technicalities involved, and many employers may actually prefer the flexibilities that exist in the relevant awards.

Miscellaneous

Flexible work directions

For two years, employers will be allowed to give “flexible work directions” to employees that the employees work different duties or at different locations. The direction must be reasonable in the circumstances and will be effective if it is a necessary part of a “reasonable strategy to assist in the revival of the employer’s enterprise”.

Enterprise bargaining

There will be some changes to enterprise bargaining that are intended to make the bargaining process easier and make the agreement approval process in the Fair Work Commission faster and less technical. The proposed changes include:

  • giving employers longer to provide the notice of employee representational rights (28 days);
  • the preapproval steps that employers must take to ensure that employees understand the enterprise agreement before they vote will be simplified under an overarching requirement that employers “take reasonable steps to ensure that the relevant employees are given a fair and reasonable opportunity to decide whether or not to approve the agreement”;
  • controversially, provide additional, limited circumstances in which the Fair Work Commission may approve an enterprise agreement that does not pass the better off overall test (BOOT);
  • when considering whether an enterprise agreement passes the BOOT, the Fair Work Commission may only consider rosters that are reasonably foreseeable to be worked, not hypothetical rosters that it is not reasonably foreseeable that employees will ever work;
  • the Fair Work Commission will be required to approve agreements, as far as practicable, within 21 working days;
  • all enterprise agreements must include a term that explains the interaction between the National Employment Standards;
  • franchisees will be able to ask its employees to vote to opt into a single-enterprise agreement that covers other employers in the franchise; and
  • greenfields enterprise agreements for major projects can have a nominal term of up to eight years.

Zombie agreements

So-called “zombie agreements”, which are collective agreements made before January 1, 2010,  will cease to operate on July 1, 2022.

How should businesses be managing the proposed changes?

While the Bill is still not yet law, organisations need to prepare for the introduction. Dealing with awards and rules can be challenging, and the introduction of these amendments will likely create a new set of challenges. Keeping up to date with these developments is crucial to understanding what these changes entail and what their impact on operations may be. 

Companies can start preparing for the changes by doing a workforce audit. Take a look at your current staff and see whose employment may be affected by the new provisions. Create an action plan and determine further steps or process changes needed to comply once these laws are passed. 

It’s also vital to take a look at your business requirements and take the Bill into account. Consider how it will affect your staff management practices moving forward. 

Automation will be essential for managing these rules within your organisation. For instance, the casual information sheet could be easily included in the documents you send to new hires during your onboarding process. Most importantly, award interpretation software will be essential when ensuring that these new rules are applied. From creating employee schedules to payroll processing, a system that checks employee conditions against the relevant legislation in real-time will be the only feasible way for Australian businesses to keep up with rapidly changing and increasingly complex award entitlements. 

The changes proposed in the Bill may be challenging to navigate, and we’re here to help. If you’re a current Tanda user, we have measures in place to ensure a smooth transition for when these are implemented. If you’re a business that wants to ensure compliance with these rules as you manage your workforce, sign up for a free trial of the system.

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Bryn Tardent-Powell

Committed to helping business owners optimise their day to day practices through technology.

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