The new year is just around the corner and many will be relieved to leave the turmoil of 2020 behind them! While there is always some uncertainty around what the future will bring, we at least know something of what to expect in regards to employment law.
The Federal Government will introduce an ‘omnibus’ Bill that will make significant changes to the Fair Work Act 2009 (Cth) (FW Act), with effect next year.
The changes include the introduction of:
- a statutory definition of casual employment;
- the ability to set-off casual loading against claims for leave entitlements; and
- universal right for casual employees to convert to permanent employment.
JobKeeper is also planned to continue in a modified form. And lastly, the Fair Work Ombudsman (FWO) is receiving funding to establish a service that will provide advice to small businesses to ensure award compliance, and penalties for non-compliance, such as underpayments, will increase.
Read on to learn about these changes in detail…
Casual employment definition
The Bill will introduce a statutory definition of casual employment based on the tests enunciated by the Full Federal Court in the WorkPac decisions. The legislation will define a person as a casual employee if employment is offered and accepted without any firm advance commitment that the work will continue indefinitely and follow an agreed pattern of work.
The meaning of “firm advance commitment” will be guided by specific factors, including whether:
- the employee can elect to accept or reject work;
- the employment is described as casual employment; and
- the employee will be entitled to a casual loading or a specific rate of casual pay.
The new definition will apply to casuals from the date they commence their casual employment.
Set-off casual loading against leave entitlement claims
Employers will be able to offset amounts already paid through casual loading against any claims for the employee to be paid for leave entitlements. If an employer is sued for payment of these entitlements, the Court must allow the employer to deduct from the amount claimed any identifiable casual loading paid to compensate the employee for the absence of those entitlements. This will apply to past and future employees.
An attempt to give this protection to employers through a Fair Work Regulation was shown to be defective in the WorkPac v Rossato (2020) decision.
The legislation would give a universal right for regular casuals to convert to full-time or part-time employment based on the nature of their regular hours. This right is currently provided in modern awards, as well as many enterprise agreements.
An employer must make an offer to a casual employee to convert if the employee has worked for the employer for a period of 12 months and has worked a regular pattern of hours on an on-going basis for the past 6 months (previously 12 months).
The employer must also weigh whether the employee could continue to work full-time or part-time without significant adjustment to hours of work.
An employer may decide not to make an offer or accept an employee request if they have reasonable grounds not to do so.
If an employee declines an initial offer to convert, a further right to request will be available every 6 months, as long as they remain eligible.
The legislation will continue, in modified form, to grant the temporary powers to employers covered by the JobKeeper scheme to issue enabling directions in relation to duties and location of work, and to reach agreement with employees on days and times of work.
It will also allow part-time employees to agree to work extra hours without triggering obligations to pay overtime for those additional hours. This will apply to employers and employees covered by the following modern awards:
- General Retail Industry Award;
- HospitalityIndustry (General) Award;
- Restaurant Industry Award;
- Fast Food Industry Award;
- Registered and Licensed Clubs Award;
- Vehicle Repair, Services and Retail Award;
- Meat Industry Award;
- Seafood Processing Award;
- Business Equipment Award;
- Nursery Award;
- Pharmacy Industry Award; and
- Commercial Sales Award.
The flexibility will only be available if:
- the employee agrees to work the additional hours and the agreement is recorded – at least by informal means such as a text message;
- the part-time employee is engaged to perform at least 16 regular hours per week;
- the shift length is at least 3 hours;
- the total work hours are less than 38 per week, and within the daily maximums and/or span of hours contained in the relevant award; and
- normal penalty rates apply for weekend or evening work.
The FWO is receiving funding to establish a service that will provide advice to small businesses to ensure award compliance. The Employer Advisory Service will start on 1 July 2021.
Employers that can show they correctly followed the guidance provided by the advisory service will be exempt from prosecution by the FWO if it is later discovered the advice is incorrect (although any underpayments will have to be repaid).
The cap on underpayment matters that can be dealt with through existing small claims processes within the Federal Circuit Court and state and territory magistrates’ courts will increase from $20,000 to $50,000. Courts can also refer small claims matters to the Fair Work Commission to deal with through conciliation or consent arbitration.
A new criminal offence of wage theft will apply where an employer dishonestly engages in a deliberate and systematic pattern of underpaying one or more of their employees. It will carry a maximum penalty of $1.11 million and imprisonment for up to 4 years (or both) for individuals, and fines of up to $5.55 million for a body corporate. Individuals convicted of the criminal offence would also be automatically disqualified from managing corporations for a period of 5 years under the Corporations Act 2001.
The maximum penalty for ordinary contraventions by employers will increase to $19,980, or $99,900 for body corporate employers.
In the case of underpayments by bigger businesses, maximum penalties will be based on the higher of either “two times the benefit obtained”, or a $99,900 a fine. In case of serious underpayments by bigger businesses, penalties will be based on the higher of either “three times the benefit obtained”, or a $666,600 fine. This linking of the fine to the benefit obtained will not apply to individual employers or small businesses.
Infringement notice fines and maximum penalties for sham contracting and for failing to comply with a FWO compliance notice will all also increase by 50%.