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UpdatesSep 18, 2020

Understanding recent key legal developments in employment law

A lot of our clients are taking the opportunity to review significant legal developments over the recent period and ensure they are doing what they need to address the implications for their business.

6 mins read

By Charles Power

A lot of our clients are taking the opportunity to review significant legal developments over the recent period and ensure they are doing what they need to address the implications for their business.

‘Casuals’ may be entitled to paid leave

The two Federal Court rulings (Workpac v Skene & Workpac v Rossato) found that a so-called “casual” was entitled to the Fair Work Act (FW Act) paid leave where:

The ruling doesn’t mean all regular casuals will be entitled to paid leave – the risk only arises where there is a mutual expectation that continuing and indefinite casual work will be offered and this will be worked.

If this mutual expectation exists, options to mitigate the risk include:

Annualised salaries

In early 2020 the Fair Work Commission introduced a model provision into the majority of modern awards imposing new requirements for annualised wage arrangements.

These mean that if an award-covered employee is to be paid a fixed monthly or annual salary to satisfy award entitlements, including base rates, overtime, penalties, loadings and allowances, the employer must:

Annualised salary arrangements for award-covered employees have become more onerous.  There is uncertainty as to whether the Award annualised salary provisions need to be satisfied in order to have a simple provision in a contract that stipulates the salary paid is for all monetary entitlements howsoever arising for the hours the employee is worked.

The model award clause requirements were intended to reflect best practice in mitigating risk of underpayment claims associated with use of annualised salaries.

Owner drivers may be deemed employees

A recent Federal Court ruling (Jamsek v ZG Operations Australia Pty Ltd (2020)) challenges the assumption that drivers who use their own truck to provide services are outside the FW Act and Superannuation Guarantee legislation. In this case, the drivers could not use their trucks for other jobs. Any profit and goodwill associated with the use of the company-branded trucks went to the company rather than the drivers. The Court ruled the owner drivers were employees and entitled to significant unpaid leave and superannuation entitlements.

Historical factors probably led to a negative outcome for company – drivers were originally employed but required to purchase the company’s trucks and become contractors to continue working.

Employers should review owner driver relationships and agreements to ensure drivers are free to work non-exclusively and can use their vehicle for other business contracts.

New wage theft legislation in Victoria

New Victorian laws effective on 1 July 2021 will make it a crime to intentionally underpay certain statutory monetary employee entitlements.

A new agency – Wage Inspectorate Victoria – will have powers to investigate potential offences with similar powers as the Fair Work Ombudsman.

Employers should ensure systems for recording working time and leave accruals are accurate.

If an employer shows it exercised due diligence and took all reasonable steps to pay employee entitlements and maintain proper records, it will mitigate criminal liability for unintended underpayment.

Clarification on personal leave entitlement calculations for part-time and shift workers

The recent High Court decision in Mondelez has clarified how a day of paid personal/carer’s leave is calculated under the FW Act for a part-time employee or shift worker whose ordinary hours of work over a two-week period are worked over fewer days.

The High Court ruling confirms the employee is in fact paid for a day of leave based on an average of daily ordinary hours (i.e. one-tenth of ordinary hours worked over 2 weeks or, if this produces uncertainty because of variable working patterns, one-26th of ordinary hours worked over a year).

The High Court ruling reverses earlier decisions that required the employee to be paid for the actual ordinary hours they would have worked on the day of leave.

The High Court ruling provides that, when the day of leave is taken, the actual hours the employee would have worked on that day are deducted from leave accrual.

This ruling only applies to the extent that the FW Act standard governs personal/carer’s leave.

Leave accrual arrangements should be checked to ensure they are consistent with the ruling.  Unions may seek to reverse the negative impact of the ruling in future enterprise agreement provisions for part-timers and shift workers. The ruling may apply to paid annual leave under the FW Act, but this has not been tested.

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