Government proposes changes to Fair Work Act

The proposed changes with the most potential impact for employers are:

Casual Employment

A new definition

The proposed definition states that “a casual employee is someone who accepts an offer of employment from their employer which 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 determination is assessed at the time of the offer and acceptance of employment, and not on the basis of any subsequent conduct of either party.

Casual conversion

The Bill proposed to facilitate casual employees converting to full time or part time employment after 12 months of service.

No double dipping on casual entitlements

To redress the “double-dipping” scenario left open by the Federal Court in Rossato, the Bill proposes that casual leave loadings will be set off against any claim for entitlements by a casual employee who is later found to have been a permanent employee.

Streamlining of negotiation and approval process for Enterprise Bargaining Agreements

The Bill seeks to overcome some of the complications and barriers which have developed over time with enterprise bargaining. The purpose of the amendments are to simplify the process and promote enterprise bargaining.  The most practical proposed changes for employers include;

• Amend the voting rules to clarify that casuals who have worked through the access period for the proposed enterprise agreement are entitled to vote;
• Franchisees will be able to opt-in to a single-enterprise agreement that covers a larger group of employers operating under the same franchise;
• the Fair Work Commission (FWC) will be required to determine applications to approve or vary enterprise agreements within 21 days (as far as practical); and
• The Better Off Over All Test (BOOT) simplified to take into account only patterns or kinds of work, or types of employment, that employees currently perform or could reasonably be foreseen to perform (meaning the agreement will be assessed against the actual working arrangements of the employer, not a theoretical working arrangement which would leave employees worse-off);
  • enabling the FWC to have regard to overall benefits (including non-monetary benefits, such as flexibility) employees would receive under an agreement compared to a relevant modern award; and
  • requiring the FWC to give significant weight to any views of the employees, employer and bargaining representatives for the agreement that have been expressed as to whether the agreement passes the BOOT.

Zombie agreements to go

Many old agreements made during the Fair Work Act ‘bridging period’ from 1 July 2009 to 31 December 2009, will cease on 1 July 2022.

Additional workplace flexibility

The Bill permits employers to issue flexible work directions to employees about their duties and location of work. This is intended to replicate and continue the flexibility which has been available to employers during COVID-19 under certain modern awards and the JobKeeper scheme.

The flexible work directions would only apply to employers and their employees covered by the following awards:

• Business Equipment Award 2020;
• Commercial Sales Award 2020;
• Fast Food Industry Award 2010;
• General Retail Industry Award 2020;
• Hospitality Industry (General) Award 2020;
• Meat Industry Award 2020;
• Nursery Award 2020;
• Pharmacy Industry Award 2020;
• Restaurant Industry Award 2020;
• Registered and Licensed Clubs Award 2010;
• Seafood Processing Award 2020; and Vehicle Repair, and
• Services and Retail Award 2020.

It is proposed that flexible work directions will only be available to employers on an interim basis for 2 years following the passing of the new laws.

Part-time flexibility

The Bill enables part-time employees to agree with their employers to work additional hours outside of their ordinary hours of work, at ordinary time rates instead of overtime rates (which would otherwise be payable under certain awards). This applies only to employees covered by the modern awards listed above.

Compliance and enforcement reform for wage underpayment

The Bill proposes to increase the civil penalties for existing ordinary remuneration-related contraventions by approximately 50% where the relevant non-compliance does not constitute a criminal offence.

In addition, the Bill envisages the introduction of a new mechanism for determining fines for large companies who have committed remuneration-related contraventions whereby the relevant penalty will be based on a multiple of the “value of the benefit” obtained by the company. This is to ensure that the civil penalty serves as a measurement of the actual scale of the underpayment.

Small businesses and individuals will be exempt from this new mechanism. However, the maximum financial penalty for these groups will significantly increase.

Further, the fines which attach to infringement notices, sham contracting and failing to comply with a compliance notice will also increase by 50%.

The Bill proposes to increase the current small claims jurisdictional limit from $20,000 to $50,000.  Courts will also be required to consider whether to refer small claims to the FWC for conciliation (and arbitration, if the parties consent). 

Criminalising underpayments

The Bill proposes to introduce a criminal offence of wage underpayment.  This offence is intended to attract a maximum penalty of up to four years imprisonment and/or a fine of $1.11 million for an individual and up to $5.55 million for a body corporate.  Individuals will also be automatically disqualified from managing corporations for a period of five years under the Corporations Act 2001 (Cth) if they are convicted of an offence that involves dishonestly and is punishable by imprisonment for at least three months.

The criminal offence is not intended to apply to one-off underpayments, inadvertent mistakes or miscalculations, but rather employers who dishonestly engage in a systematic pattern of underpaying one or more employees with intentional dishonest and systematic conduct.

Contact us

For more information on proposed changes or to discuss the likely impact on your business contact our HR Consulting team at MazarsHR@mazars.com.au or + 61 7 3218 3919, alternatively contact your usual consultant via phone or the form below.  

Published: 16/12/2020

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