Following the recent passing of the Fair Work Amendment (Closing Loopholes No 2) Bill, employers will soon be subject to new laws governing the conversion of casual workers to permanent status – the ‘employee choice’ framework.

These changes, effective from 26 August 2024, will introduce a new definition of casual employment, along with new pathways for casual workers to convert to permanent employment if they wish to.

The new definition of casual employment shifts the focus from the terms of the employment contract to the practical reality of the employment relationship. This means that rejecting a casual worker’s request to become permanent will be more complex, since HR will no longer be able to lean on contracts to establish casual status.

However, these laws will also make it more difficult for casual workers to gain the protections of permanent employment, as the framework is only available if the employee no longer satisfies the definition of a casual employee. There will also still be many instances where an employer has reasonable grounds to refuse a request. 

In preparation for the new legislation to come into effect, here are some key legal considerations to keep in mind when determining whether a casual worker is entitled to convert to permanent status.

Understanding new laws around casual conversion

One of the most significant changes coming from the new legislation is the removal of employers’ obligation to initiate casual conversion.

The process is transitioning from one which is reliant on the employer checking employment status and offering conversion accordingly to one that places the onus on employees to notify the employers that they no longer meet the definition of a casual and therefore should be permanent employees. 

For HR, this shift has the potential to eliminate much of the busywork involved in checking on the length and status of employment and offering conversion to employees who may not wish to become permanent. The changes reflect the reality that many workers, particularly in sectors like retail and hospitality, are casual by choice and do not wish to lose the casual loading or flexibility this status gives them. 

With that said, the upcoming legislation also has measures in place to allow workers who do wish to convert to permanent status to do so and gain protections such as paid leave, notice of termination and redundancy pay. 

This is likely to have most impact in industries such as aged care, community services, childcare and labour hire companies, where work tends to be predictable, but where it has traditionally been challenging for some workers to convert to permanent status.

Particularly for employers in these industries, it’s crucial to understand what will constitute reasonable grounds to refuse a request under the new laws. 

This is especially true in light of the increased anti-avoidance penalties for improperly engaging casual workers, which were introduced in February this year. 

Employers now face significant civil penalties (up to $93,900 for individuals and $469,500 for body corporates) for breaches, such as dismissing or threatening to dismiss an employee with the plan to re-engage them as casual, making false statements to persuade an individual to enter a casual employment contract or misrepresenting employment as casual. 

Read more about new laws for engaging casual workers and how they could impact your business here.

Grounds for refusing a casual conversion request  

Under the new employee choice framework, employers can reject a request if the employee still fits the new definition of a casual employee. Employers will also retain the ability to reject a request based on fair and reasonable operational grounds. 

These grounds are situations such as where converting a casual employee to a permanent status would cause significant disruption to the business operations or substantial changes would be required to the way in which the employer’s work is organised. 

For instance, if the work is highly weather-dependent or heavily influenced by varying customer demand, employers may argue that maintaining a casual, flexible workforce is essential. Industries such as quarrying, where operations can be halted due to weather, or retail, where the volume of work varies greatly, are typical examples of where these grounds might apply. 

“Even if an employee works a regular pattern of hours, this does not necessarily mean they are entitled to permanent employment.”

An employer can also reject a conversion request on the grounds that there is an absence of a firm advance commitment to continuing and indefinite (i.e. they still fall within the new definition of a casual employee).

Currently, the absence of a firm advance commitment is largely determined by the terms of a contract. Under the new legislation, to refuse a request on the basis that they still fit the definition of a casual employee, employers will need to demonstrate that there is no such commitment by assessing how the relationship plays out in reality and not just having regard to the terms of the contract.

This involves considering factors such as the employee’s ability to turn down shifts or the variability of their work hours. If an employee can decline work or if their schedule lacks consistency, that will support the notion that they still meet the casual employee definition. 

Another factor that may be relevant is how far in advance an employee is informed of their shifts and patterns of work. This issue was raised in Workpac vs Skene, a 2018 Federal Court case where a casual worker was found to fit the definition of a permanent employee in part because he was provided with 12-month rosters in advance.

Employers may also assess whether there are full- or part-time employees performing exactly the same work as the casual employee. If this is the case, this can indicate the presence of a firm advance commitment to continuing and definite work, potentially making them eligible for permanent employment.

Importantly, even if an employee works a regular pattern of hours, this does not necessarily mean they are entitled to permanent employment. 

Best practice for rejecting a casual conversion request

If an employer determines that the employee still meets the casual employee definition or they have fair and reasonable operational grounds kto refuse a request, it’s important to communicate this decision to the employee the right way.

When rejecting a request on the basis of fair and reasonable operational grounds, employers must clearly articulate the specific operational reasons for the rejection in writing, this might include outlining the business’s need for flexibility and any negative impact a permanent conversion might have. 

It’s important to thoroughly communicate the context of customer needs or other variables, and why the current casual arrangement is necessary for their operations. 

Providing clear and detailed written responses is crucial not only to avoid disputes, but also to help employees understand the decision, manage their expectations and avoid misunderstandings. 

While employment contracts are no longer the sole factor in determining whether an employee is casual or not, it remains important to include clear contractual terms that align with the new definition of a casual employee, and keep clear records of the casual loading that has been paid to employees based on their employment status. 

While the upcoming legislation aims to reduce the burden on employers whilst still providing a pathway for casual employees to convert to permanent status, employers may still have valid grounds to refuse these requests (such as because the employee still fits the casual definition, or due to fair and reasonable operational grounds). By assessing, documenting and clearly communicating their  reasons for rejection, employers can mitigate legal risk and maintain the necessary flexibility in their workforce.

Will Snow is a Director and Molly Shanahan is an Associate at Snow Legal.

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The Fair Work Amendment (Closing Loopholes No 2) Bill was recently passed, making significant changes to the Fair Work Act 2009 (FW Act). Among these changes is a new definition of ‘casual employee’ which will come into effect on 26 August 2024. 

Previously, under section 15A of the FW Act, the definition of casual employment was if:

1. An offer of employment by the employer is made on the basis of no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
2. The person accepts the offer.  
3. The person is an employee as a result of the acceptance. 

The new definition of casual employment considers the practical reality of the relationship, as opposed to merely the terms in the employment contract (as was previously the case). Broadly put, the new definition encompasses an absence of a firm advance commitment to continuing and indefinite work, and in circumstances where the employee is entitled to a casual loading or specific rate of casual pay under an industrial instrument. 

There are a broad range of considerations to determine whether there is an absence of firm advance commitment to continuing and indefinite work, including the real substance, practical reality and true nature of the employment relationship, and whether: 

• There is an inability of the employer to elect to offer work, or an inability of the employee to accept or reject work.
• It is reasonably likely there will be future availability of continuing work.
• There are full-time or part-time employees performing the same kind of work.
• There is a regular pattern of work for the employee.
• These amendments acknowledge a firm advance can take a range of different forms, including in an employment contract, but importantly, through a mutual understanding or reasonable expectation.

New pathways for casual workers to convert to permanent employment

The changes also include a new pathway for employees to change to permanent employment status, previously known as casual conversion. The new pathway replaces the existing right to casual conversion. 

If an employee has been employed for six months (12 months in a small business), they can choose to change their employment status to permanent. There must be a specific event which clearly shows the transition, and it’s now up to the employee to initiate the shift to employment. 

The upside is that the onus is no longer on the employer to review and offer casual conversion.

“The new definition of casual employment considers the practical reality of the relationship, as opposed to merely the terms in the employment contract.”  

Akin to requests for flexible work arrangements, casuals can write to their employer to notify them that they’d like to change their employment status, and employers are required to respond within 21 days. 

An employer may refuse a notification on any one of the following grounds:

• They believe the employee has been correctly classified as a casual employee, e.g. they aren’t working on a systematic basis.
• There are fair and reasonable operational grounds for not accepting the notification, such as if substantial changes would be required to the way work in the business is organised to allow the employee to convert. 
• A change of employment status to full-time or part-time would not comply with a recruitment or selection process required by law, such as the Public Service Act 1999, which outlines that casuals cannot convert without a competitive selection process.

Avoidance penalties to be aware of

The changes will also introduce new anti-avoidance provisions to prevent employers from improperly engaging casual workers. This means employers must not: 

• Dismiss or threaten to dismiss an employee with the plan to then re-engage them as casual. 
• Make false statements to persuade an individual to enter a casual employment contract, such as telling them they will be financially better off.
• Misrepresent employment as casual.

Breaching these provisions can attract civil penalties. The maximum payable under the FW Act increased by 500 per cent for both standard civil contraventions and serious contraventions from 27 February 2024. Companies can now face fines of $469,500, or $4,695,000 for serious contraventions.

Implications for employers engaging casual workers

HR professionals should get across these changes and update their casual conversion processes and procedures to ensure a smooth transition and compliance with the new regime.  Factors to consider include: 

• While not having a firm advance commitment to continuing work is a consideration in determining whether an employee is casual, employers should still consider any conduct on their behalf which could suggest the employee is not a casual (e.g. while a contract says there will not be commitment, sending a text to the casual promising to give them a specific shift every week).
• Ensuring casuals are paid a casual rate or casual loading where they would otherwise be entitled to one under an industrial instrument.
• Being aware that casuals can now request conversion to permanency, and considering what grounds (if any) an employer has to reject such a request.

Fay Calderone is an Employment Partner at Hall and Wilcox. 

A version of this article was first published in the June 2024 edition of HRM Magazine.

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Editor’s note: The Senate committee report on the Closing Loopholes Bill has now been delayed until February 2024.

The government is determined to ‘close loopholes’ around pay and working conditions with its latest tranche of industrial relations reforms. Stronger sanctions will be put in place for deliberate acts of underpayment – including jail time – and gig workers could see a boost in the protections and rights afforded to them, should the legislation get passed.

The Closing Loopholes Bill, which was introduced on Monday 4 September, also includes a federal approach to criminalising industrial manslaughter and new obligations around converting casual staff members.

None of these announcements are particularly surprising. We knew these things were in the pipeline. But they have still been met with concern from some parties.

Employer Groups say the new rules could create “uncertainty and complexity” for millions of casuals, contractors and labour hire workers, and claim that the first round of IR changes (Secure Jobs, Better Pay Bill) “resulted in deeply flawed change to the system that industry is still struggling with”.

To this, Tony Burke, Minister for Employment and Workplace Relations, and Minister for the Arts, told the Canberra Press Gallery, “When Secure Jobs, Better Pay legislation was introduced to the Parliament last year, we were told it would lead to unemployment. We were told it would lead to strikes. We were told it would fail in getting wages moving.”

He goes on to list the positive results to come out of the bill so far: less industrial action, 85 per cent of newly created jobs are full-time and more women are in full-time employment.

“This legislation is making a difference,” he said. And he’s confident this next suite of changes will be no different.

Here are the big-ticket items in this new Bill that HR should be across.

Jail time for wage theft

Employers who deliberately underpay their staff could face a maximum of 10 years in jail or million-dollar fines (capping out at $7.8 million, or three times the amount that was underpaid if that exceeds the maximum fine).

“It is and should be a criminal offence for the worker to be taking money from the till,” said Burke. “But it is not a criminal offence, in most of Australia, for the employer to be taking money from the wages.”

Penalties won’t apply to employers who make “honest mistakes”, Burke has clarified. Support will be afforded to employers who self-report accidental underpayments and the

Fair Work Ombudsman will be able to use its discretion in instances where it doesn’t pursue criminal proceedings, such as if the employer elects into a ‘cooperation agreement’ to right their wrongs.

The government has also announced an increase to the maximum penalties available for civil breaches of underpayment-related provisions (as advised by recommendation 5 of the Migrant Workers’ Taskforce report) which will come into effect on 1 January 2024, if the Bill is passed.

“It’s unlikely that a person will be jailed if they can prove that they have taken all reasonable steps to ensure that workers are being paid correctly.” Aaron Goonrey, Partner, Pinset Masons

Aaron Goonrey, Partner at Pinset Masons, says that the legislation could target anyone who was involved with purposefully withholding payments. Without seeing details of the Bill in full, he speculates this could include the company director, a CEO, payroll officer, legal advisor, accountant or an HR manager.

In determining what constitutes a deliberate underpayment, he says “consciousness and intent” will need to be proved. 

“Under the Victoria Wage Theft Act, the test to prove ‘dishonesty’ of a person in underpayments is “according to the standards of a reasonable person”.

“It may be a similar test to the existing accessorial liability provisions under the Fair Work Act. Accessorial liability occurs when a person is involved in the contravention of a workplace law.”

A contravention occurs when someone:

• Assisted, recommended or caused the contravention
• Influenced the contravention
• Was knowingly concerned in or a party to the contravention
• Conspired with others, which resulted in the contravention

Jonathon Woolfrey FCPHR, Chair of AHRI’s Industrial and Employer Relations Advisory Panel says, “Most employers will have little to fear in regard to ‘deliberate acts of underpayment’, but they will want to ensure they aren’t “reckless”, which may bring them within the parameters of the proposed bill.”

A detailed understanding of the National Employment Standards and Modern Award obligations is critical, he adds.

“It’s a common misconception to assume that paying at, or above, Modern Award rates automatically meets an employer’s obligations. A more thorough assessment is needed,” says Woolfrey, who is the Managing Partner at Talenting and an AHRI Board member and State President.

To prepare for these potential changes, Goonrey says regular payroll audits and due diligence around time and record-keeping should be a key priority for employers.

“It’s unlikely that a person will be jailed if they can prove that they have taken all reasonable steps to ensure that workers are being paid correctly.”

Woolfrey adds that employers could also implement or revise a remuneration framework that outlines an organisation’s salary, superannuation and other compensation strategies.

“[HR could also implement] ongoing monitoring mechanisms, such as regular reports to management or the board, to adapt to the dynamic IR environment, or [perform] scenario tests to assess how the organisation handles complex employment situations and whether it meets or exceeds legal requirements.”

Woolfrey says “no HR professional would argue against the broad intent of wage theft legislation”, but feels it misses broader issues.

“[The legislation] essentially serves as a distraction from the fundamental issue – the complexity of the industrial relations system. Ironically, given the rapid pace of IR reform over the past year, this new legislation contributes to that complexity. While Minister Burke has assured that the “objective is not to send people to jail,” the legislation’s big-stick approach seems to sidestep the real concerns of businesses.”

Small businesses (those with fewer than 15 employees) will be exempt from this new law.

“Ideally, you want the same rights for people in every workplace, but we have to take into account the fact small businesses don’t have an HR department,” said Burke.

The Government is pledging $32.4 million over four years to act on its plans to criminalise wage theft, which could include a “strong and visible” regulator. If passed, these changes are said to come into effect no later than 1 January 2025.

Closing loopholes for gig workers and labour hire

The Fair Work Act currently doesn’t define what an “employee” is. Instead, the courts have been referring to the ZG Operations v Jamsek case as precedent, which determined that what’s stated on an employment contract is what determines employment status.

The new Bill will include an official definition of an employee, which will also make it clearer who constitutes as “employee-like” (i.e. gig workers). Burke says the FWC will assess if someone is “employee-like” by asking:

• Do they have low bargaining power? 
• Do they have low levels of control over the work they do? 
• Are they being paid less than they would get if they were being employed as an employee? 

If the answer is ‘yes’ to these questions, then they may be entitled to further workplace rights.

For example, these “employee-like workers” (rideshare drivers/delivery riders) currently don’t have access to things such as sick leave, annual leave and minimum rates of pay.

Under the proposed laws, which would come into effect in November 2024, the Fair Work Commission will be given new powers to set minimum standards, via applications from relevant parties, including pay, penalty rates, superannuation, payment terms, record keeping and insurance.

“It’s likely that unions will take a leading role in this exercise,” says Goonrey.

“Gig economy workers will keep their status as independent contractors and the FWC will not be able to set standards on terms such as overtime rates, rostering arrangements or to change how a worker is engaged,” he adds. 

This would go against the very nature of gig work, which attracts some people due to its flexible nature.

Gig workers will also have access to a new jurisdiction within the FWC where they can claim “unfair deactivation” (an iteration of unfair dismissal) if they believe they were banned from a particular platform (e.g. UberEats app) without a fair reason.

These new rules are designed to make conditions safer for gig workers and to afford them with minimum standards for employment.

“It’s got to be possible to have 21st-century technology without having 19th-century working conditions,” said Burke.

As well as protections for gig workers, certain employers (excluding small businesses) will also no longer be able to introduce labour-hire workers to undercut the wages of those working under an enterprise agreement. 

Employees, unions and host employers will be able to apply to the FWC for an order that labour hire employees be paid at least the wages outlined in the host employer’s enterprise agreement, says Goonrey.

“Employers will be banned from taking action to avoid their obligations or prevent an order being made,” says Goonrey.

Head of the Minerals Council of Australia, Tania Constable, told the SMH that she believes these proposed changes – originally captured under the Same Pay, Same Job Bill – have the potential to “damage the economy”, stating it could “potentially smothers the entire economy, capturing every business that provides workers, services or skills to another company”.

But Burke says the legislation is likely to only impact 67,000 workers and that he’s not trying to turn every worker into an official employee. The changes are aimed at larger organisations, with the government citing the mining and aviation industries as key focus areas.

“If you are an employee, you have a whole series of rights. If you’re not an employee, all of those rights – all of them – fall off a cliff,” said Burke.

“What we want to do is turn that cliff into a ramp. So, for people in the gig economy, [we would] have a situation where you don’t get all the rights you would have as an employee, but you do have some minimum standards.”

Burke stated that there will still be a place for labour hire and gig workers to manage short-term fluctuations in demand and/or when a situation calls for a specialist skill set, so has included a three-month exemption period for these circumstances.

“A set-and-forget approach was a risky approach before, but now it’s not a viable approach for any employer.” – Jonathan Woolfrey FCPHR

Greater legal protection will also be created for independent contractors. Burke said since the Independent Contractors Act was introduced 17 years ago, it has only been used 68 times and the court has only made a ruling in three of those cases. 

He believes this is because it requires independent contractors to engage in expensive legal battles, which was unrealistic for the average contractor.

He plans to introduce a threshold for ‘no-cost’ jurisdiction within the FWC, which would make it more affordable for some contractors to enforce their rights.

Goonrey says “now is the time for both labour hire and host employers to assess their current arrangements and consider how these may need to adapt going forward to ensure contractual compliance while also seeking flexibility.”

Permanent pathways for casuals

The legislation proposes that casual workers who engage in regular and systematic hours should have access to leave entitlements and guaranteed hours by changing their employment status to permanent should they wish to.

“There would be no back pay of wages or entitlements prior to the period of conversion,” says Goonrey. “In essence, it would be another pathway for casual employees to convert to more permanent employment.”

Currently, an employee may request casual conversion any time after their 12 month anniversary of engagement, he says. 

Woolfrey says the new law would see employers required to offer a pathway to permanent work within the first six months.

“It’s estimated that this may allow up to 850,000 current casual employees the opportunity to request permanent work, which could have significant impacts on many employers. 

“This, combined with proposed changes around the use and payment of gig and labour hire workers, mean that HR practitioners need to have a thorough understanding across the various modes of employment their employer uses and ensure they’re fully aware of the employment situation and contract of each and every worker they directly or indirectly engage. 

“A set-and-forget approach was a risky approach before, but now it’s not a viable approach for any employer.”

Small business owners will be given a 12-month service period window before their casual employees can access new voluntary conversion pathways.

Read more on casual conversion here.

Criminalising Industrial manslaughter

Ninety-one workers have been killed on a worksite in 2023 so far and the government wants to introduce laws to bring that number down to zero in future years.

Industrial manslaughter legislation is already enshrined in most states and territories – or is in its proposal stages. The new Bill will introduce a federal approach.

Industrial manslaughter will become a criminal offence under Commonwealth work health and safety laws and  individuals could face 25 years in jail and body corporates could face up to $18 million in fines if “gross negligence or recklessness” is found to have contributed to the death of a worker. These changes could come into effect from 1 July 2024.

The contents of the Closing Loopholes Bill are likely to be debated over the coming weeks. If the proposals are passed, it’s likely we won’t see the majority of changes come into place until mid to late 2024.

What do you think about the proposed changes? Let us know in the comment section.

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Terminating a casual employee is a sensitive topic and is probably an undertaking that most people working in HR or management would want to avoid unless absolutely necessary. 

However, termination of employment is unavoidable in business, as there will be instances where a team member exhibits bad behaviour, their performance is not up to standard, or challenging times for your business require budget cuts. 

Irrespective of the reasons for needing to terminate a team member, you need to clearly understand the steps to follow in order to treat the person with dignity and respect – and to keep your business out of legal hot water. 

Casual employment does not offer a firm advance commitment to an ongoing agreed pattern of work. As such, employers have the flexibility to allocate work as required.      

Furthermore, if a team member is truly a casual employee as per the Fair Work Ombudsman’s (FWO) criteria, then termination of that team member can occur without notice. Casual employees can also leave without providing any notice to their employer.            

As a precautionary measure, the team member’s contract and industrial instrument (modern award) need to be checked in case further detail of their employment status is specified there. 

This article will cover the appropriate way to terminate a casual employee, and unpack other information that might be helpful, including how to understand if a team member is truly a casual employee or not.

What defines a casual employee?

As of late, there has been a lot of scrutiny around how employers engage employees, as part of the latest Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth). This includes amending fixed-term contract regulations and the casual conversion pathway within the National Employment Standards. The latest reforms are focused on curbing the ability of employers to hire team members as gig or long-term casual employees. 

These changes are significant steps in redefining how employers should evaluate their workforce requirements and, in turn, how they engage employees. It is therefore crucial to understand your obligations as an employer to avoid any associated penalties from the FWO. 

Casual employees are team members who have accepted an offer of employment with the knowledge that there is no commitment to ongoing work or an agreed pattern of work. 

Casual employees work irregular hours, and their shifts vary from week to week to suit the employer’s needs. 

Under the recent casual conversion laws, casual employees who have been employed for more than 12 months need to be offered the opportunity to convert to full-time or part-time permanent employment. However, further eligibility criteria will apply. You can read more about that here.

Risk of unfair dismissal

An unfair dismissal is when an employee is terminated from their job in a harsh, unjust or unreasonable manner.      

However, casual employees are excluded from bringing unfair dismissal claims unless they: 

• Worked regularly and systematically
• Had a reasonable expectation of continued employment
• Worked for more than 6 months (non-small business employer) or 12 months (small business employer).

Essentially, this means they have been misclassified as a casual employee. If a ‘casual employee’ meets the above criteria, they are entitled to lodge a claim for unfair dismissal. The outcome of the claim will depend on the individual facts and circumstances of the case. 

Risk of general protections claim

However, even if a worker is deemed to be a casual worker, and therefore cannot file for unfair dismissal, they still have access to other types of claims under the Fair Work Act, such as a general protections claims. General protections laws extend to full-time, part-time, casual and fixed-term employees, including potential employees (job applicants). 

General protections laws protect employees in situations where workplace rights are affected from the following:      

• Harmful (adverse) action
• Coercion
• Undue influence or pressure
• Misrepresentation

Therefore, a casual employee could lodge a general protections claim if they are of the view that their employer has taken adverse action against them for having exercised, or having proposed to exercise, a workplace right.

The term ‘workplace right’ is defined by the FWO as when a person:

• Is entitled to a benefit or has a role or responsibility under a workplace law, workplace instrument (such as an award or agreement) or an order made by an industrial body.
• Is able to initiate or participate in a process or proceedings under a workplace law or workplace instrument.
• Has the capacity under a workplace law to make a complaint or inquiry.

“Casual employees are team members who have accepted an offer of employment with the knowledge that there is no commitment to ongoing work or an agreed pattern of work.”

Things to consider before termination      

If you are unclear as to whether your team member is a permanent employee or casual employee, you should proceed with caution and treat them as you would a permanent employee.  

Consider the following before proceeding with the termination:      

• Did you have a valid and lawful reason for termination?’It’s advised that you ensure the reason for termination is not deemed harsh, unjust or unreasonable. Ensure you have a valid reason related to the employee’s performance or conduct.
• Did you follow a procedurally fair disciplinary process?Notify the team member of the reason for termination and grant them the opportunity to respond to it. Provide the team member with the opportunity to bring a support person if they request it.
• Do I need to pay a notice period?Casual employees, as defined by the FWO, are not entitled to a notice period or payment in lieu of notice under the FW Act. If the employee should be classified as a permanent full-time or part-time employee, as per the criteria under the FW Act, then a notice period or payment in lieu of notice may apply. Verify their employment contract and applicable industrial instrument (modern award) for specific obligations regarding a notice period.
• Is redundancy applicable?Most casual employees are not entitled to redundancy. However, if the casual label is misapplied and the employee is considered a permanent full-time or part-time employee, and their role is no longer required to be performed by anyone, then a redundancy situation may arise.

The basics of a termination meeting

Below are some of the basic things to consider when preparing for the termination of a casual employee:

• Offer a support person to be present

It’s advised to offer a support person to be in attendance at a termination meeting (and at any disciplinary meetings in the lead up to a termination). This may work in your favour should you get called in front of the FWC. It is not a legal requirement to offer someone a support person. However, employers cannot deny someone the chance to have a support person present in a meeting.

• Provide 24 hours’ notice

Provide the team member with 24 hours’ notice of the meeting and provide adequate information about what the meeting will entail (e.g. disciplinary meeting), so they can prepare themselves for the meeting and find a support person if they so desire. 

• Empower managers to advise of termination

The team member’s manager should be encouraged and coached on how to best deliver the termination news to their direct report. It is recommended to highlight specific examples of previous attempts utilised to rectify the situation (e.g. performance improvement plans, training or formal warning(s) issued). The termination letter should also encompass these details, so the employee has a physical record of the steps taken to support them in rectifying the situation. 

• Keep it to the point

It’s best to cut to the chase in this situation and mention termination as soon as possible. Share the decision to terminate their employment with the team member and explain why, but don’t go into excessive details unless the situation warrants it. 

Need help brushing up on HR laws and compliance around? AHRI’s short course, Introduction to HR Law, will give you an understanding of the key elements of legislation, regulation and practices HR needs to be across.

Terminating casual employees summary

In the circumstance where you need to proceed with the termination of a casual employee, first and foremost ensure they are a casual employee as per the criteria under the FW Act. 

In the instance where the team member is a permanent employee despite the ‘casual’ label given to them, it is critical to ensure the termination of employment is for a valid reason and certain rules, such as notice, and severance pay are adhered to. 

It’s always advisable to ensure entitlements owed to the employee are processed within seven days of termination. 

Termination of a casual employee is not a pleasant process. It’s always best to treat team members with respect and dignity when terminating their employment – irrespective of their employment status. 

As the saying goes, “People won’t necessarily remember what you said, but they will remember how you made them feel”. Taking a fair and kind approach, irrespective of whether an employee has grounds for lawful termination, might help you avoid reputational damage to your business in the long term. 

Cedric Moutou is a HR professional with 12+ years of experience. He has worked with various industries, from start-ups to large global organisations.      

The post A guide to terminating casual employees appeared first on HRM online.

Last year saw many unusual partnerships. Employers and employees collaborated in determining a path forward to remote work; corporate competitors sat down to align on their tactics for managing the increasing uncertainty of the pandemic; and those sitting on opposite sides of the political fence joined forces to quickly create and pass legislation to protect Australian employees.

As we now know, the latter partnership was short-lived. Weapons were lowered during the creation of the various iterations of the JobKeeper scheme and variations to certain awards; however, the Fair Work Amendment bill (IR reform bill) that was introduced to parliament late last year caused both sides to quickly take aim once again.

Last week, the Labor and Greens parties announced they would reject the proposed bill in its entirety, flagging employee pay cuts and the temporary suspension of the Better Off Overall Test (BOOT) as major concerns.

In an email following last week’s ALP caucus, Labor IR spokesperson Tony Burke, said there was no way his party would “vote for a bill that cuts pay”.

“The heroes of the pandemic are owed a debt of gratitude for the way they kept Australia running last year. Instead, Scott Morrison wants to give them a pay cut,” he wrote. “Before this legislation was introduced, we offered a simple test – it had to deliver secure jobs with decent pay. This bill delivers the opposite.”

IR minister Christian Porter responded by saying it was “a totally false claim that workers would lose pay” under the proposed bill. He maintains that those industries hardest hit by the pandemic will benefit from loaded pay rates. However, unions and the ALP stand strong in their view that an increase to employee paychecks wouldn’t compensate for lost penalty rates and allowances.

With the fate of the bill now lying in the hands of the five Senate crossbenchers – Pauline Hanson, Malcolm Roberts, Jacqui Lambie, Stirling Griff and Rex Patrick  – it’s unclear if the bill will pass in March or if amendments will be made to get it over the line, such as the removal of the suspension of the BOOT.

In the meantime, HRM speaks with IR experts – Susan Sadler CPHR, AHRI’s South Australian president and director of IR consultancy, Red Wagon Workplace Solutions; and Nick Ruskin, partner at K&L Gates – about their views on what the bill got right and where improvements could be made. (Both Sadler and Ruskin were part of AHRI’s IR working group that created AHRI’s IR submission document).

[Need to catch up on what the proposed IR bill entails? Read HRM’s wrap-up, here].

Softer punishment for an honest mistake

We need to draw a clear line between blatant cases of employee wage theft and accidental underpayment cases, says Sadler. 

“Is it fair to penalise someone for not properly understanding something that’s not entirely clear in the first place?”

Even large organisations, with all their relevant resources and expertise, are making honest mistakes, says Sadler, so think about how tough it can be for smaller, less-resourced businesses.

“It’s very scary for small business owners. For example, a 15 cents per hour [discrepancy] very quickly accrues to be quite significant. In a big business, a couple of thousand dollars might not make a difference, but it can kill a small business.”

In its IR submission, AHRI called for a shift in the relationship between the Fair Work Ombudsman and employers, stating: 

“AHRI believes the Ombudsman should provide more guidance to employers under its education compliance programs. Additionally, it should approach self-reporting by employers less aggressively and require less of employers that do so if the noncompliance arises from mistake or inadvertence compared to deliberate underpayment. This could encourage self-reporting.”

“The Fair Work Ombudsman has a policy that encourages self-reporting,” says Ruskin. “It says you must self-report if you’ve identified a serious underpayment issue that has occurred for more than 12 months and affects lots of employees – but there’s no legal obligation to do so. So why would people do it?

“It makes sense that you’d be punished, because you’ve underpaid your employees, right? But it gets to a point where you think, what’s the advantage of doing it? Because you can be treated pretty harshly, in my opinion.”

When the FWO asks employers to dob themselves in for underpayments, it then makes a call on whether or not to prosecute. Even if they don’t prosecute, they can still require employers to enter an enforceable undertaking – which includes sharing the information with the public, often through the media, says Ruskin.

“Employers sometimes have to put advertisements in the newspaper to say, ‘We the employer underpaid people, or didn’t pay loadings, and we’re very, very, sorry.'”

Ruskin proposes that there should be a more conciliatory approach for “sensible employers” who inadvertently underpay their employees as opposed to deliberate underpayments which could now be subject to new criminal penalties.

Sadler agrees that it’s not clear enough what an employer’s obligations are around self-reporting.

“Even some of the experts contributing to our submission were unclear about it,” she says.

“We were very clear [in our submission] that we think there’s a lot that Fair Work is doing right in terms of education. We just think it can go further to support smaller SMEs.

“Thinking about it logically, there are compliance obligations when you start up a business through ASIC. You have GST reporting obligations and STP [single touch payroll]. Why isn’t there a similar framework with industrial relations, in terms of paying people correctly, that helps to set businesses up? Something that an employer can cross check their processes against.”

Employers need to know where to go for the single source of truth, she adds.

“When you ring up the Fair Work hotline – and they do the best they can – but as someone seeking help, the advice can be inconsistent.”

Sadler and some other members of AHRI’s IR advisory committee experienced this in the past.

“We have all needed to ring the Fair Work hotline at various times, and sometimes called two or three times on the same issue as the matter evolved. Each time you can provide the exact same information but speak to different people and receive different outcomes. That’s an indictment on the system.”

Want to brush up on HR law? AHRI’s short course is designed to take you through the basics so you can make important decisions with confidence.

Clarifying the confusion

Both Ruskin and Sadler believe the element of the bill pertaining to casual workers was important and helpful to a certain extent.

“You’ll never be able to please everyone,” says Sadler. “We [AHRI] raised this in our  submission. We said there needs to be a balance between what employers are asking for and what’s right in terms of looking after employees. I think the bill did an okay job of that. The bill looks to clarify the confusion around what constitutes a casual worker, offers some award flexibilities and introduces compliance and enforcement measures for wage underpayment. These changes are good for everyone.”

Sadler says ever since she’s been working in HR, there has always been a rule that says if you’re employing a casual worker in a regular and systematic way, then after 12 months they have a right to be offered or be considered for permanent employment.

“But now they’re looking to legislate and force employers to make sure they’re following a process in terms of offering that level of permanency and security.”

“I think it was sensible to address it,” says Ruskin, “because of what we saw with the WorkPac decisions (Skene and Rossato), which involved cases of ‘double-dipping’.

“The bill addresses this issue very firmly. Whether it’s fair is a matter of debate. Unions, for example, think it’s retrospective legislation. There was always going to be debate about whether it’s the right definition [of casual work], but it’s good to have such a clear definition, because it was lacking.”

“Our current award system has grown out of tweaks and modifications and it has become unruly.” – Susan Sadler CPHR, director at Red Wagon Workplace Solutions and AHRI SA president.

The proposed IR bill addresses another of AHRI’s submission points, which is that the restriction on part-time ordinary hours of work under most awards should be loosened to allow for greater flexibility in worker’s hours.

“We need a workforce which is itinerant to meet the needs of business. That’s why you have a casual, of course. But if you try to use your part-time workforce as a means of supplementing the work that needs to be done from time to time, under many awards, you might have to pay overtime for those hours,” says Ruskin.

Sadler agrees: “Employers want the flexibility of being able to say, ‘We need you regularly now, but we might not need you regularly in the future.’

“How are we going to manage that fluidity in industries where they have peaks and troughs, such as transport where they’re busy during school term and then it drops off during holidays?

“I don’t think where they’ve landed in the bill answers the need of employers to have genuine flexibility without offsetting ongoing risks for themselves. What has been proposed for part-time employees, for example, is an improvement but it also has a number of conditions and there are circumstances when penalty rates may still be payable despite the employee’s agreement. 

“The process and requirements are complicated enough that implementing and maintaining the flexibility agreement would cause more trouble and risk of payroll errors than the flexibility gains could offset.” 

While Sadler agrees that the new definition of casual work was important, she says it’s part of a much bigger picture.

“Putting a definition [of casual work] out there isn’t going to solve the problem. It’s about updating the awards to reflect that level of flexibility in a way that’s easy to understand and implement,” says Sadler.

Creating a ‘base award’

Ruskin doesn’t believe the IR reform bill addresses the confusion employers are having around awards. As part of their submission, Ruskin, Sadler and the rest of the AHRI IR working group suggested that the creation of a ‘base award’ could be the answer employers have been looking for.

“We thought there should be a single award that covers a lot of employee benefits rather than having them spread out over 122 awards,” says Ruskin.

They suggested it could include common clauses in awards, such as when overtime applies or the rates offered to junior versus senior employees, for example.

A base award would work well for businesses with an employee pool covered by a range of different awards and would strip away some of the complexities faced when inputting payroll information or creating employment contracts.

“If you’ve got overtime kicking in at X time for one group of workers, and then it’s much later in the day for another type of worker, why is that? Because night time is night time,” says Sadler. 

“If some of the core things were exactly the same across the board, then we’ve got an even foundation. Where it needs to be specialised, we then build on that base award to account for specific skill sets or workplace risk, for example. 

“Awards would be easier to interpret, it would be easier for governing bodies to assess compliance, and it would be more fair and equitable for employees. Our current award system has grown out of tweaks and modifications and it has become unruly.”

It would be a significant move to wipe the slate clean and redefine the awards system (Sadler admits it’s probably a little “too radical” for this government), but with some training and a grandfather period, she says an approach like this would benefit everyone.

The future of the IR reform bill

Sadler says there has been a general sense of confusion from some of her clients about the proposed changes to the IR reform bill and she also notes that there’s a large amount of change fatigue following 2020.

“There’s also a level of anxiety, so some businesses are sticking their heads in the sand a little. It’s just too overwhelming for them and it’s hard to know where to go for a clear, honest interpretation.”

This is why, whatever form the IR reform bill end up taking, what’s most important is that they’re laid out in a clear manner that can be easily interpreted.

“There used to be a distinction between HR experts and IR experts,” says Ruskin. “In times gone by, perhaps when there was higher union membership, there was someone who knew about the award that applied and the classifications, but that’s kind of gone by the wayside. Now we’ve got HR professionals who seem to have to know lots about everything. But they also need to know what they don’t know.

“So that might be seeking more education about how the various awards work, what to put in a contract and how to properly classify people. They need to know where to go for advice. 

“Training is part of that – and that could be offered by AHRI – but also it’s worth the cost of getting external advice because that’s what can strengthen [employer’s] protection against prosecution.”

The IR reform bill is due to be discussed again in March.

The post What did the IR reform bill get right? And where are the gaps? appeared first on HRM online.

The Queensland Industrial Relations Commission (QIRC) has rejected an employer’s claim that a casual flight attendant who served more than 10 years was ‘double-dipping’ on a claim for long service leave (LSL) entitlements.

Maurice Alexander Management (MAM) argued that it paid casual loading to the flight attendant to cover her entitlement to LSL under the Flight Attendants’ Association of Australia Domestic/Regional Division Casual Flight Attendants Enterprise Agreement 2006. The federal agreement states that the casual loading was “in lieu of any entitlement to paid annual leave, paid personal leave (including sick leave), long service leave or payments for notice of termination or redundancy”.

However, Industrial Commissioner John Dwyer ruled that the loading “is not designated as payment towards any specific entitlement” but “to compensate whatever contingency (or combination of contingencies) might arise with respect to each individual employee covered by the 2006 agreement, and only during the life of that agreement”. Dwyer awarded the employee over $8,253 in LSL entitlements.

The WorkPac backdrop

MAM argued that the clause in the employee’s contract removed her entitlement to LSL. However, when Dwyer examined this exclusion clause he noted that it “does not allow for the exclusion of [the flight attendant’s] service during the period of the 2006 agreement for any subsequent calculations of LSL entitlements.”

Dwyer added that the provision attempted to impose “a blanket exclusion on a broad range of statutory entitlements that might (or might not) become vested in an employee during the life of the agreement”. He said the clause made it clear that the employer “was prepared to pay the loading regardless of whether the employees covered by the 2006 agreement were (or would become) entitled to all of the entitlements named”.

This case comes on the heels of two fairly recent court decisions on casual employment and ‘double-dipping’ entitlements.

In WorkPac v Rossato, the Federal Court of Australia confirmed that labelling an employee as a ‘casual’ in a contract does not offset their separate entitlement to paid leave, which the Fair Work Act guarantees to all permanent employees. Essentially, the post-contractual nature of the relationship was found to be impactful in determining a workers’ employment status.

Rossato confirmed an earlier Federal Court decision from 2018, WorkPac v Skene. This case questioned the “essence of casualness”, finding that a casual employee is someone who is engaged to do “inconsistent, irregular or short term” work. Those who don’t fit that description are now able to claim they are a permanent staff member and therefore entitled to the benefits that go along with that (i.e. paid leave, sick leave, LSL). 

How this fits into the wider landscape

The two WorkPac rulings have spurred the federal government into action to address the potential $39 billion in liabilities owed by employers because of these decisions.

In December 2020, it introduced an industrial relations omnibus bill (read HRM’s breakdown here), which aims to reform five areas of industrial relations – causal employment, Award simplification, JobKeeper extensions, underpayment issues and enterprise agreements.

As HRM wrote at the time, the proposed bill aims to provide clarity around casual workers by introducing a new definition of a ‘casual employee’ in the Fair Work Act.

“Under the new definition, a person is a casual employee if they’re offered employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work, according to an agreed pattern of work for the person, and the employee accepts the offer on this basis,” employment lawyer Aaron Goonrey wrote at the time.

“For example, if an employee is offered work with no promises made about receiving regular, ongoing shifts in the future – such as working the same hours every weekend moving forward – then the employee is likely to be considered a casual.”

The bill, which has been compared to the controversial WorkChoices legislation of 2005, aims to provide greater certainty for businesses with a large majority of casual employees affected by the court rulings on double-dipping. It also introduces wage theft provisions for employers to tackle underpayments, while enhancing flexibility to implement enterprise agreements in all industries. 

Passing the bill in its current form will unlikely be easy, with both unions and the Labor Party signalling they will strongly oppose its introduction. At this stage, we will all be watching on to see the proposed variations from those on the other side of the fence. Watch this space.

 A new casual employment definition is just one of many workplace changes we will experience in 2021. Find out how to support the needs of your people this year with AHRI’s webinar Reshaping our workforces and workplaces for the future. AHRI members can sign up for free to the event on February 17th and non members can pay $50 to attend.

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Half way through the year, HRM asked HR professionals what they wanted to see in the upcoming industrial relations reform bill. This week, we found out how many of those wishes were granted.

On 9 December 2020, the Federal Government introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 into Federal Parliament. This omnibus industrial relations bill set out several key industrial relations reforms to the Fair Work Act 2009 (Cth).

Since May 2020, the Federal Government has undertaken working groups with employers, industry groups and unions to collectively discuss reforms, including those relating to casual and fixed-term employees, enterprise agreements, compliance and enforcement, modern award simplification and greenfields agreements. 

(Editor’s note: it’s worth noting that many people feel the sense of togetherness shown between the Union, industry groups and the Government has waned since they first “dropped their weapons” at the peak of COVID-19 – and others argue that some of the reforms will heavily disadvantage employees – but more on that in the coming weeks).

It’s unknown when these changes will be passed as there is likely to be some pushback from certain groups.

Among other things, the bill will seek to:

• Impose larger penalties on employers who deliberately underpay employees.
• Introduce a new definition of a casual employee into the Fair Work Act, and provide greater job security.
• Propose flexibility arrangements into certain modern awards mirroring those introduced under the JobKeeper legislation. 

Here’s the top line information that HR professionals need to be aware of.

Casual and fixed-term employees

Part of the bill’s changes aim to provide more clarity around casual workers and a new definition of a “casual employee” will be inserted into the Fair Work Act.

Under the new definition, a person is a casual employee if they’re offered employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work, according to an agreed pattern of work for the person, and the employee accepts the offer on this basis. 

For example, if an employee is offered work with no promises made about receiving regular, ongoing shifts in the future – such as working the same hours every weekend moving forward – then the employee is likely to be considered a casual employee.

Employers must also provide casual employees with a Casual Employee Information Statement, to be prepared by the Fair Work Ombudsman, which may be similar in form to the Fair Work Information Statement. 

Under the new changes, employers must offer casual employees who have been employed for more than 12 months, part-time or full-time roles if the employee has worked a regular pattern of hours on an ongoing basis for the preceding six-month period.  

Employers are not required to make such an offer if there are reasonable grounds not to. Reasonable grounds could include:

• The employee’s position will cease to exist in the 12 month period after the time of deciding not to make the offer. 
• The hours of work which the employee is required to perform will be significantly reduced in the 12 month period after the time of deciding not to make the offer. 
• If, in the 12 month period after the time of deciding not to make the offer, there will be a significant change in the days on which the employee’s hours of work are required and/or the times at which the employee’s work hours are required to be performed, which cannot be accommodated within the days or times the employee is available to work during that period.
• Making the offer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.

If an employee declines the initial offer, they will have a further right to request permanent employment for every six months that they remain eligible. Employers may refuse an employee’s request if they consult the employee and have reasonable grounds, which are similar to the reasonable grounds not to make an offer (as outlined above). Employers may also refuse a request for conversion to part-time or full-time work if it would require a significant adjustment to the employee’s hours of work to be made in order for the employee to be considered a full-time employee or part-time employee.

Importantly, this change will not make a substantial difference to employers who engage casual employees who are covered by a modern award that contains a casual conversion clause. Such a clause obliges employers to provide a copy of the casual conversion clause to their casual employees and enables casual employees to request conversion to permanent employment. 

The bill also introduces new measures to prevent double-dipping by casuals, with the aim of stopping casuals from claiming the 25 per cent casual loading alongside other benefits (i.e. paid leave, public holiday pay, pay in lieu of notice of termination, or redundancy pay). This follows the recent Full Federal Court decision in Workpac v Rossato, which in effect allowed such double-dipping to occur. 

In that decision, the Full Court held that a casual employee was entitled to back pay for annual leave, personal/carer’s leave, compassionate leave and public holidays because the characteristic of “a firm advance commitment” to offer and accept work meant the employee was a permanent employee rather than a casual (see HRM’s article unpacking this decision here).

It is estimated that these changes may save employers from being exposed to billions of dollars’ worth of back-paid entitlements.

Underpayment, compliance and enforcement

For the most flagrant underpayments, the Bill will criminalise wage theft by introducing jail terms and significant fines for individuals and large businesses.  

This will occur where an employer dishonestly engages in a deliberate and systematic pattern of underpaying one or more of their employees. The offence will carry a maximum penalty of four years’ jail and/or $1.11 million fines for individuals, and up to $5.55 million for a body corporate.  

For other contraventions, including wage underpayments that do not constitute a criminal offence – such as underpayments that were perhaps not intentional or due to human error – penalties have increased by 50 per cent to $19,980 for an individual and $99,900 for a body corporates and small businesses (or, for a body corporate that is larger than a small business employer, two times the benefit obtained as a result of the underpayment. They will be charged whichever is higher).  

For serious civil contraventions, there will be a penalty of $133,200 for individuals, and $666,600 for body corporates and small businesses (or, for a body corporate that is larger than a small business employer, three times the benefit obtained as a result of the underpayment. Again, whichever is higher).

Fines and penalties will increase by 50 per cent for sham contracting and for failure to comply with a Fair Work Ombudsman compliance notice.

Further, an additional $47.3 million in funding will be provided to the Fair Work Ombudsman each year moving forward. Of this, $22.3 million will be used to investigate and address non-compliance by large businesses, and $12.9 million will be used to create a new and free advisory service for small businesses, to assist them in ensuring they’re paying their staff correctly under the applicable modern award.  

Employers who rely on the advisory service’s advice will be able to avoid later prosecution if the advice is shown to be incorrect, although any underpayments will need to be rectified.

An increase will be made to the cap on underpayment matters that are eligible to be dealt with through existing small claims processes (both within the Federal Circuit Court and state and territory courts) from $20,000 to $50,000. This should increase the speed at which such matters are dealt with by the courts. The courts will also have the option of referring matters to conciliation at the Fair Work Commission. 

The Bill will also prevent businesses from publishing job advertisements with pay rates below the minimum wage.

To provide greater certainty about how best to rectify inadvertent misconduct, the bill also requires the Fair Work Ombudsman and the Australian Building and Construction Commission to set out when they will defer litigation in appropriate cases and codifies the factors they may consider when accepting enforceable undertakings.

JobKeeper flexibility extensions

The current flexibility provisions introduced under the JobKeeper scheme which enable employers to vary employees’ duties and locations are proposed to be extended for a period of two years, until March 2023.  

These measures are subject to a range of safeguards, such as minimum rates of pay and the ability of parties to have disputes settled in accordance with an identified modern award dispute settlement procedure. 

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Award simplification

The bill will enable the Fair Work Commission to vary modern awards in the retail, accommodation and food services industry so that employers may pay loaded rates (which will be higher than an ordinary hourly rate) instead of penalty rates, and allowances under awards.

Twelve key awards in the retail, accommodation and food services industry will be amended to enable permanent part-time employees to agree to work extra hours at their ordinary rates of pay as required without employers paying overtime, which is intended to lead to less reliance on the casual workforce.

The legislated flexibility will be available to permanent part-time employees if:

• One of the 12 awards applies to their employment.
• The employee agrees to work the additional hours and the agreement is documented.
• The employee is engaged to perform at least 16 regular hours per week (or an average of 16 hours if the relevant award provides for the employee’s hours to be averaged over a period e.g. a roster cycle).
• The shift length is at least three continuous 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 (otherwise, overtime is payable)
• Normal penalty rates apply, such as for working on the weekend or on public holidays.

Enterprise agreements

The bill proposes a number of key changes to the agreement making and approval processes under the Fair Work Act which are designed to make these processes quicker and easier, and also reduce the level of prescription imposed by the Fair Work Act. Key changes include:

• The timeframe for giving a notice of representational rights to employees will increase from 14 to 28 days after the notification time for the agreement.
• The pre-approval requirements will be simplified so the key requirement is that employers must take “all reasonable steps to ensure that the relevant employees are given a fair and reasonable opportunity to decide whether or not to approve the agreement.” This requirement can be satisfied in a number of ways, including if the employer takes all reasonable steps to ensure that, during the access period, the relevant employees have access to the written text of the agreement and any other non-public materials incorporated into the agreement; are notified of the time, place and method for voting; and have the terms of the agreement explained to them in an appropriate manner.
• Instead of the requirement for the FWC  to be satisfied that the terms of an agreement do not exclude the safety net provided by the National Employment Standards (NES), enterprise agreements will include a term which explains the interaction between the NES and enterprise agreements.
• In applying the better off overall test (BOOT), the FWC will only be required to take into account patterns or kinds of work, or types of employment, that are currently engaged in or are reasonably foreseeable and not those that are ‘hypothetical’.  The FWC will also have regard to the overall benefits (including non-monetary benefits) employees would receive under the agreement when compared to the award, as well as any views expressed by employers, employees and their representatives relating to whether the agreement passes the BOOT.

According to the Government, to assist with the sometimes laborious and drawn out process of obtaining approval for enterprise agreements, the FWC will now be required to make a decision regarding the approval of enterprise agreements within 21 days of receiving an application.

The bill also proposes to permit the FWC, for a limited period of two years, to approve an agreement which may not pass the BOOT in limited circumstances taking into account, among other things, the views and circumstances of employees and employers covered by the agreement and the impact of COVID-19 on the enterprise.

Greenfields agreements

Greenfields enterprise agreements will now be permitted to have a length of up to eight years, if the project in question is worth at least $500 million.  

This extension may also be applied to projects worth at least $250 million, but only if the project is deemed to be nationally or regionally significant, is creating jobs and the responsible Minister makes a declaration that the project is a ‘major project’ for the purposes of the relevant provision.

Where a greenfields agreement specifies a nominal expiry date that is more than four years after the date on which it is approved, the agreement will need to include a term that provides for annual pay increases for the nominal life of the agreement.

Registered Organisations bill

The Federal Government also introduced the Fair Work (Registered Organisations) Amendment (Withdrawal from Amalgamations) Bill 2020, which seeks to amend the Fair Work (Registered Organisations) Act 2009 to enable sections of amalgamated unions to de-merge. This would, for example, enable a demerger of the CFMEU’s mining and energy division from the amalgamated union. You can read more on that here.

For more information about the Industrial Relations reforms, visit the Attorney-General’s Department website.

Aaron Goonrey is a partner at Lander & Rogers. Luke Scandrett, Jenni Mandel and Isabel Hewitt also contributed to this article.

The post What you need to know about the new IR reform bill appeared first on HRM online.

UPDATE 28th July: The FWC approved its provisional view to allow two weeks paid pandemic leave for employees under the Aged Care Award. The variation will be in place for three months starting July 29. You can read the full decision here. 

In 2008, an anonymous complaint was made to the Advertising Standards Bureau (ASB) regarding a Codral “Soldier On” comercial. In the commercial a man “soldiers on” to work despite suffering from a cold or flu. The ad closes with a voice over saying “Don’t let colds or flu steal your day away from you”.

The ASB dismissed the complaint, but if it were made today, it would probably strike most of us as common sense. The complaint says Codral’s advertisement went against “social distancing” guidelines and encourages employees to attend work where they will likely spread their sickness. 

During this pandemic, we are explicitly told not to soldier on. “No more heroics of coming to work with a cough and a cold and a sore throat. That’s off the agenda for every Australian for the foreseeable future,” said chief medical officer Brendan Murphy in May this year.

But the decision to stay home is not so easy for many Australians. Over two million are casually employed and for some of them the choice is between staying home sick or being able to afford rent and food. 

There are a growing number of people who are saying COVID-19 is forcing us to take a hard look at casual work, both in the short and long term. 

Short term

In a recent press conference Victorian premier Daniel Adrews acknowledged the difficulty facing many casual and freelance workers. 

“There is a large proportion of these people who are making these choices [to go to work despite symptoms] because, in their judgment, they’ll look at their bank balance, they’ll look at the fact that if they don’t work the shift, they won’t get paid for the shift.”

Andrews said there was a need for further conversations about the precariousness of casual work, but in the meantime urged employees to take advantage of the state’s $1500 Worker Support Payment. The payment is open to employees who are diagnosed with COVID-19 or forced to self-isolate because they have had close contact with a confirmed case. 

A separate support payment is offered to those who miss work while waiting for COVID-19 results, which can take up to 72 hours. The payment of $300 will likely go a long way to encouraging casual workers to stay home but for a minimum wage earner over 21, three days of work could amount to almost $550. For some that money would be the difference between affording rent that week and not. 

Queenslanders have access to a similar payment, but again only if they have tested positive for COVID-19. The other states don’t offer such a scheme.

Unions have advocated for the introduction of paid sick leave since the pandemic started and it seems, for some higher-risk workers, the FWC is listening. A full bench is considering varying the aged care award to include paid pandemic leave, despite dismissing calls for the same provisions for the public health sector.

If instituted the entitlement would “apply to casual employees engaged on a regular and systematic basis, and would entitle them to payment based on an average of their earnings over the previous six weeks”. The variation is proposed for a period of three months. 

The variation would allow for two weeks paid leave on each occasion the worker has to self-isolate. In the Australian Council of Trade Unions’ (ACTU) initial application on the matter they called for “paid day of leave on each occasion the employee is tested for COVID-19” unless the test happens in the workplace within the workers usual hours.

Long term

One in four Australians are employed casually yet there is a tendency to associate casual workers with low paid, low skill jobs. While many casual positions are entry level, the recent Workpac cases (Workpac v Skene and Workpac v Rossato) have highlighted how casuals – often labelled with the unofficial term “permanent casuals” – are used across all kinds of sectors and levels of skills. 

On the one hand, societal opinions of casuals seem to be changing during this pandemic. Delivery drivers and supermarket employees were frequently labeled “essential”. But, as HRM has written about before, many likely didn’t perceive themselves this way. 

In the July edition of HRM, Professor Katie Bailey, head of the HRM and Employment Relations Group at King’s Business School, King’s College London spoke about the difficulty of finding meaning in casual work. Her research showed that the belief that your work was meaningful was undermined by job insecurity, health risks, low pay and a lack of autonomy – all hallmarks of lower skilled casual work.

“At the end of the day, for as long as we’ve got these jobs that are highly insecure, it’s very difficult for people in them to find a sense of meaningfulness,” said Bailey.

To rectify this issue, and make essential work essential to the workers, she believes “a fundamental reappraisal of the way we structure employment” is required. Andrews hinted at the same in his press conference.

JobKeeper

Some of the most persistent criticisms of JobKeeper are to do with how it interacts with casual workers. Those who had worked with an organisation for fewer than 12 months (as of March this year) are ineligible for the wage subsidy. The Australia Institute claims 723,700 lost their job due to this. 

The new JobKeeper changes have kept the same eligibility requirements for casuals, and they are likely to hit the pockets of even those casuals who are eligible. If they worked fewer than 20 hours they will be placed on the lower tier payment. 

Interestingly, Brendan Coates and Jonathan Nolan from the Grattan Institute believe they’ve found a loophole for part-time and casual workers that will allow some to claim both JobKeeper and JobSeeker once the changes come through.

In an article on The Conversation, Coates and Nolan say workers could claim up to $554 per fortnight on top of JobKeeper which would keep their income closer to the original JobKeeper rate.

We are not through this pandemic yet. With record numbers of new daily infections recorded recently, the precariousness of some casual workers may only become more stark. With the federal government’s IR reform process already underway, it will be interesting to see what gets proposed in the coming months and years to offer more certainty for both workers and organisations.

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The Fair Work Commission has ruled it was within an employer’s power to increase the hours of casual and part-time staff while they were on JobKeeper.

In a case involving staff at the cash-transit business Prosegur, FWC Deputy president Peter Sams ruled it was reasonable for the employer to increase the hours of some casual and part-time employees to 25 hours per week. 

While this rule upends the previous understanding that employers could only reduce the hours of employees on JobKeeper, it does not mean an organisation can increase staff hours in whatever way they see fit. 

Being reasonable

HRM asked Michael Byrnes, employment law partner at Swaab, what implication this decision has for employers. He says it hinges on the definition of a “reasonable” request.

“It is important to note that it very much turns on the circumstance of the case and the question of what is reasonable, having regard to the situation of the employees and the operational needs of the business,” says Byrnes.

While a lifeline for a lot of organisations, JobKeeper has caused a lot of administrative anxiety for HR and payroll experts across the country. Questions about “reasonable requests” have plagued it from the beginning.

As HRM previously reported, toy retailer Kidstuff asked some of their employees to triple their hours to be eligible for JobKeeper. However, the retail union, SDA NSW, argued the request was unreasonable.

In the case of Prosegur, the business wanted all employees, regardless of employment type, to work 25 hours a week. For some casuals this was an increase in hours from before JobKeeper. 

Deputy president Sams decided this was reasonable, saying there was a business case for doing so and citing the fact that one of the company’s casual workers had longer hours than this pre-COVID while another had only slightly less. He also said the alternative would have caused a “rostering nightmare”. 

Byrnes says employers should be careful of reading too much into the case because it’s not a free pass. 

“It’s probably only going to be in rare circumstances where an employer can ask an employee to work more hours than previously, and it may well be that the circumstance of the business means it’s not actually a reasonable request.”

Casual employees

“A request for a full-time or part-time employee to increase their hours beyond what they were doing previously is less likely to be found to be a reasonable request [than a casual]. So this decision has a particular impact on casuals more than others.”

Casual employment has been under the microscope lately. The recent Workpac v Rossato case highlighted the need for employers to understand what defines a casual. An important feature of casual employment is the power to refuse or swap shifts.

“Hopefully [the FWC’s] decision will help employers navigate a casual employee’s right to reject hours or shifts and the need for business to start gearing up again.

“But HR shouldn’t assume they can increase the hours of casuals just because of this decision, I would caution reading too much into this and deciding it is a free pass for employers to compel casual employees to work more hours.

“If they do decide to roster them on for more hours, then they need to be in a position to argue that the rostering is reasonable in regard to the employee’s individual circumstances and the operational needs of the business.”

Obstinance and abandonment 

Restaurants and retailers across the country have complained of the struggle to get employees back into the workplace. Unlike some office jobs where staff could work from home, many people in these sectors couldn’t work at all during the lockdown. JobKeeper helped these businesses keep staff while they were closed, but now employers are saying staff don’t want to return. 

As the Australian Financial Review reports, in some instances employees are expressing a genuine concern about catching COVID-19 – this is particularly persuasive if they are immunocompromised or live with someone who is. But there have also been reports of employees that argue they shouldn’t have to work longer hours than they did before the pandemic, since the money comes from the government and not their employer.

The nature of JobKeeper is such that disagreements between employers and their workers can be harder to navigate. Employers can’t so easily dismiss and replace staff members they feel have abandoned work because new hires would not be eligible for JobKeeper. 

For organisations in that circumstance, Byrnes has advice.

“Employers need to be firm in the direction if they’re asking an employee to return to work. If it comes to it, particularly with permanent employees, it may be the case that an employee has abandoned their work. 

“If an employee has abandoned their employment, then the employment relationship has come to an end and neither the employer nor employee will be eligible for JobKeeper.”

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Editor’s note: A High Court decision made on the 26th of November, 2020, granted labour hire company Workpac, special leave to challenge the full Federal Court’s Rossato casual employment ruling (details below). Details around the estimated time of the new hearing are yet to be shared.

The sequel to WorkPac v Skene turned out to be just as explosive as the original. Same company, slightly different type of employee, but same outcome.

In WorkPac v Rossato, the Federal Court of Australia confirmed that labelling an employee as “casual” in a contract isn’t decisive in making them a casual employee. Instead, other contractual elements and the post-contractual nature of the employment also play a key role. 

This case reflects the earlier decision. In 2018, the Full Court of the Federal Court ruled on appeal that a casual employee of labour hire company WorkPac was actually a permanent employee. As HRM wrote at the time, the key issue was the “essence of casualness”.

Top line takeaway: a casual employee is someone whose work is inconsistent, irregular or short term, and casual employees whose work doesn’t fit that description can now make a claim that they are (and have been) a permanent employee, and are therefore owed the appropriate entitlements. 

While a full breakdown of the decision would be valuable, what this article will delve into is the essential confusion and outline what might happen next. Because this isn’t just a legal issue. There are cultural and business understandings that have been ruptured by these WorkPac court cases.

Different views of casual work

If you were to got back to first principles and ask “what is the purpose of casual work, and why was this category created?” you would get different answers depending on who you asked.

We all might agree that society wants a type of non-permanent staff member who could be brought on to meet fluctuating demand without incurring longer term business costs. We also all might agree that the trade-off for that non-permanency and job insecurity should be extra pay and a very high level of flexibility. Outside of their changing, short-term jobs the worker should have full control over their labour, and can pursue other interests such as education.

But businesses, particularly those reliant on customer demand that fluctuates with the days and seasons (hospitality, tourism, etc), also want employees who are more permanent but who don’t create too many longer term business costs and administrative burdens that could hurt business outcomes. They want employees they can dismiss more easily, and who will not incur redundancy payouts when they do. If that can’t be a casual worker, they want some kind of in-between category.

How you would create such a category while satisfying the workers themselves is not something Australia has accomplished.

The best attempt was a long-term casual. But what have long-term casuals who work steadily and systematically got in return for their combination of pseudo-permanency and job insecurity? In the Fair Work Act they get some extra rights, such as parental leave. Reflecting their different role, they are also allowed to claim the JobKeeper subsidy. And, like other casuals, they also get casual loading – extra money to offset their insecurity.

Nevertheless, it’s a very imperfect category. For other types of permanent employees, the Fair Work Act envisions jobs that have multiple protections, notification periods before they can be terminated, redundancy payouts, and paid annual and sick leave – things that help change work from a series of tasks into a role in society. Confusingly, “long-term casual”, and “casual” for that matter, are also not well defined in legislation.

So for quite some time we have been stuck with this tension between what our laws are trying to do, what workers want, and what businesses want. Enter the two WorkPac cases.

Their essential question is this: if someone agrees to a contract where they are labeled a casual employee, but their work is systematic (rostered well in advanced, for example), regular (happens at set hours on set days) and long term (has been happening for years), are they still a casual employee? 

The WorkPac decisions say “no”, they are not.

The shocking part of this to many in the business community is that the employment type they thought existed, doesn’t exist. In practical terms, it technically hasn’t existed for some time. From the perspective of many employers, casual employees used to be casual because they agreed to be casual. And employers fulfilled their part of the bargain, and paid employees who didn’t receive the entitlements of full-time and part-time work casual loading.

Now, even as these employers consider how many entitlements they might owe employees who make a claim, they also have to wrangle with the fact that for years they have paid those employees more money than they would have otherwise. Do they get this money back?

In WorkPac v Rossato, the answer was again “no”. This decision was arrived at for a number of reasons, but for employers a section is clarifying of why casual loading is also perhaps not what they thought it was.

Why are casual workers paid casual loading?

In the words of industrial relations minister Christian Porter, “Small businesses have operated for the last decade inside a pretty widely accepted understanding about how you engage someone either as a permanent or a casual and the fact that they’d have one sort of entitlement or a compensation if they’re a casual in the form of loading.”

This is no doubt true for many. And the thing is, the court decision agrees with that, but not in the one-to-one fashion most owners might have assumed. 

The decision tries to clarify why the Fair Work Act says casual employees are not entitled to some of the rights in the National Employment Standards (NES) in the first place. It decides that “the nature of their employment” is the reason. But why does it find that ? It’s not entirely clear in the wording of the legislation. As the decision states,  “The Fair Work Act does not contain any express statement of the rationale”. The decision then offers two inferred rationales:

1. Casual employees don’t get these entitlements because they aren’t necessary or appropriate, considering what casual work is. The example they use: because casual work is “intermittent, irregular, or short term” it doesn’t make sense that they would have entitlements which rely on work that is otherwise. This was the rationale used by the court in WorkPac vs Skene.
2. Casual employees don’t get these entitlements because “not being bound to provide their services, casual employees are free to work or not, as they choose”. Because the employee can refuse a shift when it suits them, for example, and otherwise has more control over the timing of their employment, it’s inappropriate for them to have paid leave for when they are not working.

The decision then offers up a third rationale, which it then dismisses. It’s an important one because it’s a rationale that makes a lot of sense intuitively when you consider casual loading. That it was dismissed is crucial to changing that understanding.

The rationale is: “The FW Act contemplated that the NES entitlements may be taken either as leave or in money and that, in the case of casuals, they should be taken in money.”

The philosophy behind this rationale is why employer groups are now referring to the decision as enabling “double dipping”. If it’s true that employees were paid 25 per cent extra because they were considered casual and didn’t have leave entitlements, by asking for leave entitlements aren’t they essentially getting the same money twice?

The decision says this doesn’t wash. The Fair Work Act doesn’t provide for ‘entitlements or their cash equivalent’, it just provides for entitlements. It does imagine scenarios where employees can cash out on leave, but they are the exception. The decision further states (emphasis added): “casual loading is in the nature of a compensation for an absence of entitlement, not a payment in lieu of taking the entitlement.”

In other words, being paid casual loading does not in and of itself make someone a casual employee.

It should also be mentioned that the decision proves that WorkPac did a poor job of separating casual loading from its employee Rossato’s pay. It’s clear he was paid more, but it wasn’t always clear what amount of it was for being classified as a casual.

What happens now?

In a statement, Porter has said  the government will be talking to employers and employer groups and has not ruled out legislation that could change the casual equation. Some of those groups have estimated the cost of this decision could be in the billions.

Tony Burke, Labor’s industrial relations spokesperson, has said his party is unlikely to support legislation. He told the Sydney Morning Herald, “If there’s any ‘double dipping’ going on here it is being performed by the employers – they’re taking advantage of the insecurity of casual work while still getting permanent hours out of their workers.”

In a statement sent to the media, Business NSW has supported the creation of a new employment category: ‘perma-flex’. Basically, they want to solve the tension spoken of earlier by changing  the Fair Work Act so that it contain the type of employee they wanted all along.

“Under the proposal, employers would be able to convert a regularly rostered casual into a permanent employee with flexible hours who would be paid leave entitlements, including annual and sick leave. The 25 per cent loading paid to casuals would be reduced to 10 per cent, to take into account the value of the leave entitlements the employees could access,” the statement reads. 

In the same statement, it acknowledges that unions have opposed the creation of such a category. So the tension has changed – and certainly the WorkPac decisions are being celebrated as a win for workers – but it definitely has not disappeared.

In the meantime, there are practical implications for employers. This case truly is something of a sequel, so the advice for them looks a lot like it did in 2018. As HRM wrote, there are four things employers should be considering:

1. review existing casual agreements to limit the risk of repaying casual employees certain entitlements; for example, by checking if the agreements have appropriate set off clauses; 
2. be more diligent in classifying casuals, as employees who work set, inflexible hours with a degree of certainty about ongoing work are unlikely to be ‘casual’;
3. review and monitor your casual workforce: employment arrangements may change during employment and if a casual is no longer a casual, consider converting their employment status to permanent to mitigate any potential exposure (particularly where a casual employee is covered by a modern award containing a casual conversation clause); and 
4. determine whether casual employees are required: employing a “long-term” casual can be significantly more expensive than a permanent employee, and they do still have rights (e.g. they may have rights to protections from an unfair dismissal).

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