PROPOSED CHANGES TO THE FAIR WORK ACT
In the last Federal parliament sitting of the year, the Federal Industrial Relations Minister, Chris Porter, has put forth some significant changes to the Fair Work Act, under the Fair Work Amendments Bill 2020.
Some of these changes are temporary, and in response to the ongoing economic recovery brought about by COVID-19.
These changes, if passed, would also make null & void a potential High Court ruling stating that casuals can get both casual loading and annual leave – effectively double-dipping and causing up to a $39 billion tidal wave into Australian businesses. While this High Court case will not be heard until 2021, the Federal Industrial Relations Minister has flagged the concern with this case for some time.
What are the proposed changes?
The “Better Off Overall Test” (BOOT) which is a measure used to protect minimum wages for Enterprise Agreements, will be suspended for two (2) years, although in practicality due to the length of Enterprise Agreements, it will be longer.
Fair Work’s timeline to assess to Enterprise Agreements will be shortened to 21 days.
Part-time workers in some key Awards cannot earn overtime unless they work over 38 hours a week.
Some Enterprise Agreements related to projects over $500M (or $250M with the IR Minister’s approval) can go for eight years, double the current limit.
Increased fines for individuals and companies related to underpayments.
And last, but definitely not least, the definition of a casual will be extended to protect businesses.
What are the true impacts for Australian businesses?
BOOT Test changes
It is unlikely that the proposed BOOT changes will be used frequently by the Fair Work Commission; the Minister himself saying it will be very rare. For the main part, businesses will still need to show that employees are better off overall than the applicable Award rates, loadings and conditions… However, there will be an avenue for businesses to demonstrate that employees voted for an agreement that meant they were worse off AND it is in the public interest for the Commission to still approve that agreement.
Unions will continue (quite rightly) to be vocal on this topic to retain some rigour to the process, whilst still allowing some businesses at strong risk of failing due to the economic downturn, to have a chance of survival.
Any such approvals can only run for two (2) years, but as most Enterprise Agreements are set for 2 to 4 yrs it may, in actuality, run for longer.
Enterprise Agreement assessments within 21 days
Over the course of the last few years, it is generally accepted that whilst the Fair Work Commission does its best to approve Enterprise Agreements in a “timely manner”, there are some Agreements that sit in the doldrums for months whilst there is pedantic squabbling about the BOOT that may never apply to the business, or other parts of law.
This new Bill would require the Commission to assess Enterprise Agreements within 21 days of submission, and not allow a seat at the table for any Union that was not involved in its negotiation (except in exceptional circumstances).
This is music to the ears of some very large organisations that have been hamstrung by a process hijacked by “what ifs” for up to 12 months.
Part-time workers can only earn overtime after 38 hours
This proposed amendment rights a clear wrong in our eyes. We have discussed before about the imbalance afforded to part-time workers who receive overtime if they work extra hours a week, but under 38 hours. In our mind, these workers should not receive overtime penalties when their full-time colleagues do not. The current situation also actually disincentives an employer to convert a casual to part-time work.
Under the new Bill, for part-time workers in the Accommodation and Retail & Food industries (which have been impacted the most by COVID-19), workers will not receive OT rates until they work over 38 hrs a week.
Eight (8) year Enterprise Agreements
Projects worth over $500M (or $250M if approved by the Federal IR Minister) can receive approval for Enterprise Agreements up to eight (8) years, which is twice the current maximum timeframe.
Increased penalties
For individuals or companies caught out doing the wrong thing by their employees, the fines are proposed to increase:
To a maximum $1.1M for individuals and up to four (4) years in jail
To a maximum $5.5M for companies
On the back of some head-shaking news this year in regards to systemic underpayments, including Coles & Woolworths, this can’t come soon enough.
Definition of a Casual
The bombshell that was the Rossato case (although not the first of its kind), allowing this employee to double-dip and receive both casual loading and annual leave accruals, has been cut-off at the pass by this proposed Bill.
This Bill extends the definition of a casual employee to cover any worker offered irregular shifts and paid a loading, regardless of whether the future employment pattern becomes more regular. This will be hotly debated and the specific wording will no doubt be altered prior to the Bill passing, but the intent is clear – and it will be applied retrospectively.
Businesses are at risk of a $39 billion hole without this change though, and at a time when the economy and the country is suffering, coupled with unemployment and underemployment rising, it is a cost that businesses right now can ill-afford.
The right for a casual employee to request conversion to permanency after 12 months still remains, and rightly so as the grow of casualisation of the workforce is not something we at HR Unplugged promote.
This Bill, whilst perhaps over-exaggerated by Unions (with the exception of the casual definition) are the first substantial changes in a long time in the Fair Work landscape.
Please reach out to discuss how this may impact your business – we are here to help. Contact Mel at mel@hrunplugged.com.au 0424 995 502. Visit our website for more info www.hrunplugged.com.au