Following months of much publicised discussions between employer groups and unions, on 9 December 2020, the Morrison Government introduced a bill to Parliament which represents what may be the most significant amendment to Australia’s industrial relations system since the introduction of the Fair Work Act 2009 (Cth) (FWA) in 2009.
The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) aims to improve the operation and usability of the national industrial relations system by providing greater certainty and flexibility to employers and employees during this time of employment and economic recovery.
New definition of “casual employment”
The Bill seeks to provide greater certainty to businesses and employees with respect to casual employment, particularly arising out of the recent Federal Court decisions of WorkPac v Rossato  FCAFC 84 and WorkPac v Skene  FCAFC 131.
The Bill aims to achieve this by:
The proposed definition also makes clear that the question of whether or not an employee is a casual employee is to be assessed at the time the offer of employment is made and accepted and not on the basis of the parties’ subsequent conduct or whether the employee in fact works a regular pattern of hours. This serves to ensure that a person’s employment status cannot unintentionally change over time; and
The Bill also introduces a new obligation for employers to offer long term casuals (being those who have been employed for at least 12 months and have worked a regular pattern of hours on an ongoing basis during the last 6 months) the opportunity to convert to full-time or part-time employment, unless there are reasonable grounds not to make the offer.
The Bill also preserves the existing right of a casual employee to request to convert to permanent employment (subject to new eligibility requirements).
While casual conversion mechanisms are not new, the Bill introduces new eligibility criteria and a number of procedural requirements which employers will need to follow.
Employers will also be required to provide casual employees with a “Casual Employee Information Sheet”, which is to be prepared by the Fair Work Ombudsman.
More flexible part time employment arrangements
The Bill introduces a new mechanism under which employers can reach agreement with part-time employees to work additional hours without being required to pay overtime rates. An “additional hours agreement” can only be made if a prescribed modern award covers the employer and employee. Many of the prescribed awards cover the hospitality and retail industries.
These provisions are intended to promote flexibility and efficiency for businesses and facilitate part-time employees gaining more hours of work by removing restrictive requirements in awards which limit the ability to vary agreed part-time hours or require overtime rates to be paid where an employee exceeds their ordinary hours of work.
The Bill contains conditions for entering into such an agreement, including the following:
Employees will need to be mindful that overtime will still be payable in certain circumstances, including where the agreed additional hours result in an employee working outside the span or spread of hours permitted under the award or in excess of the daily or weekly maximum number of hours specified in the award.
Extension of flexible work directions
The Bill seeks to extend some of the JobKeeper flexible work directions introduced earlier this year in response to the COVID-19 pandemic.
Under the new provisions, an employer will be able to direct an employee (whether full-time, part-time or casual) to perform any duties that are within their skills and competency, or to work at a different location, subject to certain safeguards including that the direction is not unreasonable and is a necessary part of a reasonable strategy to assist in the revival of the employer’s business.
The directions will only be available to employers and employees who are covered by one of the prescribed awards listed in the Bill, which cover industries that have been hardest hit by COVID-19. The availability of the directions will not be dependent on a business’s eligibility for JobKeeper payments. Consultation and notice requirements will also apply.
It is proposed that the flexible work directions will be available to employers for 2 years.
Changes to “better off overall test”
The Bill aims to make agreement making and the approval process easier and faster in response to concerns about the current system’s technicality and complexity.
The Bill proposes to amend the better off overall test (the BOOT) which currently requires the Fair Work Commission (FWC) to ensure that employees covered by an enterprise agreement would be better off overall than they would be under an award which would otherwise apply.
Under the proposed changes, the BOOT would be modified such that the FWC:
The Bill also allows the FWC to approve an enterprise agreement which does not pass the BOOT where it would be appropriate having regard to:
Any agreement approved under this mechanism can only have a nominal expiry date of up to 2 years.
Cessation of transitional instruments
The Bill will also provide that all enterprise agreements made during the transitional period from 1 July 2009 to 31 December 2009 will automatically cease to have effect on 1 July 2022.
Employees covered by these transitional instruments will revert to the applicable modern award unless a new enterprise agreement has been negotiated.
Introduction of jail time for serious underpayments
The Bill aims to enhance the compliance and enforcement framework in the FWA to more effectively deter non-compliance with workplace laws. The Bill increases the pecuniary penalties for remuneration related contraventions and sham arrangements by 50% and introduces a new criminal offence for dishonest and systematic wage underpayments.
The maximum penalty for the new offence will be 4 years imprisonment and a fine of $1.11 million for individual employers or a fine of $5.55 million for corporate employers. Individual managers and advisers may also be criminally liable as accessories.
The provision is intended to operate broadly and cover underpayment of base rates of pay as well as unlawful deductions from employee wages.
Relevant factors in determining whether a pattern of underpayments is systematic will include the number of underpayments, the period over which they occurred, and the number of employees affected. The offence will not apply to one off conduct.
The Bill also increases the small claims cap from $20,000 to $50,000, with a view to making it easier for employees to recover entitlements.
Outstanding issues and where to from here
At this stage, a number of issues remain unclear, including:
Further, given the vocal opposition to the Bill which has already been expressed, it is unclear when or if at all the Bill will pass Parliament. In particular, the Opposition and a number of unions have expressed their strong criticism to changes which would allow businesses to more readily bypass the BOOT and it has been reported that the Government may be prepared to concede to such criticism to ensure a quick passage of the Bill.
For further advice on how the changes sought to be introduced by the Bill may affect your business, please contact our specialist workplace law team.
This article provides general comments only. It does not purport to be legal advice. Before acting on the basis of any material contained in this article, we recommend that you seek professional advice.
Paul Dugan, Principal in our Disputes Team
Direct Telephone: +61 8 8210 2266
Kylie Dunn, Senior Associate in our Disputes Team
Direct Telephone: +61 8 8210 2286