The proposed changes represent some of the most significant workplace reforms since the Fair Work Act 2009 (Cth) commenced and are contained in the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Fair Work Amendments Bill). The Federal Government’s fact sheets on the proposed changes are here.

Key areas of focus are casual and part-time employment, changes to identified modern awards*, flexible work directions, greenfields agreements in the construction industry, enterprise bargaining changes and new compliance and enforcement mechanisms, including jail terms for deliberate worker exploitation.

Modern awards that have been specifically identified include the General Retail Industry Award 2020, the Hospitality Industry (General) Award 2020, the Pharmacy Industry Award 2020, the Restaurant Industry Award 2020, the Registered and Licensed Clubs Award 2010 and “other awards” prescribed by the regulations.

What employers need to know about 6 key potential reforms

  1. Casual employment: Whether an employment relationship is casual in nature will be assessed as at the time a job offer is made, rather than based on parties’ future conduct. Additionally, identifiable casual loading can be applied to reduce employees’ entitlements if they are later found to be permanent employees “at law”.

    Permanent employment must be offered after 12 months if, during the previous 6 months, casual employees had ongoing, regular work. This is not required if there are reasonable grounds for not doing so. The proposed reforms are intended to reverse the impact of WorkPac Pty Ltd v Rossato [2020] FCAFC 84, where a casual employee was found to be permanently employed, and, as a result, entitled to annual and personal leave entitlements.

    See Schedule 1 of the Fair Work Amendments Bill.

  2. Part-time employment: Part-time employees covered by identified awards* who work at least 16 hours a week can agree to work “additional agreed hours” without overtime payments. Additional agreed hours must be for at least 3 hours of work, whilst hours of work that occur outside of the span of hours that apply to ordinary hours of work will still require overtime payments to be made.

    Employers cannot apply undue influence or pressure on employees to agree to work additional agreed hours. Agreements between employees and employers for additional hours to be worked can be terminated with 7 days’ written notice by either party.

    See Schedule 2 of the Fair Work Amendments Bill.

  3. Flexible work directions: The proposed laws “deem identified modern awards to include terms that allow an employer to give a direction…about the duties to be performed…or the location of (an) employee’s work”, due to the impact of COVID-19. Flexible work directions can also be given as part of a reasonable strategy to assist with the revival of an employer’s business or organisation.  

    See Schedule 2 of the Fair Work Amendments Bill.

  4. Enterprise Agreements: Under the proposed laws, employers will face fewer obstacles when making enterprise agreements. Employers will only be required to take reasonable steps (as opposed to all reasonable steps) to notify employees when voting for enterprise agreement is occurring. Employers will also only be required to take reasonable steps to explain the terms of proposed agreements and give relevant employees access to the materials they will be voting on (as opposed to all reasonable steps).

    Casual employees will not be allowed to vote on enterprise agreements, and, in certain circumstances, the proposed enterprise agreement does not need to meet the current Better Off Overall Test to be approved by the Fair Work Commission. For example, the Fair Work Commission can approve an enterprise agreement that does not result in employees being better off overall compared to the minimum rates of pay in the award depending on the impact of COVID-19 on an employer’s business, and whether employees support the agreement (i.e. vote in favour of it).

    See Schedule 3 of the Fair Work Amendments Bill.

  5. Greenfields agreements in the construction industry: Greenfields agreements apply to new businesses, activities or projects when employers do not yet have any employees working in the business, activity or project. Under current laws, greenfields agreements can only last for 4 years. Under the proposed reforms, greenfields agreements in the construction industry, for major projects (worth least $500 million), will be able to last for 8 years.

    The length of an enterprise agreement (including a greenfields agreement) is important because protected industrial action can only occur after an enterprise agreement passes its nominal expiry date. Longer enterprise agreements limit industrial action that can be taken during the life of major construction projects.

    See Schedule 4 of the Fair Work Amendments Bill.

  6. Compliance and enforcement mechanisms: There will be a cheaper, easier process for employers and employees to conciliate underpayment claims where the quantum of the claim is under $50,000 in the Fair Work Commission, either via an order of the Court, or on application of the parties. The Fair Work Commission will also be able to arbitrate these claims.

The proposed reforms also create new offences, including for employers who dishonestly engage in a systematic pattern of underpaying one or more employees. These employers can be subjected to penalties including a maximum penalty of $5.55 million for body corporates, and $1.11 million and / or 4 years’ imprisonment for individuals.

See Schedule 5 of the Fair Work Amendments Bill.

What employers need to do now

The Fair Work Amendments Bill must pass the House of Representatives, and pass the Senate, before receiving assent and becoming law. It is possible that the proposed reforms may be opposed by the Opposition, Independent Senators and unions.

Until the Fair Work Amendments Bill passes both Houses of Parliament, which may only occur in 2021, current workplace laws continue to apply, and employers must continue to ensure compliance with existing laws. We will continue to provide updates on the Bill’s passage through Parliament.

Preparing for New Risks and Compliance

Our National Workplace Team at Moray & Agnew is able to assist your business or organisation in navigating compliance with current workplace laws, and advising you on future changes. For more information, contact your usual contact in Moray & Agnew’s Workplace Team.