Update – Q1 FY24

Welcome to KHQ’s quarterly update – and what a quarter it has been.

In February 2023, we provided you with a comprehensive update regarding the changes in Australia’s workplace relations law.

Given that a majority of the changes occurred on 6 June 2023, we thought in this quarterly update we’d take you through some of the major changes to the Fair Work Act 2009 (Cth) (FW Act) with the amendments from the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (the Amending Act).

Nearly 2 months on from the introduction of the second tranche of changes in the Amending Act, we have also included some case law to watch and how the Fair Work Commission and Courts have been implementing and navigating in the new regime.

NEW UPDATES – 1 JULY 2023

As you may be aware by now, from 1 July 2023 there have been changes to certain payments and requirements under the FW Act. As a reminder we have set out key updates to consider:

• The high income threshold regarding the eligibility of an employee to be protected from unfair dismissal has now been adjusted to be $167,500.
  • As a reminder, the high-income threshold takes into account earnings which are:
    • wages
    • such other amounts (if any) worked out in accordance with the Fair Work Regulations 2009 (Cth)
    • amounts dealt with on the employee’s behalf or as the employee directs, and
    • the agreed money value of non-monetary benefits.
  • It does not include:
    •  commissions
    • incentive-based payments and bonuses, or
    • overtime (except guaranteed overtime).
• Wage increases:
  • Modern Award minimum wages have increased by 5.75% as determined by the Full Bench of the Fair Work Commission on 1 June 2023.
  • The National Minimum Wage increased to $882.80 per week, or $23.23 per hour.
• The Fair Work Commission fee for unfair dismissals, general protections, unlawful termination disputes, orders to stop bullying and orders to stop sexual harassment has increase to $83.30.

THE ROLL OUT OF THE LAST TRANCHE OF CHANGES HAS COMMENCED

The second tranche of changes from the Amending Act have been rolled out. This tranche includes some of the major changes that will significantly impact the new era of enterprise bargaining and industrial relations. As a recap and to promote a thinking exercise, we have provided a brief snapshot of the main changes that have now taken effect:

• The FW Act now includes three separate bargaining agreements for multi-enterprise agreements, being:
  • supported bargaining agreements: this has replaced the pre-existing low-paid bargaining stream, and enables the FWC to make a supported bargaining authorisation to compel multiple employers to bargain together in consideration of several factors. These are usually lower paid industries and does not include the construction industry and are voluntarily or involuntarily entered into
  • single interest employer agreements: these will apply to employers who have clearly identifiable common interests and reasonably comparable business activities and operations. This can be either voluntary and involuntary, including situations where an employer can be roped into an existing agreement, and
  • cooperative workplace agreements: which will apply to any multi-enterprise agreements that fall outside of the two categories above. This is also a voluntary only stream.
• The FW Act now requires an employer to issue a NOERR where they receive a request in writing from a bargaining representative of an employee covered by an existing enterprise agreement (covering a single employer), where the existing enterprise agreement has passed its nominal expiry date (but not more than 5 years have passed and the proposed replacement agreement will cover the same, or substantially the same, group of employees as the one it is replacing).
• Now when considering whether, on application for the approval of an enterprise agreement, the enterprise agreement has been “genuinely” agreed to, the FWC will be required to consider the Fair Work (Statement of Principles on Genuine Agreement) Instrument 2023 (Statement of Principles) when making its assessment. The Statement of Principles provides guidance to employers to ensure employees have genuinely agreed to a proposed enterprise agreement. The Statement of Principles includes the following:
  • employees must have been informed of their right to be represented by a bargaining representative
  • employees have been given a reasonable opportunity to consider a proposed enterprise agreement and the terms were explained to them, and
  • employees have been provided with a reasonable opportunity to vote on the proposed enterprise agreement.
• When applying to the FWC for the approval of an enterprise agreement, the FWC will continue to assess the BOOT against existing employees but will now also consider any ‘reasonably foreseeable employee’. To provide a bit more context, the FWC will now have regard to the following when assessing the BOOT:
  • the views of the employer, the employees and any bargaining representatives with the primary consideration of being any common view between the employer and an employee bargaining representative, other than a bargaining representative that is not a union, and
  • the patterns of work or the types of employment that are reasonably foreseeable at the test time having regard to the nature of the enterprise to which the agreement relates.
• The new broader regime of “intractable bargaining” has now made its way into the FW Act. While the previous regimes for industrial action-related declarations and determinations are still available, intractable bargaining is also now available. As a quick recap, the FWC may make an intractable bargaining declaration if it is satisfied that:
  • a compulsory FWC conciliation has been previously held in relation to bargaining for the proposed agreement
  • 9 months has passed from the later of:
    • the nominal expiry date of the last agreement, or
    • the date that bargaining commenced or a supported or single interest bargaining authorisation came into operation
  • there is no reasonable prospect of agreement being reached if the FWC does not make the declaration, and
  • it is reasonable in all the circumstances having regard to the views of all the bargaining representatives to make the declaration.
• By now, if you have an enterprise agreement made before 1 January 2010 (Zombie Agreement) you should have notified affected employees that:
  • they are covered by the Zombie Agreement, and
  • the Zombie Agreement covering the employee will automatically terminate on 7 December 2023, unless an application is made to the FWC to extend the default period of the Zombie Agreement.
• Grounds for requesting flexible working arrangements have been expanded to include pregnant employees and where the employee, or a member of their immediate family or household for whom the employee provides care and support, experiences family or domestic violence. Additional requirements also apply:
  • A response to an employee’s request must state whether the request is granted, any agreed change that differs from the request or that the refusal is on reasonable business grounds.
  • A request may only be refused if:
    • the employer has discussed the request with the employee and genuinely tried to reach an agreement with the employee
    • an agreement could not be reached
    • the employer has regard to the consequences of the refusal for the employee, or
    • refusal is on reasonable business grounds.
• The FWC is now also empowered to conciliate and arbitrate any disputes regarding flexible work, including immediately moving to arbitration in exceptional circumstances.
• Small claims have now also been expended from $20,000 to $100,000 which means that an applicant’s claim to underpayment under small claims has significantly increased. However, interest will no longer count towards the cap.
• While pay secrecy whereby employers could prevent employees from disclosing their salary, bonuses etc was prohibited from 7 December 2022, from 7 June 2023 employers are now exposed to civil penalties for contravention of the new rules. The civil penalties are up to $66,000 and it is vitally important that employers have reviewed employment contracts and other documents from 7 December 2022 to ensure no pay secrecy provisions continue to exist.

CASE LAW UPDATE

While the new tranche of amendments to the Amending Act have been in force for over a month, we are yet to see significant case law which addresses these changes and provides some guidance as to how the framework will now work.

However, there has been a trickle of cases considering the new amendments and the impacts on employers and employees in the workplace. Below we have set out some key cases to watch and consider the new amendments.

The secrets revealed

In the case of Equans Electrical and Communications Pty Limited NSW Enterprise Agreement 2023-2026 [FWCA] 1705, the FWC has rejected an employer’s bid to redact a “commercially sensitive” list of clients included in its proposed agreement.

In her decision, Deputy President Dobson considered the new prohibition on pay secrecy set out in sections 333B, 333C and 333D of the FW Act. The Deputy President provided that the Applicant had made the decision itself to include the list in the proposed enterprise agreement to distinguish differing amounts of overtime payable to employees, but the Deputy President was of the view that this information could have been expressed differently. Therefore, the confidentiality order sought would be in breach of section 333B of the FW Act and declined to provide the confidentiality orders sought.

This indicates that pay secrecy does not just apply to situations where employees can discuss their pay in the office. Rather, it can apply to a range of pay-related discussions and terms relating to confidentiality of employees’ pay.

Test case – intractable bargaining declaration

On 21 July 2023 the FWC Full Bench was set to hear a bid by Virgin Australia Regional Airlines Pty Ltd (VARA) (a Virgin Australia subsidiary) for an intractable bargaining declaration. This was to be the first case to be held under the Amending Act’s new legislation regarding deadlock-breaking provisions. However, VARA discontinued its application on 20 July 2023 after unsuccessfully seeking an adjournment.

As a brief summary of the case, in the outline of submissions filed by VARA, pursuant to s234 VARA applied to the FWC for the making of an “intractable bargaining declaration” under s235 of the FW Act to replace the Virgin Australia Regional Airlines Aircraft Engineers (Western Australia) Enterprise Agreement 2017.

VARA claimed that the proposed enterprise agreement had been subject to very extensive, yet failed, bargaining between it and the Australian Licensed Aircraft Engineers Association (ALAEA). While it was subject to short breaks, bargaining had been ongoing for 3 years for the proposed enterprise agreement. VARA also contended that, in accordance with s235 of the FW Act, it participated in seven Commission-assisted conciliation conferences and there was no reasonable prospects of certain of ALAEA’s terms being accepted.

The Commission has already refused to suspend engineers’ industrial action in mid-June 2023. Further, two earlier proposed agreements were voted down by more than 90% of employees.

While this was to be the first test case, we are sure there will be more to come as employers and bargaining representatives alike navigate the Amending Acts changes.

Zombies to remain dead

The FWC Full Bench has recently confirmed its decision to not extend the term of a zombie agreement, even though the extension was sought by both the employer and employees.

An application made by the Northern Inland Credit Union and two senior managers (see Application by Northern Inland Credit Union Limited and Kathy Bevan, Application by Northern Inland Credit Union Limited and Anna Lise Clark [2023] FWCFB 120) sought to extend their 2007 agreement by the maximum four years.

However, the Full Bench (comprising President Hatcher and Deputy Presidents Wright and Roberts) found that with the new amendments in the Amending Act, the 2007 agreement should not be extended. The Full Bench ultimately found that it would not be consistent with the Amending Act to consider the default position that zombie agreements should be allowed to continue to operate merely because parties agreed that this should occur.

Zombie keeps going

While the Northern Inland Credit Union’s zombie agreement has been put to rest, Nine2Three Employment Solutions Pty Ltd (t/a CIRCLE Recruitment) has extended its 2007 zombie agreement by an extra seven months (see Nine2Three Employment Solutions Pty Ltd t/a CIRCLE Recruitment & HR [2023] FWCFB 126). While the labour hire company attempted to convince the FWC to grant a 4-year extension, the Full Bench pushed back saying that such a lengthy extension would not be granted as the 2007 agreement, which was to expire in 2012, was less beneficial to employees than the Award which applied to them, namely the Clerks – Private Sector Award 2020 (Clerks Award).

The 2007 agreement provides for 20% casual loading, as well as significantly lower rates than the Clerks Award and allows employees to ‘request or agree’ to work additional hours at their ordinary rate of pay. However, the company stated that it was severely affected by the pandemic, and was suffering from the inability to hold staff and recruit new staff. The company also stated that it had increased workers’ wages to be the same or ‘minimally higher’ than the Clerks Award and passed the BOOT.

However, the Full Bench found that that this did not arise through the 2007 agreement’s operation – rather it was just an administrative practice the company had adopted. However, given the requirement to apply the administrative steps of the Award to its current employees, the Full Bench allowed the extension of the 2007 agreement until 1 July 2024.

Another Act has received Royal Assent

While the Amending Act has been the topic of focus, we note that the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 (PWE Act) has received Royal Assent. The PWE Act delivers the following further changes to the FW Act:

1. From 1 July 2023 the FW Act now includes greater flexibility for employees who are taking unpaid parental leave. The amendments now align with updates made to the Paid Parental Leave scheme which were also introduced from 1 July 2023. The PWE Act now provides that employees taking unpaid personal leave:

• • will be able to take up to 100 days of their 12 month entitlement flexibly during the 24 month period after the birth or placement of their child. The previous entitlement was only 30 days
  • pregnant employees will be able to access their flexible unpaid parental leave up to 6 weeks before the expected birth of their child, and
  • both parents will be able to take 12 months unpaid parental leave at any time within the 24 months of their child’s birth or placement, and can also apply for an extension of up to 12 months beyond the initial 12 month period.

This removes the previous cap on 8 weeks of employee couples taking concurrent leave.

2. The FW Act and the Migration Act 1958 (Cth) (Migration Act) will also have some interaction with new provisions dealing with employment of migration workers. The new changes will mean that in the event of a breach of the Migration Act, or an instrument under it, the validity of a contract of employment or contract of services will not be affected for the purposes of the FW Act. This means that in situations where a worker under a working visa who has limits on their working hours, but are employed for 38 hours per week, will still be entitled to be paid, and to also seek an underpayment, for their contracted hours.
3. From 30 December 2023, employees will be able to authorise salary deductions made by their employer, in writing, that are regular deductions for amounts that vary from time to time. The deductions can only be made where the deductions are principally for the employee’s benefit, and are not for the direct and indirect benefit of the employer. The purpose of this change is to ease administrative burdens on employees and employers as the current provisions require an employee to provide a new written authority on each occasion when the amount of an authorised deduction varies.
4. From 1 January 2024, the National Employment Standards (NES) will include a right to superannuation contributions. This now means that if superannuation is unpaid or underpaid, it can be enforced under the FW Act by more employees. While obligations have existed under the superannuation guarantee laws, there was no contravention of the NES provisions if an employer did not meet their obligations. The ATO will continue to have the main responsibility for ensuring compliance for superannuation guarantee laws, while the Fair Work Ombudsman will be responsible for referring unpaid superannuation claims to the ATO.

OTHER THINGS TO LOOK OUT FOR

Public holidays continue

On 11 July 2023, BHP commenced its challenge in the High Court in relation to the full Federal Court’s ruling regarding public holiday work and when employees can reasonably refuse requests to work on public holidays.

As a quick recap, on 28 March 2023 the Full Federal Court ruled that OS MCAP unreasonably required up to 85 production employees to work across Christmas holidays in 2019. The Full Federal Court found that s114(2) of the FW Act permits an employer to request an employee to work on public holidays, and s114(3) allows that the request can be refused if it is not reasonable or refusal is reasonable. The Full Federal Court found that “request” had its ordinary meaning which meant that the employer could ask the question and the employee had a choice of whether to agree or refuse to work.

So this will be another “watch this space” case to see if there is any significant changes to the interpretations of the Full Federal Court’s decision.

Is it a customary practice?

Recently, in United Workers Union v Compass Group Health Hospitality Services Pty Ltd [2023] FCAFC 92, the Full Federal Court recently ruled that a major contractor could not rely on “ordinary and customary turnover of labour” provisions.

 In 2018, the Compass Group lost an aged care contract after an almost 20 year relationship. Consequently, the Compass Group dismissed 21 of its employees, attempting to rely on the exception in s119(1)(a) of the FW Act to discharge its obligation to make redundancy payments to employees. The company tried to argue that due to the nature and duration of their employment, the exception applied.

The Full Court ultimately held that the company could not rely on ordinary and customary turnover of labour for the following reasons:

• the length of employment indicated that the roles were permanent or ongoing in nature, given a majority of employees had been employed from 1 to 13 years
• the employees were providing ongoing services, and were not hired on a fixed or finite basis, and
• Compass Group failed to notify employees of the potential termination of the contract.

Therefore, the company was found to have been in contravention of s119(1)(a) of the FW Act for not paying employees their entitlements for redundancy pay for their respective continuous years of service.

THE FINAL WORD

We hope this has given you a crash course on some of the new and exciting things to consider with the changes implemented by the Amending Act.

In the meantime, we obviously love talking about this stuff so please do just give us a call if you want to shoot the breeze or scope out how you might seek to address the particular issues that will affect your business. It continues to be a big year!