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ALERT: Everything you need to know about the Fair Work Amendment Bill 2021

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Federal Parliament has passed the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (often referred to as the Omnibus IR Bill) (‘the Bill’).

The Bill outlined proposed changes to the Fair Work Act 2009 (Cth).

Labour and the Greens opposed the entire Bill, and following discussions with the minor parties and cross bench Senators last week, the Bill was significantly amended and a number of provisions removed. The Bill was passed by the Senate on the last sitting day before the May Budget.

What's included in the Bill?

The Bill retains provisions clarifying casual employment arrangements.

The current uncertainty and inconsistency surrounding casual employment, and the consequential risk of inadvertent underpayment and ‘double dipping’ are all addressed as follows:

  • A new definition of ‘casual employment’.
    A person is a casual employee if :
  1. An offer of employment made by the employer to the person is made 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
  2. The person accepts the offer on that basis; and
  3. The person is an employee as a result of that acceptance.In determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be had only to the following considerations:
  1. Whether the employer can elect to offer work and whether the person can elect to accept or reject work;
  2. Whether the person will work only as required;
  3. Whether the employment is described as casual employment;
  4. Whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or an industrial instrument
  • A regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. The question whether an employee is a casual is assessed on the basis of the offer of employment (no advanced commitment of ongoing work) and the acceptance of that offer, not on the basis of any subsequent conduct of either party.
  • If an employee’s status as a casual is established upon commencing employment, they will remain a casual unless they elect to convert to full-time or part-time employment. The statutory definition is to be applied retrospectively meaning former and current casual employees who meet this definition at the commencement of their engagement cannot later claim paid leave entitlements –  even if their employment status changed due to post-contractual conduct.
  • The Bill provides employers with the mechanism to use casual loading to offset relevant entitlements (such as leave, public holidays, notice and redundancy) where the Court finds that a casual employee (former, current or new) does not meet the statutory definition of casual employment. This offsetting is available where an employee is paid an identifiable casual loading to compensate the employee for not having one or more entitlements during the employment period.
  • Eligible casual employees will have expanded rights of conversion to convert after 12 months of employment where during at least the last 6 months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, and the employee could continue to work as a full-time employee or a part-time employee (as the case may be).  An employer must offer such employees conversion unless there are reasonable grounds not to do so. This right also applies to award/agreement free employees.
  • Existing eligible casual employees may request conversion within six months of the legislation commencing if they have been employed on a casual basis for at least 12 months.
  • The Fair Work Ombudsman is required to publish a ‘Casual Employment Information Statement’, which employers will be required to provide to casual employees before, or as soon as practicable after, the employee starts employment as a casual employee with the employer. The employer is not required to provide this statement more than once per year.

What was removed?

  • The Bill proposed to include provisions in 12 nominated Modern Awards that allowed:
  1. Agreement to be reached between an employer and a part-time employee to work additional hours up to 38 per week at ordinary rates;
  2. An employer to give ‘flexible work duties directions’ and ‘flexible work location directions’ (flexible work directions) to perform different duties and/or work at different locations in response to the pandemic.
  • The Bill proposed some changes to enterprise bargaining provisions in the pre-approval and approval processes, as well as changes to the termination of agreements. A significant proposed change was to the ‘Better off Overall Test’ (BOOT) to move away from a clause-by-clause assessment of Agreements. The Bill proposed that Legacy (‘Zombie) Agreements made before the Fair Work Act commenced, or during the ‘bridging period’ in July-December 2009 will be automatically terminated by 1 July 2022. The Bill also proposed to extend the maximum term of ‘greenfield’ enterprise agreements for ‘major projects’ from four to eight years, where a major project is one with capital expenditure of either at least $500m or at least $250m.
  • The Bill proposed a new criminal offence of ‘dishonestly’ engaging in a systematic pattern of underpaying employees attracts a maximum penalty of $5.6m for a corporation and $1.1m and/or four years’ imprisonment for an individual. The Bill proposed general increases in penalties relating to ‘remuneration related contraventions’ essentially underpayments, including ‘serious contraventions’ and sham contracting.  The Bill  also proposed that the threshold for a ‘small claim’ was to be increased to $50,000, with provision for referral to the Fair Work Commission Court to conciliate small claims matters or arbitrate them by consent.

What should employers do?

Review casual arrangements

Despite the provisions in the legislation, employers should review their casual arrangements and practices, such as terms contained in contracts of employment, the express payment of casual loadings, and review patterns of hours of casuals to determine eligibility to offer conversion. Employers should establish processes to ensure compliance with conversion provisions.

The changes to the casual provisions are contentious with unions, and it is likely that unions will seek to include in enterprise bargaining claims provisions for greater benefits for casuals such as leave accruals or redundancy rights.

Review payroll compliance

Despite the removal of provisions dealing with underpayments and contraventions, payroll compliance remains a significant issue for employers. This is emphasised by regular press coverage of large companies that have self-reported underpayments to the Fair Work Ombudsman (FWO). The FWO is increasingly well resourced, and has significantly increased its prosecutions and the amount of wages recovered for employees over the last few years.

Therefore, employers should address compliance issues, for example, by:

  • Reviewing employee contracts for annualised salary arrangements.
  • Reviewing salary arrangements for compliance with Modern Awards – many Modern Awards were varied last year to contain annualised salary provisions.
  • Conducting regular wage audits.

Reviewing employee records for compliance with the Fair Work Regulations 2009 (Cth) (‘Regulations’). FWO regular audits have revealed that common breaches are underpayment of hourly rates for weekend work, and incorrect payslips.

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Written by
John McKenzie
John draws on his 25 years plus industrial relations and human resources experience to partner with businesses to deliver tailored and practical solutions.