We go to the polls on the weekend. Much has been said about Labor’s agenda for industrial relations and the union movement’s push to “change the rules”. We examine five proposed changes by Labor which we consider will have the most impact on employers in the field of employment relations, should Labor form government.
1. A legislated definition of casual employment
Proposed change: It will no longer be left to employers and employees to agree to casual employment. Rather, there will be a legislated test to determine whether an employee is entitled on the one hand to a casual loading, or on the other hand to accrue annual leave.
Our view: It is possible the test could be set prospectively and retrospectively: that is, prospectively where there is an expectation of ongoing work because the employer has committed to particular hours or days (if so, the employment is not casual), and retrospectively if the work has been regular and systematic in the past (if so, the employment is not casual).
This would change the way many businesses operate. Merely having a set roster for casual employees could make their employment such that an obligation to accrue annual leave arises.
Proposed change: Labor has also announced it will repeal regulations recently enacted which are directed at permitting an employer to recover casual loading it has mistakenly paid to an employee subsequently found by a Court to have been entitled to accrue annual leave.
Our view: One effect will be that a significant portion of the workforce will have their take home pay cut by 25%, as employers will be forced to apply a definition which excludes the entitlement to casual loading, accruing annual leave instead.
2. Changes to enterprise bargaining
Proposed change: A return to industry-wide bargaining and multi-employer bargaining.
Our view: A “quid pro quo” of enterprise bargaining has long been protected industrial action. Multi-employer bargaining therefore means protected industrial disputes across multiple employers at the same time to achieve parity of conditions across different businesses.
Proposed change: A “disclosure framework” that requires employers to produce to bargaining representatives information when rejecting claims made during bargaining.
Our view: This is likely to make the process of enterprise bargaining more technical and cumbersome.
Proposed change: Prohibiting the unilateral termination of enterprise agreements.
Our view: This is presently not a common feature but one increasingly threatened by employers during bargaining.
Overall comment: An already crowded rulebook when it comes to enterprise bargaining will become even more complicated to navigate.
3. Forcing parity of wages for contractors and labour hire
Proposed change: If workers are doing the same job, they should get the same pay. Labor will legislate to ensure that workers employed through a labour hire company will receive the same pay and conditions as people employed directly.
Our view: Many workplaces divide their operations differently. Some use labour hire and contractors to perform particular specialised work, such as maintenance, cleaning, security, or transport. However, often that work can also be an expected part of the work of “direct hire” employees at the workplace. It will become important to specify exactly what work is to be done when and by whom, in order to avoid liability and disputation.
A practical effect of the test may see a re-introduction of “demarcation” rules whereby employees must not perform work that is otherwise done by employees of contractors or labour hire.
4. Penalty rates
Proposed change: Labor has been vociferous in its criticism of the Fair Work Commission’s decision to impose a gradual reduction in the penalty rates payable on Sundays and public holidays to employees in the hospitality, fast food and retail industries.
Labor has committed to introducing legislation within its first 100 days of office to restore the previous penalty rates in these industries, and prohibit any future variations to awards that will result in a reduction in take-home pay.
Our view: Intervening in decision making of the “independent umpire” compromises the integrity of the system and creates a precedent. Future governments, Labor or Liberal, will point to this as authority to legislate away future outcomes or decisions of the Fair Work Commission which they dislike.
5. Expanded wage recovery avenues and compliance obligations for “economic decision makers”
Proposed change: A new jurisdiction to sit alongside the Fair Work Commission to hear individual claims of unpaid wages of up to $100,000, where cases are to be heard and determined “in a day”.
Claims brought by groups of workers against a single employer will also be permitted.
Our view: The current system of recourse through the Federal Circuit Court is costly and time consuming for employers, employees and unions. Expediency will be welcomed. However, prior to the announcement of the election, the Government had proposed to introduce the imposition of jail terms for those responsible for deliberate wage contraventions. It is unclear whether lawyers can appear in the new jurisdiction. Should the new jurisdiction hold the power of serious sanction without legal representation, its introduction is likely to be widely criticised.
Proposed change: Labor will impose liability on “economic decision makers”, such as franchisors and businesses at the top of a supply chain, for failing to ensure that other employers, such as franchisees and subcontractor suppliers, comply with their workplace relations obligations.
Our view: Commercial contracts and procurement arrangements should be reviewed to ensure that due diligence and monitoring occurs in respect of the wage arrangements of contractors and suppliers, and their contractors and suppliers.
The Fair Work Ombudsman will continue to look closely at principals in a supply chain, and franchisors, where their commercial decisions result in non-compliance by franchisees and subcontractors.
The message is clear: those who can influence wage outcomes directly in their own business, or of other businesses in their supply chain, will be held accountable.