The Federal Government has introduced its long-awaited industrial relations reforms to Parliament. The Omnibus Workplace Relations Bill contains measures intended to support recovery from the economic damage caused by the pandemic and will address known issues and remove barriers to job growth.
The reforms include a new definition of ‘casual’ employment, offset provisions to protect employees from ‘double dipping’, some relaxation of enterprise agreement requirements, and greater flexibility for distressed industries.
Many of the changes proposed are a common-sense balance of supporting both the needs of employers and employees and will ultimately provide employers with certainty when they need it most.
The South Australian Business Chamber joins the Australian Chamber of Commerce in urging Federal Members of Parliament to support the passing of the Bill when Parliament resumes next year.
Casual Employment
In what will be a significant relief for most businesses, the Bill cements into the Fair Work Act offset provisions that enable employers to use casual loading to offset claims for paid leave entitlements.
The changes follow controversial rulings over the last year that saw businesses exposed to double dipping payment on some casual employee’s entitlements.
The Bill includes a definition of casual employment that focuses on both parties’ intention when the employer first hired the employee. This will provide greater clarity on the nature of the employment arrangement.
However, the Bill also grants staff the right to elect to convert to a permanent role after 12 months of regular employment, subject to the employer having reasonable right to refuse.
It is vital that employers will be able to offer casual jobs to young South Australians especially without the risk of unexpected and unfair claims down the track.
Awards
The Bill proposes to allow employers covered by the 12 Modern Awards in the retail, food and accommodation industries a greater flexibility for a period of two years.
The flexibilities will enable employers to give directions to change work location or duties of employees.
Employers will be able to align current working arrangements with the realities of changed availability of employment opportunities, as we saw occur during the COVID-19 pandemic.
Changes will be modelled on the JobKeeper flexibilities that were inserted into the Awards by the Fair Work Commission (FWC).
Additionally, permanent part-time workers under the 12 awards will be able to be do extra hours above their regular roster without having to be paid overtime by entering a ‘Simplified additional hours agreement’, noting this will be a permanent change.
The South Australian Business Chamber is seeking feedback from members in distressed industries, outside the 12 already covered, to consider how these might be included for both the continued JobKeeper related flexibilities and new part-time provisions.
Enterprise Agreements
Enterprise Agreements have been in decline in recent years as less employers undertake the current complex and arduous process of negotiating an agreement.
Agreement flexibility is critical to keeping businesses trading rather than insolvent and maintaining connection between employees and employers.
As part of the reforms, the Bill includes tweaks to the ‘better off overall test’ (BOOT) for enterprise agreements, which is the system that allows employers to enter into workplace-specific agreements. Rather than a focus on every individual employee being better off, the amended legislation would instruct the Commission to give more weight to what the employer and employees agreed.
The changes will require the Fair Work Commission to focus on existing or foreseeable work patterns, rather than unlikely scenarios, when deciding whether all workers will benefit from new workplace deals as required.
The Bill also provides some sunset provisions to be available for the next two years, that allow the Commission to consider the impact of COVID 19 on the business in assessing the BOOT, if the employees and employer have agreed.
Proposed changes in the Bill also include some minor procedural requirements in making the agreements, and places limits on who can act as a bargaining representative as well as requiring the Fair Work Commission to approve most agreements within 21 days.
Businesses relying on transitional instruments are advised to consider alternatives as the Bill proposes their termination by 1 July 2022, the South Australian Business Chamber consultants will be able to work through strategies to assist in this process.
These reforms will help make enterprise agreements a more viable option, but more will need to be done if bargaining is to support Australia’s longer-term recovery.
Greenfield Agreements
Major projects of over $500m will be able to make Greenfield EBAs of up to 8 years.
Projects between $250 to $500m can also do so by ministerial declaration.
Such agreements will need to deliver a wage increase in each year of operation.
These changes will be most relevant for large resource projects, which will be critical to Australia’s recovery, but also potentially major capital city infrastructure projects.
Compliance and Enforcement
The Bill introduces criminal offences and penalties for underpayments for the first time at the national level. Intended to be used for the most serious intentional and damaging underpayments, the test will be a substantial one, of dishonesty, which should include deliberation and intent.
The maximum jail term proposed by the Bill is four years, with fines of up to $1.1M for individuals and $5.5M for companies.
There will be differing treatments of small and big businesses with big business facing the higher fines or three times the value they derived from the underpayment.
The Fair Work Commission (FWC) will, for the first time, assume a role in dealing with underpayments with a small claim jurisdiction expanded to address claims of up to $50,000.
The FWC will be able to conciliate or, by agreement, arbitrate these cases.
Under these proposed changes, employers will also be prohibited from advertising jobs at rates of pay which are below the national minimum wage or any special national minimum wage which applies.
A majority of underpayments result from mistakes. In order to be fair and balanced, the South Australian Business Chamber argues workplace laws must tackle ambiguity and inflexibility first and foremost, which will help increase compliance. We are also note that all employers, including Governments and not-for-profit bodies will be treated equally in terms of penalties, including those for individuals such as jail terms.
ACCI has already called for a two-year delay in the implementation of this clause based on the challenges facing many employers during the pandemic period.
Next Steps
The South Australian Business Chamber is seeking feedback from members in relation to all changes proposed by the Bill. We will be working closely with ACCI to ensure SA businesses views are represented at the national level. The Bill is going to be in a consultation phase for at least the next two months and we encourage members and the broader SA business community to help us to help you on these important reforms.
Please send your views to policy@business-sa.com by Friday 15 th January 2021 including contact details for a return call.
