The Year Ahead...
What lies ahead in 2011?
2010 saw significant changes to the workplace relationships landscape as we all knew it, with the introduction of modern awards, national employment standards, good faith bargaining and a variety of other developments. Just when you thought things had settled down, be aware that 2011 will also be an exciting and challenging year for business and HR managers alike. There has already been and will continue to be a raft of change and development that will require your attention and action. Some of these include: another transitional adjustment to modern award wages; changes to the high income guarantee; an increase in general protections claims; the 2 yearly modern award review; changes to the definition of "small business" for the purpose of unfair dismissal; rising labour costs stemming from an annual wage review; and changes to the Trade Practices and fair trading legislation.
Transitional adjustment to modern awards
From the first full pay period on or after 1 July 2011, business will need to make another adjustment to wage rates, penalties and loadings, as part of the complicated transitional provisions in modern awards (unless you have already gone straight to the 2014 rates). Businesses who have enterprise agreements are not immune from this transitional adjustment, as you must ensure base rates of pay are at least equal to or greater than the transitional modern award rates. FCB Workplace Law has developed extensive IP in relation to the transitional provisions and can assist your business to ensure that you are meeting your minimum legal requirements. There are serious financial consequences of getting the transitional rates wrong. If you underpay your employees, your business could face significant penalties of up to $33,000 per breach in addition to the underpayment costs and negative attention drawn to your business. If you are overpaying your employees this too can have significant financial costs that will be realised on the company's financial statements. The transitional provisions are extremely complex. Why take on this risk when we can lead you through it?
High Income Threshold to increase
From 1 July 2011 the high income threshold (currently $113,800 p.a.) is likely to increase as a result of indexation. This will have implications for: businesses who have provided employees with a guarantee of annual earnings so as to opt out of modern award coverage; and also in relation to who is eligible to bring an unfair dismissal claim.
It is timely for employers to consider the strategic benefits that can be attained depending upon the time period for which a guarantee of annual earnings applies. FCB Workplace Law can explain the advantages and disadvantages in setting a short and long guarantee period.
The general protections provisions of the Fair Work Act 2009 (Cth) are likely to be one of the more frequently seen types of legal proceedings during 2011. In broad terms, the general protections provisions prohibit an employer from taking "adverse action" against a person because that person has exercised or proposes to exercise a workplace right; engages in industrial activities; or on discriminatory grounds.
Statistical reports for the first and second quarters of the 2010-11 year, released by Fair Work Australia have identified that 978 applications under s 365 (dismissals contravening the general protection provisions) and s 773 (dismissals contravening certain grounds specified in s 772 including some workplace rights and other discriminatory grounds) were lodged in the second half of 2010. This is strong evidence to support the prediction that the number of general protection applications will be greater than the 1176 applications (under s365 and s 772) Fair Work Australia finalised in the 2009-10 year (as noted in Fair Work Australia's 2009-10 Annual Report).
Employees are becoming increasingly aware of the availability and advantages of choosing a general protections claim over other types of proceedings. In contrast to an unfair dismissal claim, there is no minimum employment period (e.g. 6 months) an employee is required to have completed before they can make a claim; they have 60 days to file a claim as opposed to 14 days in the case of an unfair dismissal; and once they have established that they had a workplace right the onus shifts to the employer to establish that adverse action was not taken against them because of that workplace right.
Employers should familiarise themselves with what is meant by adverse action, workplace rights, industrial activities and discriminatory grounds, to ensure that practices do not expose business to these types of claims. Remedies available to an employee include injunctions, reinstatement and uncapped compensation. With the growing number of this type of claim being commenced, there is a likelihood employers will be increasingly exposed to liability during 2011. Even if you win you may not be able to recover your legal costs. If you lose, your business could face a pecuniary penalty of up to $33,000 per breach in addition to any compensation awarded.
Employers can also use the general protections regime to make a claim against an employee, a union and/or its officials if the circumstances allow. We have experienced first hand that even the threat of this claim can act as a particularly effective offensive tool to assist in changing the dynamics of an industrial bargaining dispute. If appropriate, it may be something to consider as part of your workplace relations strategy.
2 yearly review of Modern Awards
Fair Work Australia will be conducting a review of all modern awards from 1 January 2012. Any business which has experienced a problem or difficulty with modern award(s) should avail itself of the opportunity to make submissions during 2011. The matters that will be considered by FWA are whether a modern award(s):
a) is achieving its objective; and
b) is operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.
In determining whether a modern award is achieving its objective a number of considerations are taken into account including:
- the need to promote flexible modern work practices and the efficient and productive performance of work; and
- the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
- the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.
Fair Work Australia may make a determination varying any of the modern awards in any way that it considers appropriate (subject to the requirements of the FW Act) to remedy any issues identified in the review.
Fair Work Australia has not as yet specified when submissions can be made however we will keep you abreast of any additional information as it is released.
If you would like assistance in making submissions to Fair Work Australia, please contact one of our Partners at FCB.
Definition of Small Business
From 1 January 2011 the definition of a small business changed from an entity with fewer than 15 full-time equivalent employees to an entity with fewer than 15 employees, regardless of whether they are full-time, part-time or casual workers. This new and expanded definition will likely lead to an increase in unfair dismissal claims as employees of businesses that were formerly a "small business" are no longer required to have completed a minimum employment period of 12 months before being eligible to bring a claim (it will only be necessary for them to have completed a minimum employment period of 6 months).
Cost of labour to rise
In early June 2011 the Minimum Wage Panel will release its decision regarding the Annual Wage Review 2010-11. Any increase in minimum wage rates is likely to take effect from the start of July. Businesses should stay tuned for further updates on these increases and factor them into budgets and planning.
Changes to Fair Trading Legislation
On 1 January 2011, the Trade Practices Act 1974 (Cth) ("TPA") was renamed the Competition and Consumer Act 2010 (Cth) ("CCA"). Section 53B of the TPA, which dealt with misleading conduct relating to employment, is now contained in section 31 of schedule 2 of the CCA. It has been drafted somewhat differently, most notably the reference to "corporation" has been changed to "person" (which includes individuals, partnerships and corporations). There is also a new civil pecuniary penalty provision (effective from 15 April 2010) which is up to a maximum of $1.1 million in the case of a body corporate or $220,000 if not a body corporate for breach of the provision dealing with misleading conduct relating to employment.
2011 is set to be another big year in workplace relations. You and your business should be vigilant in ensuring legal compliance with the changes to occur this year. Please contact your trusted and expert member of FCB if you wish to discuss any of the matters raised in this article or otherwise.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.