The federal government yesterday made several important amendments to the Workplace Relations Regulations 2006 (Cth) (Regulations). While some of these amendments introduce significant new provisions of which employers should be aware, some simply clarify employer obligations.
These amendments to the Regulations have received some ‘press’ during the course of today. Most press coverage of the amendments has focused on a perceived ‘softening’ of the government’s Work Choices laws. But what do these amendments actually entail and what is their impact on employers?
Perhaps the most significant of these amendments is an extension of the transitional period for compliance with the record-keeping obligations established under the Regulations. Employers now have until 26 March 2007 to ensure they are compliant with the record keeping obligations.
There are other key amendments which will impact on your human resource management.
Extension of record-keeping transitional period to 26 March 2007
As you will be aware from previous publications, the Regulations set out quite prescriptive record-keeping obligations for employers. These Regulations require employers to keep certain records relating to employees and allow penalties to be imposed on employers of up to $2,750 per breach.
Previously, employers had until 26 September 2006 before they could be penalised for a breach of the record-keeping obligations. Under the amended Regulations, employers will only be able to be prosecuted for failure to comply with the record-keeping obligations if the breach occurs after 26 March 2007. This is a significant change, especially since many employers are still grappling with how to implement new time recording arrangements to comply with the Regulations.
No ‘fines’ for employees on sick leave or who fail to meet notice/evidence requirements
The amendments ensure that employees cannot be penalised monetarily (or ‘fined’) where they:
- are absent from work due to illness or injury, or
- fail to meet notice or evidentiary requirements for sick, carer’s or compassionate leave.
The amendments make clear that the Australian Fair Pay and Conditions Standard (Standard)—which does not provide penalties in such circumstances—prevails over any workplace agreement or employment contract which imposes such a penalty. The term ’penalty’ is defined as:
- a deduction of an amount from the employee’s remuneration
- a reduction of an employee’s entitlements (eg leave), or
- a requirement that the employee pay an amount to their employer.
Importantly, any term in a workplace agreement which allows for such a penalty will constitute ‘prohibited content’ for the purposes of the Regulations.
However, this does not preclude an employer from withholding payments to an employee where that employee has failed to comply with their obligations in relation to notice or evidence. That is, employees must still comply with notice and evidence requirements before being entitled to be paid in respect of sick, carer’s and compassionate leave.
Standard does not apply to sick / carer’s / compassionate leave accrued prior to 27 March 2006
The amendments clarify that the Standard does not apply to sick, carer’s and compassionate leave which an employee accrued prior to the introduction of Work Choices (ie 27 March 2006). That is, for such leave accrued prior to 27 March 2006, the relevant industrial instrument (ie workplace agreement, contract or award) will apply and the Standard will not prevail over that instrument if the Standard is ‘more favourable’, as it normally would.
Although this may seem to be a logical clarification, the same principle might also be able to be applied to annual leave. For example, annual leave which accrues under the Standard (ie after 26 March 2006) cannot be cashed out, or directed to be taken, except in the limited circumstances outlined in the Workplace Relations Act. However, where employees have significant past accruals of annual leave (prior to the commencement of Work Choices), it may be possible to direct employees to take such leave or enter into cashing out arrangements.
Ability to ‘cash out’ paid sick / carer’s / compassionate leave in exchange for ‘other benefit’
A term of a workplace agreement is prohibited content to the extent that it allows employees to forego paid sick, carer’s or compassionate leave other than in a manner that would result in a more favourable outcome than the Standard. One of the ways in which an arrangement may be considered ‘more favourable’ is for the employee to be paid an amount of money to forego their leave. The amendments allow such leave to be forgone in exchange for ‘an amount of pay or other benefit’. This allows employers to provide other incentives for employees to forego such leave entitlements. But it will be important for employers to ensure that those other benefits will be considered to be truly ‘more favourable’ than the Standard.
‘Cashing out’ of annual leave other than at employee’s written election is prohibited content
The amended Regulations clarify that a term of a workplace agreement is prohibited content to the extent that it allows ‘cashing out’ of annual leave other than at the written election of the employee. This will not prevent ‘cashing out’ provisions from being included in workplace agreements. However, it will be important that such provisions explicitly state that if employees wish to cash out annual leave, they must elect to do so in writing.
Crediting of annual leave in advance and in arrears
Under the Standard, annual leave is to be credited to an employee every four weeks. The amendments provide that crediting of annual leave annually:
- in arrears of service is less favourable than the Standard, and
- in advance of service is more favourable than the Standard.
This means that the Standard will prevail over provisions of workplace agreements or contracts which credit annual leave annually in arrears of service. However, the Standard will not prevail over provisions crediting annual leave annually in advance, as this is more favourable than the Standard.
Key implications for employers
- Employers now have more ‘breathing space’ for compliance with the record-keeping obligations in the Regulations. If you have not already reviewed your internal processes for compliance with the Regulations, ensure that you do so well before 26 March 2007 so that revised processes can be put in place before this time.
- Employees must not be ‘fined’ for being absent due to illness or injury or failing to meet notice or evidentiary requirements for sick, carer’s or compassionate leave. However, as discussed above, this does not at all diminish an employer’s right to require appropriate notice and evidence in support of such leave, before providing payment for that leave.
- When considering whether the Standard will apply to sick, carer’s or compassionate leave, employers should check when the leave was accrued. The Standard will only apply to leave accrued on and after 27 March 2006.
- The terms of proposed collective agreements must be checked carefully in light of the revised ‘prohibited content’ provisions outlined above.
- The Standard will prevail over workplace agreements which credit annual leave annually in arrears of service. While it is not necessary for employers to amend such agreements, it will be important to keep in mind that the provisions of the Standard should be complied with (ie annual leave should be credited to an employee every four weeks).
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.