Workplace Relations Update

• Requirements for record keeping and providing pay slips

• Independent Contractors Act 2006 (Cth) started on 1 March 2007

• What are genuine operational reasons for terminating employment?

Requirements For Record Keeping And Providing Pay Slips

From 27 March 2007, the new record keeping requirements come into operation following amendments to the Workplace Regulations 2006. The new requirements are less onerous than originally proposed under WorkChoices. Employers to whom WorkChoices applies need to be aware of these requirements as penalties may apply for non compliance.

Employers are required to keep an individual record for each employee. These records must be legible, in English, readily accessible to a workplace inspector and be in a condition that would allow a workplace inspector to ascertain an employee’s entitlements and whether the employee is receiving those entitlements.

Employers are required to keep the following general information about each employee:

• the name of the employer and the name of the employee

• whether the employee’s employment is full-time or part-time

• whether the employee’s employment is permanent, temporary, or casual

• the date on which the employee’s employment began.

An employer who is required to make superannuation contributions for the benefit of an employee must keep details of such contributions in the employee’s records. The employer must record:

• the name of the employee’s superannuation fund

• the basis on which the employer became liable to make contributions, including any choice of fund made by the employee and the date of that choice

• the amounts of the contributions, the periods to which the contributions relate and the date of payments.

If an employee is eligible to receive an overtime penalty rate or loading, then the times when the employee started and ceased working overtime, or the total number of overtime hours worked for each day, must be recorded.

Where an employer and employee have agreed, in writing, that the employee’s hours of work are to be averaged over a specific period under the Australian Fair Pay and Conditions Standard, a copy of this agreement must be retained.

An employee’s pay record must include the employee’s rate of remuneration as well as:

• details relating to any incentive-based payment, bonus, loading, penalty rate or other monetary allowance that the employee is entitled to be paid

• the gross and net amounts paid to the employee

• details of any deductions from the employee’s gross remuneration.

The pay record of a casual or irregular part-time employee who is guaranteed a basic periodic rate of pay must also include the hours worked by the employee.

Employers are required to maintain records in relation to an employee’s leave. The details required to be retained in relation all types of leave taken by an employee are:

• the rate of accrual

• the amount of leave taken by the employee

• the balance of the employee’s entitlement to leave from time to time

• where an employee has elected to forgo an entitlement to leave, a copy of the employee’s written election to forgo the leave and the rate and date of the payment for the amount of leave forgone.

Employers must keep details of how an employee’s employment was terminated (ie. by consent, by notice or summarily) and the name of the person who terminated the employment.

Records of general employment matters and superannuation contributions must be kept for seven years after an existing entry is changed, or for seven years after the employee’s employment is terminated, whichever occurs first.

In every other case, an employer must keep an entry in a record for a continuous period of seven years after the date on which the entry is made. It should be noted that these record keeping requirements apply in addition to any other record keeping requirements such as requirements under taxation laws.

Employers are required to provide employees with a written pay slip for each payment of any remuneration within one day of the payment. The pay slips may be issued in electronic form or in hard copy and are required to include the following information:

• the name of the employer and the name of the employee

• the date of the payment and the period to which it relates

• where the employee is paid at an hourly rate, the ordinary hourly rate, the number of hours worked in that period and the amount of the payment made at that rate

• where the employee is paid an annual rate of pay, that rate as at the latest date to which the payment relates
• the gross and net amounts of the payment

• the amount paid for any other entitlements, including an incentive based payment, bonus, loading or penalty rate

• details of any deducted amount, including the name of the account or fund into which the deducted amount was paid

• if applicable, the name of the superannuation fund and the amount of the contribution that will be, or has been paid.

Failure to comply with any of these requirements could result in a penalty. Where a workplace inspector has reasonable grounds to believe an employer has contravened a requirement under these Regulations, inspectors can issue an infringement notice of $110 per breach for an individual or $550 for a body corporate. Alternatively, a workplace inspector can apply to a court for an order of a pecuniary penalty for a contravention. Courts may impose penalties of up to $1,100 per breach for individuals and $5,500 for a body corporate.

Employers should review their employee records, pay slips and record keeping systems to ensure compliance with the Regulations when they come into operation at the end of March. Keep in mind that the implementation of any changes may take some time and therefore action should be taken now. Any deficiencies should be immediately rectified, however be aware that incorrectly altering a record or making false or misleading entries into records can attract penalties.

Contact gadens lawyers' workplace relations team for further information or assistance in complying with the Regulations.
by Dan Feldman and Jessica Menzies

Independent Contractors Act 2006 (Cth) Started On 1 March 2007

The Independent Contractors Act 2006 (Cth) (the Act) commenced on 1 March, 2007.

The Act only affects independent contractors who are a party to a 'services contract' with the requisite constitutional connection. A services contract is a contract for services to which an independent contractor is a party that relates to performance of work by the independent contractor. A services contract has the requisite constitutional connection where one of the parties to the services contract is a constitutional corporation, the Commonwealth or a Commonwealth authority or the services contract has a connection with a territory.

The Act excludes state and territory laws that confer or impose benefits/rights on a party to a services contract relating to 'workplace relations matters'. The term 'workplace relations matters' is defined to include remuneration, allowances, leave entitlements, hours of work, termination, disputes, industrial action any other matter specified by regulation. This means that state and territory laws that confer or impose such benefits/rights on a party to a services contract are no longer applicable from 1 March, 2007, (subject to transitional arrangements – see below).

The Act establishes a national unfair contracts jurisdiction which is vested in the Federal Court of Australia and the Federal Magistrate's Court. Under this jurisdiction, services contracts can be reviewed on the grounds that they are unfair and/or harsh.

Importantly, if a corporation is a party to a services contract, only a corporation whose director, or a family member of the director, mainly performs the work relating to the services contract can access the unfair contracts jurisdiction.

In addition, the Act limits the review of a services contract to the terms of the services contract when it was made and relevant matters that were existing at the time that the services contract was made. This is significant as it means that a services contract cannot become unfair after it was made (eg. because of the conduct of a party to the services contract). This is likely to limit the use of the jurisdiction.

The Court has very broad powers if it determines that a services contract is unfair and/or harsh, including the power to vary the services contract and order the payment of compensation. The court also has the power to make interim orders in certain circumstances.

There are complex transitional arrangements that apply to an independent contractor engaged under a services contract as at 1 March, 2007, that allow the continued application of state and territory laws for a limited period except in relation to access to unfair contracts claims.

Parties to independent contractor arrangements need to consider how the Act affects their rights and obligations. Contact a member of gadens lawyers workplace relations to obtain more information about how the Act affects your independent contactor arrangements.
by Mark Sant and Nicole Linton

What Are Genuine Operational Reasons For Terminating Employment?

The WorkChoices reforms significantly restrict access to the unfair dismissal jurisdiction. One of the restrictions was to exclude an unfair dismissal claim where the dismissal was for 'genuine operational reasons or for reasons that include genuine operational reasons'.

Until the recent decision of the full bench of the Australian Industrial Relations Commission (IRC), Carter v Village Cinemas Australia [2006] AIRC 584, this restriction had been narrowly interpreted with several decisions holding that genuine operational reasons alone was no defence and that employers had to demonstrate it was necessary to terminate. That is, employers still had to consider redeployment opportunities and other means of avoiding redundancies prior to dismissing employees.

The Carter case clarifies the ambit of the restriction. The IRC found that where there is an operational reason for terminating employment, the termination does not need to be an unavoidable consequence of the operational reason for the exemption to apply.

In this case, Carter was the general manager of one of Village Cinemas complexes which was closed because of "genuine operational reasons". Mr Carter asked to take six months long service leave in case a position of general manager at another location became available during that time. Village Cinemas refused his request and dismissed Carter. Carter brought an unfair dismissal claim and Village Cinemas argued that Carter was exempt from bringing the application because his dismissal was for a genuine operational reason.

At the first instance, the IRC found that the termination was not for a genuine operational reason, finding that the restructure and redundancy of his position did not logically result in a need to terminate his employment as there were other options available. Accordingly, the IRC ruled that it had jurisdiction to hear Carter's unfair dismissal claim.

On appeal, the full bench of the IRC, the first full bench to have dealt with this new provision, found that it is irrelevant for the purposes of deciding if a termination was for genuine operational reason or reasons which included genuine operational reasons, if the employer could have done something other than terminating the employee's employment. The full bench held that the operational reason need only be a 'ground or cause' for the termination, the termination did need to be an unavoidable consequence of the 'genuine operational reason'.

Employers making an employee's position redundant due to 'genuine operational reasons' (eg. relocation of the work premises) the employer is not required to consider alternatives to terminating the employee's employment. However, each case needs to be assessed on its own circumstances and employers bear the evidentiary onus of establishing that the dismissal was for a genuine operational reason. The IRC held that:

It should also be noted that while employers can mount a jurisdictional challenge to an application in these circumstances, the IRC is required to hear this argument as opposed to other jurisdictional challenges which are now commonly done 'on the papers' without a need for hearing, for example, with out-of-time applications and applications where the employer employs less than 100 employees.
by Kathryn Dent and Nicole Linton

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.