Happy 2017! With the new year now in full swing, here is this year's list of 10 key items that we think should be on every HR Manager's (or business owner's) "to do" list in 2017.
- ANNUAL LEAVE: Review Annual Leave Policies and Employment Agreements as to Annual Leave
Effective from 29 July 2016, most awards were amended to incorporate new provisions as to annual leave. The new provisions include:
- a right for employers to direct employees to take annual leave if they have accruals exceeding eight weeks;
- the ability for employees to take leave in advance with agreement from their employer (and where an employee's employment is terminated before they have accrued the leave taken in advance, the right for an employer to make an appropriate deduction from the employee's final pay); and
- the inclusion of a cashing-out provision, which will permit employers to agree with an award employee to cash out accrued annual leave if they:
- have a signed written agreement with their employer;
- have a balance of at least four weeks' annual leave remaining after they have "cashed out"; and
- don't cash out more than two weeks in a 12-month period.
ACTION: Employers who have policies in relation to annual leave should review such policies to reflect the changes. Likewise, employers should review any relevant provisions in their employment agreements in order to ensure consistency with the new provisions (and/or the newly revised policies).
- SALARY: Review annualised salary arrangements
Where an annualised salary is being paid pursuant to an applicable award, an employment contract must clearly identify the applicable award and meet the requirements of the specific award as to the payment of an annualised salary. Often, that means that it will be necessary for an employment contract to set out exactly which provisions of the award are to be satisfied by the payment of the annualised salary
In a 2016 Western Australia case1, an employer whose employment contract failed to set out exactly which provisions of the Clerks Private Sector Award 2010 were to be satisfied by the payment of the annualised salary has found itself facing an order to pay unpaid overtime and meal breaks of some $29,000 – despite that the claimant employee had, it thought, been paid an annualised salary. What the employer had done in that case, instead of setting out exactly which award applied and which provisions of the award were to be satisfied by the payment of the annualised salary, was include a "catch-all" provision stating that the annualised salary was "inclusive of any award provisions/entitlement that may be payable under an award". The Court formed the view that such clause was not properly specific as to what the award was and what the annualised salary included – hence the employer facing an order to pay unpaid overtime and meal breaks.
ACTION: Employers operating under the annualised salary provisions of awards should ensure that their contracts properly identify the applicable award and that the annualised salary provisions in their contracts are specific as to which provisions of the award are to be satisfied by the payment of the annualised salary.
- PARENTAL LEAVE: Reassess Paid Parental Leave Policies
The Government introduced revised legislation to prevent parents "double-dipping" into government and employer-funded paid parental leave schemes in late October of last year. That being the case, we consider it likely that the Fairer Paid Parental Leave Bill 2016 (or some modification of it) will introduce parental leave double-dipping preventions in 2017. The ramification of this will be that it will no longer be possible for employees to "double-dip" by accessing both Government-funded paid parental leave and employer-funded parental leave payments. Consequently, parental leave policies and general employer positioning in relation to employer-funded schemes will very likely change.
ACTION: When the change takes place, an employer's paid parental leave policies and positions should be reconsidered and/or revised.
- EMPLOYMENT CONTRACTS: Ensure that employment contracts are not silent on notice and do not rely on the NES or a minimum period of notice
Employees have long been able to bring a claim for reasonable notice when their employment was terminated and the employment contract silent on notice (and an Award or enterprise agreement providing for notice did not apply). There has been a varied view, since the introduction of the Fair Work Act in 2009 though, as to whether s117 of the Act (which provides a minimum period of notice rather than a definitive notice period) affected that right. A decision of the Full Federal Court of Appeal2 recently determined that section 117 does not displace a right to reasonable notice when the contract of employment is silent on the question of notice. In the writer's view, the same would apply where a contract of employment has a notice period which is expressed as a minimum rather than a definitive period.
ACTION: Whilst there is a conflict in the case law as to whether section 117 does in fact displace the implied term of reasonable notice3, it is prudent for employers to ensure that their employment contracts (particularly where an Award or enterprise agreement providing for notice does not apply), are not silent on notice and do not (expressly or impliedly seek to) rely on the NES or a minimum period of notice, instead relying on a definitive period of notice (which period must be at least equal to the minimum amount otherwise prescribed by the NES – beware specifying four weeks without providing for the additional week's notice once the relevant period of service and 45 years of age are attained).
- OHS COMPLIANCE: Ensure familiarity and, in due course, compliance with the new OHS Regulations (Victoria)
The current Occupational Health and Safety Regulations 2007 and the Equipment (Public Safety) Regulations 2007 are due to expire on June 19, 2017. New OHS Regulations are likely to be released in the earlier part of 2017.
ACTION: It will be important for employers, HR Managers, and other relevant staff to be across the new OHS Regulations upon commencement.
- FAIR WORK ACT COMPLIANCE: Ensure particular vigilance around Award and Fair Work Act compliance
With increased activity by the Fair Work Ombudsman (FWO), the tendency for most prosecution proceedings to be pursued also against accessories (parties other than the employer, including directors, senior managers, accountants, HR personnel etc) and the soon-expected significant increase in civil penalties for breaches by both individuals and corporations, employers and individuals alike should act with particular vigilance to ensure full Award and Fair Work Act compliance.
ACTION: Employers and (where applicable) their directors and HR Managers should, in the least:
- properly analyse wages and payroll procedures to ensure that amounts which are paid to employees are sufficient and compliant under the relevant award or enterprise agreement;
- ensure familiarity with the award/s and/or enterprise agreements which apply to employees, in order to readily identify (and quickly address) any instances of non-compliance;
- ensure that proper record-keeping (to accord with the Fair Work legislation and regulations) is occurring;
- ensure that proper care is taken when making decisions to an employee's detriment, ensuring that the decision-making process and appropriate reasons are adequately documented along the way; and
- (also see below in this regard) ensure that good quality guidance and advice from expert professionals is available and sourced to assist when it comes to understanding and navigating the Fair Work legislation and regulations (and also awards and enterprise agreements where required), and managing appropriate risk.
- INTERNAL PROCEDURES: Review internal procedures where making decisions to an employee's detriment
In 2016, in one of the largest general protections claims payouts to date, an employer (a subsidiary of Rio Tinto) was required to pay to an employee $1,272,109 for past and future loss of wages, plus $24,626 in interest, together with a penalty of $50,000 to the employee's Union, when it was found to have breached the general protections provisions of the Fair Work Act by standing an employee down just four days after he was awarded significant damages for a back injury which he had sustained some years earlier. The employer maintained that the employee was stood down only to protect health and safety, rather than for the reason alleged by the employee namely that he was stood down for exercising his workplace right to pursue the employer for damages arising from his injury, but was unable to prove to the court's satisfaction that the reason for standing the employee down was other than due to the exercise by the employee of the relevant workplace right4. Had the employer in this case appropriately documented the decision-making process when it came to the decision to stand the employee down and the reasons for it, the outcome of the case may well have been very different (thereby saving the employer about $1.3 million).
ACTION: Employers should take good care when making decisions to an employee's detriment, ensuring that the decision-making process and appropriate reasons are adequately documented along the way. The review and implementation of appropriate processes to ensure that this occurs could save your business (and its individual decision-makers) significantly.
- GARDEN LEAVE & RESTRAINTS: Check and where necessary revise employment contracts which deal with garden leave and restraints
In 2016, the NSW Supreme Court determined that the time served by a senior employee on garden leave did not count toward a prescribed restraint period under the terms of the employee's employment contract. Whilst the outcome of the case turned significantly upon the specific wording of the employment contract, the decision provided a useful lesson to employers using (or preparing) employment contracts containing garden leave and restraint provisions.
ACTION: When using employment contracts containing garden leave and restraint provisions, employers should be: mindful of and properly reflect in the terms, the intended interaction between the two provisions; and, where the two are intended to operate "one after the other" (which is the usual intent of such clauses) to draw an express distinction between the termination of the employment contract and the cessation of duties.5
- REDUNDANCY: Beware prior service as a casual when implementing permanent staff redundancies and revise redundancy policies accordingly
A Fair Work Commission majority, in 2016, controversially ruled that certain previous casual employment must be taken into account when calculating redundancy pay6. This represents a departure from the way in which redundancy pay has commonly been calculated, namely by reference to employees' part-time or full-time service only (and not previous casual employment). Relating only to situations where a permanent employee's role is redundant in circumstances where the employee has at some stage during their tenure transitioned from a casual role (and not to casual employees who have always, truly, been casual employees – as true casual employees are not entitled to redundancy pay in any event). This will have ramifications for some employers in relation to the implementation of certain redundancies.
ACTION: Employers should consider redundancy practices and relevant implications carefully where casual-come-permanent employees are concerned. Any affected redundancy policy should also be suitably revised.
- FAIR WORK INFORMATION STATEMENTS: Ensure that the new Fair Work Information Statement is being used
A new Fair Work Information Statement was introduced on 1 July 2016.
ACTION: Employers should now be using this updated version of the Information Statement, accessible here: https://www.fairwork.gov.au/employee-entitlements/national-employment-standards/fair-work-information-statement
1 Simone Jade Stewart v Next Residential Pty Ltd  WAIRC 00756
2 McGowan v Direct Mail and Marketing Pty Ltd FCCA 2227
3 See, for instance, Kuczmarksi v Ascot Administration P/L  SADC 65
4 CFMEU v Hail Creek Coal Pty Ltd  FCA 1032
5 DP World Sydney Limited v Guy  NSWSC 1072 (1 August 2016)
6 AMWU v Donau Pty Ltd  FWCFB 3075 (15 August 2016)
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.