Australia: Change the rules – which ones? What busi­ness­es need to know about Labor employ­ment policy

Last Updated: 16 May 2019
Article by Richard Ottley and Nicole Cini

The Fed­er­al Elec­tion is less than two weeks away and the Aus­tralian Labor Par­ty (Labor), has announced a robust and ambi­tious reform agen­da. With­in this reform agen­da are key changes to the Aus­tralian Fair Work regime, and the ques­tion aris­es as to how will these changes impact Aus­tralian busi­ness­es if Labor is elected?

Unions have mount­ed a cam­paign to 'Change the Rules', but the amount of change to be imple­ment­ed remains uncer­tain. This arti­cle exam­ines Labor employ­ment and indus­tri­al rela­tions poli­cies and pro­vides some insight as to how Aus­tralian busi­ness­es may be impact­ed, should there be a change in gov­ern­ment. It appears that busi­ness­es who are like­ly to be the most impact­ed, are those who engage migrant work­ers, have been impact­ed by penal­ty rates reform, and who oper­ate in a fem­i­nised industry.

Penal­ty Rates

Labor has announced key changes to penal­ty rates, being the rever­sal of the changes which cut cer­tain penal­ty rates, and leg­is­la­tion to pro­hib­it future changes to penal­ty rates.

As the deci­sion to cut penal­ty rates was made by the Fair Work Com­mis­sion (FWC), it is like­ly that Labor's changes to penal­ty rates will be imple­ment­ed by leg­isla­tive amend­ment to the Fair Work Act 2009 (Cth).

These changes will impact busi­ness­es in the ser­vice sec­tors recent­ly sub­ject to amend­ments to the penal­ty rate pro­vi­sions in their rel­e­vant mod­ern awards, includ­ing retail and hospitality.

Should Labor be elect­ed, they have promised that these changes will imple­ment­ed with­in the first 100 days of gov­ern­ment, so busi­ness­es would need to ensure that their penal­ty rates were aligned with any leg­isla­tive change.

Liv­ing Wage

Chang­ing the Aus­tralian min­i­mum wage to a ?"liv­ing wage" is an ambi­tious pro­pos­al that lacks pol­i­cy clar­i­ty. Tra­di­tion­al­ly, the Aus­tralian min­i­mum wage sys­tem is already based on the liv­ing wage deci­sion pro­vid­ed in the Har­vester judge­ment 1907. In this deci­sion Hig­gins J declared that fair and rea­son­able wages for an unskilled male work­er required a liv­ing wage suf­fi­cient to sup­port a wife and three chil­dren. This dif­fers from the def­i­n­i­tion of a min­i­mum wage which is tra­di­tion­al­ly the min­i­mum wage required for an indi­vid­ual. There­fore, it is unclear what Labor will actu­al­ly change in sub­stance, how­ev­er, it is like­ly that it will be through an amend­ment to the annu­al wage review criteria.

As the Annu­al Wage Review 2019 is already under­way, a tran­si­tion to a ?'liv­ing wage' is unlike­ly to occur until at least 2020. There­fore, this par­tic­u­lar change is not some­thing that Aus­tralian busi­ness­es need to be con­cerned with in the imme­di­ate future.

Labour Hire

Labour hire is a pop­u­lar short-term staffing option in many indus­tries, par­tic­u­lar­ly hor­ti­cul­ture and man­u­fac­tur­ing. Labor has revealed that they intend to man­date that labour hire employ­ees are paid the same as their direct hire coun­ter­parts. Employ­ers should note these changes and con­sid­er whether staffing needs are bet­ter ful­filled by labour hire arrange­ments, or by direct­ly engag­ing staff.

Casu­al employment

Labor will leg­is­late to ensure that all casu­al employ­ees have the right to request con­ver­sion to per­ma­nent work after 12 months of full or part time engage­ment. Present­ly most if not all awards have casu­al con­ver­sion claus­es, but non-award employ­ees do not have the right to request casu­al con­ver­sion. Under Labor's pro­pos­al, employ­ees would now have the right to chal­lenge an unrea­son­able refusal of such request by employ­ers. Exist­ing pro­vi­sions for casu­al con­ver­sion are quite strin­gent so employ­ers should ensure that they are com­pli­ant with mod­ern award require­ments when assess­ing a request to con­vert to per­ma­nent employ­ment. Labor will also intro­duce a leg­isla­tive def­i­n­i­tion of casu­al employ­ment fol­low­ing con­sul­ta­tion with key stakeholders.

Pay Equi­ty

The pay equi­ty pol­i­cy is per­haps the most robust reform agen­da pro­posed by Labor in their employ­ment and indus­tri­al rela­tions pol­i­cy agen­da. Equal remu­ner­a­tion will be addressed by imple­ment­ing pay equi­ty as a cen­tral objec­tive of the work­place rela­tions sys­tem and by estab­lish­ing a statu­to­ry ?'Equal Remu­ner­a­tion Principle'.

This will be accom­pa­nied by the cre­ation of a Pay Equi­ty Unit and a boost to FWC fund­ing to con­duct Pay Equi­ty Reviews and order pay increas­es to fem­i­nised indus­tries. Com­pa­nies with more than 1000 employ­ees will have manda­to­ry report­ing of their gen­der pay gaps and there will be a ban on pay secre­cy claus­es. It is unclear when this change will be imple­ment­ed, but it will be sig­nif­i­cant. This will have an impact on large employ­ers who will have to report pay inequity and employ­ers in fem­i­nised indus­tries such as child care, who will be sub­ject to phased fund­ing of pay increases.

Migrant Work­ers

Anoth­er robust pol­i­cy agen­da item is changes to tem­po­rary skilled migrant visas. Labor will increase the Tem­po­rary Skilled Migra­tion Income Thresh­old for 457 visa hold­ers (or sim­i­lar visas), and lim­it non-mon­e­tary fac­tors that con­tribute to the base salary such as accom­mo­da­tion. This will be accom­pa­nied by increased fund­ing for a joint agency task­force and the exten­sion of exist­ing FWO pow­ers. There will be more strin­gent cri­te­ria for skills assess­ments and occu­pa­tion­al licensing.

Labor has claimed that they will estab­lish an inde­pen­dent labour mar­ket test­ing body to deter­mine gen­uine skills needs. It is unclear if this will gen­uine­ly bridge a gap between employ­ment, edu­ca­tion and train­ing, and immi­gra­tion, three areas that are typ­i­cal­ly man­aged sep­a­rate­ly. Tem­po­rary skilled visas will be fur­ther restrict­ed to gen­uine skills needs, and the cost of the visa will be increased. This indi­cates a crack down on the use of tem­po­rary migrant work­ers. This may pose dif­fi­cul­ties for indus­tries that have tra­di­tion­al­ly relied on migrant labour such as IT and aged care. Employ­ers that heav­i­ly rely on skilled migrant work­ers should be proac­tive in their labour force planning.

Com­pli­ance

The Labor pol­i­cy agen­da out­lines plans to amend the legal test for sham con­tract­ing, lim­it the cir­cum­stances where enter­prise agree­ments can be ter­mi­nat­ed, and increase the enforce­ment and penal­ties for the under­pay­ment of wages. While these par­tic­u­lar changes will only impact employ­ers who are non-com­pli­ant, they do have the poten­tial to cre­ate more admin­is­tra­tive red tape for all employers.

Fair Work Commission

It is no secret that Labor has expressed dis­ap­proval at the Coali­tion Government's rapid appoint­ment of 20 FWC com­mis­sion­ers from an employ­er back­ground. In response, Labor has sig­nalled a mer­it-based appoint­ment sys­tem along­side the pre­vi­ous­ly men­tioned estab­lish­ment of a Pay Equi­ty Unit. This may sig­nal a sig­nif­i­cant over­haul of the FWC with the impact of such changes cur­rent­ly being unclear.

Analy­sis of the Labor pol­i­cy agen­da on employ­ment sug­gests that the changes will be stag­gered, and with poten­tial­ly sig­nif­i­cant impacts on Aus­tralian busi­ness­es. As always, with any leg­isla­tive change, busi­ness­es should ensure that they remain informed and adjust to any leg­isla­tive changes promptly.

For further information please contact:

Richard Ottley, Partner
Phone: +61 2 9777 8380
Email: rbo@swaab.com.au

Nicole Cini, Associate

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.

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