Australia: 2015 – The year that was: A workplace relations recap

Introduction

Just as 2014 was, 2015 has been rife with changes and developments to the workplace relations landscape. It would be an almost impossible task to comprehensively list all of the year's relevant developments. However, we have chosen some of them to highlight here as we say farewell to 2015 and look ahead to all that 2016 may bring.

Fair Work Act Amendments

Possibly the most significant but certainly the most anticipated of things to occur this year are the first amendments to the Fair Work Act 2009 (Cth) under the current Federal Government. Those changes came into effect on 27 November 2015.

Originally proposed in February 2014 as a full package of reforms, what has been introduced is a significant compromise on what the Government had proposed (so as to secure the support of the Senate crossbenchers), the result being that the changes are limited. The changes of primary relevance pertain to:

Given that the amendments to the Fair Work Act 2009 (Cth) are but a small part of what the Government had proposed in 2014, it is hardly surprising that on 3 December 2015 the aptly named Fair Work Amendment (Remaining 2014 Measures) Bill 2015 was introduced into the House of Representatives. That Bill seeks to tighten entry rules and the transfer of business provisions, and to clarify obligations as to annual leave loading payments on termination of employment (all of which were measures originally proposed in 2014, but not enacted as part of the November 2015 changes).

Modern Award Review

As part of its four-yearly review of modern awards, whilst not an exhaustive list, the Fair Work Commission has:

• finalised model annual leave provisions to be inserted into modern awards, which provisions will include:
• • a right for employer's to direct employees to take annual leave if they have accruals exceeding 8 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);

• ruled that provisions in 11 modern awards (including awards as to Manufacturing, Timber, Wine and Airports) dealing with the transfer of employment and service for annual leave purposes must be amended so that they become consistent with the National Employment Standards;
• ruled that the standard absorption clause in modern awards has served its 'transitional purpose' and will be removed (making it necessary for employers making over-award payments to otherwise document any offset arrangements to ensure that they are able to lawfully offset over-award payments – best achieved by the inclusion of an appropriately worded "set off" provision in an employee's employment contract);
• finalised a model term for time-off-in-lieu of payment for overtime. At the time of writing, the Full Bench of the Fair Work Commission is considering submissions from interested parties on whether the model term should be inserted into specific awards; and
• agreed to include accident make-up pay in a number of modern awards.

The modern award review will continue into 2016.

Productivity Commission Review

The Productivity Commission's draft report on the workplace relations framework was issued in August 2015. Nearly 1000 pages long, the draft report indicates that the Fair Work regime needs 'renovation', but not a 'knockdown and rebuild'. The draft report recommends a number of changes, although they are far fewer in number than might have been expected. In our view, the most significant proposed changes are in relation to:

• the reduction of Sunday penalty rates in some industries;
• a new 'enterprise contract' system that would allow businesses to vary award terms for certain groups of employees;
• the structure and membership of the Fair Work Commission.

The Productivity Commission's final report was handed to the Government on 30 November 2015. The Government has not yet released the final report. The Government must table the report in each House of the Parliament within 25 sitting days of receipt. Given that Parliament has now risen for 2015, a quick perusal of the parliamentary sittings dates for 2016 would indicate that it is unlikely that the report will be tabled before July of 2016.

Of course, there is no guarantee that even the final recommendations of the Productivity Commission will be taken up and implemented by the Government. Watch this space.

Trade Union Royal Commission

The Royal Commission into Trade Union Governance and Corruption has continued throughout 2015, in a high-profile fashion.

After claims of apprehended bias, a late-night document release furore and the identification of alleged cartel behaviour (to name but a few 'incidences' of the Royal Commission throughout 2015), at the time of writing Royal Commissioner Dyson Heydon had wound down the Commission's public hearing schedule and was working toward the delivery of the final report which is due to the Governor General by 31 December 2015.

Pay Rates and other monetary changes

2015 has also seen the following monetary changes:

• Modern Award rates of pay increased by 2.5 percent, rounded to the nearest 10 cents (lower than last year, with the FWC citing lower inflation and aggregate wages growth as being responsible for the more modest increase).
• The National Minimum Wage (for adults working full time) increased by $16.00 per week. Taken as an hourly rate, that's $17.29 (up from $16.87).
• The high income threshold was increased from $133,000 to $136,700.
• The ETP cap for life benefit and death benefit termination payments increased from $185,000 in the 2014/2015 financial year to $195,000.
• The genuine redundancy base limit increased to $9,780 and the amount for each completed year of service increased to $4,891.
• The maximum superannuation quarterly contribution base increased to $50,810 (equating to a $203,240 annual contribution base).

The Fair Work Ombudsman also published a new version of the Fair Work Information Statement (applicable from 1 July 2015).

The Budget

The primary matters affecting the workplace which were announced with the 2015 Federal Budget are:

• Paid parental leave: with the Government's signature paid parental leave scheme having been scrapped in February 2015 (just five months before it was due to commence), the Budget dealt a further blow (and announced on Mother's Day, no less) to paid parental leave. If legislation in regard to this particular Budget initiative is passed (although it seems that it does not currently have the requisite support within the Senate in order to be passed), from 1 July 2016 it will no longer be possible for employees to "double dip" by accessing both government funded paid parental leave and employer provided parental leave payments.
• Work-related car expenses: whilst the "logbook method" of calculating expenses will be retained, the "12% of original value method" and the "1/3 of actual expenses method" will be removed. Further, the "cents per kilometre method" will be modernised through the introduction of a flat rate of 66 cents per kilometre, regardless of the engine size of the vehicle.

Significant decisions

Some of the year's more significant decisions include the following (in no particular order):

Annual leave

• The Federal Court determined, and the Full Court of the Federal Court confirmed, that annual leave owed to workers whose employment comes to an end is to be paid out at the same rate they would have received had they taken it whilst still at work – meaning that where an employee is covered by an award or is otherwise entitled to annual leave loading, annual leave loading should be paid to them on termination.
• The Federal Court ruled that employees in NSW receiving workers compensation are entitled to accrue annual leave during their absence. The decision will likely also impact employers and employees in other States, including in Victoria and in Western Australia. It should be noted that the Federal Government has in its proposed workplace reform package, proposed a provision that would remove an employee's entitlement to take or accrue leave when receiving workers compensation.
• The Fair Work Commission determined that in relation to shift-worker employees not covered by an award or enterprise agreement (although it is likely that the principle applies equally to shift-worker employees more broadly), for an entitlement to an additional week's leave, the employee must work a minimum of 34 Sundays and six public holidays in a year.
• Also in regard to shift-workers, the Fair Work Commission ruled that annual leave must be recorded and is taken by the week or the day, not by the hour – meaning that if a shift worker works 38 hours in four days (rather than in 5 days or more) in a week over the course of a year, they are still entitled to 4 or 5 weeks' annual leave (subject to eligibility for a fifth week – see point directly above in this regard) and to access 10 days of carer's leave.

Bargaining

• In continuation of recent trend (seen also in 2014) a Fair Work Commission Full Bench ruled invalid a Notice of Representational Rights because it departed from strict wording and content requirements, holding that variations from the prescribed form were unacceptable.

Enterprise Agreements

• A Full Bench of the Fair Work Commission terminated 12 enterprise agreements which were past their nominal expiry date, during a stalemate in negotiations for an agreement to replace them. The employer successfully argued that the "legacy provisions" within the agreements hindered its competitiveness and productivity. The decision of the Full Bench was upheld by a Full Court of the Federal Court.

Sham Contracting

• The High Court found that an employer who misrepresented employment as an independent contracting arrangement did not avoid the sham contracting provision in section 357 of the Fair Work Act 2009 (Cth) through introducing a third party (including a labour hire company) into the arrangement. The impact of the High Court's decision in this regard is such that employers can no longer readily avoid the provision preventing sham contracting by simply introducing a labour hire company or another third party to disguise the true nature of the employment relationship.

Contractors v Employees

• The Full Court of the Federal Court added to the law in relation to contractors vs employees, making a decision which has marked a movement away from the emphasis in other recent decisions, on whether the worker was operating as an "entrepreneur" essentially running their own business, in finding that the so-called "entrepreneur" test is just one of the various factors to be considered when answering the question as to whether a worker is an employee or a contractor.

General Protections

• The Federal Circuit Court doled out penalties of $3,500 each for two Human Resources Managers who it said failed to exercise a choice to not implement an employer's decision which had the result of subjecting an employee to unlawful adverse action.

Redundancy

• The Fair Work Commission:
• • determined that redundant employees do not have an automatic right to be redeployed into positions within the employer's business which are held by labour hire workers.
  • determined that redundant employees do not have the right to decide whether they are suitable for a particular redeployment role. It was held that such a decision must be made objectively on the basis of whether or not the employee is capable of performing the redeployment role (with relevant training) – and that the relevant objective assessment need not be made having regard to an employee's preference to work in a particular area or role.

  The Federal Court determined that an employee had been subjected to adverse action when a spreadsheet matrix used in the redundancy selection process caused him to be given a low score for "attitude" by a manager with whom he had historically had a terse relationship as a product of his union activity (serving as a lesson for employers to ensure that each decision maker in any termination process must have impartial and non-prohibited reasons for making the decision).

Drugs and Alcohol

• The Fair Work Commission upheld an employer's right to randomly sample both saliva and urine – opting for "saving lives" rather than preserving privacy.
• A Full Bench of the Fair Work Commission overturned the reinstatement of a ferry captain who was dismissed pursuant to his employer's "zero tolerance" drug and alcohol policy after crashing a ferry into a wharf and failing a drug test administered afterward. A Full Court of the Federal Court agreed with the Full Bench's decision.

Bullying

• A five-member Fair Work Commission Full Bench determined that "at work", for the purposes of an employee being permitted to make a bullying claim, encompasses "both the performance of work (at any time or location) and when the worker is engaged in some other activity which is authorised or permitted by their employer, or in the case of a contractor their principal (such as being on a meal break or accessing social media while performing work)". Essentially they said that alleged bullies need not be "at work" at the time of their conduct. (Note – technically the decision was made on 19 December 2014 (and not in 2015) but it was made at a time subsequent to our 2014 workplace relations recap and it is important enough to mention in this year's).
• The Fair Work Commission made a stop bullying order and, for the first time, published its reasons for doing so. The orders made were that the applicant employees not approach their manager (against whom a bullying application had been made) and that the employer implements appropriate anti-bullying policies, procedures and training to address issues with its workplace culture.
• The Fair Work Commission upheld a performance management program embarked upon by an employer as being "reasonable management action", thereby finding that unlawful bullying (bullying, by law, does not arise in situations of reasonable management action) had not occurred.

Safety

• Under the harmonised work health and safety laws (harmonised other than in Victoria and Western Australia), 2015 saw:
• • the first prosecution of an officer;
  • a record $1.1 million fine doled out to an employer operating an unsafe workplace (which resulted in a contractor suffering a fatal electrocution);
  • guidance from the Courts as to just who will be considered an "officer" for the purposes of the laws (essentially whether or not a person who was not a director or company secretary could be an officer was found to be dependent upon an assessment of their role in the company as a whole, rather than upon a specific function or project in respect of which they may have been engaged).

Discrimination

• Australia Post was unable to avoid being vicariously liable for the racially discriminatory conduct of one of its workers because the Court found that whilst its policy was "exemplary", Australia Post did not effectively respond to complaints of discrimination and that they displayed "a curious lack of engagement" in relation to such claims.
• The Federal Court awarded a worker suffering from Crohn's disease $175,000 for pain, suffering and loss of wages, finding that she was discriminated against on the grounds of her disability and that her employer had failed to make reasonable adjustments to her workplace or employment conditions before terminating her employment.

Abuse of workers

• The Federal Circuit Court awarded a functionally illiterate Indian national with poor English language skills approximately $200,000 when it determined that he had been trafficked from India and forced to work in "conditions akin to slavery".
• Three members of a family were held personally liable by the Federal Circuit Court for their involvement in two Indian students receiving less than 60% of the award rate of pay.
• The Fair Work Ombudsman, in the Federal Circuit Court, completed its first prosecution of an employer for failing to pay minimum wages to interns on "work experience" (and who had worked for the employer as "volunteers"). The employer was required to back-pay the workers and was hit with a $24,000 penalty for breaching the Fair Work Act 2009 (Cth).

Employer-directed medical assessments

• The Federal Court upheld an employer's right to direct an employee to attend an appointment with its nominated medical practitioner to decide whether the employee was fit for duties, and then to dismiss the employee when he refused to attend.

Other developments

The following other developments which (in our view) are of significance have occurred in 2015:

• A number of high profile franchisors and/or their franchisees have been the subject of allegations of exploitation of workers, fresh food labour hire suppliers were exposed for the alleged exploitation of workers and the Baiada Group was found to have been exploiting a large number of working holiday visa holders.
• In September the Building Code 2013 was amended to incorporate mandatory drug and alcohol testing for construction projects funded by the Commonwealth and requiring head contractors to have comprehensive policies in place to manage alcohol and other drugs and to mandate testing.
• In July the Federal Government commenced its Fair Entitlements Guarantee Recovery Program with a view to increasing the prospects of the Government recovering amounts which it has paid, through the Fair Entitlements Guarantee Scheme, to former employees of companies in liquidation. The program will run for initial period of 2 years.
• The Federal Government asked the Human Rights Commission to conduct an inquiry into age and disability discrimination in employment. The Commission has until July 2016 to report its findings and recommendations.
• The extent of required gender equality reporting was reduced, meaning that employers, as from April 2015, are no longer required to report on data relating to things such as: CEO and senior executive remuneration, workers engaged on a contract for services basis, the number of applications received and interviews conducted and the number of requests and approvals for parental leave extensions.
• The Senate resolved to inquire into portable long service leave schemes. The Education and Employment References Committee will conduct the inquiry although no dates for submissions and report had been set as at the date of writing. The Victorian Government is also presently undertaking its own similar investigation with a view to extending state-based portable long service leave schemes, particularly in the community services sector.
• A ministerial working group has been established to consider policy options to curb the exploitation of foreign visa workers.

Looking ahead

With the next Federal election meant to be held between August 2016 and January 2017, obviously 2016 will bring a significant amount political campaigning at the Federal level as both major parties try to appropriately position themselves. Further:

• We consider it likely that (in the words of parliamentary spokesperson Minister Karen Andrews) "the continuation of constructive discussions" with crossbench senators in relation to the Fair Work Amendment (Remaining 2014 Measures) Bill 2015 will take place in 2016, hopefully with an outcome of further reform in relation to entry, transfer of business and leave loading on termination of employment.
• We predict that there will be an equal number of continued "constructive discussions" within the Senate in relation to the proposed restrictions upon paid parental leave.
• The modern award review will continue into 2016 and will traverse further issues, including issues to be common to all awards such as casual employment, part-time employment, family friendly work arrangements and the inclusion of family and domestic violence clauses.
• We expect some new Fair Work Act amendment bills will come into being as a product of the final recommendations of the Productivity Commission. As to whether legislative change will come about as a result, in an election year, it is difficult to say.
• In view of the recent High Court determination regarding sham contracting, we are predicting that in 2016 the Fair Work Ombudsman may ramp up its efforts in identifying and prosecuting employers who may be breaching the obligations which they have to not involve themselves in sham contracting arrangements.
• Given the decisions in relation to the ferry captain, we expect that into 2016 employers will seek to rely more heavily on zero tolerance drug and alcohol policies to discipline or dismiss employees.
• We expect that the amounts awarded in discrimination cases for pain, suffering and loss of wages will in 2016 increase from what has been the norm for some time now, to align more closely with the relatively significant amount of $175,000 awarded in the recent case earlier referred to.
• The Human Rights Commission's inquiry into age and disability discrimination in employment will be a "watch this space issue" following the release of Commission's report in or around July 2016.
• The Education and Employment References Committee will likely commence its inquiry into portable long service leave schemes in 2016 and full details as to the ambit and nature of what may eventuate in that regard should become known.
• We anticipate that the ministerial working group which has been established to consider policy options to curb the exploitation of foreign visa workers will lead to further Fair Work Act reform proposals being taken to the 2016 election.
• The Fair Work Ombudsman's "crackdown" on worker exploitation will likely continue in full force.

This article is not intended to include each and every development in workplace relations in 2015. Nor is it, or any part of it, intended to constitute legal advice.

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.