MESSAGE FROM THE EDITOR

In this edition of the Update, we first report on new legislation passed in respect of modern slavery, review of Modern Awards and report on the introduction of domestic violence leave into the National Employment Standards ("NES"). Next, we report on three recent decisions concerning the employment status of workers in the gig economy and accessorial liability for underpayment of wages.

IN THE PIPELINE—HIGHLIGHTING CHANGES OF INTEREST TO EMPLOYERS IN AUSTRALIA

Modern Slavery Act Passes Through the Senate

On 29 November 2018, the Modern Slavery Bill 2018 (Cth) was passed in the Senate, establishing a "Modern Slavery Reporting Requirement" for large businesses operating in Australia, being organisations with consolidated revenue of more than $100 million. This annual reporting requirement will affect approximately 3,000 Australian businesses that now must account for their actions to address modern slavery risks in their operations and supply chains.

Final amendments to the Bill introduced compliance mechanisms empowering the Minister for Home Affairs to require entities to explain why they have not complied with the reporting requirement and/or to undertake specified remedial action. The new legislation does not include civil penalties for non-compliance. However, a mandated three-year review will consider whether such penalties should be introduced.

As noted in our June 2018 Update, the Modern Slavery Act 2018 (NSW) was passed on 23 June 2018. This Act requires businesses in NSW with a turnover of more than $50 million to prepare a modern slavery statement. Currently, there are no other states that have passed modern slavery legislation.

No More Four-Yearly Review of Modern Awards

The Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017 (Cth), passed on 5 December 2018, removes the requirement of the Fair Work Commission ("FWC") to conduct four-yearly reviews of Modern Awards and gives the FWC powers to approve enterprise agreements with minor procedural or technical errors. Following passage of the Bill, the FWC still has the power to vary Awards, of its own volition or by application by parties covered by a Modern Award.

Domestic Violence Leave in the NES

On 6 December 2018, the Fair Work Amendment (Family and Domestic Violence Leave) Bill 2018 (Cth) was passed, entitling all Australians to a guaranteed five days of unpaid family and domestic violence leave each year. The entitlement is available in full at the commencement of each year rather than accruing progressively and does not accumulate from year to year. The entitlement was included into all Modern Awards beginning in July 2018 because the FWC considered the existing entitlements to be insufficient for employees facing family and domestic violence. Following the passage of this Bill, the leave is now available to all types of Australian workers.

HOT OFF THE BENCH—DECISIONS OF INTEREST FROM THE AUSTRALIAN COURTS

Joshua Klooger v Foodora Australia Pty Ltd [2018] FWC 6836

Factual Background. Mr Klooger, a Foodora delivery driver, created a substitution scheme via a chat group between delivery drivers by giving his app-login details to other drivers so they could swap shifts. Foodora requested that Mr Klooger leave the chat group and hand over the rights to it to Foodora, claiming that he was potentially breaching the company's confidentiality and intellectual property rights. When he failed to do so, Foodora terminated Mr Klooger's contract. He subsequently brought a claim for unfair dismissal.

Legal Background. The case centered on two key issues. First, it concerned whether Mr Klooger was an employee or an independent contractor of Foodora, as he would have access to the unfair dismissal jurisdiction only if he were an employee. Second, the case evaluated whether the dismissal was unfair under s 387 of the Fair Work Act 2009 (Cth) (FW Act).

Decision. First, the FWC found that Mr Klooger was an employee of Foodora. To determine whether an individual is an employee or a contractor, the court typically looks to a number of factors, including the level of control an employer exercises over its employees and whether the individual served the others business or operated a business of his or her own.

Here, the FWC concluded that the level of control by Foodora over its employees was consistent with that of an employer-employee relationship. In coming to its decision, the FWC considered various factors, including:

  • that Mr Klooger worked for other delivery companies at the same time;
  • that Mr Klooger did not have substantial investment in the capital equipment he used to perform the delivery work and did not have significant business expenses;
  • that Mr Klooger's bicycle was used for nonwork-related activities;
  • that there is little skill involved in operating a bicycle in the performance of delivery work and the work does not involve an established profession, trading or calling;
  • that Foodora presented its drivers to the world at large as a component of its business, with the court's attention drawn to statements on the Foodora website referring to "our drivers";
  • that Foodora drivers were required to use Foodora clothes and equipment;
  • that Foodora did not deduct tax from the remuneration paid to Mr Klooger;
  • that remuneration was paid periodically; and
  • that Mr Klooger was not provided with paid holidays or sick leave.

The FWC also noted the need to expand the orthodox analysis of the employee/subcontractor question as the nature of work changes with new technologies. The FWC also reasoned that, if the characterisation of the contract identifies any violation of the law or regulatory standards, the characterisation that avoids or minimises the likelihood of such violation is preferred.

Second issue, the FWC found Mr Klooger's dismissal unfair under s 387 of the FW Act. A dismissal is unfair under the Act if it is "harsh, unjust or unreasonable". Here, the court concluded the substantive and operative reason for Mr Klooger's dismissal was his public complaints public about workplace rights and entitlements, particularly his appearance on "The Project". The FWC found that such conduct does not represent a reason that is sound, defensible or well-founded. The FWC also noted that Mr Klooger was not given an opportunity to respond or provide explanation prior to his dismissal.

Fair Work Ombudsman v OzKorea Pty Ltd & Ors (2018) 70 AILR 102-981

Factual Background. This decision involved two proceedings, each of which concerned underpayment of the cleaning staff at Woolworths stores in Tasmania. OzKorea was subcontracted by Pioneer Respondents ("Pioneer") to carry out Pioneer's obligations under its contract with Woolworths for cleaning services. Mr Hwang was the director of OzKorea.

The court addressed three issues: (i) whether the contraventions of the FW Act and FW Regulations alleged against Mr Hwang/OzKorea were proven; (ii) whether there was a subcontractor relationship between Mr Hwang/OzKorea and Pioneer; and (iii) whether Pioneer was accessorily liable for breaches of the minimum standards provisions of s 550 of the FW Act.

Legal Background. In order for Pioneer to be accessorily liable for breaches by OzKorea under s 550 of the FW Act, Pioneer must have had knowledge of the essential ingredients of the breaches. Further, s 793 of the FW Act provides that any conduct engaged in on behalf of a body corporate by an officer, employee or agent of the body within the scope of their authority, or by a person acting with the consent or agreement of an official of the body, is taken to have also been engaged in by the body corporate.

Decision. First, the court was satisfied that the allegations of underpayment by Mr Hwang and OzKorea were proven.

Second, the court found there was a subcontractor relationship between Pioneer and Mr Hwang/OzKorea for cleaning services.

Third, the court concluded that because Pioneer's CEO had contractually agreed to ensure compliance by representatives with Award entitlements, he had knowledge of the application and operation of the Award, the amounts being paid to subcontractors and the number of hours required to fulfil the contract with Woolworths. Thus, the court found he had knowledge that the amounts being paid were insufficient to meet the minimum standards.

The court recognized that, in some cases, it is impossible to prove that a head contractor had actual knowledge of the sums paid to the employees. This does not mean, however, that the head contractor does not have actual knowledge that the sums paid to employees are insufficient to meet the minimum employment standards. The FWC rejected the contention that the law requires the head contractor to be aware of the amount paid to each employee each pay period or the hours worked by each employee.

The court awarded penalties of $5,000 on Mr Hwang, $20,400 on OzKorea and $40,000 to Pioneer.