IN THIS UPDATE: Mondelez v AMWU, minimum wage changes, modern awards, enterprise bargaining, labour hire licensing, the SKM appeal case, and recent developments in industrial manslaughter.

The financial year is well underway and with the decision of the Full Court of the Federal Court in Mondelez v AMWU [2019] FCAFC 138, it really has started with a bang in the industrial relations space!

As most of you will know, in the decision in Mondelez, the Full Court of the Federal Court held that the NES entitlement to 10 days personal leave per year is to be calculated as 10 ‘working days’ – being the ordinary hours that would have been worked during a 24 hour period but for the absence.

Obviously, the decision has implications for those who have employees working compressed rosters on averaging arrangements, but it also has the potential to impact entitlements for part time employees and all others who don’t work their ordinary hours across 5 days per week, with the same number of hours each day. It’s a significant decision. And if you know of a payroll system that accrues in days, we’d be overjoyed to hear about it!

In the meantime, the following are your ‘need to knows’ for the start of the year.

Workplace Relations update

Increases to minimum wages, thresholds and fees, and changes to forms

As you will all no doubt know, the National Minimum Wage Order 2019 came into operation on 1 July 2019 and provided an increase of 3% to modern award rates of pay, resulting in a national minimum wage of $19.49 per hour or $740.80 per week.

In the unfair dismissals space, the high income threshold has increased to $148,700 with the compensation cap increasing to $74,350 accordingly. The application fee for unfair dismissals (and general protections and bullying applications) has also increased to $73.20.

The Fair Work Commission have also recently updated a number of their forms – particularly in the enterprise bargaining space. The latest version is always available from their website.

Award modernisation

The 4 yearly review of modern awards continues, and on 4 July 2019, the Commission issued a decision largely finalising the review of annualised wage provisions in modern awards. As a result, modern awards will be varied to now contain one of four model clauses with respect to annualised salaries. Details of the model clauses, and the impacted modern awards, are available in the decision 4 yearly review of modern awards – Annualised Wage Arrangements [2019] FWCFB 4368.

The changes do significantly increase the regulatory obligations on employers and, in summary, require employers to:

  • keep a record of the start and finishing times of work, and any unpaid breaks taken by each employee subject to an annualised wage arrangement and, each pay period or roster cycle, have the employee sign, or acknowledge in writing (including by email), that the record is correct; and
  • use that record to, once every 12 months, compare the amount the employee would have earned under the modern award and the amount actually paid to the employee. If there is a shortfall, the amount needs to be paid to the employee within 14 days.

There are also expanded requirements with respect to the agreement with an employee to enter into an annualised wage arrangement.

One ‘work around’ in cases of new employees who earn more than the high income threshold ($148,700 excluding superannuation) is to have the employee accept a ‘guarantee of annual earnings’ following which the modern award will not apply to them. Let us know if you’d like to talk about this option further.

Enterprise bargaining

As you may have noticed, the timeframes associated with enterprise agreement approval in the Commission are largely getting better and the days of waiting several months appear to be behind us. ‘Common issues and defects’ that have delayed agreements being approved (including issues with the NERR and notifications of the vote) have been identified by the Commission and it appears that some are now able to be resolved as a result of the amendment to the Fair Work Act dealing with minor or technical errors, and the decision of the Full Bench in relation to that provision in Huntsman.

What still appears to be a ‘trip up’ is the explanation of terms of the agreement particularly where not all terms detrimental to those in the relevant modern award (or included in the relevant modern award but not the enterprise agreement) are explained to employees. The Commission has published statistics which indicate that where there isn’t the satisfaction of the requirements of s.180(5) of the Fair Work Act (in the sense that was outlined in the decision of the Full Court of the Federal Court in One Key Workforce) then the deal is unlikely to be approved.

Where we are seeing some turning of the tide is in some ‘push back’ to unions intervening in approval matters where they have not been a bargaining representative for the agreement. The Commission recently refused permission to the AWU to be heard in the approval of an agreement where it was not a bargaining representative (see here). In another recent decision the Commission severely criticised the CFMMEU’s involvement where they were a stranger to the proceedings and their involvement caused delay which the Commission considered to be unnecessary and detrimental to the employees and employers who had made their agreement and just wanted it approved and operating.

Labour hire licencing

Labour hire licencing statutory schemes are operating in Victoria, Queensland and South Australia with labour hire authorities in each of these States responsible for implementing and enforcing the legislation. Under the Victorian scheme, labour hire providers must have applied for, or have, a labour hire licence by 30 October 2019. An unlicensed provider of labour hire, or a person that uses an unlicensed provider, may be subject to significant financial penalties (currently up to $528,704 for a body corporate in Victoria).

The existing legislation, given the broad way in which it is drafted, has the potential to reach a range of provider arrangements beyond the historically commonly understood term of ‘labour hire’. Our key ‘to do’ is to review your procurement arrangements to make sure you are across where the schemes may/may not apply to you and the requirements as to licencing or other obligations.

Safety Update

SKM appeal case

The Victorian Supreme Court recently affirmed the reasonable practicability test of an employer’s general duty under the Victorian OHS Act after a Magistrate misstated the test.

SKM Services Pty Ltd (SKM) operated a recycling sorting service in Victoria. Specialised technical equipment was used, including a baler to crush and bale aluminium cans and a baler to crush and bale steel cans. Both balers were purchased by SKM from a supplier. An employee of SKM sustained an amputation injury to his hand on the aluminium can baler.

SKM faced three charges of alleged breaches of s.21 of the OHS Act for failing to provide and maintain safe plant (the balers) and a safe system of work for strapping the bales. The employer’s duty in this regard is qualified by what’s reasonably practicable, as set out in s.20 of the OHS Act. Reasonably practicable (s.20(2)(c)) requires consideration of what the employer ‘ought’ to have known about the risk and ways to eliminate or reduce it, as opposed to what it could have known.

The Magistrate held SKM could have foreseen the identified risk and implemented engineering controls in the form of tunnel guarding on both the balers.

The Victorian Supreme Court held (at [106]) that “the Magistrate impermissibly reasoned backward form what had happened, and how readily it ‘could’, in hindsight be guarded against, rather than examining the question on the basis of what SKM ‘should’ have foreseen prior to the injury”.

This decision confirms that the test is what an employer should have foreseen and done, with actual or constructive knowledge, to eliminate or reduce the risk to health and safety. Remembering that it’s a matter for the prosecution to prove the reasonable practicability of the measures it says should have been taken.

SKM Services Pty Ltd v Magistrates’ Court of Victoria & Anor [2019] VSC 460 (15 July 2019)

Industrial manslaughter – recent developments

Industrial manslaughter laws operate in Queensland and the ACT. Industrial manslaughter offences in existing OHS/WHS legislation is also planned for Victoria and the NT.

The Victorian Government appointed Workplace Manslaughter Implementation Taskforce will develop the laws, under which employers will face fines of almost $16 million and individuals responsible for negligently causing death will face up to 20 years in prison. The new offence is planned to be introduced into Victorian parliament by the end of this year.

The NT Government plans to introduce industrial manslaughter laws within a year with maximum penalties of life imprisonment for individuals (company officers) and $10 million for bodies corporate. There is no current proposal by the Federal Government to introduce federal industrial manslaughter laws.

If you conduct business in jurisdictions where these offences operate (or are pending) your company’s officers should be updated, informed and trained in the significance of this offence to them as an individual. Support mechanisms and resources to assist officers to comply with their duties should be reviewed, adapted and expanded, as required.