2020 has been a significant year in industrial relations – the coming together of the Federal Government, unions and business in the IR Working Groups, as well as High Court and Full Federal Court decisions – while governments, employers, unions and the FWC all stretched and prodded the Fair Work Act and industrial instruments to meet the challenges of the pandemic.

2021 looks set to continue that trend

In lightning speed, the Fair Work (Registered Organisations) Amendment (Withdrawal from Amalgamations) Bill 2020 was passed by both Houses of Parliament last week. It will enable branches and divisions of amalgamated unions and employer associations to apply to the FWC to withdraw from the amalgamated organisation after the expiry of the current time limit of five years after amalgamation. No doubt the first cab off the rank will be the CFMMEU's mining and energy division.

Of greater interest to many, last week the Government also introduced its highly anticipated 'IR Omnibus bill' – the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill. The bill proposes changes to the Fair Work Act 2009 and other related legislation and major reform in a number of key areas. With both houses of Parliament about to rise for the year, this bill is set to make much slower progress through Parliament than the union de-merger legislation, but will be high on the Government's agenda for 2021. The bill will face staunch opposition from the ALP, who has described it as 'the worst attack on workers' wages and conditions since WorkChoices'.

The big ticket items

Casual employees

A new definition of casual employment is proposed – an employee who accepts an employment offer which makes 'no firm advance commitment to continuing and indefinite work according to an agreed pattern of work' is a casual. A regular pattern of hours will not of itself indicate a firm advance commitment, which can be determined only by reference to whether the:

  • employer can elect to offer work and whether the employee can elect to accept or reject that offer;
  • employee will work only as required;
  • employment is described as casual employment; and
  • employee will be entitled to a casual loading or specific rate of pay.

Where a court finds that an employee has been incorrectly characterised as a casual, it will be able to offset any casual loading paid to the employee to compensate the employee for not having certain entitlements (such as to paid annual leave) against any entitlements claimed by the employee. The impact of the Bill on claims which have been made (or which might be made) relating to the period prior to the Act commencing is dealt with in detailed and complex transitional provisions which will have to be closely scrutinised in any particular circumstance to determine whether the claim is affected by the new provisions. A critical issue will be the extent to which an identifiable amount has been paid for casual loading. A legal challenge in relation to these parts of the Bill has already been foreshadowed, with some commentators suggesting that the transitional provisions amount to an impermissible acquisition of property.

Casual employees will continue not to be entitled to annual leave, paid personal/carer's leave, notice of termination and redundancy pay.

'Long term casuals' will become 'regular casual employees' – but the current definition and regime will largely continue to apply. Service as a regular casual employee will count for parental leave and flexible work arrangements. Service as a casual employee is not to be taken into account when determining an employee's entitlement to redundancy pay. So when a casual employee converts to ongoing employment, their redundancy pay entitlement is limited to the period of service as an ongoing employee and not a casual employee.

Except where there are reasonable grounds not to do so (in which case written reasons must be given), employers will be required to offer casual conversion to employees who have worked for at least 12 months, and for at least six of those 12 months have worked a pattern of hours that could continue to be worked as a part-time or full-time employee. Where these requirements are met, an employee can also request conversion, and can only be refused in limited circumstances. Some procedural obligations (broadly of the same nature as those that apply to flexible work arrangements) will apply to offers and requests. An employer cannot vary hours of work or dismiss an employee to avoid these provisions. When the parties agree, the FWC will have jurisdiction to deal with disputes, but only where a dispute resolution procedure in an industrial agreement, employment contract or any other written agreement does not already exist.

Criminalising underpayments

It will be an offence for an employer to dishonestly and systematically underpay an employee – payment must be in full, in money and at least monthly. In determining dishonesty, a court may have regard to a range of factors, including the number and period of the underpayments, the number of employees affected, and the employer's response to any complaints about the underpayment.

'Major project' greenfields agreements

A 'major project' greenfields agreements (a new concept) will be able to be made for projects of more than $500 million, and projects of $250-$500 million or national significance declared to be such by the Minister. Provided an agreement has an annual wage increase, an agreement can have a term of up to 8 years (doubling the usual maximum term of four years). This would remove the risk of protected industrial action during construction, giving employers greater certainty about wages and conditions during this period.

Modern award changes

Part-time employees covered by a list of identified modern awards (applying in industries most heavily impacted by COVID-19) can agree with their employers to work additional hours without attracting overtime. The agreement will need to be recorded in a new 'simplified additional hours agreement' and will only apply to employees working 16 hours or more each week (or an average of that much). These agreements will be able to be terminated by either party giving 7 days' notice or agreement.

COVID-19 recovery measures

During the COVID-19 recovery period (only):

  • Identified modern awards will be deemed to allow an employer to issue a 'flexible work direction' to an employee about the employee's duties and location of work – if that direction is reasonable and there is available information that leads the employer to reasonably believe that the direction is a necessary part of a reasonable strategy for the revival of the employer's enterprise. Employees must be given three days' notice of a direction and be consulted with.
  • If in the public interest and otherwise appropriate, the FWC can approve an agreement that does not pass the BOOT. Employers may be asked by the FWC to provide financial information to the FWC to substantiate the impact of the pandemic on their enterprise. The 'suspension of the BOOT' has already attracted criticism that it will result in cuts to take-home pay. Of course, the FWC will have a discretion as to whether an agreement should be approved if it does not pass the BOOT and it may exercise this temporary power conservatively, particularly where BOOT issues are relatively extensive.

Enterprise agreements

Some ongoing changes to the BOOT test are also proposed, including to require the FWC when approving an agreement to:

  • only look at actual or reasonably foreseeable patterns of work - not hypothetical rosters; and
  • give 'significant weight' to the bargaining parties' position as to whether the agreement passes the BOOT – in effect, reducing the ability for 'outside' parties to oppose the approval of an agreement on BOOT issues.

The best of the rest

Casual employment

  • FWO must prepare and publish a Casual Employment Information Statement, which must be provided by employers to casual employees at the beginning of employment.

Enterprise agreements

  • Notices of employee representational rights will be required to be issued within 28 days of notification of bargaining, extended from 14 days.
  • The pre-approval process is largely retained – but is slightly less prescriptive in some respects and compliance will now be considered through the prism of whether the employees received a 'fair and reasonable opportunity to decide whether or not to approve' the enterprise agreement.
  • To be eligible to vote on an enterprise agreement – a casual employee must perform work at some stage during the access period to be eligible.
  • Introduction of a 'model NES interaction term' which must be included in enterprise agreements.
  • Allowing new franchisees to opt-in to existing single enterprise agreements made with a group of employers operating under the same franchise.
  • Requiring there to be at least 3 months elapsed since an enterprise agreement has passed its nominal expiry date before an application can be made to the FWC to terminate the agreement, rather than simply the nominal expiry date having been passed.
  • Limiting the ability for 'outside' parties to inform the FWC in respect of certain enterprise agreement applications unless there are exceptional circumstances.
  • Requiring agreement approval applications to be determined, as far as reasonably practicable, within 21 working days of being lodged. If it cannot be determined in that time frame, the FWC is required to set out why it was not able to determine it within the timeframe.
  • A voluntary transfer of employment between associated entities initiated by an employee will not trigger a transfer of business.
  • Amendments to the Fair Work Act (Transitional Provisions and Consequential Amendments) Act 2009 will mean that agreements made prior to the commencement of the Fair Work Act or in the bridging period under the Fair Work Act will automatically cease to set terms and conditions of employees covered by those agreements by 1 July 2022.

Compliance and enforcement

  • Increasing the small claims proceedings threshold from $20,000 to $50,000 and enhancing FWC's role in resolving such claims. This can include orders from Courts that the FWC conciliate underpayment claims and, where agreed by both parties, arbitrate.
  • Prohibition on employment advertisements with pay rates less than the national minimum wage.
  • FWC powers to dismiss applications enhanced.