Industrial Relations Reforms on the Agenda

OWEN WEBB, AHA|SA WORKPLACE RELATIONS MANAGER

The Federal Government has signalled its intentions in relation to industrial relations reforms with the introduction of its industrial relations reform package into Federal Parliament. The proposed legislation seeks to make substantial changes to Australia’s industrial relations system, particularly as it relates to casual employment.

The AHA has led advocacy efforts on behalf of Australia’s hotel and hospitality industry, through our membership on several key ministerial working groups.

The end result of this consultation is the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill), which seeks to amend the Fair Work Act 2009 (Fair Work Act) and related legislation. The Bill aims to provide greater certainty and flexibility to employers and employees, support productivity, employment and economic growth and assist in Australia’s recovery from COVID-19 by stimulating job creation whilst protecting workers.

The reform package is currently being debated in Parliament with Federal Labor at this initial stage signalling that it will oppose the Bill in its current form. So how do the changes being proposed through the Bill impact the hotel and hospitality industry?

CASUAL EMPLOYEES

Arguably, one of the most significant inclusions in the Bill is the introduction of a statutory definition of a casual employee. The definition focuses on the offer and acceptance of employment.

The Bill intends to prevent ‘double dipping’ as a result of inadvertent misclassifications. In circumstances where an employee is misclassified as casual, the casual loading paid to an employee can be offset against claims for leave and other entitlements.

This will give employers confidence to create jobs as well as encourage rehiring of many casuals who lost their jobs due to COVID-19.

Additionally, the Bill introduces a mandatory obligation requiring employers to offer regular casuals conversion to full-time or part-time employment and provides limited exceptions to the obligation. This obligation provides employees engaged as casuals, who work regularly to convert to permanent employment if it is their preference.

The conversion entitlement is enlivened if the employee has been:

a) employed for at least 12 months; and

b) worked a regular pattern of hours for six (6) months.

There is a residual right for employees to convert in certain circumstances where they have not received or accepted an employer offer to convert.

The Bill also requires casual employees to be provided with a Casual Employment Information Statement published by the Fair Work Ombudsman (FWO).

MODERN AWARD FLEXIBILITIES

The Bill seeks to extend the current JobKeeper flexibilities contained in the Fair Work Act relating to duties and location of work for two (2) years for award covered employees.

The Bill introduces part-time flexibility provisions across ‘identified modern awards’, two of which are the Hospitality Industry (General) Award 2020 and the Restaurant Industry Award 2020. The new provisions allow employers and employees to work together and agree for employees who already work at least 16 hours per week to work additional hours and be paid at their ordinary rates.

This change will provide benefits for both employers and employees, by:

• stimulating employment in recovering businesses;

• additional hours of work for employees who want it; and

• place permanent employment (with paid leave entitlements) on a more competitive footing with other traditionally more flexible forms of employment.

CREATION AND APPROVAL OF ENTERPRISE AGREEMENTS

This Bill aims to make the enterprise agreement making and approval processes easier and faster.

The Bill will reduce the level of prescription currently imposed by the Act and provide greater flexibility of how employees are provided with a fair and reasonable opportunity to consider an agreement prior to casting a vote.

As part of the approval process, the Fair Work Commission (‘FWC’) would be required to listen to the views of the bargaining representatives, and intervention by other persons/parties would be limited.

The Bill proposes all enterprise agreements include a mandatory term which explains the interaction between the National Employment Standards (‘NES’) and the particular agreement.

This will expedite the approval process as the FWC will no longer be required to satisfy itself the terms of an agreement exclude NES protections. The FWC would be required to approve agreements, as far as practicable, within 21 working days.

The Bill clarifies that the FWC is required to consider the following when applying the better off overall test (BOOT) (the process of assessing the agreement against the applicable modern award):

• only the patterns, kinds of work or types of employment employees are currently engaged in and is reasonably foreseeable for employees to be engaged in;

• the overall benefits (including non-monetary benefits) employees would receive under the agreement compared to a relevant modern award; and

• any views expressed by employers, employees and their bargaining representatives regarding whether the agreement passes the BOOT.

Additionally, in limited circumstances, the Bill proposes to permit the FWC to approve an agreement which may not pass the BOOT after taking into account the views and circumstances of the:

• employees;

• employer(s);

• employee organisation/s covered by the agreement,

• impact of COVID-19 on the enterprise;

• extent of employee support for the agreement; and

• whether agreement approval is in the public interest.

This measure is limited to two (2) years and is intended to support businesses still recovering from the impact of COVID-19.

COMPLIANCE AND ENFORCEMENT

This Bill enhances the compliance and enforcement framework to deter non-compliance more effectively and make it easier to recover wages when underpayments occur.

In effecting this, the Bill introduces a new criminal offence for dishonest and systematic wage underpayments and increases the value and scope of civil penalties and orders which a court can impose for non-compliance.

Employees would be able to recover entitlements more efficiently through the small claims process, by increasing the small claims cap from $20,000 to $50,000.

The Federal Circuit Court and Magistrates Courts would be able to refer small claims matters to the FWC for conciliation and consent arbitration.

Also, the Bill makes it an offence for a business to publish job advertisements with pay rates below the minimum wage.

POWERS OF THE FWC

The Bill includes measures to support more efficient FWC processes, including to enable the FWC to:

• deal with appeals ‘on the papers’ where appropriate.

• vary or revoke decisions relating to agreements and workplace determinations more easily, to correct minor errors; and

• deal more effectively with unmeritorious applications.

These measures would enable the FWC to deal with matters more expeditiously and promote effective allocation of its resources.

NEXT STEPS

The legislation will stimulate significant public debate and require substantial negotiation in the Parliament over the coming months.

The AHA will continue to lobby Federal Parliamentarians to support this Bill. There has always been an obvious need to bring greater certainty, clarity and simplicity to Australia’s industrial relations system, but the COVID-19 crisis has only increased the urgency to do so.

AWARD FLEXIBILITY CASE – HOSPITALITY AND RETAIL SECTORS

As part of the Federal Government’s IR reform agenda to bring greater flexibilities into Modern Awards, the Minister for Industrial Relations, Christian Porter MP has requested that the FWC use its powers under the Fair Work Act 2009 (Cth) to make amendments to a number of priority modern awards in those sectors hardest hit by the pandemic.

In December 2020 the FWC commenced the process of determining the potential for greater flexibilities in Awards covering the Hospitality and Retail Sectors.

This affects the following awards in the hospitality and retail sectors:

• Hospitality Industry (General) Award 2020

• Restaurant Industry Award 2020

• Registered and Licenced Clubs Award 2020

• General Retail Industry Award 2020

The Minister in his letter to FWC President Justice Ross identified that as a result of stakeholder meetings held between employer groups and unions during the height of the COVID-19 Pandemic there were a number of award flexibility measures that ‘could prove critically important for providing businesses in the most distressed part of the economy with the confidence to increase hiring during the recovery’. The two key areas included:

• To potentially simplify pay arrangements in the form of ‘loaded rates’ and/or ‘exemption rates’ designed to reduce the cost of administrative burden for employers and address existing pay rate complexities.

• Further streamlining of present classification structures so that they are clearer, easier to understand and simpler to apply.

Nationally the AHA has put forward initial submissions and proposals to the FWC to vary the Hospitality Industry (General) Award 2020 (‘HIGA’). The AHA has submitted four proposals in relation to the HIGA including:

• Consolidation of Junior Employee Classifications Rates

• Simplification of hours of work arrangements

• Simplification of late night/early morning penalties; and

• Introduction of loaded rates

In relation to loaded rates the AHA has proposed the introduction of 6 loaded rates for full-time employees to simplify the administration and understanding of entitlements and payroll for employers and employees. The loaded rates are based on the base hourly rate for the respective classification plus a specific loading (see table below).

40 HOUR PROPOSALS

A: Monday to Friday 40 hrs, 10% loading on base rate

B: Monday to Saturday 40 hrs, 19% loading on base rate

C: Monday to Sunday 40 hrs, 28% loading on base rate

45 HOUR PROPOSALS

D: Monday to Friday 45 hrs, 20% loading on base rate

E: Monday to Saturday 45 hrs, 25% loading on base rate

F: Monday to Sunday 45 hrs, 35% loading on base rate

In each case the loaded rate would compensate the employee for work performed:

• Between 7am-Midnight (Mon to Fri)

• Saturday (Max of 10 hrs)

• Sunday (Max of 10 hrs)

• Overtime up to the relevant 40 or 45 hour range

• Split Shift allowance

• Tool allowance

• Buffer of $10 per week

Work performed on public holidays or in excess of daily/weekly limits is proposed to be paid at the applicable award overtime or public holiday rate. The AHA will keep members abreast of the developments in this major case.