UNDERSTANDING IMPENDING NEW IR LAWS

The Federal Industrial Relations Minister, Christian Porter, has introduced legislation that will have a significant impact on employers when it is passed.

In particular, MTA members need to be fully aware of impending industrial relations reforms that govern the employment of casual workers.

While the draft legislation provides greater flexibility and certainty for employers, there are a range of compliance issues that must be understood and double checked.

DEFINITION CHANGES

There is now a risk that you could pay the higher rate for casuals, but then be required to pay leave entitlements as well.

For the first time, the proposed legislation would introduce a statutory definition of “casual”. This relates to whether or not, when a person was first employed, the offer of employment was made on the basis of no advanced commitment of continuing work, or any great pattern of work.

The second impact of the legislation is to ensure that a casual loading you may pay to an employee can be offset against any leave entitlement. That means if you do get your classification wrong, and assign a person as a casual when they are not, you can offset that casual loading against leave entitlements. That means an employer does not end up making double payments.

Thirdly, the legislation introduces “casual conversion” for every casual. This is where, subject to certain criteria, a casual that has regular and systematic employment for six to 12 months depending on the sector, has a right to convert to a permanent role.

On the other hand, there is much more protection for employers who have offered the conversion, and it has been refused, to be clear that the person remains a casual.

PART TIME EMPLOYMENT CHANGES

In terms of employing casuals, a stumbling block for many businesses has been part time employment under the Vehicle Repair Services and Retail Award.

One of the key stumbling blocks has been where someone is part time and is employed for, say, 20 hours a week. Then for a few weeks, you need them to work 25 hours. Currently, you have to pay them the overtime rate for that additional work.

The new legislation has introduced the flexibility to allow, by agreement, a part time employee to work additional hours at their normal rate of pay.

This overcomes one of the big stumbling blocks for most businesses in putting people on permanent part time, rather than casual. They didn’t have that flexibility for employees to work some extra hours if needed.

The MTA believes that is a big change for our members.

COMPLIANCE CHANGES

The one other big change that impacts members is related to compliance.

There will be far higher penalties for underpayment claims under the new legislation.

There are also criminal penalties being introduced for dishonest and systemic wage underpayments, what is colloquially called wage theft.

This relates to planned and systemic underpayments, as opposed to an understandable error, which we know can happen and would generally be dealt with simply by rectifying the underpayment. You can still be penalised for those, but while they are at the lower end, the legislation imposes higher penalties, even for accidental errors.

However, if it's dishonest and systemic, criminal penalties will apply.

NEXT STEPS FOR EMPLOYERS

Presuming the legislation passes more or less in its current format, MTA members should review their current employees in terms of whether they are appropriately classified as permanent full time, permanent part time, or casuals, and whether that could be altered under the changes.

They should also assess the casual conversion provision for their employees and make sure it complies.

It would also be timely to undertake a payroll audit, either internally or using the MTA.

It is critical to ensure that people are correctly classified, and are being paid the correct rate, with the correct penalties, loadings and leave entitlement.

MTA members can contact the Workplace Relations team for support or enquiries at 8291 2000 or wr@mtasant.com.au.