CTH Introduces Bill for IR Reforms to Support Jobs and Economic Recovery from COVID-19

Thursday 17 December 2020 @ 9.01 a.m. | Industrial Law | Legal Research

The Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 (Cth) was introduced into the House of Representatives by Attorney-General and Minister for Industrial Relations, Mr Porter, on 9 December 2020. The Bill's purpose is described as being to amend the Fair Work Act 2009 (Cth) (Fair Work Act) and related legislation to assist Australia's economic recovery from the effects of the COVID-19 pandemic. According to the explanatory materials, the Bill aims to "improve the operation and usability of the national industrial relations system" by the provision of greater certainty and flexibility to employers and employees. The Bill also aims to ". . . support productivity, employment and economic growth and ensure that employees also receive their share of benefits that flow from economic recovery".

The Bill Objectives

The Bill's key objective is described as being to support the Government's commitment to Australia's jobs and economic recovery. The Bill's explanatory material says this will occur by:

  • providing certainty to businesses and employees about casual employment;
  • giving regular casual employees a statutory pathway to ongoing employment by including a casual conversion entitlement in the National Employment Standards (NES) of the Fair Work Act;
  • extending two temporary JobKeeper flexibilities to businesses, in identified industries significantly impacted by the pandemic;
  • giving employers confidence to offer part-time employment and additional hours to employees, promoting flexibility and efficiency;
  • streamlining and improving the enterprise agreement making and approval process to encourage participation in collective bargaining;
  • ensuring industrial instruments do not transfer where an employee transfers between associated entities at the employee's initiative;
  • providing greater certainty for investors, employers and employees by allowing the nominal life of greenfields agreements made in relation to the construction of a major project to be extended;
  • strengthening the Fair Work Act compliance and enforcement framework to address wage underpayments, ensure businesses have the confidence to hire and ensure employees receive their correct entitlements; and
  • introducing measures to support more efficient Fair Work Commission (FWC) processes.

Key Areas of Amendment

Casual Employees: The Bill proposes the introduction of a statutory definition of "casual employee" focused on the offer and acceptance of employment and which draws on "common law principles". In doing this the Bill is said to prevent unfair outcomes in situations where employers have to pay an employee twice for the same entitlement in the event that an ongoing employee is misclassified as casual. Under the Bill casual loading amounts can be offset against claims for leave and other entitlements in certain circumstances, to address any potential for "double dipping" when recognising the employee's correct classification.

In respect of casual employees, the other change proposed by the Bill is the introduction of a statutory obligation for employers to offer regular casual employees conversion to full or part-time employment, unless there are reasonable business grounds not to do so.

Award flexibilities: The Bill identifies the complexity of awards as a "significant issue for many businesses", and in the context of the COVID-19 pandemic, such issues are exacerbated by "restrictive rules in modern awards" around duties and locations of work. The Bill proposes to ensure flexibility for employers, especially small businesses by extending existing JobKeeper flexibilities in the Fair Work Act concerning duties and location of work to employers and employees to whom identified modern awards apply. These flexibilities, with appropriate employee safeguards, will be available for a period of two years from the date passage of the Bill.

The explanatory material outlines that, as part of the changes proposed, the Fair Work Commission (the FWC) will "no longer be required" to be satisfied that the terms of an enterprise agreement do not exclude the safety net provided by the National Employment Standards (NES) and instead, the agreement must include a term which explains the interaction between the NES and enterprise agreements. The stated intention for the change is the intention to improve the "timeliness of agreement approvals" by the FWC, while maintaining the position that enterprise agreements may not contravene the safety net provided by the NES. Under the new provisions the FWC will be required to approve agreements, as far as practicable, within 21 working days.

The Bill also proposes to clarify the process for the assessment of enterprise agreements against modern awards by requiring the FWC, in applying what is known as "the better off overall test (BOOT)", to:

  • only take into account patterns or kinds of work, or types of employment, that are currently engaged in or are reasonably foreseeable, not those that are hypothetical or not reasonably foreseeable;
  • have regard to the overall benefits (including non-monetary benefits) employees would receive under the agreement compared to a relevant modern award; and
  • have regard to any views relating to whether the agreement passes the BOOT expressed by employers and employees and their bargaining representatives.

One of the more controversial changes proposed by the Bill is that, the Bill will also permit the FWC, in limited circumstances, to approve an agreement which may not pass the BOOT taking into account the views and circumstances of employees, employers and employee organisations covered by the agreement, the impact of COVID-19 on the enterprise and the extent of employee support for the agreement, and whether approval is in the public interest.

The proposed changes to the BOOT are qualified in that they are described as:

  • a time-limited measure (which will automatically be repealed two years after commencement);
  • intended to support businesses still recovering from the impact of COVID-19; and
  • agreements approved under these changes would be limited to two years duration.

Greenfields agreements: The Bill proposes changes with respect to the construction of major projects which the government claims "contributes significantly to jobs and economic growth around Australia" and the risk of enterprise agreements nominally expiring during the critical construction of a major project. The Bill will enable the FWC to approve longer-term Greenfields agreements made in relation to the construction of a major project, to specify a nominal expiry date of up to eight years after the day the agreement comes into operation. Where the Greenfields agreement specifies a nominal expiry date more than four years after the day on which the FWC approves the agreement, the agreement must include a term that provides for annual pay increases for the nominal life of the agreement. These changes, according to the government, will "provide greater investor certainty for future major projects".

Compliance and enforcement: This Bill, according to the explanatory materials, enhances the Fair Work Act compliance and enforcement framework to more effectively deter non-compliance with workplace laws and make it easier to recover wages when underpayment does occur.

According to the explanatory material, employees will be able to recover their entitlements more easily, quickly and cost-effectively through the small claims process, by increasing the small claims cap from $20,000 to $50,000. Federal Circuit Court and magistrates courts will be able to refer small claims matters to the FWC for conciliation and consent arbitration. The Bill will prevent businesses from publishing job advertisements with pay rates below the minimum wage.

To encourage voluntary compliance action by businesses and provide greater certainty about how best to rectify inadvertent misconduct, the Bill requires the Fair Work Ombudsman (FWO) and the Australian Building and Construction Commission (ABCC) to set out when they will defer litigation in appropriate cases, and will codify the factors they may consider when accepting enforceable undertakings.

Fair Work Commission: The Bill proposes 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 enterprise agreements and workplace determinations more easily, to correct minor errors; and
  • deal more effectively with unmeritorious applications.

Comment and Reaction

The ABC News reported ACTU Secretary, Sally McManus' comments that, the changes proposed by the government made it almost "impossible" for casual workers to convert to permanent work and that the changes would "entrench casual work":

"If an employer is unreasonable or does not offer them permanent employment, there is little they [the employees] can do about it, ... Even though we know so many casual workers are not paid more than permanent workers, it also retrospectively takes away rights they would have to paid leave. Casual workers who are incorrectly classified by their employers currently have this right, this legislation would take it away."

In the ACTU's view the Bill is "... a huge missed opportunity to begin to make jobs more secure and turn around the number of causal and insecure jobs."

The Minister for Industrial Relations Mr Porter is reported by the ABC News as saying that he was sure more consultation on the Bill would occur before the Bill was passed by the parliament:

"There are things in this Bill that the unions won't particularly love. There are things in this Bill that business groups are not going to particularly love as well... And no doubt that what we will go into now is a second stage of consultation."

The Bill according to the Minister will after the second reading "go off to a committee in 2021".

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