2018 in Review and What to Expect in 2019
This month we look at some of the major developments from 2018 as well as what to watch out for in 2019.
2018 IN REVIEW
There were significant changes in the employment law space in 2018, particularly in relation to modern awards and casual employment. We summarise some of the main changes and trends from 2018 below.
Changes to Modern Awards
The Fair Work Commission was busy in the latter part of 2018 making various changes to modern awards as part of its 4-yearly review.
The main changes included:
- Casual conversion – from 1 October 2018 most awards provide that ‘regular casuals’ can request to convert to permanent and employers can only refuse on ‘reasonable grounds’. Employers must also give all casuals a copy of the relevant casual conversion clause (see our alert here).
- Termination pay – from 1 November 2018 a clause was inserted into 89 awards requiring employers to pay employees amounts owing within 7 days of termination (not in the next pay run) (see our alert here).
- Family and domestic violence leave – from 1 August 2018 award covered employees can take 5 days unpaid family and domestic violence leave (see our update here). From 12 December 2018 this type of leave was added to the NES in the Fair Work Act (see our alert here).
- Flexible working arrangements – from 1 December 2018 there are additional obligations on employers in relation to requests for flexible work (see our update here).
These are only some of the changes that were made. There were also plain language changes (see our alert here) as well as changes to specific awards.
It is essential that employers are familiar with the award or awards for their workplace, the changes made, that the changes are implemented and that relevant policies and contracts are updated.
Breach of an award term can lead to time-consuming and costly disputes with employees as well as potential penalties under the Fair Work Act.
Changes – casual employees
The upshot of the 2018 developments is that employers who employ long-term, regular casuals may be at risk of claims for unpaid ‘permanent’ entitlements but may now be able to offset any entitlements owing against the casual loading already paid.
The 2018 developments included:
- The August 2018 Federal Court decision of Workpac v Skene. (See our update here). This was a hot topic during the latter part of 2018. Unions heralded the decision as a win for ‘permanent casuals’ whilst employer associations were concerned about ‘double-dipping’ claims.
- Workpac commencing proceedings in October 2018 seeking declarations that a similar employee was in fact casual or that any unpaid ‘permanent’ entitlements could be offset against the casual loading paid. The CFMEU and the Federal IR Minister have intervened in these proceedings. (See our update here).
- The Federal Government introducing a new Fair Work Regulation in December 2018 enabling employers to claim that casual loading be offset against any NES entitlements owing in certain circumstances. (See our alert here).
The full impact of the 2018 developments is not yet clear.
Claims for unpaid ‘permanent’ entitlements can lead to costly and time-consuming disputes and there could also be breaches of awards and the Fair Work Act. The modern award casual conversion provisions also need to be kept in mind.
Aitken Legal has regularly assisted employers navigate the changing casual employment space, and we stand ready to continue to assist.
During 2018, the Fair Work Ombudsman (FWO) secured record high penalties against businesses who were found to have underpaid employees.
The FWO didn’t just target large employers or businesses that underpaid many employees but also prosecuted small family businesses and employers where a single employee was underpaid.
Looking at 2018 prosecutions, the main areas where employers got it wrong included:
- failing to pay award rates, overtime and penalty rates;
- paying flat rates that didn’t adequately cover the minimum wage, penalties, and allowances;
- failing to pay annual leave and superannuation;
- failing to provide payslips or keep records;
- providing the FWO with false records.
Employers who underpay employees risk disharmony in the workplace and poor retention rates, as well as legal implications including FWO investigations, infringement and compliance notices and potential prosecution and penalties.
Trend: accessorial liability provisions – individuals now commonly prosecuted
The 2018 FWO prosecutions reveal it is now standard practice for the FWO to use the accessorial liability provisions in the Fair Work Act to prosecute individual directors and managers who are ‘involved in’ contraventions of the Act.
It has also become more common for employees and unions to use the provisions to name directors and managers in claims for breach of the Act, such as adverse action claims.
Some examples of the use of the accessorial liability provisions in 2018 include:
- Throughout 2018 directors were frequently prosecuted by the FWO and regularly penalised amounts of between $5,000 and $50,000.
- The owner of a Gold Coast security business was personally fined $115,668 for his involvement in the business taking adverse action against an employee and underpaying several employees.
- An accountancy firm was fined $51,330 for its involvement in its client underpaying employees.
- In December 2018, former ABC managing director Michelle Guthrie also named 4 individuals in her adverse action proceedings against the ABC for their part in her dismissal.
- In late 2018 the federal court allowed unions to amend their claim to include an employer’s IR Manager as being involved in contravention of transfer of business provisions under the Act.
Business owners and managers need to ensure that they comply with the Fair Work Act and be aware that the accessorial liability provisions are now commonly being used by the FWO, employees and unions when pursuing claims under the Act.
What to expect in 2019
Some commentators have suggested that 2019 will be a year of even more significant change in industrial relations. We summarise the main potential developments for the year ahead below.
The Federal Election is tipped for May 2019 with polls indicating a win for Labor.
Labor’s ‘Fair Go Action Plan’ includes a focus on ‘standing up for workers’. Some of the proposed changes include:
- restoring penalty rates;
- cracking down on ‘dodgy’ labour hire;
- stopping sham contracting and ‘fake’ casuals;
- closing the gender pay gap;
- cracking down on the ‘abuse’ of 457 visas
- making changes regarding Enterprise Bargaining including a possible return to pattern bargaining.
- abolishing the Australian Building and Construction Commission, as well as the union watchdog, the Registered Organisations Commission.
Whether it is the Coalition or Labor who wins the election, it is clear that we will see some legislative changes in industrial relations in 2019.
Modern Awards – 4-yearly review ongoing
Employers should expect more changes to modern awards with the Fair Work Commission’s 4-yearly review to continue into 2019.
Changes coming to most awards include in relation to redundancy and reasonable overtime, as well as further plain language changes.
There will also be changes to specific awards as well as changes to groups of awards, such as the construction awards.
Employers will need to keep on top of the further changes to awards this year and ensure that all relevant changes are implemented.
There will continue to be developments in relation to casual employment this year, particularly in relation to long-term, regular casuals.
As discussed above, the full impact of the 2018 developments is not yet clear.
It will be interesting to see how the new Fair Work Regulation will be used by employers and applied by the courts.
Also, although this new regulation has been passed by the Federal Government, it may be still be subject to parliamentary review this year.
All parties will also be awaiting the decision in the Workpac v Rossato proceedings which is expected to be heard in the early part of this year.
Also, the Federal Government has just introduced a bill into Parliament to include casual conversion provisions in the Fair Work Act. The provisions will be similar to those inserted into most modern awards last year but will apply to all national system employees. We will keep you updated on the status of this bill and any changes made to the Fair Work Act.
With all of the above, as well as the potential changes if Labor wins the election, the casual employment space will be one to watch in 2019.
Sexual harassment rising
Workplace sexual harassment claims and the amount of compensation being awarded is expected to continue to rise this year.
This has been linked to increased public awareness following the global #MeToo and Times Up campaigns.
In 2019 Australia’s first national inquiry into workplace sexual harassment will take place with recommendations expected to drive policy and legislative change.
Sexual harassment complaints and claims can take a variety of forms and employers can also be prosecuted by the FWO for breach of the Fair Work Act.
These complaints and claims are damaging to workplace morale, reputation and productivity as well as time-consuming and costly.
In 2019, employers will want to not only ensure sexual harassment has no place at their workplaces, but in the wake of increasing awareness and claims employers will also need to be more proactive in preventing and managing sexual harassment.
FWO using stronger penalty and investigation provisions
The first prosecutions by the FWO using the ‘vulnerable workers’ provisions of the Fair Work Act have just started to come before the courts.
The provisions were introduced in 2017 and relate to conduct taking place from September 2017. Further prosecutions using the provisions will start to come through this year.
The provisions include:
- significantly increased penalties for ‘serious contraventions’ and breaches of record-keeping and pay slip obligations;
- prohibition of ‘cashback’ schemes;
- a reverse onus of proof for employers who do not meet record keeping obligations, that is, they will need to disprove wage claims in court;
- new penalties for giving the FWO false or misleading information or hindering FWO investigations; and
- stronger FWO investigation powers.
(See our alert here).
The FWO has just commenced the first prosecution using the reverse onus of proof provision.
A Queensland sushi operator did not meet its record keeping or payslip obligations and is now facing the difficult task of proving that it did pay the employees correctly (Fair Work Ombudsman v A & K Property Services Pty Ltd & Ors (BRG68/2019)).
The FWO has stated that in the past employers may have avoided litigation because the FWO could not produce sufficient evidence, but that now employers should be on notice that the FWO will make full use of the new laws and employers will need to disprove the allegations in court.
There is no doubt that the underpayment of wages will continue to receive attention this year.
Contact us for assistance
It is certain that 2019 will be a year of major change in the employment law space.
Employers, business owners and managers will need to be proactive and ensure they are on top of any changes and their obligations under the Fair Work Act, other relevant legislation and modern awards, as well as their own policies, procedures and contracts.
Aitken Legal will continue to provide you with updates and alerts throughout the year.
We specialise in all aspects of employment law and can assist you with any queries or issues employers may have.
Disclaimer: The information contained this article is general and intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation.