What does an ALP Government mean for employers?
In our pre-election Alert, we analysed what the impacts of an Albanese-led Labor Government might look like for employers. Having won the election, the Australian Labor Party (‘ALP’ or ‘Labor’) will now seek to implement the industrial relations reforms we examined.
Some of the proposed reforms announced by the ALP during the election campaign will necessitate change to the employment relations strategies of organisations of all sizes and industries. In this Employment Update, we have summarised some of the proposed reforms we consider employers should be turning their minds to, as employers may be forced to implement the change contemplated by these proposed reforms in the very near future:
“Same Job, Same Pay”
Labor’s Same Job, Same Pay reform intends to target the labour hire industry and ensure that employees working alongside one another doing the same job receive the same pay, whether they are employed directly or through a labour hire company.
Any organisation that sources labour through labour-hire arrangements may soon need to examine the terms and conditions of their placed workers, and the agreements they have with labour-hire providers. While the precise detail of the plan has not yet been announced, the impact of these changes could conceivably extend to ‘internal’ labour-hire arrangements within related entities under service arrangements.
Until the proposed amendment’s details are revealed in full, labour-hire providers and recipient businesses might consider analysing what differences exist, if any, in the working conditions of employed workers and labour-hire workers and consider how they might resolve those differences (if necessary).
The previous Coalition government introduced the first legislative definition of casual employment which focused on the employment contract, and in particular the offer and acceptance of casual employment. The ALP intends to reverse this change and according to their website, appear likely to revert to defining casual employment as something similar to the “absence of a firm advance commitment as to the duration of the employee’s employment or the days or hours the employees will work”. If such a definition is adopted, this will necessitate the assessment of whether an employee is a casual employee to be based on an analysis of the overall circumstances of the employment, such as duration, pattern of work and hours of work.
If and when this change is made, employers who engage casual employees will be required to reconsider their casual employment arrangements in light of the new definition.
The prospect of casual employees making claims for unpaid entitlements on the basis they were not genuinely a casual employee may once again loom as a significant risk for employers who engage casual employees. It will once again become essential that employers adequately describe the casual loading paid in lieu of permanent-employee entitlements in their employment contracts and pay slips as a separate and clearly identifiable amounts to protect their interests in the event that a claim for permanent employee entitlements is made.
Many employers will already have these types of protections in place given the systems changes that were essentially forced upon employers as a result of the Workpac v Rossato decisions in the lower courts (and before the Fair Work Act changes and the High Court gave certainty to employers on the issue). However, if they have not put those systems in place, they may need to act quickly to assess their casual employment arrangements, and take steps to protect themselves in this regard.
In an effort to crack down on insecure work, Labor intends to regulate the use of fixed-term employment contracts to limit the maximum duration of fixed-term contracts to 24 months. It appears that the number of renewals will also be capped at 2 renewals within 24 months, but this has not been formally announced.
It is uncertain whether the reference to a fixed-term contract also includes the type of contract commonly referred to as a ‘maximum term’ contract, which provides for a specified term of the contract, but also allows for termination within the term by the giving of appropriate notice. Aitken Legal assumes that this change will apply to maximum-term contracts, but this is not clear from the current information available.
Employers who regularly utilise longer fixed-term or maximum-term contracts in their workforce should start to consider how these changes will impact on their business model, and how they can resolve those impacts should the changes pass through parliament in the near future.
At this stage, it is unknown when the proposed changes will come into effect and how they will interact with pre-existing fixed-term contracts.
Labor’s plans include a proposal to prohibit employers from including pay-secrecy clauses in their employment contracts. The same plan, introduced to target the gender pay gap, will also require large employers to report their gender pay gap publicly.
Employers should start considering how a move to having transparency between employees on their wage arrangements could impact internal employee relations and external reputations. It is recommended that employers who will be impacted seek advice from Aitken Legal on the changes that may be required to employment contracts and policies to comply with these new obligations and on any risk mitigation strategies that may be necessary.
Any remaining ‘WorkChoices’ era agreements (often referred to as ‘zombie agreements’) will be automatically terminated by a particular date that is yet to be announced.
Employers who still operate under collective agreements which were created before the introduction of the Fair Work Act 2009 should be immediately considering how they will deal with the potential automatic termination of those agreements, and a potential transition to the modern award system. These employers may need to consider whether they need to re-engage in enterprise bargaining with their workforce with the purpose of negotiating a new enterprise agreement, or whether they are prepared to move to the modern award system and by implementing common law contracts of employment.
Aitken Legal is well placed to provide advice on all aspects of this important business decision for affected employers.
The changes outlined above are significant for all employers. The contemplated changes around the definition to casual employment in particular could lead to a further era of uncertainty for employers, despite the issue having been given more certainty by the High Court in last year’s Rossato decision. It will certainly be interesting to see how this issue develops over coming months.
Aitken Legal will continue to monitor the developments in this area as the new Federal Government introduce their proposals, and will endeavour to keep employers up-to-date with any important changes as they are debated and potentially passed through parliament.
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.