Employment law proposals set to impact Australia’s employers in 2021

2021 is set to be a bumper year for employment law changes with a number of wide-ranging proposals in the pipeline.

The Coalition government’s Industrial Relations reform bill, which was unveiled at the end of 2020, is likely to have the biggest impact on employers across the country.

HRD spoke to Kyle Scott, director of the Australian Business Lawyers & Advisors (ABLA) about some of the key areas for employers to watch this year.

Defining a casual employee

The most far-reaching aspect of the proposed Fair Work Amendment bill looks to create a statutory definition of a casual employee for the first time.

It comes after the High Court rulings of Workpac vs Skene and Workpac vs Rossato which ruled that a worker could not be defined as casual if their work patterns reflected regular, ongoing employment.

As such, the employee may be eligible for entitlements like annual leave and sick pay, as well as their casual loading.

Workpac has appealed the High Court’s ruling and Scott said while it’s difficult to predict when the court will publish its decision, it could be as late as the second part of this year.

The Fair Work Amendment bill proposed by Attorney-General Christian Porter may pass through Parliament before the High Court’s ruling on the appeal, setting a precedent for employers to follow in terms of defining their casual workforce.

The ruling sparked concern among employers over potentially costly claims and created confusion about determining when the employee transitioned from a casual to a permanent worker.

“The bill at the moment makes it clear that an employer makes that assessment at the commencement of employment,” Scott said. “It is about whether the offer of employment involves an advanced commitment of work.”

The bill also looks to end so-called ‘double dipping’, allowing an employer to use the casual loading to offset the cost of accrued entitlements.

The bill was introduced to Parliament in December, but it has already faced some opposition and will inevitably undergo a number of amendments before being passed.

Scott said it was unlikely the bill would come into place before April this year and employers would have to hold tight.

But for businesses which rely on casual employees, being aware of the proposed changes and reviewing the definition of their employees will enable them to be better prepared.

Proposed changes to the BOOT

The most controversial element of Porter’s bill is around plans to amend the Better Off Overall Test (BOOT) which underpins enterprise agreements.

Employers argue the BOOT is too complex and means enterprise agreements often fall down due to the prescriptive nature of the process.

“The bill is looking to relax some of the elements of the enterprise bargaining framework because over the last few years we’ve seen a significant decline in the number of agreements being made,” Scott said.

“They’re looking to make the process a little bit easier to encourage employers to make an enterprise agreement.”

The reform would allow employers affected by COVID-19 to ask the Fair Work Commission for an exemption to the BOOT for new agreements made until 2023.

The proposed change has been met with strong opposition from unions and the Labor party, meaning the Coalition may struggle to get it through government as it currently stands.

There is a considerable grey area when it comes to gig economy workers in Australia.

As the trade of gig employers continues to expand, more legal challenges are expected in court as the unions continue to push for better rights.

“There’s a move towards the contracting relationship being really put under the microscope and challenged,” Scott said. “Currently we have yet to get a resolution on the status of gig workers and whether or not it’s legitimate within these models for workers to operate as independent contractors.”

In Australia, gig workers are considered independent contractors rather than employees but it’s a distinction that unions continue to challenge.

In the UK, the Appeal Court went against Uber on this point, upholding an employment tribunal’s finding that drivers were “workers” and therefore entitled to the national living wage and holiday pay. Uber has appealed the decision in the Supreme Court.

Unlike the situation with casual workers, there is currently no proposed federal legislation on gig workers, meaning the courts will play a key role in hashing out the legalities on a case by case basis.

“I expect to see ongoing challenges and ongoing litigation around the gig economy,” Scott said. “But I think it might be some time before we get any real clarity on the issue.”

Stepping up compliance and enforcement

Another key element of the Fair Work Amendment bill is the plan to criminalise wage theft and raise the penalty for employers found to be underpaying staff on a deliberate and sustained basis.

We’ve seen a ramping up of the FWC’s efforts to tackle underpayments and that will continue throughout 2021.

“One of the more practical and sensible things within that is the plan for the FWC to work with unions and employer groups to develop clear rates and schedules,” Scott said.

“Under the proposal the data will be made available to all of the payroll systems in the country to try to demystify and make it a little bit easier to comply with the relevant pay rates.”

Employers following the FWC guidance in good faith would then be protected from being persecuted in the event of accidental underpayments.

Continuing COVID-19 measures

The JobKeeper scheme is set to end in March but some of the measures brought in may hang around for a while longer.

Scott said the Fair Work Amendment bill is looking to enshrine some of the flexibility put in place for certain industries during the pandemic, such as streamlined rates of pay.

“It’ll be interesting to see whether these measures die a natural death at some point this year when the pandemic recedes or whether some of them work so well that they will be kept on a permanent basis,” Scott said.

Requests for flexible work arrangements could also become contentious as businesses look to bring employees back into the office later in the year.

Workers who have the right to request flexible arrangements will now have a stronger case if their employer tries to revert to traditional working days and hours.

“I’m sure there’ll be a few legal issues popping up around how hybrid or remote working works in practice,” Scott said. “I think that’ll be an emerging field in 2021.”

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