Proposed Fair Work Reforms

On 9 December 2020, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill (Bill) was introduced to the Federal Parliament by the Attorney General and Minister for Industrial Relations, Christian Porter. The Bill proposes to amend the Fair Work Act 2009 (and related legislation) in light of the impacts of the COVID-19 pandemic.

The Bill is the result of the Morrison Government’s industrial relations extensive reform roundtables, which commenced in June 2020.¹ In conjunction with a range of stakeholders, including unions and employers, the Government has set out to overhaul the following five main areas of industrial relations legislation, in an attempt to improve the operation and usability of the national system. 

1. The regulation of casual employees and employment
2. Award flexibility and simplification
3. Enterprise agreement making
4. Greenfields enterprise agreements
5. Compliance and enforcement

Casual employees

Under the reforms, a person will be statutorily defined as a casual employee if they:

• are given an offer of employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
• the person then accepts the offer on that basis and becomes an employee.²

Shining a light on the recent common law developments, casual loading amounts will be permitted to be offset against an employee’s claims for leave and other entitlements, should they be misclassified. According to the explanatory memorandum for the Bill, these amendments, alongside the new statutory definition, should ease employer’s fears of employees’ “double dipping” and entice them to rehire casuals they may have ceased to give work to during the COVID-19 pandemic.

Additionally, those classified as casual employees must be offered the opportunity to convert to a permanent part-time or full-time role if:

• they have been employed by the employer for a period of 12 months;
• during at least the last six months of that 12 month period, they worked a regular pattern of hours on an ongoing basis; and
• there are no reasonable business grounds for the employer to decide not to make such an offer.³

Should the casual employee choose not to accept the offer for employment at the applicable time, they are able to request another offer after six months from the date of the first offer if they still qualify.

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Award flexibilities and simplification

It is no secret that many businesses, particularly in the sectors of retail, hospitality, restaurants and bars, were severely damaged by the unprecedented impacts of COVID-19. With small businesses dominating these particular sectors, their lack of resources meant that they struggled with both the complexities of awards on top of the new restrictions placed upon them.

The Bill proposes to extend the existing JobKeeper flexibilities concerning duties and location of work for employees in the Fair Work Act, for a period of two years.⁴

Furthermore, employers and their part-time employees will be able to enter into a simplified additional hours agreement, where the part-time employee may work additional hours not subject to overtime.5 The explanatory memorandum states this will place part-time employees on equal footing with their casual competitors and encourage employers to provide additional hours.

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Enterprise agreement making

In an effort to tackle slow turnaround times for enterprise agreement approvals, the Bill has proposed the Fair Work Commission will have 21 days, as far as practicable, to complete the process.6 To assist in a faster process, the Fair Work Commission will no longer need to be satisfied that enterprise agreements align with the NES and instead, businesses will need to include a term within the agreement which explains its interaction with the NES.⁷

In terms of the approval process itself, currently under section 193 of the Fair Work Act, brownfields enterprise agreements must pass the better off overall test (the BOOT). This will only occur if the Fair Work Commission is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied than if the relevant modern award applied.

Controversially, the Bill seeks to make the assessment and approval of enterprise agreements more lenient, allowing the Fair Work Commission to take into account the following additional considerations when an agreement does or might not pass the BOOT:

• the views of the employees and employers covered by the agreement and the bargaining representatives for the agreement;
• the circumstances of those employees and employers and of any employee organisation that wants the agreement to cover it;
• the impact of COVID-19 on the enterprise;
• the extent of employee support for the agreement; and
• the public interest.⁸

Whilst this provision has the intention of being limited in its application and expiring after a period of two years, it has already sparked outrage amongst unions. 

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Greenfields agreements 

The creation of new construction projects and subsequent greenfield agreements made prior to the introduction of employees, are essential to economic growth. The Bill proposes to enable the Fair Work Commission to approve the terms of large greenfields agreements for up to eight years, preventing mid-project industrial action. This will apply to major construction projects valued at more than $500 million and projects above $250 million should the Minister be satisfied they are of national or regional employment significance. 9

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Compliance and enforcement

Finally, the Bill has introduced further safeguards against employer contraventions of the Fair Work Act and related legislation, by

• creating a criminal offence if an employer dishonestly engages in a systematic pattern of underpaying their employees;¹⁰
• raising the small claims cap from $20,000 to $50,000 to enable employees to easily recover their entitlements and allowing the Federal Circuit Court and magistrates courts to refer these claims to the Fair Work Commission for conciliation and consent arbitration;¹¹
• preventing business from publishing job advertisements with pay rates below minimum wage;¹²and
• requiring the Fair Work Ombudsman and the Australian Building and Construction Commission to publish information relating to circumstances where they will defer litigation and codify the factors they may consider when accepting enforceable undertakings.¹³

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Comments

The Government argues that the Bill provides the certainty and flexibility Australia needs to recover from the economic destruction of COVID-19. However, strong union opposition has highlighted that such legislative reform, particularly relating to enterprise agreement making, may in fact cause more harm than good for employees.

At the time of writing this article, the Second Reading had been moved and the Bill is expected to be referred to a Senate enquiry. We will continue to monitor the progress of the Bill and provide updates when they become available. With the backlash that has already come up against this Bill, it will be interesting to watch how this plays out in Parliament.

If you require any further information, please contact our Workplace and Employment team.

¹  https://www.attorneygeneral.gov.au/media/media-releases/roundtable-kicks-ir-reform-process-3-june-2020

²Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), s 15A.

³ Ibid, s 66B.

⁴ Ibid, ss 789GZG, 789GZH.

5 Ibid, s 168M.

⁶ Ibid, s 255AA.

⁷ Ibid, 205A. 

⁸ Ibid, s 19.

⁹ Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth), s 23B.

¹⁰ Ibid, s 324B.

¹¹ Ibid, s 548(2)(a).

¹² Ibid, s 563AA.

¹³ Ibid, ss 16(1)(d), 682(1)(d).

We gratefully acknowledge the assistance of Lauren Hocking, Griffith University (Nathan) penultimate year law student, in the preparation of this article.