On the 9th of December, the Morrison Government introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020, which was drafted as a result of the COVID-19 roundtable process.

It is expected that the Bill will be before the Senate in the second half of March, 2021. It is important to note that the Government needs the support of 3 of the 5 cross benchers, leaving room for amendments.

This Bill introduces changes to the status and entitlements of casual employees, compliance and enforcement, award flexibility, enterprise agreement approvals and greenfields agreement.

What you need to do

• Review your strategy for engaging casual employees, and consider how you will manage the proposed casual conversion arrangements.
• If you are in the hospitality, retail or other target sectors, consider how you can leverage the proposed award flexibilities to drive better outcomes for your business and employees.
• If you are currently bargaining for an enterprise agreement, consider how the proposed approval requirements might impact on approval of a new enterprise agreement.
• If you have a pre-Fair Work Act instrument, start developing a strategy for revising your arrangements ahead of the 1st of July 2022 deadline.
• If you have not already looked closely at compliance with your industrial instruments, make this a priority in 2021.

Casual Employees

Definition of Casual Employee

The Bill proposes a new statutory definition of “casual employee”, suggesting an employee be deemed casual if:

• the offer of casual employment is made on the basis of no firm advance commitment to continuing and indefinite work according to an agreed pattern of work;
• the offer is accepted on that basis; and
• they become an employee because of that acceptance.

It is important to note that the employment status is assessed when the offer is made and accepted, and not, as case law currently stands, on the basis of subsequent conduct after commencing employment.

No firm advance commitment exists when:

• the employer can elect to offer work and whether the person can accept or reject work;
• the person will only work as required;
• the employment is described as casual; and
• the person is entitled to a casual loading or specific rate for casual employees.

Casual Conversion

The Bill would amend the National Employment Standards (NES) in the FW Act to provide casual conversion rights to employees.

Casual conversion rights will come with a positive obligation for the employer to make an offer, not just communicating the right. The offer must be made if the employee is employed for at least 12 months and they have worked a regular pattern of hours in the last six months.

The employer needs to inform employees when they don’t qualify or an offer is not being made, and provide a reason for this within 21 days.

Casual employees who are not offered conversion on reasonable grounds or decline a request will retain the right to request conversion every six months, provided they have met the criteria for an offer in that period.

Importantly, periods of casual employment prior to conversion do not count as service for the purposes of paid leave, notice periods or redundancy pay.

Because of these changes in the Fair Work Act, the FWC will have to review all Awards to ensure compliance with the new regime.

Double Dipping

Courts will be required to offset the casual loading against claims for other entitlements in the event that an employee has been misclassified as a casual employee.

This effectively overturns the Rossato decision in which the Federal Court found that an employer was not entitled to off-set casual loading against the various unpaid leave entitlements of an employee misclassified as casual.

Note: The Rossato case has been granted special leave to appeal this decision by the High Court, which will hear the appeal in 2021.

Casual Employment Information Statement

Employers will be required to provide all casual employees with a Casual Employment Information Statement (CEIS) on commencement of employment alongside the Fair Work Information Statement.

Compliance and Enforcement

The Bill makes significant changes to the compliance and enforcement provisions in the FW Act.

Federal Criminalisation of Underpayments

The Bill will introduce a criminal offence for any employer who dishonestly engages in a systematic pattern of underpaying one or more employees. It will carry a maximum penalty of $1.11 million and imprisonment for up to four years (or both) for individuals, and fines of up to $5.55 million for a body corporate for the worst underpayments, and includes provision for ancillary liability for individuals involved in the commission of the offence. This criminal offence will not apply to one-off underpayments, inadvertent mistakes or miscalculations.

It intends to exclude the application of State and Territory industrial laws in relation to underpayments and records offence.

Individuals convicted of the criminal offence would also be automatically disqualified from managing corporations for a period of five years under the Corporations Act 2001.

Sham Contracting

Infringement notice fines and maximum penalties for sham contracting will all also increase by 50%.

Award Flexibilities

JobKeeper extensions

As flagged by Minister Porter, the Bill seeks to extend two of the COVID-19 JobKeeper flexibilities for distressed industries for a further two years. These flexibilities relate to duties and location of work – including from home – and not the ability of employers to issue JobKeeper enabling directions that cut working hours and consequently pay.

The following identified modern awards apply:

• Business Equipment Award 2020
• Commercial Sales Award 2020
• Fast Food Industry Award 2010
• General Retail Industry Award 2020
• Hospitality Industry (General) Award 2020
• Meat Industry Award 2020
• Nursery Award 2020
• Pharmacy Industry Award 2020
• Restaurant Industry Award 2020
• Registered and Licensed Clubs Award 2010
• Seafood Processing Award 2020
• Vehicle Repair, Services and Retail Award 2020

Flexibility for part-time employees

The award flexibilities include the ability of part-time employees to agree to work extra hours on extra pay with applicable penalties, rather than at overtime rates.

Part-time employees must be covered by the above identified award and work at least 16 hours a week. The agreement must identify the additional agreed hours and be made before the hours are worked.

Enterprise Agreements

The end of pre-FW Act agreements

All agreements and other instruments made prior to the commencement of the FW Act or during the bridging period prior to the commencement of the modern award system will cease to operate on the 1st of July, 2022. Employees covered by these agreements will than revert to the modern award.

Pre-approval requirements

Employers will only be required to take reasonable steps to ensure employees are given a fair and reasonable opportunity to decide whether or not to approve an agreement. This would remove the strict requirements in relation to access and explanation timeframes.

BOOT

When applying the ‘Better of Overall Test’ (BOOT), the FWC will now be required to only take into account patterns or kinds of work and types of employment that the business is engaged in, or are reasonably foreseeable, not those that are hypothetical or not reasonably foreseeable. It will also be required to take into account the overall benefits (including non-monetary benefits) employees would receive under the agreement compared to a relevant Award.

Agreements to be approved within 21 days

The FWC will now be required, as far as practicable, to determine applications for approval or variation of enterprise agreements within 21 days