Casual Employees – a right to go permanent?
Does your business engage casual employees who work a regular pattern of hours on an ongoing basis? If so, you may need to be aware of some recent changes to modern awards, and an important recent case.
Casual employment has been a hot topic in Australia recently. It's worth auditing your casual workforce to check whether you have any long term casuals who might actually be permanent employees. In Workpac v Skene [2018] FCAFC 131, the Full Court of the Federal Court confirmed the correct approach for classifying casual employees is the common law test (looking at a range of factors) and not simply the fact they are engaged and paid as a casual (which is the terminology typically used in modern awards). As a result, a long-term casual labour hire employee was found to be permanent. The employee was entitled to backdated leave entitlements in addition to the casual loading which he had received. That loading is designed to compensate for the lack of benefits, so this was a pretty significant windfall for the employee.
Because of this decision, casual employees who work a regular pattern of hours on an ongoing basis are more likely to be permanent employees and entitled to a range of statutory benefits – even if they are being paid the additional casual loading. Failing to pay or provide those benefits will breach the Fair Work Act 2009 (Cth) (FWA) and can lead to back pay, penalties (up to A$63,000) and personal liability for those knowingly involved in the breach.
Since 1 October 2018, all modern awards give ‘regular casual employees’ the right to request a conversion to full-time or part-time employment. If you have a large casual workforce, this might be welcome news because, on one view, it is useful to mitigate the risks associated with wrongly classifying long-term casuals – for example, those which played out in Skene.
While the specific wording of the clause varies slightly between awards, generally speaking, employers must provide their eligible casual employees with a copy of the casual conversion clause. Existing casual employees must receive a copy of the clause by 1 January 2019. New casual employees must receive a copy within 12 months of commencing employment. You can access the modern awards (which include the casual conversion clauses).
This doesn't mean that all casuals who make a request must be converted, but your business can only refuse on reasonable business grounds. Employers are not allowed to vary casual employees' hours in order to avoid their obligations under the casual conversion clause.
Employers are advised to implement processes to deal with casual conversion requests – for example, by diarising 12 month anniversaries – to avoid breaching the awards.
Gig economy workers – employees or independent contractors?
The 'gig economy' is shaking things up in the Australian employment space, as it has in many other countries already.
In Australia, we only have two classifications of workers: employees or independent contractors. To date, 'gig workers' have typically been treated by the companies who engage them as contractors. However, in its Future of Work report released in September 2018, the Senate Committee roundly rejected that position.
The Committee proposed a test to be applied to discern the nature of their engagement: if a company makes money directly as a result of workers' labour, and if workers are dependent on the company for work and income, then those workers are employees of that company. Of course, this particular recommendation may not be implemented by legislation and the current Liberal Government is unlikely to do so. However, the Australian Labor party (which is ahead in the opinion polls in the lead up to a Federal election next year) appears determined to address this issue. Many people have suggested Australia should adopt the UK approach – where there is a third category of 'worker', benefitting from some, but not all, employee rights.
The Australian arm of food delivery company Foodora recently entered voluntary administration after a former delivery rider brought a claim for unfair dismissal (which requires him to establish that he was an employee) and claims it had incorrectly classified its workers as contactors when they were employees. The rider was successful and the Fair Work Commission (FWC) accepted he was an employee, awarding him significant compensation.
Interestingly, Uber has successfully defended two similar unfair dismissal claims, with the FWC accepting those workers were independent contractors. With Uber expected to float soon, the Transport Workers Union (TWU) has announced that it will seek to disrupt any public listing by agitating these issues with potential investors. A planned class action against Uber has also been announced, alleging conspiracy by unlawful means, causing harm to taxi drivers and operators. Watch this space.
Superannuation amnesty – the time is right to audit your contractors
Do you have any skeletons in your superannuation closet? Halloween may be well and truly over, but if so, now may be the time to bring them out.
On 24 May 2018 legislation to give effect to a Superannuation Guarantee (SG) Amnesty was introduced to Parliament. It hasn't yet been passed, but if enacted it will be applied retrospectively to voluntary disclosures made from 24 May 2018.
Usually, if a company fails to make SG contributions on time, the ATO can impose a SG Charge, a substantial Penalty Charge (up to 200% of the amount of the SG Charge), and additional interest. The proposed Amnesty will enable employers to report and pay any unpaid entitlements – without penalty – for a period of 12 months, until 23 May 2019.
While the Amnesty legislation remains stuck in the Senate, the ATO have nonetheless been waiving penalties for companies self-reporting any superannuation transgressions that occurred from 1 July 1993 to 31 March 2018.
The sting in the tail? From 23 May 2019 the ATO will stop waiving these penalties, whether the Amnesty passes or not. In light of this, employers should audit their super practices now and if they identify any issues, they should take legal advice about how to deal them.
Underpaying 'vulnerable' workers – exploitation or oversight?
The Fair Work Ombudsmen (FWO) has been baring its (recently) sharpened teeth. The target: companies exploiting vulnerable workers.
Since gaining greater investigatory power and access to higher penalties following the introduction of the Fair Work Amendment (Protecting Vulnerable Workers) Act in September 2017, the FWO has won more than $7.2 million in court-ordered penalties. A snapshot of recent litigation:
The above cases showcase employers intentionally underpaying workers, however employers unintentionally underpaying workers are also in the firing line. We are seeing an increasing number of instances of unintentional underpayment being pursued by the FWO. Often, underpayment is an innocent mistake, a computer glitch or an input error. But the bottom line is that the FWO will not take 'oversight' as an excuse.
BEAR with us, International Banks
Another watchdog flexing its muscles is the Australian Prudential Regulation Authority (APRA) which has been given greater power to hold bank directors and senior executives to account.
The Government's Banking Executive Accountability Regime (BEAR) gives APRA the power to compel 'accountable persons' (APs) (bank directors and senior executives) to act with integrity, honesty and due care. The powers were extended to large Authorised Deposit-Taking Institutions (ADIs) in July 2018 and will apply to small and medium ADIs from 1 July 2019. This will probably include Australian branches of foreign banks.
BEAR is very similar to the senior managers regime in the UK. Practically speaking, BEAR requires that ADIs identify and register APs with APRA and prepare an accountability map. Each AP must also have an accountability statement describing their discrete areas of responsibility. In addition, ADIs are required to defer a proportion of each AP's 'variable remuneration' (which can include both long and short term incentives) for a minimum period of four years – unless the amount to be deferred is less than $50,000. Deferred remuneration must be reduced if an AP breaches their BEAR accountability obligations.
Companies regulated by BEAR must have a remuneration policy in place that reflects BEAR. We have been working with many impacted ADIs to comply with BEAR in 2018.
Whistleblower developments
Whistleblowing protection in Australia is, currently, not extensive. Although employees benefit from the adverse action protections if they are victimised for making a complaint or inquiry about their employment, broader whilstleblower protections are limited.
If legislated, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017, which is currently before Parliament, would (amongst other things) broaden the types of conduct whistleblowers can make disclosures about, allow anonymous disclosures, toughen whistleblower immunities and extend the group of people who can make and receive protected disclosures. Also, all but the smallest of companies would have to put in place a policy dealing with prescribed matters, including how whistleblowers will be protected.
In practice, the new law could create a number of difficulties for employers in receiving and investigating 'protected disclosures'. For example, it would be difficult to thoroughly investigate an anonymous disclosure. Further, the proposed restrictions on disclosing a whistleblower's identity could seriously hamper investigations. If a whistleblower's identity is disclosed, even unintentionally, significant penalties are proposed. The Bill also extends the group of people to whom whistleblowers can disclose events to include a person's manager or supervisor – so this broad category of individuals will need to be trained to properly handle protected disclosures.
The Bill has been passed by the Senate and will now be considered by the House of Representatives, probably in February 2019. We will keep you posted.
What's on the (2019 election) horizon?
It's an interesting time for Australian politics following the recent leadership spill within the Liberal party.
With a May 2019 federal election looking probable and results from the most recent polls suggesting a change in government is likely, we are starting to think about the implications of the Australian Labor Party's (ALP) workplace and industrial relations policies on business practices.
With varying levels of support from both the Greens and the Australian Council of Trade Unions (ACTU), the ALP has been vocal about 'swinging the pendulum back in favour of workers'. Their policy proposals announced to date include:
- cracking down on 'sham' enterprise agreements;
- requiring companies with over 1,000 employees to publically report their gender pay gap and companies with 250 or more employees to report their
- CEO/employee pay ratio;
- banning pay secrecy clauses which prevent employees from discussing their pay with co-workers;
- ensuring the same pay for the same work;
- providing the Fair Work Commission with greater arbitration powers;
- increasing penalties for phoenix companies (who cease trading and fail to pay employee entitlements – only to start up again) and their directors;
- increased penalties for sham contracting (where an employee is improperly engaged as an independent contractor);
- a new statutory definition of 'casual employee'; and
- allowing industry wide bargaining.
Recent Developments in Australian Migration Policy
The Australian migration landscape is constantly evolving. We have seen a large amount of change in the employer-sponsored visa environment over the last year and a half. The Subclass 457 visa has been replaced with the Subclass 482 Temporary Skill Shortage (TSS) Visa, with changes including the mandatory introduction of labour market testing in many applications. There have also been policy developments in regard to restrictions in access to the employer sponsored permanent residency program that have had an impact on TSS holders in certain occupations who can now no longer access employer sponsored permanent residence in Australia.
Despite these recent changes, the use of the programs is still strong. We have been working with a number of our clients to help them navigate these changes in an efficient manner. For more information regarding the changes you can access a Technical Update that our team prepared on this issue.
Alternatively, please get in touch with us if you have any questions or visa needs. Our migration team has extensive experience with a wide range of visa matters, including visa strategies for high net worth individuals, investors and business owners as well as employer-sponsored visas for businesses entering the Australian market.