The IR Reform Bill – What you need to know

The Federal Government introduced a major industrial relations reform Bill (IR Reform Bill), that if passed, will make substantial changes to the Fair Work Act (FW Act) and provide opportunities for more productive and flexible workplaces.

Ai Group has been heavily involved in the development of the Bill and worked hard to achieve a worthwhile outcome. It is expected that the Bill will be passed by Parliament in late March 2021.

Background

Over the past six months, the Federal Government has been developing an IR Reform Bill to assist the recovery from the COVID-19 pandemic. There were five working groups formed with employers and unions to discuss reforms. Ai Group played a key role in all five working groups.

The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 would amend the FW Act.

The following are the key changes proposed in the Bill which are most relevant to Employment Plus clients.

Casual employment

Definition of a ‘casual employee’

The Bill contains some provisions designed to reduce uncertainty and cost risks arising from recent Federal Court decisions. Under the Bill a person will be a ‘casual employee’ if they are offered employment with no firm advance commitment to continuing and indefinite work, according to an agreed pattern of work and the employee accepts the offer of employment on this basis.

To determine whether the above conditions have been met, regard can only be given to the following:

• Whether the employer can elect to offer work and whether the employee can elect to accept or reject work
• Whether the employee will work only as required
• Whether the employment is described as casual employment
• Whether the employee will be entitled to a casual loading or a specific casual rate of pay.

Although the Bill has not yet been passed, employers may wish to adopt the following approach when providing a letter of offer to a new casual employee:

• Clearly state that the offer of employment is as a casual employee;
• Specify the amount of the casual loading – generally 25%;
• Expressly state that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of hours;
• Expressly state that the employer can elect to offer work to the employee and that the employee can elect to accept or reject work;
• Expressly state that the employee will work only as required.

Employers should ensure that the employee signs the employer’s written offer of employment confirming acceptance before the employee commences work.

Protection against ‘double-dipping’

Importantly the Bill would provide some protection to employers against ‘double-dipping’ claims made by employees or ex-employees who were employed and paid as casuals but who later claim that they are entitled to annual leave and other benefits of permanent employment. There will be a provision which allows the amount of the casual loading paid to an employee to be offset against any entitlements that the employee claims are owed to them.

The Bill will also clarify that service as a casual employee is not counted when calculating redundancy pay and other entitlements, if the casual converts to permanent employment.

Casual conversion

The Bill would amend the National Employment Standards (NES) to provide for conversion to permanent employment for casual employees who have been employed for 12 months, if they have worked a regular pattern of hours over the last 6 months.

The employer must make an offer to the employee to convert to full-time or part-time employment unless there are reasonable grounds for the employer not to make the offer and the reasonable grounds are based on facts that are known, or reasonably foreseeable, at the time of deciding not to make the offer. An example may be, where the employer knows that the job that the casual employee is currently performing will not be required in 12 months’ time.

The casual conversion offer must be made within 21 days after the employee has completed 12 months of employment.

If the employee chooses not to convert to permanent employment, they can remain as a casual employee indefinitely.

This provision is similar to the casual conversion clauses in most awards.

Casual Employment Information Statement

The Bill would require the Fair Work Ombudsman to publish a Casual Employment Information Statement which includes information about the definition of a ‘casual employee’ and conversion rights.

Employers will be required to give this statement to all casual employees.

Compliance and enforcement

The Bill would make significant changes to the compliance and enforcement provisions in the FW Act, and would introduce a new criminal offence for an employer who “dishonestly engages in a systematic payment of underpaying one or more employees”. The maximum penalties are:

• For an individual – imprisonment for 4 years or $1.11 million;
• For a body corporate - $5.55 million.

For other contraventions, including wage underpayments that do not constitute a criminal offence, penalties have increased by 50%.

Fines and penalties will increase by 50% for sham contracting and for failure to comply with infringement notices issued by the Fair Work Ombudsman.

The Bill will also prevent businesses from publishing job advertisements with pay rates below the minimum wage.

Further advice or assistance

For further advice or assistance on this topic, or any workplace relations matter, contact the Ai Group Workplace Advice Line.

Call 1300 862 217 8.30am – 5.15pm Mon-Fri