Employment Law Update – Summer 2018

Blow Out In Enterprise Agreement (EA) Approval Times

In the 2017–18 financial year, the Fair Work Commission’s (FWC) median target of 32 days to deal with EA approval applications has more than doubled to 76 days – much longer than in any other year.

The FWC annual report stated that the key contributor to the delay was an increase in applications identified as potentially not meeting the statutory requirements. Notably, the incidence of agreements requiring undertakings prior to approval has nearly tripled since 2013.

The Employment law team at MST Lawyers has also anecdotally noticed a significant increase in the time taken by the FWC to allocate an approval application to a member of the FWC (it could take at least three months).

Victorian State Labor Party’s Promise To Criminalise “Wage Theft”

The Victorian Labor Party, in the lead up to the recent State election, promised to introduce new laws to criminalise wage theft.  In its policy announcement on 26 May 2018, Premier Daniel Andrews published the following:

“Under the proposed new laws, employers who deliberately withhold wages, superannuation or other employee entitlements, falsify employment records, or fail to keep employment records will face fines of up to $190,284 for individuals, $951,420 for companies and up to 10 years jail.

These are tough penalties, but they are fair penalties and reflect how seriously we take the exploitation of workers in our state.

The new laws will also make it faster, cheaper and easier for workers to get the money their employer owes them through the courts. For claims of up to $50,000, court filing fees will be reduced, claims will be heard within 30 days, and court processes will be simplified.”

Following its election victory on 24 November 2018, it remains to be seen whether the newly elected Victorian State Government will introduce these new criminal laws.

If ever put forward in Statement Parliament, the new criminal laws will face a number of challenges.

Firstly, there are constitutional obstacles that the State Government will need to overcome.  Section 26(1) of the Fair Work Act 2009 (Cth) (FW Act) prevents industrial laws from being introduced for the “establishment or enforcement of terms and conditions of employment”.  This may well capture criminal laws as a type of enforcement action for workplace law contraventions.

Furthermore, section 30 of the FW Act also excludes State laws from applying in other cases if there is an inconsistency with Federal law.  Arguably, there are already Federal laws in place (e.g. the FW Act) which cover the field.

Secondly, how one could prosecute the criminal laws remains to be seen, particularly the evidentiary challenges involved in proving beyond reasonable doubt that a person intended to breach workplace laws.  This would especially be the case where there is a complex supply chain, or where there are other parties involved such as labour hire agencies or franchisors.

For the time being, no draft legislation has been put forward by the State Government in relation to this controversial policy.  Watch this space.

Employee Vs Independent Contractor

It has been a relatively busy year in the areas of laws relating to the question of whether a person is a contractor or an employee.

In the recent case of Klooger v Foodora Foods Australia Pty Ltd [2018] FWC 6836, a single member of the FWC (Commissioner Cambridge) decided that an online food delivery rider (Mr Klooger) was an employee for the purpose of his unfair dismissal claim against Foodora Foods Australia.

The decision was reached notwithstanding that Mr Klooger admitted to delegating his delivery services to other riders.

The primary factors which led to the decision include:

• The nature of the work performed by Mr Klooger was analogous to that of a bicycle courier as the applicant only ever chose to perform his delivery work by bicycle (the High Court had once found a bicycle courier to be an employee in the decision of Hollis v Vabu [2001] HCA 44).
• The fundamental arrangements that established the work engagements that were performed by Mr Klooger involved him firstly accessing or logging into an app which, at predetermined times each week, displayed available shifts;
• Foodora had a considerable capacity to control the manner in which Mr Klooger performed the work. While the shifts were offered and accepted freely, Foodora set the start and finish times for the shifts, the geographical area in which the shift was to take place, and with the introduction of the new ‘batching’ or ‘ranking’ system, rewarded those workers who performed work at certain times;
• While Mr Klooger did delegate work to other riders, there were no contractual terms permitting him to do so.
• Mr Klooger was presented to the world at large as an ‘emanation’ of Foodora’s business. He was required to dress in Foodora branded attire, and use equipment displaying the livery of the Foodora brand.

Though the decision was adverse to the interests of any business which takes part in the gig-economy, its value as a precedent may be quite limited given that the decision was made by a single commissioner in the Fair Work Commission.

We expect more test cases to be run in the coming year by app users who dedicate their time to provide some form of service for reward. 

Introduction Of Casual Conversion Clause In Modern Awards

As part of the FWC’s four-yearly modern award review, a new model clause titled ‘Right to request casual conversion’, has been inserted into 85 modern awards effective 1 October 2018. 

The new model clause will not affect any employer who is covered by a registered workplace agreement or any one of the 28 modern awards which already contain a casual conversion clause.

Employers who are covered by a modern award which contains the new casual conversion clause should observe its obligations under the clause, including (if any) any obligation to provide existing and future casual employees a copy of the casual conversion clause.

The current Federal Government intends to legislate a right for long-term regular casual employees to convert to part-time/full-time employment into the National Employment Standards in the FW Act.

This could potentially lead to:

• A reduction in the casual workforce across all industries (and conversely an increase in the unemployment rate).
• An increase in the use of permanent/fixed-term/task-based employment.
• An increase in the rate of termination of casual employment (prior to employees reaching 12 month’s service), which could, in turn, lead to an increase in the number of unfair dismissal and/or general protections claims.

Termination Payments Must Be Made Within 7 Days Of The End Of Employment

As part of the FWC’s 4-yearly modern award review, new obligations have been introduced into 89 modern awards which require employers to pay an employee’s final termination pay within 7 days of the termination of employment.

A complete list of the 89 modern awards affected can be viewed here.

Abolishment Of The 4 Year Modern Award Review Process

On 5 December 2018, the Parliament passed the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017, abolishing the requirement for the FWC to conduct 4 yearly reviews of modern awards retrospectively from 1 January 2018.

Reviews that commenced prior to 1 January 2018 and have not concluded under the current 4 yearly review will be able to be finalised after that date.

The Fair Work Commission will still have jurisdiction to make, vary and revoke modern award entitlements to maintain a fair and relevant safety net. Any party wishing to seek a variation to a modern award, after the Bill receives royal assent, will be required to make an application to the Fair Work Commission.

Casual Employee ‘Double Dipping’ Update

The much publicised decision of the Full Federal Court in WorkPac Pty Limited v Skene [2018] FCAFC 131 (Skene) has caused significant concern among businesses. 

Primarily, this concern has centred around casual employees ‘double dipping’ by way of receiving a casual loading (which is paid in lieu of paid leave entitlements, redundancy and notice of termination), and, upon being deemed to be a permanent employee by the courts, receiving the permanent employee entitlements for which the casual loading was paid.

Workpac did not seek leave to appeal Skene to the High Court of Australia, rather Workpac commenced separate proceedings in the Federal Court of Australia seeking a declaration that another former employee, Mr Rossato, was a casual employee and therefore:

• is not entitled to paid leave under the FW Act or the relevant industrial instrument; and
• WorkPac is entitled to set off payments made to Mr Rossato against any entitlements that Mr Rossato may have.

A number of interested parties have intervened in the Rossato case, including the Federal Minister for Jobs and Industrial Relations, the Construction Forestry Maritime Mining and Energy Union (CFMMEU), Mr Skene and the class action law firm Adero (on behalf of former Workpac employee Beau Daniel Meaney).

In addition, the Government introduced, on 13 December 2018, new regulations into the Fair Work Regulations 2009, that allow an employer, who has paid an employee an amount that is clearly identifiable as an amount to compensate for the loss of NES entitlements, to claim that amount against any NES entitlement to which the employee eventually becomes entitled.

As regulations can be enacted immediately, without the need for a bill to pass Parliament, these new regulations will be subject to significant scrutiny should Labor win the next federal election.

Unpaid Family And Domestic Violence Leave Extended To All Employees

MST Lawyers previously reported (here) that a new model clause had been inserted into all modern awards, providing award covered employees with five days of unpaid leave to deal with family and domestic violence.

The Government has since succeeded in passing legislation that will provide this entitlement to all employees.

This means that employees employed under enterprise agreements created prior to 1 August 2018, or who were considered award free, will now receive the same entitlement to unpaid leave to deal with family and domestic violence.

This leave is in addition to the personal leave provided for in the National Employment Standards.

Fair Work Ombudsman v Ava Travel Pty Ltd & Ors [2018] FCCA 3627 (7 December 2018)

A small coach company (Ava Travel Pty Ltd) has been penalised $164,475 with its sole director, secretary and shareholder also penalised $3,825 (totalling $168,000), despite a judge finding the breaches were not deliberate, rather as a result of “clumsiness and inadvertence”.

The penalty awarded against the company is almost four times higher than the underpayment finding of $44,000.

The penalty awarded against Ava Travel Pty Ltd was broken down as follows:

Description of contravention	Maximum penalty	Discount for tttt Co-operation: 25%	Percentage of maximum	Penalty
Sham contracting	$51,000	$38,250	50%	$19,125
Threat to engage as independent contractor	$51,000	$38,250	50%	$19,125
Minimum rate	$51,000	$38,250	40%	$15,300
Casual loading	$51,000	$38,250	20%	$7,650
Saturday penalty rates	$51,000	$38,250	20%	$7,650
Sunday penalty rates	$51,000	$38,250	20%	$7,650
Overtime	$51,000	$38,250	20%	$7,650
Early/late work penalties	$51,000	$38,250	20%	$7,650
Minimum engagement	$51,000	$38,250	20%	$7,650
Waiting time	$51,000	$38,250	20%	$7,650
Annual leave on termination	$51,000	$38,250	30%	$11,475
Superannuation	$51,000	$38,250	30%	$11,475
Frequency of pay	$51,000	$38,250	30%	$11,475
Failure to keep records	$25,500	$19,125	30%	$11,475
Failure to provide payslips	$25,500	$19,125	30%	$11,475
Total	$765,000	$535,500		$164,475

*A discount of 25% was applied to the maximum penalty on account of Ava Travel’s co-operation in the proceedings.

This decision corroborates the FWO’s annual report for FY2017-18, which showed a rise in the amount of court-awarded penalties over previous years, a trend we expect to see continued in FY2018-19.