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Federal Court fines union and its officials for “no-ticket, no-start”

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Introduction

Read the full decision here.

In [2020] FWCFB 4350, the Full Bench of the Fair Work Commission has dealt with the ambiguity that is the casual loading and penalty rates. In this case overtime rates of pay.

In its decision headed “4 yearly review of modern awards – common issue – overtime for casuals – draft determinations” The FB of the FWC set out to identify and resolve potential ambiguities in a number of modern awards in relation to the overtime entitlements of casual employees as part of the 4 yearly review of modern awards. It specifically deals with those remaining modern awards identified in a statement which was issued on 6 December 2019 (December Statement) in relation to which there remain outstanding issues. The awards listed in the December Statement fall into three categories:

  • Category 1 consists of 35 awards in relation to which there are contested issues requiring determination. These include the 34 awards set out in paragraphs [3], [8], [12], [14] and [15] of the December Statement. In addition, we have placed the Local Government Industry Award 2010 (now Local Government Industry Award 2020 in this category because, although there is a consensus position amongst the parties, the Fair Work Ombudsman has published a pay rates guide to the award which is at odds with the parties’ position.
  • Category 2 consists of 55 awards where there has been a consensus reached (either by way of agreement or the non-expression of any opposition to a party’s position) as to the meaning and effect of the existing provisions concerning the overtime entitlements of casual employees. These are the awards identified in paragraphs [4], [6], [16], [17], [21], [22] and [23] of the December Statement, except for the Local Government Industry Award. In some cases, variations to the awards are agreed or not opposed to give effect to the consensus position.
  • Category 3 consists of the 3 awards listed in paragraph [19] of the December Statement about which no submissions have been made.

In addition, there is a fourth category of three awards which were referred to in a statement which was issued on 14 October 2019 2 (October Statement). In relation to these awards, paragraph [2] of the October Statement said that: “interested parties advised that they were in agreement as to the meaning and effect of the current casual overtime provisions in the following awards, and no modification of the exposure drafts for those awards was required”. This decision seeks to finalise the position with respect to these category 4 awards.

To get the full picture, you will need to review the decision in full, however on my quick reading the amendment is not intended to alter award that clearly state that overtime is additional to the base rate of pay. That is, this is a case of clearing up any ambiguity on the subject.

Historically

The Full Bench describes historical work:

“We note at the outset that in respect of a number of awards, various parties have submitted that the Full Bench of the Australian Industrial Relations Commission which conducted the award modernisation process pursuant to Part 10A of the Workplace Relations Act 1996 (AIRC award modernisation Full Bench) adopted a standardised approach or “general rule” as to the payment of the casual loading and overtime penalty rates. This standard approach was said to be discernible in the following passage of a decision issued on 19 December 2008:

‘[50] In all the circumstances we have decided to confirm our earlier indication that we would adopt a standard casual loading of 25 per cent. We make it clear that the loading will compensate for annual leave and there will be no additional payment in that respect. Also, as a general rule, where penalties apply the penalties and the casual loading are both to be calculated on the ordinary time rate.”

“While it is certainly the case that the 25% casual loading is, with a few exceptions, the standard in modern awards, it cannot be said notwithstanding the above passage that any standard or general approach was actually applied by the AIRC award modernisation Full Bench concerning the relationship between the casual loading and overtime penalty rates. The modern awards made as a result of the award modernisation process are marked by a high degree of diversity in this respect, as will become apparent in the analysis of the disputed awards. Some modern awards, at least originally, did not provide for casual employees to receive overtime penalty rates at all. Of those that provide for overtime penalty rate entitlements for casual employees, they may be divided into three categories:

  • awards where overtime penalty rates are payable in substitution for the casual loading;
  • awards where the casual loading and the overtime penalty rate are added separately to the minimum hourly rate (the cumulative approach);
  • awards where the overtime penalty rate is applied to an ordinary hourly rate consisting of the minimum hourly rate and the casual loading (the compounding approach).

Advice

All modern awards are progressing from the “2010” to “2020” revisions. You are advised to download the latest version of the award from the Fair Work Commission website. Wage tables and subscription options are also available on the Fair Work Ombudsman website.

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Introduction

In a very interesting article by Samantha Maddern and Shannon Walker from, law firm Norton Rose Fulbright Australia, explains how the award that covers those employees not covered by an award are covered by the Miscellaneous Award has been changed.

On 12 February 2020 the Fair Work Commission (Commission) amended the Miscellaneous Award 2010 with effect from 1 July 2020. The changes extend the coverage of this Award to traditionally award-free employees with potentially far reaching consequences for some employers.

Existing coverage

The Miscellaneous Award is intended to be a safety net for lower paid or less senior employees who aren’t caught by the usual industry or occupational modern awards. Clause 4.1 states:

Subject to clauses 4.2, 4.3, 4.4, 4.5 and 4.6 this award covers employers throughout Australia and their employees in the classifications listed in clause 14 …. who are not covered by any other modern award.

The coverage of the Miscellaneous Award has always been somewhat limited (and difficult to fathom) because:

  • the employee must fall within a classification listed in clause 14 (although the classification definitions in Schedule B are very general, as set out below);
  • under clause 4.2, the Award does not cover those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards; and
  • clause 4.3 excludes both employees in an industry covered by a modern award who are not within a classification in that modern award, and employees in a class exempted by a modern award from its operation, and their respective employers.

For example, a security guard employed by a construction company to perform security work would not be covered by any modern award because:

  • the employer is not in the industry of security (being a construction company) so the Security Services Industry Award 2010 does not apply;
  • the Building and Construction General (On-site) Award 2010 cannot apply as there is no security guard classification; and
  • the Miscellaneous Award cannot apply because of the exclusion in clause 4.3 of that Award (excluding coverage of employees in an industry covered by a modern award who are not within a classification in that modern award).

Extended coverage

In its 4-year review of the Miscellaneous Award, the Commission determined that its coverage should be extended by striking out the following words in clause 4.2 and deleting clause 4.3 altogether:

4.2 The award does not cover those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards including managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists.

The consequence of these changes is that the Miscellaneous Award may now apply to:

  • more senior employees (though not managerial or professional employees) who were traditionally excluded from award coverage; and
  • other employees performing award work traditionally covered by an award, but previously excluded from award coverage either because they did not fall under an industry or occupational based modern award or because of the exception in clause 4.3 which has now been deleted.

Implications for employers

Employers with employees who have traditionally been considered to be ‘award free’ should assess whether the Miscellaneous Award might now apply and, if so, whether a review of their terms and conditions of employment is now warranted to ensure compliance with the Award, which contains provisions on overtime, penalty rates, meal breaks and consultation, for example.

The classifications in the Miscellaneous Award are set out below:

Level 1: An employee who has been employed for a period of less than three months and is not carrying out the duties of a level 3 or level 4 employee.

Level 2: an employee who has been employed for more than three months and is not carrying out the duties of a level 3 or level 4 employee.

Level 3: an employee who has a trade qualification or equivalent and is carrying out duties requiring such qualifications.

Level 4: an employee who has advanced trade qualifications and is carrying out duties requiring such qualifications or is a sub-professional employee.

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Modern Awards continue to evolve

The Fair Work Commission is extensively varying existing awards as a result of the 4-yearly review of modern awards. The modern awards will be varied in 3 tranches during 2020.

The technical and drafting matters for the second tranche of awards have been completed. The varied awards were published on 14 February 2020 and the first group commenced operation on 13 April 2020.

Advisory

The Fair Work Commission Advises that:

  • Any outstanding substantive or common issues claims that have not yet been determined will be incorporated into the varied awards by way of a subsequent variation determination.
  • If you are subscribed to updates for any of the varied awards, your subscription to our email service will be transferred to the new award.
  • If you do NOT want your subscription transferred to the varied award, please unsubscribe from updates to that award.

More information?

To find out which awards have been varied, and to access the new versions of the awards, go to the Modern awards list on the Commission’s website.

To see the decisions relating to these awards, go to 2019 FWCFB 8569 and 2020 FWCFB 690.

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The Fair Work Commission’s response to COVID-19

Introduction

The FWC has been quick to act in allowing mutually agreed application by Unions/Employers to provide unprecedented flexibility in with the modern award system.

On 9 April 2020, a six-member Full Bench of the FWC issued a comprehensive Statement outlining proactive steps after following both expert health and economic advice, and set out areas that the FWC will take extraordinary steps to assist employers and employees, including:

  • The varying of modern awards.
  • Unpaid pandemic leave.
  • Annual leave at half-pay.

I predict that this Statement will be on the curriculum of future students of employment law.

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Full Statement here.

Introduction

A Full Bench of the Fair Work Commission has issued a Statement about its four yearly review of Modern Awards, stating that some 2.2 million employees have their pay set by a modern award. Prior to the commencement of modern awards on 1 January 2010 there were 3323 instruments (including State and federal awards) setting pay and conditions across the country.

There are now 121 modern awards. Substantially decreasing the number of awards has reduced the incidence of multiple modern awards applying in one enterprise and has made it easier to identify the applicable modern award. In research undertaken by the Commission in 2016, employee and employer organisation participants acknowledged that the modern award system was a ‘vast improvement’ on the previous system.

Simplification

Simplifying the language and structure of modern awards has been a central focus of the Review. At the start of the Review, the Commission engaged with small businesses and interested parties to make awards simpler and easier to understand and apply. The objective has been to produce redrafted modern awards that can be read by an employer or employee without needing a history lesson or paid advocate to interpret how the award applies in the workplace.

  1. Standard clauses have been redrafted in plain language.
  2. A schedule of hourly rates has been included to provide a calculated wage rate rather than a percentage of the hourly rate and avoid the need for employers and employees to make calculations.
  3. A new model provision about how and when employees must be paid outstanding wages and other amounts due when employment ends has been included.
  4. The National Training Wage Schedule has been standardised and removed from most modern awards except for the Miscellaneous Award 2010. The Schedule has been incorporated into other awards by reference to the Miscellaneous Award 2010.
  5. Award terms that were inconsistent with the National Employment Standard have been removed.
  6. All outdated transitional provisions have been removed.

New award provisions

The following additional award provisions have been inserted into all modern awards following claims by industrial parties during the Review:

  1. An entitlement to 5 days’ unpaid leave to deal with family and domestic violence. 14
  2. A right to request conversion from casual employment to part-time or full-time employment.

3, A right to request flexible working arrangements in certain circumstances.

  1. Three new provisions relating to annual leave which allow employers and employees to more effectively manage their leave; firstly a term allowing employees to cash out annual leave; secondly a term which allows employees to apply for and take leave in advance of the entitlement to leave accruing and thirdly a provision which allows employers to direct employees to take leave in circumstances where they have an excessive leave balance. Template agreements for cashing out annual leave and taking annual leave in advance were included as schedules to each modern award.
  2. The provisions about taking time off in lieu of payment for overtime (TOIL) were standardised in the 21 modern awards that had such a term prior to the Review. A TOIL term was also inserted in 92 other modern awards that did not previously provide this flexibility. A template agreement for TOIL was inserted as a schedule to each of the relevant modern awards.

Plain language

A Plain Language Full Bench was established to oversee the plain language project, which included:

  • The production of plain language guidelines;
  • Redrafting selected awards in plain language;
  • Redrafting standard clauses in all modern awards;
  • Redrafting the national training wage schedule.

Commentary

This statement goes to reinforce my previous views that the under and overpayment of employees has risen to the level of incompetency, never seen before. How on earth can accounting packages (presumably) can get the nuances of the complexity of tax law right; but the simplicity of paying someone correctly so wrong?

My advice: when choosing a payroll system – choose wisely; and preferably one that is Australian developed and maintained (and yes you MUST subscribe to software updates).

This article is part of a regular newsletter. If you wish to receive the newsletter providing information on the latest employee relations news and trends click here.

As I have published previously, Modern Awards have, in some cases, been dramatically changed. This includes the soon to be amended annualised wages provision. You keep proper records (see my free tool here). An annualised salary must clearly explain what makes up an annualised salary for any award-covered employee that receives an “all-in” hourly/week/etc rate of pay.

And an excellent article by Nicholas Ellery and Jack de Flamingh of Corrs Chambers Westgarth here provides a great explanatory of this new requirement.

And don’t forget my free eBook that provides you with all the information you need to know when the Fair Work Ombudsman knock on your door here.

Full decision: https://www.fwc.gov.au/documents/decisionssigned/html/2019fwcfb5145.htm

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On 4 October 2019, terms allowing an employer to unilaterally substitute a public holiday or substitute a public holiday with agreement from the majority of their staff will be removed from awards that contain them.

Instead, employers and individual employees can agree to substitute another day (or part-day) for a public holiday.

Public holiday entitlements will apply to the substituted day for any employees that agree. For any employees that don’t agree to the substitution, the original public holiday will attract public holiday entitlements.