Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2019-2020
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAIR WORK AMENDMENT (SUPPORTING AUSTRALIA'S JOBS AND
ECONOMIC RECOVERY) BILL 2020
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Industrial Relations,
the Hon Christian Porter MP)
[This page is intentionally blank]
Outline
FAIR WORK AMENDMENT (SUPPORTING AUSTRALIA'S JOBS AND
ECONOMIC RECOVERY) BILL 2020
OUTLINE
The Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill
2020 (the Bill) amends the Fair Work Act 2009 (Fair Work Act) and related legislation to
assist Australia's recovery from COVID-19.
The Bill aims to improve the operation and usability of the national industrial relations
system. By providing greater certainty and flexibility to employers and employees the
Bill aims to support productivity, employment and economic growth and ensure that
employees also receive their share of benefits that flow from economic recovery.
The Bill supports the Government's commitment to Australia's jobs and economic recovery,
including by:
providing certainty to businesses and employees about casual employment;
giving regular casual employees a statutory pathway to ongoing employment by
including a casual conversion entitlement in the National Employment Standards
(NES) of the Fair Work Act;
extending two temporary JobKeeper flexibilities to businesses, in identified
industries significantly impacted by the pandemic;
giving employers confidence to offer part-time employment and additional hours
to employees, promoting flexibility and efficiency;
streamlining and improving the enterprise agreement making and approval
process to encourage participation in collective bargaining;
ensuring industrial instruments do not transfer where an employee transfers
between associated entities at the employee's initiative;
providing greater certainty for investors, employers and employees by allowing
the nominal life of greenfields agreements made in relation to the construction of
a major project to be extended;
strengthening the Fair Work Act compliance and enforcement framework to
address wage underpayments, ensure businesses have the confidence to hire and
ensure employees receive their correct entitlements; and
introducing measures to support more efficient Fair Work Commission (FWC)
processes.
The Bill has been developed with input from a range of stakeholders, including unions and
employers to ensure that reforms are appropriately balanced, providing flexibility and
certainty for business and important protections for employees.
Casual employees
Certainty about employment arrangements, including the rights and obligations of both
parties, is essential to ensure that business has confidence to employ and employees receive
their correct entitlements. This Bill will introduce a statutory definition of casual employee
that focuses on the offer and acceptance of employment and draws on common law
principles.
House of Representatives i Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Outline
The Bill is intended to prevent unfair outcomes in situations where employers have to pay an
employee twice for the same entitlement. In the event that an ongoing employee is
misclassified as casual, the Bill enables casual loading amounts to be offset against claims for
leave and other entitlements in certain circumstances, to address any potential for 'double
dipping' when recognising the employee's correct classification. Together with the statutory
definition, this will give employers confidence to create jobs by using casual employment as
a flexible employment option and encourage rehiring of many casuals who lost their jobs due
to COVID-19.
The Bill introduces a statutory obligation for employers to offer regular casual employees
conversion to full or part-time employment, unless there are reasonable business grounds not
to do so. This will help employees engaged as casual employees who work regularly to
become ongoing employees, if that is their preference. The new entitlement will require an
employer to offer an eligible casual employee conversion to full or part time employment
after 12 months of employment, with a residual right of conversion in certain circumstances
for employees who have not received or accepted an employer offer to convert. The Bill also
requires casual employees to be provided with a Casual Employment Information Statement
published by the Fair Work Ombudsman (FWO).
Award flexibilities
Award complexity is a significant issue for many businesses, especially small businesses,
which may lack the resources to understand in detail how awards operate. In the context of
the COVID-19 pandemic, business uncertainty was exacerbated by restrictive rules in modern
awards around duties and locations of work. To ensure flexibility for employers, especially
small businesses in distressed sectors, this Bill will extend existing JobKeeper flexibilities in
the Fair Work Act concerning duties and location of work to employers and employees to
whom identified modern awards apply. These flexibilities, with appropriate employee
safeguards, will be available for a period of 2 years from the passage of the Bill.
The Bill also introduces part-time flexibility provisions to be available across identified
modern awards. This will enable employers and employees to work together to agree
additional hours of work to part-time employees who already work at least 16 hours per
week, to be paid at ordinary rates of pay. Currently under many awards the only way a
part-time employee can work additional hours at ordinary rates of pay is to formally alter the
regular pattern of hours. An ad hoc arrangement to work additional hours may attract
overtime rates - even if an employee volunteers to work those additional hours. This operates
as a disincentive for employers to offer additional work to part-time employees and increases
the likelihood of employers engaging employees on a casual basis. This change will provide
significant benefits for both employers and employees, by encouraging more employment in
recovering businesses additional hours of work for employees who want it, and placing
permanent employment (with paid leave entitlements) on a more competitive footing with
other traditionally more flexible forms of employment.
Agreement making
This Bill aims to increase the number of Australians covered by enterprise agreements -
driving higher wages and productivity in the process - by making agreement making and
approval processes easier and faster for employers and employees, while balancing flexibility
and fairness.
The Bill will enhance these processes by reducing the level of prescription imposed by the
Fair Work Act and providing greater flexibility as to the methods by which employees may
Fair Work Amendment (Supporting ii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Outline
be provided with a fair and reasonable opportunity to consider whether to approve an
enterprise agreement prior to the vote. The FWC will be required to listen to the views of the
bargaining parties in the approval process, and intervention by other persons before the FWC
will be limited.
The FWC will no longer be required to be satisfied that the terms of an enterprise agreement
do not exclude the safety net provided by the NES and instead, the agreement must include a
term which explains the interaction between the NES and enterprise agreements. This
measure is intended to improve the timeliness of agreement approvals by the FWC, while
maintaining the position that enterprise agreements may not contravene the safety net
provided by the NES.
The FWC will be required to approve agreements, as far as practicable, within 21 working
days.
The process for assessment of enterprise agreements against modern awards will also be
clarified by requiring the FWC, in applying the better off overall test (BOOT), to:
only take into account patterns or kinds of work, or types of employment, that are
currently engaged in or are reasonably foreseeable, not those that are hypothetical
or not reasonably foreseeable;
have regard to the overall benefits (including non-monetary benefits) employees
would receive under the agreement compared to a relevant modern award; and
have regard to any views relating to whether the agreement passes the BOOT
expressed by employers and employees and their bargaining representatives.
The Bill will also permit the FWC, in limited circumstances, to approve an agreement which
may not pass the BOOT taking into account the views and circumstances of employees,
employer/s and employee organisation/s covered by the agreement, the impact of COVID-19
on the enterprise and the extent of employee support for the agreement, and whether approval
is in the public interest. This is a time-limited measure (which will automatically be repealed
two years after commencement), intended to support businesses still recovering from the
impact of COVID-19. Agreements approved under this provision would be limited to two
years' duration.
The Bill will enable franchisees to opt-in to a current single-enterprise agreement that covers
a larger group of employers that operate under the franchise and ensure that industrial
instruments do not transfer where an employee may transfer between associated employing
entities at the employee's initiative.
The Bill will also sunset (by 1 July 2022) agreements approved prior to the commencement
of the Fair Work Act and during the 'bridging period' prior to the commencement of the
system of modern awards.
Greenfields agreements
The construction of major projects contributes significantly to jobs and economic growth
around Australia. The risk of enterprise agreements nominally expiring during the critical
construction of a major project can give rise to uncertainty and risk, leading to higher costs
for employers resulting from potential protracted negotiations and delays. This uncertainty
can also potentially impact investment and job creation.
The Bill will enable the FWC to approve longer-term greenfields agreements made in relation
to the construction of a major project, to specify a nominal expiry date of up to eight years
House of Representatives iii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Outline
after the day the agreement comes into operation. Where the greenfields agreement specifies
a nominal expiry date more than four years after the day on which the FWC approves the
agreement, the agreement must include a term that provides for annual pay increases for the
nominal life of the agreement.
These changes will provide greater investor certainty for future major projects. This will
support Australia's economic recovery and help to encourage jobs growth.
Compliance and enforcement
This Bill enhances the Fair Work Act compliance and enforcement framework to more
effectively deter non-compliance with workplace laws and make it easier to recover wages
when underpayment does occur. In addition to supporting employees' financial security in
this way, the Bill aims to ensure that widespread compliance with workplace laws promotes
fair competition, and that non-compliant businesses do not gain an unfair advantage.
To better deter non-compliance, the Bill introduces a new criminal offence for dishonest and
systematic wage underpayments, and increases the value and scope of civil penalties and
orders that can be imposed for non-compliance.
Employees will be able to recover their entitlements more easily, quickly and cost-effectively
through the small claims process, by increasing the small claims cap from $20,000 to
$50,000. Federal Circuit Court and magistrates courts will be able to refer small claims
matters to the FWC for conciliation and consent arbitration. The Bill will prevent businesses
from publishing job advertisements with pay rates below the minimum wage.
To encourage voluntary compliance action by businesses and provide greater certainty about
how best to rectify inadvertent misconduct, the Bill requires the FWO and the Australian
Building and Construction Commission (ABCC) to set out when they will defer litigation in
appropriate cases, and will codify the factors they may consider when accepting enforceable
undertakings.
Fair Work Commission
The Bill includes measures to support more efficient FWC processes, including to enable the
FWC to:
deal with appeals 'on the papers' where appropriate;
vary or revoke decisions relating to enterprise agreements and workplace
determinations more easily, to correct minor errors; and
deal more effectively with unmeritorious applications.
These measures will enable the FWC to deal with matters more expeditiously and promote
effective allocation of its resources.
Fair Work Amendment (Supporting iv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Financial Impact Statement
FINANCIAL IMPACT STATEMENT
The measures in the Bill are estimated to have a minor financial impact and will be reported
once the costings have been finalised.
House of Representatives v Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
December 2020
Regulatory Impact Statement:
Casual Employment Reforms
Fair Work Amendment (Supporting vi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The problem
Casual employees generally receive a 25 per cent casual loading in lieu of paid entitlements
received by ongoing employees.
Despite having a long industrial history in Australia, the current legal framework around casual
employment, covering over 2 million employees, does not provide certainty or confidence for
employers or employees to use casuals as a genuine employment option.
This is because:
Recent court decisions have highlighted confusion and uncertainty for employers and
employees caused by the absence of a statutory definition of 'casual employee'.
Casual employees do not have universal access to an entitlement to request to convert
to full-time or part-time employment where appropriate.
COVID-19 has heightened existing concerns about casual employment both in terms of
certainty and confidence for job creation and potentially changing individuals'
preferences for long term job security.
Absence of a statutory definition and financial uncertainty
The term 'casual employee' is not defined in the Fair Work Act 2009 (FW Act), but takes its
meaning from the common law.
Multiple court decisions over time, most recently WorkPac Pty Ltd v Skene [2018] FCAFC 131
(Skene) and WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato), have developed the meaning
of the term 'casual employee' at common law focussing on an assessment of the substance and
totality of the employee/employer relationship.
Historically, general industrial practice has been aligned with the description of casual
employees in most modern awards which broadly define casual employees as those who are
engaged as casuals and paid a loading. The approach in Skene and Rossato departed from
earlier decisions of the Fair Work Commission (FWC) which viewed that the characterisation of
the employee's status turned on the terms of the applicable modern award or enterprise
agreement. Rather, Skene and Rossato exacerbated uncertainty by confirming that the
description of a casual in a modern award or enterprise agreement gives way to the common
law definition for the purposes of both National Employment Standards (NES) entitlements and
entitlements under the award or agreement.
The common law meaning of casual employee gives regard to the nature of the employment
relationship at engagement. The substance of the employment relationship over time (post-
contractual conduct) may also be relevant.1 The transition of an employee's legal status in many
cases is gradual and means that employees who have been engaged as casual may become
'other than casual' at an indeterminate point in time and subsequently become entitled to paid
NES entitlements that casuals do not receive (despite receiving a 25 per cent casual loading
intended to compensate for the absence of those entitlements). The department estimates that
1
WorkPac Pty Ltd v Rossato [2020] FCAFC 84 .
House of Representatives vii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
existing potential back pay liabilities for employees in these circumstances could be between
$18 and $39 billion.
As such, this legal framework requires employers and employees to continuously evaluate their
employment relationship to understand the nature of their entitlements and obligations at any
point in time.
Certainty in relation to the applicable rights and obligations for casuals who work on a regular
basis over an extended period can only be determined through lengthy court proceedings.
Users with the greatest need for certainty - including individual casual employees and small
businesses - do not have the resources, time or capacity to undertake disruptive and
prohibitive legal proceedings to understand their obligations or access their entitlements.
Conversion from casual employment to full-time or part-time
employment
While casual employment is a legitimate choice for many employees, some casual employees
would prefer the benefits associated with ongoing employment and do not currently have a
universally applicable mechanism to assist them to change their employment status. While
employers and employees can agree to be engaged under a different form of employment at
any time, arguably the power to do this currently rests largely with the employer. Casual
employees may also be hesitant to engage with their employer on such matters due to
concerns about losing work or being treated differently as a result of making a request to
convert to ongoing employment.
On 5 July 2017, the FWC decided to insert a model casual conversion clause in most modern
awards.2 The clause provides that a casual employee who has worked a regular pattern of hours
in the preceding 12 months has a right to request to convert their employment to full-time or
part-time. An employer must accept the request unless there are reasonable grounds not to do
so. Reasonable grounds for refusal must be based on facts which are known or reasonably
foreseeable, and include the following:
it would require a significant adjustment to the casual employee's hours of work in
order for the employee to be engaged as a full-time or part-time employee in
accordance with the provisions of this award;
it is known or reasonably foreseeable that the regular casual employee's position will
cease to exist within the next 12 months;
it is known or reasonably foreseeable that the hours of work which the regular casual
employee is required to perform will be significantly reduced in the next 12 months; or
it is known or reasonably foreseeable that there will be a significant change in the days
and/or times at which the employee's hours of work are required to be performed in
the next 12 months which cannot be accommodated within the days and/or hours
during which the employee is available to work.
This decision improved access to the right to request casual conversion for award reliant
employees, however it did not apply to everyone. Seven modern awards, including the Black
2 Fair Work Commission, [2017] FWCFB 3541, 5 July 2017.
Fair Work Amendment (Supporting viii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Coal Mining Industry Award 2010, do not have casual conversion clauses. Further, the right did
not extend to award/agreement-free employees or those employed under an enterprise
agreement that does not contain a casual conversion provision. For example, departmental
analysis indicates around two-thirds (61.6 per cent) of existing current enterprise agreements
(across all industries) do not currently have a casual conversion clause. 3
Despite protections from adverse action for exercising a workplace right, many workers may
still be concerned about negative consequences to their employment in making a request.
The need for government action
As outlined above, the absence of a statutory definition of casual employee is a longstanding
issue. However, the most recent court cases have heightened concerns for over 2 million casual
employees and over 800,000 employing businesses. A Fair Work Commission Vice President has
publicly highlighted that the conflict between the common law definition of casual employee
and the way it is described in awards is a "fundamental problem" that "has to be resolved or in
time it will snowball".4
Addressing these concerns is a priority in supporting the Australian economy and labour market
over the post-COVID economic recovery phase. In the first months of the COVID-19 pandemic,
casuals experienced a disproportionate share of job losses, representing around 500,000 of the
800,000 jobs lost during that period. While casual employment has started to recover since
then with an extra 200,000 casual employees in work between May and August 2020, action
needs to be taken to give employers the certainty to re-employ displaced workers and create
new jobs.
The Government has the capacity and obligation to respond to these concerns by progressing
amendments to the FW Act. The primary objective to be achieved through government
intervention is to provide a clear and fit-for-purpose casual employment framework that will:
give employees and employers certainty around the nature of their employment
relationship at all times;
preserve the availability of flexible forms of work for employers and employees who
have a genuine need and desire to use them; and
ensure balance and fairness with genuine pathways in place for casual employees who
wish to obtain ongoing employment.
Policy Options
Option One: Maintain the status quo
Under this option, what constitutes a 'casual employee' will continue to take its meaning
from the common law, which requires an assessment of the substance and totality of the
employee/employer relationship in every case. This is because under the common law, the
3 Attorney-General's Department, Workplace Agreements Database (December 2019).
4
Workplace Express, 28 May 2019.
House of Representatives ix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
nature of a casual employment relationship can change over time, and can only be assessed by
reference to the specific circumstances of each employment relationship.
If a Court was to find that an employee was other than a casual, it may not be possible for an
employer to offset any casual loading (of generally 25 per cent) paid to compensate the
employee for the absence of entitlements such as paid leave against amounts payable to the
employee for those entitlements. Any decision in this regard will be based on the specific facts
of the matter and the recent Rossato decision did not provide clear guidance about the
availability to offset casual loading in these circumstances. The Full Federal Court found that the
employer was not entitled to offset any casual loading payments it had made against a claim for
unpaid entitlements from an employee who was found to be other than a casual at common
law. This has highlighted the risk of significant potential financial liabilities for accrued
entitlements which is undermining business confidence during a time of unprecedented
economic challenge.
Casual employees only have access to a right to request casual conversion if the terms and
conditions of their employment are set by an award or enterprise agreement containing a
casual conversion clause. Using the Employee Earnings and Hours 2018 publication which
includes information around method of setting pay, we estimate that three quarters of casual
employees or around 2 million casual employees are covered by a modern award or an existing
enterprise agreement that includes a casual conversion entitlement, meaning approximately
600,000 casual employees do not currently do not have access to conversion.
The majority of modern awards contain the FWC model casual conversion clause that provides
an employee with a right to request to convert if, in the previous 12 months they have worked a
regular pattern of hours on an ongoing basis which, without significant adjustment, they could
continue to work as a full-time or part-time employee. An employer may only refuse a request
on reasonable grounds based on facts that are known or reasonably foreseeable at the time of
refusal.
Companies now need to recognise substantial contingent
liabilities
As a result of recent court cases concerning the distinction between casual and full-time or part-
time employment, Australian accounting standards require approximately 25,000 Australian
companies to consider any potential contingent liabilities of casual employees who may be
found to be other than a casual at common law.
Following the Court decisions in Rossato and Skene, the Australian Securities and Investments
Commission (ASIC) raised awareness of the possible financial reporting considerations
associated with the case law for entities reporting in accordance with Chapter 2M of the
Corporations Act 2001 (Corporations Act). The Australian Accounting Standards applying under
s296 of the Act that become relevant in considering accounting implications arising from the
case law are:
AASB 119 Employee Benefits (AASB 119)
AASB 137 Provisions, Contingent Liabilities and Contingent Assets (AASB 137)
Fair Work Amendment (Supporting x House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
In order to comply with the accounting standards5, entities need to consider whether the legal
circumstances in the Rossato and Skene cases apply to the entity's own employment
arrangements. In practice, affected entities may group employment arrangements with similar
characteristics for the purposes of assessing whether the principles arising from the cases apply
to those arrangements.
For financial reporting purposes, the outcome of such assessments may result in one of the
following:
The entity's financial report is affected when:
- Legal circumstances from the case law probably apply and a liability is recognised on
the statement of financial position (unless the amount cannot be reliably
estimated); or
- Legal circumstances from the case law possibly (but not probably) apply, in which
case a contingent liability would be disclosed in the notes to the financial
statements.
The entity's financial report is unaffected when clearly none of the facts/principles apply
(e.g. the entity did not employ casuals, or the prospect of casual employees being
determined to be ongoing employees by a Court is remote).
Under outcome A above, where the case law probably applies, entities need to consider what
entitlements affected casuals may be eligible for. Entities may need to consider the financial
reporting requirements on a benefit-by-benefit basis for each group of employees identified.
Entities would also need to consider the recognition or disclosure implications for associated
matters such as taxation (e.g. withholding tax and payroll tax) and superannuation guarantee
contribution payments.
Option Two:
Amend the Fair Work Act 2009 to:
legislate a statutory and objective definition which provides that a casual employee is
a person who has accepted an employment offer on the basis that there is no firm
advance commitment to continuing and indefinite work according to an agreed
pattern of work;
provide a universal, strengthened casual conversion mechanism as a National
Employment Standard entitlement; and
ensure the same entitlements be paid only once in the event of claims for payments
for relevant entitlements are made to the court
This option would amend the FW Act to insert a definition of casual employee that gives effect
to the parties' intention on engagement (that is, acceptance of an employment offer that does
not include a firm advance commitment to ongoing work). This would provide a high degree of
5
Accounting for Entitlements - Casual Employees, Australian Institute of Company Directors, Chartered
Accountants Australia and New Zealand and CPA Australia, 2020.
Available at: https://aicd.companydirectors.com.au/-
/media/cd2/resources/advocacy/research/pdf/cpaaom3619_297x210_accounting-for-entitlements_web.ashx
House of Representatives xi Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
certainty as to a person's employment status at any point in time and largely alleviate the need
to assess contingent liabilities as per the current accounting standards.
This option would also include measures that will apply to court orders where an employee is
found to be other than a casual employee. Where an employee was previously paid identifiable
loading amounts to compensate for not having relevant entitlements such as paid leave, a court
must reduce amounts payable for those entitlements so that employers will not need to pay for
the same entitlements twice.
This option would also amend the NES in the FW Act to insert a universal casual conversion
mechanism that has been adapted from the FWC model clause (see also Option Three). In
comparison to the FWC model clause, the nature of casual conversion would be further
strengthened by introducing an employer obligation to offer conversion (rather than an
employee right to request) and shortening the period of service required to demonstrate a
regular pattern of work.
The key elements of the conversion entitlement would be:
An employer would be required to make an offer to convert a casual employee to
equivalent full-time or part-time employment if the:
- casual employee has been employed for a period of 12 months; and
- employee has worked a regular pattern of hours on an ongoing basis in at least the
last 6 months of that period which, without significant adjustment, the employee
could continue to work as a full-time or part-time employee.
The employer would not be required to make an offer where the casual employee is not
eligible, or where the employer has reasonable grounds to not make an offer. If not
making an offer after 12 months of employment, the employer must provide written
notice to the employee, including the relevant reasonable grounds.
Where an offer is made, the employee would be required to give the employer a written
response accepting or rejecting the offer. If the employee does not give a response
within the specified time period, they would be taken to have declined the offer.
The employer offer would be coupled with a residual right to request where a casual employee
who meets the eligibility criteria could make a written request to convert at any time, as long as
they have not in the previous 6 months, been notified by their employer that an offer has not
been made because of reasonable grounds, or rejected an offer to convert from their employer.
The employer would be required to grant or refuse the request, and must not refuse a request
unless they have consulted the employee and the refusal is made on reasonable grounds based
on facts that are known, or reasonably foreseeable, at the time of the request.
This option would also include other consequential measures including anti-avoidance, dispute
resolution and transitional arrangements.
Option Three:
Amend the Fair Work Act 2009 to:
introduce a statutory definition that a casual employee is a person who is 'engaged
and paid as such'; and
Fair Work Amendment (Supporting xii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
provide access to casual conversion to those employees who currently do not have it.
This option would amend the FW Act to insert a definition of casual employee based on the
most common descriptors of a casual employee in modern awards, that is, a casual employee is
one who has been engaged and paid as such. This would provide the greatest level of certainty
to employers and as per Option Two, alleviate the need to recognise contingent liability in
accordance with accounting standards and other potential legal cost to determine an
employee's employment status. However, this definition will solidify the employer as the
primary decision maker in determining an employee's legal status, irrespective of the true
nature of the employee/employer relationship and with no reference to the current common
law.
This option would also amend the NES in the FW Act to insert an entitlement for casual
employees to request to convert to full time or part time employment. This would extend the
application of the FWC's model clause to the following categories of casual employees:
employees who are covered by a modern award that does not contain a right to request
casual conversion;
employees to whom an enterprise agreement applies and who are either:
- covered by a modern award that does not contain a right to request casual
conversion; or
- not covered by a modern award at all; and
employees who are award and agreement free.
Modifications from the FWC model clause would be limited to those that are necessary to
ensure that the new entitlement operates effectively in the FW Act framework, as well as
appropriate consequential and transitional provisions.
Costing of policy options
Available statistics and some base assumptions
For this costing we have used the ABS Characteristics of Employment (CoE) 2018 publication
(latest data available) as it contains questions about the work arrangements of casual
employees. The CoE data suggests that, as at August 2018, there were roughly 2.6 million casual
employees, which includes 2 million casual employees with a tenure with their employer of
greater than 6 months and around 1.5 million casual employees with a tenure with their
employer of at least 12 months.
The number of casual employees typically increases at or around the same rate as the labour
force. The latest ABS Labour Force data shows that as at August 2020 there were around 2.3
million casual employees, which is below the February 2020 estimate of roughly 2.6 million
casual employees (before onset of COVID-19 estimates). Budget estimates suggest that
unemployment is likely to increase in the short term before recovering. We would not like to
speculate on the rate of recovery of casual employment. Instead, we have made our estimates
on the assumption that casual employment will remain stable at 2018 rates over the forward
estimate.
House of Representatives xiii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Based on the information collected in the CoE, we have identified 'likely to be regular' casual
employees as those who are guaranteed to work a minimum number of hours each week and
meet at least one of two criteria:
earnings/income do not vary from one pay period to the next;
usually worked the same number of hours each week.
Using the above definition of 'likely to be regular', as at August 2018, there were approximately
690,000 casual employees 'likely to be regular' with a tenure of greater than six months, which
includes 540,000 casual employees 'likely to be regular' with a tenure of greater than a year.
There are 820,000 employing business, of which approximately 25,000 are reporting entities
under the Corporations Act.
Cost estimate - Option One: Status quo
For Option One (status quo), we estimate the total regulatory costs to be up to $243.8 million
over a ten year period.
Cost estimate for Option One (Part 1 - complying with the accounting standards)
To comply with the accounting standards, there is a need to estimate contingent liabilities for
casual employees through applying principles from the common law. For the purpose of this
costing, we have identified four steps that employers would need to undertake to ensure
compliance with these standards.
Identifying employees whose legal circumstances from the case law probably apply.
Calculating potential liabilities for identified employees.
Disclosing and reporting any contingent liabilities for identified employees.
Ongoing record keeping obligations.
For Step 1, we have assumed a simplified process for employers to make a reasonable
assessment of the probability that their casuals may be found to be ongoing employees under
the common law. The simplified process is not intended to replace the common law
assessment. It involves consideration of two key elements - tenure of employment and
regularity of engagement.
We assume that casual employees with a tenure of less than 6 months have a remote possibility
to be found as ongoing employees for this costing purpose. We consider that identifying these
employees is straightforward and, hence, have not included them in the costing.
Under Step 1, employers need to assess the regularity of engagement for the 2 million
employees with 6 months or longer tenure. This assessment is assumed to take 5 minutes for
each casual employee and we have assumed that the number of casual employees will remain
stable at or around 2018 levels over the forward estimates.
For each of the 690,000 casual employees who are 'likely to be regular' and hence legal
circumstances from the case law probably apply and they could be found to be ongoing
employees, employers need to assess their potential liabilities, in the case they have
misclassified their workers. We assume it takes businesses 20 minutes to estimate the liabilities
for each 'likely to be regular' casual employee (Step 2).
Fair Work Amendment (Supporting xiv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Available data shows that 65 per cent of all casuals are employed by medium and large
employers6, and 35 per cent of all casuals are employed by small businesses. However, we
recognise that not all of these businesses are 'reporting entities' required to comply with
accounting standards as per the Corporations Act.
Based on the coverage of reporting obligations set out in the Corporations Act, including
business size, turnover, business ownership, and limited available data, we assume that 70 per
cent of all casuals are employed by reporting entities. This estimate comprises all 65 per cent of
casuals employed by medium and large employers and 5 per cent of those who are employed
by small business (reduced from 35 per cent in recognition that small businesses are less likely
to be reporting entities).
Therefore we have adjusted the number of casual employees who are subject to the ASIC
guidance downward by 30 per cent.
Similarly it is possible that reporting entities covered by the Corporations Act may not employ
casual employees. In the absence of any reliable data, we assume 70 per cent of the 25,000
businesses (i.e.17,500 businesses) employ casual employees for whom contingent liabilities
need to be reported. We also assume that it takes each business 2 hours each year to
consolidate liabilities for each individual employee into their annual financial statements (Step
3).
Businesses that report liabilities related to casual employment to ASIC will also have to remove
the liabilities when their obligation ends. The FW Act has a statute of limitation of 6 years to
claim back pay liabilities. Therefore businesses will need to remove liabilities for departed
employees after 6 years. We assume that this step will take businesses an hour a year (Step 4).
Step 1 - Assess casual employees7
= Labour cost (hourly wage rate and any non-wage costs of employees) x time to make
assessment x number of casual employees x proportion of casual employees in reporting
entities
= ($41.74 x 1.75) x 5 minutes x 2 million x 70%
= $8.5 million
Step 2 - Cost of calculating liabilities
6
Businesses are categorised by the ABS as:
small businesses, with employment of less than 20 persons (excluding non-employing businesses)
medium businesses, with employment of 20 to less than 200 persons
large businesses, with employment of 200 or more persons
7
Work related labour rates as published in Office of Best Practice Regulation, 2020, The Australian Government Guide to
Regulatory Impact Analysis: https://www.pmc.gov.au/resource-centre/regulation/regulatory-burden-measurement-
framework-guidance-note
House of Representatives xv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
= Labour cost (hourly wage rate and any non-wage costs of employees) x time to calculate
liabilities x number of 'likely to be regular' casual employees x proportion of 'likely to be
regular' casual employees in reporting entities
= ($41.74 x 1.75) x 20 minutes x 690,000 x 70%
= $11.8 million
Step 3 - Disclosure and reporting
= Labour cost (hourly wage rate and any non-wage costs of employees) x time to report and
disclose x number of businesses with casual employees and covered by Corporations Act x
proportion of business that are reporting entities
= ($41.74 x 1.75) x 2 hours x 25,000 x 70%
= $2.6 million
Step 4 - Record keeping
= Labour cost (hourly wage rate and any non-wage costs of employees) x time to update
records x number of businesses with casual employees and covered by Corporations Act x
proportion of business that are reporting entities
= ($41.74 x 1.75) x 1 hour x 25,000 x 70%
= $1.3 million
Costing Right to Request (Part 2 - casual conversion under industrial instruments)
As at August 2018, there were 540,000 casual employees 'likely to be regular' with a tenure of
greater than a year. We assume this will remain stable at or around this rate for the entire
estimate.
Using the Employee Earnings and Hours 2018 publication which includes information around
method of setting pay, we estimate that three quarters of casual employees currently have the
right to request casual conversion under their award or an existing enterprise agreement.
Assuming this is also true for 'likely to be regular' casual employees, we estimate approximately
400,000 regular casual employees (75 per cent of 540,000 'likely to be regular' casual
employees) have the right to request conversion.
To convert this to an annual estimate, we used the CoE publication which suggests
approximately 40 per cent of casual employees (41.3 per cent) have a tenure of less than a year.
Using this figure, we assume that 41.3 per cent of the current regular casual employees (roughly
170,000 employees), would commence employment each year and may consider requesting
casual conversion in any given year.
There is no comprehensive data on the take-up of casual conversion. Without the enhanced
features of the conversion entitlement under Option Two, we assume 10 per cent of eligible
employees will request conversion. We estimate 17,000 casual employees will request
conversion in any given year.
Fair Work Amendment (Supporting xvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
We also assume it will take 10 minutes for an employee to determine their eligibility for
conversion and make a request (Step 1). We assume it will take 10 minutes for an employer to
make an assessment on whether an employee is regular and respond (Step 2).
Step 1 - annual employee costs
= Individual leisure rate x time per employee x number of casual employees x proportion that
respond to the offer
= $32.4 x 10 minutes x 17,000
= $0.1 million a year
Step 2 - annual employer costs
= Labour cost (hourly wage rate and any non-wage costs of employees) x consider request x
number of casual employees
= ($41.74 x 1.75) x 10 minutes x 17,000
= $0.2 million a year
Estimated cost of Option One
Total Cost
(Annual employer cost x 10 years) + (annual employee costs x 10)
= ($8.5 million + $11.8 million +$2.6 million +$1.3 million + 0.2 million) x 10 years + ($0.1 million
x 10 years)
=$243.8 million
We estimate the total costs to both employers and employees to be up to $243.8 million over
a ten-year period, or up to $24.4 million annually.
Regulatory burden estimate - Status quo average annual impact
Employer costs per Employee costs per Total costs per year
year year
Annual costs $24.3 million $0.1 million $24.4 million
Cost estimate - Option Two:
Amend the Fair Work Act 2009 to:
legislate a statutory and objective definition which provides that a casual employee is
a person who has accepted an employment offer on the basis that there is no firm
advance commitment to continuing and indefinite work according to an agreed
pattern of work;
provide a universal, strengthened casual conversion mechanism as a National
Employment Standard entitlement; and
ensure the same entitlements be paid only once in the event of claims for payments
for relevant entitlements are made to the court.
House of Representatives xvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
For Option Two we estimate the total regulatory costs to be up to $103.9 million over a ten
year-period.
Statutory definition
The statutory definition under this option would significantly reduce the regulatory burden on
employers and employees. As per normal practice under the status quo, employers would have
to consider whether they are engaging an employee in accordance with the applicable legal
framework. However, a key feature of the statutory definition in this option is that once the
nature of the relationship has been set on engagement, that status would remain until the
employee otherwise converts. This would provide a regulatory cost saving to employers who
would no longer have to assess the nature of the relationship on an ongoing basis. Rather, this
assessment would take place at the start of employment and at specified times in accordance
with the casual conversion framework. This approach would provide certainty to employers and
employees alike.
Casual conversion - employer requirement to offer and employee right to
request
The casual conversion mechanism under this option would incur a new regulatory cost for all
employers of casual employees. The administrative requirements would include:
Providing all casual employees with a copy of a Casual Employment Information
Statement (note all employers are currently required to provide a copy of the Fair Work
Information Statement so there would be no expected additional cost).
Considering whether an employee, who has completed 12 months of employment
beginning the day the employment started, has met the eligibility criteria.
Determining whether they are required to make an offer of casual conversion.
Giving a written notice to the employee (including whether the employee is not eligible
and/or the applicable reasonable grounds for refusal).
If the employee does not accept the employer's reasons for not making an offer, the
cost of engaging in the appropriate dispute resolution procedure is considered out of
scope.
Employees who have been made an offer of conversion from their employer would also incur a
regulatory cost through the requirement to respond to such an offer in writing.
If an employee exercised their residual right to request casual conversion, the employer would
also need to consider and respond to the employee's request including reasons if the request is
refused. If the employee disputes the employer's refusal, the cost of engaging in the
appropriate dispute resolution procedure is considered out of scope.
Cost estimate for Employer obligation to offer (part 1 of Option Two)8
The employer obligation to offer would be triggered for all casual employees that have been
employed for a period of 12 months. As at August 2018, there were around 1.5 million casual
employees with a tenure with their employer of at least 12 months.
8
Numbers in this section have been rounded for simplicity.
Fair Work Amendment (Supporting xviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
We assume that it would take 10 minutes for an employer to assess whether an employee is
'regular like' and to provide written notification of the outcome.
The ABS CoE publication also suggests that around 40 per cent (41.3 per cent) of casual
employees start work for a new employer in any given year. Using the initial estimate of 1.5
million, we estimate approximately 620,000 casual employees would trigger the employer right
to offer in each of the following nine years.
We assume that only casual employees who are 'regular like' would receive an offer, as defined
in the 'available statistics and some base assumptions' section. As stated in the aforementioned
section, we estimate there would be 540,000 casual employees likely to receive an offer in the
initial year, noting this is underpinned by a range of working assumptions.
While there are 540,000 casual employees likely to receive an offer in the initial year, the
number of employees likely to receive an offer in subsequent years is a function of the number
of new casual employees. The ABS CoE publication also suggests that around 40 per cent (41.3
per cent) of casual employees start work for a new employer in any given year. The number of
casual employees likely to receive an offer for each of the following nine years is therefore
approximately assumed to be 220,000 (41.3 per cent of 540,000).
Step 1
Initial employer cost for existing casuals9
= Labour cost (hourly wage rate and any non-wage costs of employees) x time per business to
make assessment x number of casual employees
= ($41.74 x 1.75) x 10 minutes x 1.5 million
= $18.4 million
Initial employee cost
= Individual leisure rate10 x time per employee x number of casual employees
= $32.4 x 10 minutes x 540,000
= $ 2.9 million
Step 2
Annual employer cost
= Labour cost (hourly wage rate and any non-wage costs of employees) x hours per business to
make assessment x number of casual employees
= ($41.74 x 1.75) x 10 minutes x 620,000
= $ 7.6 million a year
9
Work related labour rates as published in Office of Best Practice Regulation, 2020, The Australian Government Guide to
Regulatory Impact Analysis: https://www.pmc.gov.au/resource-centre/regulation/regulatory-burden-measurement-
framework-guidance-note
10
Based on the mean hourly wage of a casual employee in their main job as at Aug 2019, using the ABS Characteristics of
Employment publication.
House of Representatives xix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Annual employee cost
= Individual leisure rate x time per employee x number of casual employees
= $32.4 x 10 minutes x 220,000
= $1.2 million a year
Cost estimate of residual right to request (part 2 of Option Two):
A casual employee would have a residual right to request casual conversion in the event that
they did not receive an employer offer of conversion or had refused an employer offer of
conversion.
A casual employee would be able to make a request to convert if none of the following had
occurred in the past 6 months:
the employee has not, at any time during that period, refused a conversion offer made
to the employee;
the employer has not, at any time during that period, given the employee a notice that
an offer has not been made on reasonable grounds; or
the employer has not, at any time during that period, given a response to the employee
refusing a previous request.
For employers, there would be an administrative requirement when an employee requests
casual conversion. This would include (as per the process outlined by the FWC):
Considering whether to grant or refuse the employee's request.
Discussing and recording this in writing.
If the request is granted, documenting the discussion concerning the terms of the
conversion.
If the request is refused, providing within 21 days written reasons .
If the employee does not accept the employer's refusal, the cost of engaging in the
appropriate dispute resolution procedure.
The inclusion of the right to request proposal into the NES would provide casual conversion
rights to the remaining estimated quarter of casual employees who do not have them through
awards or enterprise agreements.
Using the CoE publication, we estimate that there are 540,000 casual employees with regular
hours and at least 12 months tenure. The right to request conversion is a residual right,
meaning that it is sequenced to only be available after the completion of the employer offer
requirement. Hence, we assume there are no regulatory costs associated with the right to
request provision in the first year.
To convert the 540,000 employees to an annual estimation, we used the CoE which suggests
that around 40 per cent (41.3 per cent) of casual employees or 220,000 casual employees, start
work in any given year and would newly gain the right to request in each of the following nine
years (as used in the Option One above).
Data on the take up of conversion is limited. However, it is generally agreed that it is relatively
low. We used the same take up rate of 10 per cent as used in the Option One above.
Fair Work Amendment (Supporting xx House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Approximately 22,000 casual employees would be estimated to use the right to request
conversion in each of the following nine years.
Initial employer cost
N/A - initial cost unable to be estimated as detailed above.
Annual employer cost
= Labour cost (hourly wage rate and any non-wage costs of employees) x time per business to
make assessment x number of casual employees
= ($41.74 x 1.75) x 10 minutes x 22,000
= $0.3 million a year
Initial employee cost
N/A - initial cost unable to be estimated as detailed above.
Annual employee cost
= Individual leisure rate x hours per employee x number of casual employees
= $32.4 x 10 minutes x 22,000
= $0.1 million a year
Estimated cost of Option Two
Total cost
=Initial employer cost + (annual employer cost x 9) + (residual rights employer cost x 9) + Initial
employee cost + (annual employee cost x 9) + (residual rights employee cost x 9)
=$18.4 million + ($7.6 million x 9) + ($0.3 million x 9) + $2.9 million + ($1.2 million x 9) + (0.1
million x 9)
=$103.9 million
We estimate the total costs to both employers and employees to be up to $103.9 million over
a ten-year period, or up to $21.3 million in the initial year and $9.2 million annually.
Regulatory burden estimate - Option Two average annual costs
Employer costs per Employee costs per Total costs per year
year year
Option 2 $8.9 million $1.5 million $10.4 million
Option 1 (Status quo) $24.3 million $0.1 million $24.4 million
Regulatory savings +$15.4 million* -$1.4 million +$14.0 million
*numbers do not sum to the total as the numbers have been rounded.
House of Representatives xxi Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Cost estimate - Option Three
Amend the Fair Work Act 2009 to:
introduce a statutory definition that a casual employee is a person who is 'engaged
and paid as such'; and
provide access to casual conversion to those employees who currently do not have it.
For Option Three we estimate the total regulatory costs to be up to $8.9 million over a 10 year
period.
Statutory definition
The proposed statutory definition under this option would mean a casual employee is one who
is engaged on that basis and paid a casual loading. There would not be a requirement to
consider the parties intention as to the nature of the relationship at engagement. An employee
will remain casual until the employee otherwise converts. Compared to the status quo,
employers will no longer have to assess future contingent liabilities.
Employee right to request casual conversion aligned with modern awards
This would effectively extend the FWC model casual conversion clause to all casual employees
in the national system. Administrative requirements under the NES or awards would include (as
per the process outlined by the FWC):
Providing all casual employees with a copy of the entitlement - to be done through the
existing Fair Work Information Statement so no expected cost.
Considering and responding to the employee's request including reasons if the request
is refused.
If the employee does not accept the employer's refusal, the cost of engaging in the
appropriate dispute resolution procedure which is considered out of scope.
Businesses and employees who are covered by industrial instruments that already have casual
conversion clauses would not be directly impacted by this option. The impact of this option
would be on employers and employees who do not already have casual conversion provisions in
their industrial instruments. We estimate that around one quarter of casual employees do not
currently have a right to request casual conversion in their industrial instrument or roughly
600,000 casual employees.
Cost estimate for Option Three11
Using the CoE publication, as at August 2018, there were 540,000 casual employees 'likely to be
regular' with a tenure of greater than a year.
We have also assumed that the introduction of the right to request conversion into the NES, the
increased publicity of the right to convert and the clear definition will led to an increased up-
take of conversion from 10 per cent to 20 per cent, giving around 110,000 casual employees
making a request in the first year.
11
Numbers in this section have been rounded for simplicity.
Fair Work Amendment (Supporting xxii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
We have assumed the number of employees who use the residual right to request will be
related to the number of employees becoming casual employees in a given year. The CoE
publication suggests that around 40 per cent (41.3 per cent) of casual employees start work on
any given year. Using the initial estimate of 540,000, we would estimate approximately 220,000
casual employees would trigger the employer right to offer in each of the following nine years.
Once again, we assume that 20 per cent of these casual employees will use the residual right to
request. We estimate approximately 44,000 casual employees will trigger the right to request in
each of the following nine years.
We assume it will take employers 10 minutes to assess a request to convert.
Initial employer cost
= Labour cost (hourly wage rate and any non-wage costs of employees) x time to make an
assessment x number of casual employees
= ($41.74 x 1.75) x 10 minutes x 110,000
= $ 1.3 million
Annual employer cost
= Labour cost (hourly wage rate and any non-wage costs of employees) x time to make an
assessment x number of casual employees
= ($41.74 x 1.75) x 10 minutes x 44,000
= $0.5 million a year
Initial employee cost
= Individual leisure rate x time per employee x number of casual employees
= $32.4 x 10 minutes x 110,000
= $0.6 million
Annual employee cost
= Individual leisure rate x time per employee x number of casual employees
= $32.4 x 10 minutes x 44,000
= $0.2 million a year
Estimated cost of Option Three
Total cost
=Initial employer cost + (annual employer cost x 9) + Initial employee cost + (annual employee
cost x 9)
=$1.3 million+ ($0.5 million x 9) + $0.6 million+ ($0.2 million x 9)
=$ 8.9 million
We estimate the total costs to both employers and employees to be up to $8.9 million over a
ten-year period, or up to $1.9 million in the initial year and $0.7 million annually.
House of Representatives xxiii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Regulatory burden estimate - Option Three average annual costs
Employer costs per Employee costs per Total costs per year
year year
Option 3 $0.6 million $0.3 million $0.9 million
Option 1 (Status quo) $24.3 million $0.1 million $24.4 million
Regulatory savings +$23.7 million -$0.2 million +$23.5 million
Net benefits of policy options
Option One
Many stakeholders, including a Vice President of the Fair Work Commission, have commented
that the status quo is not sustainable12 where there are over 2 million casual employees.
Maintaining the status quo will mean ongoing uncertainty for businesses who employ casual
employees. The absence of a statutory definition of a casual employee requires employers to
maintain an up-to-date awareness of case law which provides indicia of who is and is not a
casual employee based on the court's assessment of specific circumstances and parties subject
to a dispute.
For Australian reporting entities, it means annual reviews of existing casual employee
arrangements, an assessment of the probability of the employee being considered a permanent
employee under case law, and further calculations to ensure that financial reports accurately
reflect the potential liabilities in relation to the employee group.
For employees, maintaining the status quo means that the right to request conversion from
casual to permanent employment is restricted to certain award-reliant employees, with no
clear universal path to securing permanent employment for those eligible employees that
wish to do so. Employees would also continue to experience uncertainty regarding the nature
of their employment, without a clear statutory definition to use as a reference point.
Option Two
Option Two delivers a balanced approach for employers and employees seeking certainty
around their obligations and entitlements, as well as a genuine pathway for casual employees
seeking to convert to permanent employment.
Regulatory savings
Compared to the status quo, Option Two provides a significant administrative and operational
savings for Australian employers and employees alike. The definition of casual employee will
12
Workplace Express, 28 May 2019.
Fair Work Amendment (Supporting xxiv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
provide certainty to employers by ensuring that the employment status of an employee can be
determined at the point of engagement, rather than an assessment of a relationship over time.
The employer obligation to offer conversion to eligible employees and residual right to request
will expand access to casual conversion provisions beyond employees covered by the industrial
instruments which currently have casual conversion clauses. It also serves to eliminate barriers
to conversion for employees, and is expected that the current incidence of conversion to
ongoing employment will increase as a result.
Fairness and certainty will be enhanced by requiring a court to consider identifiable amounts
employees have already been paid in the form of causal loading when determining a claim for
entitlements such as paid leave. This will ensure that employers will not have to pay twice for
the same entitlements. Removing employment status uncertainty, as well as addressing the
prospect of paying for entitlements that have already been paid in the form of a casual loading,
will instil greater confidence in employers to hire new employees and contribute to Australia's
COVID-19 economic recovery more broadly.
This Option will also reduce the administrative burden on Australian reporting entities by
removing the requirement under the status quo to do regular assessments on the likelihood of
their casual employee cohort being considered permanent employees through the application
of case law indicia and calculate financial liabilities.
Option Three
While Option Three results in the largest reduction in overall regulatory costs compared to the
status quo, it does not represent a fair and balanced resolution to the current problems faced
by employers and employees.
This is because the proposed definition of casual employee in Option Three does not include the
key feature of casual employment determined by the Courts, which is an absence of an advance
firm commitment to continuing and indefinite work.
Further, while Option Three does expand the existing right to request casual conversion to an
increased number of employees, barriers to requesting conversion, such as employees' concern
about negative consequences to their employment in making a request, may continue to exist
without a positive obligation on employers to initiate the conversion process.
Consultation
On 11 June 2020, the Australian Government established five working groups to consider how
to improve the operation of the industrial relations system, looking at five key areas for reform:
agreement making, modern awards, greenfields agreements, casuals and fixed term employees,
and compliance. The Casuals and Fixed Term Employees Working Group met seven times for
discussion.
Membership of the working group
Employer organisations: Australian Chamber of Commerce and Industry (ACCI),
Australian Higher Education Industrial Association (AHEIA), Australian Industry Group (Ai
House of Representatives xxv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Group), Australian Retailers Association (ARA), Council of Small Business Organisations
Australia (COSBOA).
Unions: Australian Council of Trade Unions (ACTU), Australian Nursing and Midwifery
Federation (ANMF), Health Services Union (HSU), National Tertiary Education Union
(NTEU), United Workers' Union (UWU).
As the discussions of the working groups were held in-confidence and the final outcomes non-
binding, this RIS does not discuss in detail the stakeholder views that were put forward in the
working groups process. However, working group members generally recognised that the
legislative framework that governs casual employment needs to be improved to ensure
entitlements and obligations are clear and certain for both employers and employees. They also
recognised that casual employees should have a choice if they prefer not to be converted and
remain as casual employees.
Preferred Option
For the reasons outlined in this submission, Option Two is the preferred option.
The proposed statutory definition of casual employee will provide certainty to employers and
employees by clarifying the employment status of casual employees. This will have a
deregulatory impact as it will remove the requirement for employers and employees to apply
complex legal concepts to understand the nature of their relationship at any point in time. It
will also reduce the need for businesses to account for and report on any potential future
employee entitlement liabilities should a court determine the employee to be other than a
casual.
The statutory obligation for employers to offer conversion of regular casual employees to full-
time or part-time employment after 12 months, and the residual right for employees to request
conversion, will have an annual regulatory cost of approximately $10.4 million on employers
and employees. It will require employers to offer conversion, or notify employees why an offer
has not been made, after 12 months employment, as well as respond to requests from eligible
casual employees to convert.
Compared to the status quo, the net benefit of the new reforms have been estimated at up to
$14 million per year in reduced regulatory costs for employers and employees. While Option
Three results in the lowest regulatory cost, Option Two is the preferred option because it
provides a better balance of employer and employee interests in relation to the definition of
casual employee as well as by removing the main source of regulatory burden on employees to
initiate the conversion process.
Implementation and Evaluation of Options
The reform will be implemented through legislative changes to the Fair Work Act 2009.
There will be a Casual Employee Information Statement published by the Fair Work
Ombudsman (FWO) for employers to give to casual employees to explain the entitlement to
convert from casual to part-time or full-time employment.
Fair Work Amendment (Supporting xxvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The FWO will also undertake communications to increase awareness of the change and provide
support to employers and employees, particularly small business.
Implementation risks
There are a number of risks to successful implementation. The most significant of these are that
necessary legislative amendments may not obtain passage through Parliament. The risk to
legislative passage has been partly addressed through the industrial relations reform
consultation process, which has involved extensive consultation with key stakeholders.
Another risk is that employers and employees will not become aware of the reforms, or
understand their operation. The risk that the reform will not be understood would be addressed
through proposed additional advisory materials from the FWO.
Transitional arrangements
Under transitional measures, the statutory definition will apply in relation to the offer of
employment that was made before commencement of the legislation.
Employers will be required within the first 6 months to make offers of conversion to all existing
eligible casuals, unless they have reasonable grounds not to, and the conversion process and
the regulatory costing has been captured above. The residual right to request that will be
available to all eligible casuals is also captured by the employee regulatory impacts calculated in
the costing above.
Monitoring and evaluation
The Attorney-General's Department will monitor ABS data on casual employment as well as any
disputes before the FWC or courts regarding the operation of the new provisions. The
department will also continue to engage in stakeholder consultation with employer groups and
unions to gauge the impact of reforms. In particular, consultation will be undertaken through
the regular meetings of the National Workplace Relations Consultative Council (NWRCC). The
NWRCC is a forum for employer and employee representatives to consult on workplace
relations and labour market matters of national concern, and meetings are chaired by the
Minister for Industrial Relations.
House of Representatives xxvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
December 2020
Regulatory Impact Statement:
Part-time flexibility
Fair Work Amendment (Supporting xxviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The problem
Modern awards (awards), along with the National Employment Standards (NES), constitute the
industrial relations safety net that underpins the wages and conditions of national system
employees in Australia. Awards are instruments of the Fair Work Act 2009 (the Fair Work Act)
that may only be varied by the Fair Work Commission (FWC) consistent with the modern
awards objective.13 There are currently 121 awards, each covering defined industries and
occupations. Awards contain mandatory content prescribed by the Fair Work Act and additional
non-prohibited terms.14 The content of each award varies to reflect the industry and work it
covers.
Part-time employment is typified by the employee being eligible for the same benefits as a
permanent full-time employee on a pro rata basis. For example, a part-time employee working
half the time of a full-time employee would be entitled to accrue annual leave at half the
amount. There has long been a recognition that arrangements relating to part-time employees
should not act to discourage employers from offering additional hours to part-time employees
nor encourage the use of casual employment to address this inflexibility. 15 While casual
employment offers flexibility that business genuinely needs, there are some businesses that
indicate they use casual employment rather than navigate some parts of awards that regulate
part-time employment. To this extent, award complexity contributes to the adoption of casual
employment.
The concept of ordinary hours of work exists in the industrial relations framework to discourage
overwork and establish appropriate safeguards for employees.16 A full-time employee's
ordinary hours are defined in their award and if they exceed their ordinary hours they are
entitled to overtime. Overtime is generally 150 per cent of the base rate of pay for the first 2 or
3 hours and then 200 per cent afterwards. An employee does not accrue leave or
superannuation for overtime, meaning a component part of the premium the employer pays for
an employee working beyond ordinary hours is to compensate for lost accruals.
A similar practice extends to part-time employees. A part-time employee's ordinary hours are
normally defined by what they agree with their employer as their regular pattern of work
(and/or roster). Each award has different rules about how patterns of work (and/or rosters) can
be agreed upon and altered. Most awards contain provisions that allow part-time employees to
work additional hours, including at ordinary rates, either by varying their regular pattern of
work (and/or roster) or by allowing them work ordinary hours outside their agreed work
pattern (and/or roster). However these provisions differ in their complexity and efficacy in
meeting the business needs where employers commonly need to respond to ad hoc demand,
especially in service-based industries, and adjust their operations quickly.
13
Fair Work Act 2009 (Cth), s. 134
14
Fair Work Act 2009 (Cth), Part 2-3, Division 3, Subdivision C
15
See the Award Modernisation Request relating to overtime penalty rates for part-time work at para 53, 26
August 2009
16
Fair Work Act 2009 (Cth), s. 139(1)(f)
House of Representatives xxix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Under some awards it can be impracticable for businesses to offer additional hours to part-time
employees even if both employers and employees agree on the arrangement. Instead,
businesses advise they either do not offer these additional hours or instead opt to use casual
employment. Inhibiting mutual agreement to work additional hours disadvantages part-time
employees, of who almost one quarter would prefer to work more hours.17
For example, employers face uncertainty when they offer their part-time employees additional
hours under the General Retail Industry Award (GRIA). While a part-time employee can agree to
change their roster to work additional hours, this cannot change their total number of hours
worked in a week. If the employee wants to temporarily increase the number of hours per week
they can work, they need to make a separate written agreement with their employer. The
award is unclear whether this can be a temporary agreement, so to avoid doubt, the employer
and employee may need to make another written agreement to return to their previously
agreed number of hours.
More usable part-time flexibility measures can be attained through enterprise bargaining. For
example, Woolworths enterprise agreements contain provisions that allow part-time
employees' hours to be adjusted upwards more flexibly. Unlocking additional flexibly is less
accessible to small business employers who find the enterprise bargaining process burdensome.
As a result of varied and inconsistent provisions under awards, the mechanisms to provide
additional hours to part-time employees are unclear. For employers the uncertainty about how
to agree to additional hours of work with part-time employees can make engaging casuals
workers more attractive. This attraction towards casual employment disadvantages part-time
employees by preventing them from receiving additional hours and reducing the choices
prospective employees have in how they are employed. Part-time employees in retail and
hospitality consistently report they would work more hours if they were available. 18 The current
arrangements are not meeting the operational needs of employees and modern, flexible
businesses.
The need for government action
The modern award system has a long history. Stakeholders, particularly small business,
regularly raise concerns about the impact of award complexity on business. Small businesses
are less likely to have the resources to devote to understanding how awards operate, and in
some cases, this can result in employers avoiding having to engage with the system by not
employing new staff or relying on contract employment. 19
According to ABS Survey of Employee Earnings and Hours in (May 2018), more than half of
employees working in small businesses in Accommodation and Food Services (58.9 per cent)
and Retail Trade (53.9 per cent) were covered by awards. 20 The Fair Work Commission mapped
17
ABS, Participation, Job Search and Mobility, Australia, February 2020.
18
ABS, Characteristics of Employment, 2014 to 2019
19
Sweeney Research on behalf of the Fair Work Commission, A Qualitative Research Report on Citizen Co-
Design with Small Business Owners, August 2014, p.25.
20
Information note - Small businesses and modern awards, Fair Work Commission, 31 August 2020
Fair Work Amendment (Supporting xxx House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
12 awards to these two distressed sectors which are the focus of this policy due to their high
proportion of small business employers and award reliance. In total, around 670,000 employees
have their pay set directly by an award in these industries. A further 530,000 employees have
their pay set under individual arrangements and many of those arrangements are underpinned
and impacted by award conditions.
Employers indicate award complexity is leading to them delaying or reconsidering hiring
decisions.21 A successful economic recovery from COVID-19 hinges on employers having the
confidence to provide more jobs and more hours. Stakeholders have identified a series of broad
issues in the awards system that could be simplified to support this outcome.
The COVID-19 pandemic highlighted particular limitations in the award system. Businesses have
had to rapidly change their existing operating arrangements as a result of changed business
conditions and trading restrictions. Some industries, namely the hospitality and retail industries,
were severely impacted. Between February and May 2020, the Accommodation and food
service industry reported a net decrease of 294,100 workers (or a 31.4 per cent decrease) and
the Retail trade industry reported a net decrease of 60,000 workers (or a 4.8 per cent
decrease).
Awards have been found too restrictive to respond effectively to the COVID-19 pandemic, and
had to be addressed by expedited, temporary award variations by the Fair Work Commission
(COVID schedules) and JobKeeper flexibilities in the Fair Work Act. The JobKeeper flexibilities
and COVID schedules were critical to helping businesses survive the crisis. Providing options for
employers to deploy their workforce more flexibly will be just as important in giving employers
the confidence to bring forward hiring decisions during the recovery. Related reforms in
distressed industries needs to be progressed as a priority. The retail and hospitality are
particularly award-reliant. Businesses operating in these sectors are sensitive to demand-side
impacts. These sectors also have high rates of casual and part-time employment and
underemployment.
One reform area that has been considered particularly relevant to these two industries is
providing employers and employees who operate under an award in the hospitality and retail
industries with a consistent process to agree to work additional hours without attracting
overtime rates, subject to appropriate safeguards. Under the current arrangements, while an
employee can agree to work additional hours at ordinary rates, they must do so under systems
that can be complex, time consuming and potentially ambiguous. This policy would provide
employers with the confidence to engage part-time employees, and to offer them additional
hours where agreed and appropriate.
Addressing award complexity remains important. Combined with other reform measures, this
policy would provide impetus and a workable model for continuous improvements to the
industrial relations system.
21
See the Office of the Australian Small Business Commissioner's submission to the Productivity Commission
review in to the Workplace Relations Framework, ASBFEO Submission to PC inquiry, p.7
House of Representatives xxxi Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Policy Options
Options for consideration
Option one
Option one would maintain the status quo. This would mean that employers and employees
could only agree to additional hours in accordance with their award, which can be problematic
for the reasons outlined above.
Option two
Option two would introduce a set of provisions into the Fair Work Act to legislate a process for
part-time flexibility applying to awards covering the hospitality and retail industries. These
provisions would facilitate agreement between employers and employees to undertake
additional work beyond their nominal part-time hours. This option would not displace any pre-
existing award-based arrangements. Employers could continue to use existing arrangements if it
meets their needs. Instead, it would provide a separate, uniform approach across awards that
employers could opt to use instead of existing award-based mechanisms available to them.
Employees would be provided with appropriate safeguards:
Only employees who are engaged for a minimum of 16 hours per week and 3 hours per shift
where additional flexible hours are agreed could agree to work additional hours. Employers will
be required to notify the employee on what basis they are being offered the additional hours.
Employees would have the right to refuse an additional hours agreement. This right would be
considered a workplace right for the purposes of the general protections, making it a
contravention of the Fair Work Act for employers to take adverse action against an employee
who refuses an offer to work additional hours on this basis.
An employee would continue to receive overtime and penalty rates that would otherwise be
payable. This includes:
Overtime payable for working more than a maximum daily/weekly hours, or working
outside a span/spread of hours.
Additional amounts like penalty rates, incentive-based payments and bonuses, loadings
and monetary allowances.
Employers would be required to retain the agreement with their employee, which could
be done verbally when the agreement is made and subsequently recorded electronically
prior to the end of the additional work.
Option three
Option three would create a new statutory form of employment - Flexible Part-Time. This form
of employment would be made mandatory content in modern awards to encourage the FWC
and industrial organisations to vary awards to accommodate it. Option three would provide
similar rights and entitlements to that of option two, like minimum engagement periods,
maximum weekly hours, the right to refuse additional hours, leave accrual for additional hours,
an entitlement to superannuation payments on additional hours, and overtime/penalty rates
where they would otherwise be payable.
Fair Work Amendment (Supporting xxxii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The object of part-time flexibility is to provide consistency and simplicity for employers who
employ part-time employees. Option three would disproportionately complicate the already
complex industrial relation framework by creating a new category of employment. The creation
of a new form of employment may also result in compliance issues concerning the inadvertent
misclassification of employees.
Significant work by the Fair Work Commission would be required to vary affected awards to
clarify whether and how other award entitlements and provisions apply to this new form of
employment in general. This may lead to delays in the adoption of legislated flexibility for part-
time employees.
Net benefits of policy options
It is difficult to quantify the regulatory impact of each option as there is no precise information
collected on the employees and businesses directly affected. The analysis below is based on
the limited available data and relies on a number of assumptions including the number of award
reliant business, the use of existing award provisions and the potential take up of any new
provisions.
Table 1 sets out employing businesses in the relevant ANZSIC divisions using counts from 2018-
19 ABS Counts of Australian businesses. The Department assumes that 40 per cent of these
businesses are award-reliant and employ part-time employees.
Table 1 - Counts of Australian businesses
Operating at start of Entries Total
financial year 2018- businesses
19
Retail Trade 131,478 19,416 150,894
Accommodation and Food
94,584 16,536 111,120
Services
Combined 226,062 35,952 262,014
Estimated award-reliant
businesses that employ part 90,425 14,381 104,806
time employees
Source: ABS Counts of Australian Businesses, 2018-19.
Table 2 provides estimated employee numbers at the ANZSIC divisional level using ABS
Characteristics of Employment and ABS Employee Earnings and Hours data. The Department
estimated the numbers of existing and new part-time employees by using the tenure of that
employee with their current employer: employees with tenure greater than 12 months were
considered as existing part-time employees, while employees with tenure less than 12 months
were considered new. This estimation does not take into account switching from full-time to
part-time employment.
House of Representatives xxxiii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Table 2 - Part-time employees
At start of financial year
2018-19 ('000)
Retail Trade
new part-time employee 51.7
existing part-time employee 126.6
Accommodation and Food Services
new part-time employee 99.7
existing part-time employee 139.0
Combined
new part-time employee 143.3
existing part-time employee 265.2
Source: ABS Characteristics of employment, August 2019 and ABS Employee Earnings and Hours, May 2018.
Option one - Status quo
Maintaining the status quo will mean that employer concerns about the practicality of the
application of existing award provisions relating to additional hours will remain un-resolved.
Without the ability to easily interpret and apply these award provisions, employers are unlikely
to use them due to their inherent limitations. This barrier to using award flexibilities prevents
part-time employees from receiving the opportunity to work additional hours. They may also
provide perverse incentives to favour offering casual over part-time employment.
Administrative costs
In-scope administrative costs relevant to the maintenance of a business includes the time taken
for business and employees to understand and comply with existing provisions in awards. As
outlined above, the existing part-time flexibility award provisions can be complex to navigate.
The Department assumes that an employer or part-time employee will take 30 minutes to
understand and implement their existing award provisions. The Department also estimates that
of the relevant businesses, 20 to 50 per cent have attempted to use part-time flexibility
provisions.22
Table 3 show the total administrative burden associated with the continual compliance with
existing award provisions, ranging between $5.6 million (based on 20 per cent usage rate) and
$14.1 million (based on 50 per cent usage rate) over ten years.
22
A range is provided to test the analysis sensitivities as required by OBPR under the regulatory cost
framework.
Fair Work Amendment (Supporting xxxiv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Table 3 - Estimated regulatory cost of option 1 (status quo)
Item Calculation* Cost$
Year 1 - 10 (per year)
Businesses - New Unit labour cost x 0.5 hour x $105,052 -
award-reliant Number of new award-reliant businesses x $262,629
businesses Rate of use of part-time flexibility in awards
$73.05 x 0.5 x 14,381 x ( 0.2 and 0.5 )
Employees - New part- Unit labour cost x 0.5 hour x $458,560 -
time award-reliant Number of new part-time employees x $1,146,400
employees Rate of use of part-time flexibility in awards
$32.00 x 0.5 x 143,300 x ( 0.2 and 0.5 )
Total over 10 years $5.6 million -
$14.1 million
*Employee and business numbers are from the data in table 1 and table 2.
$
Costs are expressed as a range depending on take-up (20% - 50%).
Option two
Option two is to provide a more viable option in order to facilitate mutually-beneficial
arrangements between employers and employees. Simplified and uniform provisions will also
reduce the amount of time it might take for an employer or employee to understand their
rights and obligations.
Business impact
This option would provide a uniform approach across awards in these industries under which
employers could offer part-time employees additional hours at their ordinary rate of pay where
certain overtime rates would otherwise have been triggered. This option:
provides additional flexibilities that take into account the operational realities in
modern workplaces, including those which involve customer service,
introduces consistency of available mechanisms to manage the hours of part-time
employees across awards, and
is expected to support Australia's economic recovery by increasing hours worked.
The hourly wage cost for employing a casual employee is generally higher than employing an
equivalent full-time or part-time employee due to the casual loading. This option not only
encourages the attractiveness of using part-time employment, it also removes a major
disincentive to engage part-time employees: rigid and inflexible award provisions and concern
about making inadvertent errors as a result of potential ambiguity.
Employee impact
This option is supported by a number of important safeguards to ensure employees are not
exploited or coerced into unwanted arrangements, including:
allows employees who wish to work additional hours at ordinary rates an clear
mechanism to do so, resulting in an increase in their take home pay,
House of Representatives xxxv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
creates an explicit right to refuse to enter into an additional hours agreement with an
employer, and
protects the right of employees to receive overtime where they are directed by their
employer to do so.
Further, under this option, for these additional hours worked, employees would:
accrue annual leave, personal leave, and superannuation contributions (contrast with
normal overtime hours, where these entitlements do not accrue),
continue to receive overtime payment should the hours exceed the maximum hours
contained in the award, and
continue to receive penalty rates and other payments that would apply for those hours
worked.
Administrative costs
Where there is agreement between an employer and part-time employee, this option alters
arrangements relating to wage entitlements as well as superannuation contributions and leave
accruals for additional hours worked. These are outside the regulatory cost framework. In-
scope regulatory cost would include the time taken for businesses and employees to
understand and comply with the legislation.
The Department assumes that the new simplified, uniform provisions would take 15 minutes to
read, understand and implement. It is expected the part-time flexibility provisions under this
option will be viewed as more efficient and usable than the existing award provisions, while
those employees who want more hours are more likely to agree to these arrangements. The
usage rate of the provisions will therefore be higher than option 1, ranging from 40 to 60 per
cent, with the corresponding estimated regulatory cost ranging between $6.6 million and $9.9
million (Table 4).
Fair Work Amendment (Supporting xxxvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Table 4 - Estimated regulatory cost - Option 2
Item Calculation* Cost$
Year 1
Businesses - Award- Unit labour cost x 0.25 hours x $660,553 -
reliant businesses Number of award-reliant businesses x $990,830
Rate of use of new legislated provisions
$73.05 x 0.25 x 90,425 x ( 0.4 and 0.6 )
Employees - Part-time Unit labour cost x 0.25 hours x $848,640 -
award-reliant Number of part-time employees x $1,272,960
employees Rate of use of new legislated provisions
$32.00 x 0.25 x 265,200 x ( 0.4 and 0.6 )
Years 2-10 (per year)
Businesses - New Unit labour cost x 0.25 hours x $105,052 -
award-reliant Number of new award-reliant businesses x $157,578
businesses Rate of use of new legislated provisions
$73.05 x 0.25 x 14,381 x ( 0.4 and 0.6 )
Employees - New part- Unit labour cost x 0.25 hour x $458,560 -
time award-reliant Number of new part-time employees x $687,840
employees Rate of use of new legislated provisions
$32.00 x 0.25 x 143,300 x ( 0.4 and 0.6 )
Total Year 1 + 9 x (Years 2-10) $6.6 million -
$9.9 million
*Employee numbers are from the data in table 1 and table 2.
$
Costs are expressed as a range depending on take-up (40% - 60%).
Option three
Option three would have an effect on the same cohort of employers and employees as option
two. An employer seeking to apply option three would be engaging an employee in a new form
of work (Flexible Part-Time), meaning that the existing part-time provisions of awards would
not apply to them. Significant variation in affected awards may be necessary to fully
accommodate this new type of part-time employees in the award system.
While we note award variations made by the Fair Work Commission generally are outside of
scope of regulatory cost framework, this option could result in an entirely new section in these
awards, a considerable increase in the length of awards, and mechanisms created to distinguish
regular part-time employees and Flexible Part-Time employees. Further, interaction with other
provisions in the awards would also need to be carefully examined by the Commission to
eliminate any unintended consequence. For these reasons, stakeholders would prefer the
certainty of option two.
While option 3 creates a new form of work, complexity is consequential to the legislation which
is in scope under the regulatory cost framework. Administrative costs associated with
understanding and applying the new legislative provisions are estimated to be same as option
two.
House of Representatives xxxvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Consultation
On 11 June 2020, the Australian Government commissioned five working groups to consider
how to improve the operation of the industrial relations system, one of which related to award
simplification. The purpose of the Award Simplification Working Group was to simplifying the
award system in key distressed sectors, especially for small businesses. This working group met
formally six times and engaged nine third-party experts to inform their work.
Membership of the working group
Employer organisations: Australian Chamber of Commerce and Industry (ACCI),
Australian Industry Group (Ai Group), Council of Small Business Organisations Australia
(COSBOA), Australian Hotels Association (AHA), National Retail Association (NRA).
Unions: Australian Council of Trade Unions (ACTU), United Workers' Union (UWU),
Australian Workers' Union (AWU), Shop, Distributive and Allied Employees' Association
(SDA).
The consultations undertaken as part of the working groups were held in-confidence to
promote increased cooperation between parties. While parties had varying assessments of the
level of complexities and flexibilities in the award system, it was generally acknowledged that
the need to support business and job creation post-COVID and additional flexibilities to business
must be balanced with strong safeguards to protect employee entitlements.
Preferred Option
Award complexity is a long-standing issue and there have been successive attempts to simplify
and refine the award system over time. Despite these efforts there is broad acknowledgement
that system usability and complexity needs further reform. 23 Option two (the preferred option)
makes changes consistent with concurrent government reforms to the industrial relations
system by ensuring that the reforms are targeted and proportionate.
Employers advise that the current situation materially impacts on the flexibility of business
operations and the opportunity for part-time employees to gain more hours. The status quo
does not recognise the reality of contemporary employment practices, and it imposes
unnecessary complexity to business operations caused by businesses needing to navigate
various provisions in the award to identify a pathway. Providing uniform and streamlined
provisions will improve the ability for employees to understand their rights and lower the
transactions costs for businesses in their day-to-day management of their workforce.
Simplification of the award system is a necessary and ongoing process. The award system
requires continual refinements to ensure its operation promotes flexible modern work practices
and the efficient and productive performance of work. The status quo is not meeting this
objective in respect to part-time employment, and this is why the status quo is not the
preferred option.
23
Productivity Commission, Workplace Relations Framework Inquiry Report, 30 November 2015.
Fair Work Amendment (Supporting xxxviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
While option three would largely achieve the same objectives, it represents a disproportionate
response to the problem that may necessitate significant and unwarranted variation in awards
to accommodate a new statutory form of employment.
By comparison, option two represents a proportionate response to a known problem. It
provides relevant and material benefit for economic recovery, without introducing further
unnecessary complexity into the award system. The consistent and streamlined process would
reduce administrative burden imposed on employers and employees.
Acknowledging the continuing role of the Fair Work Commission in setting pay and conditions in
awards, this option would only introduce part time flexibilities into awards in the hospitality and
retail industries. This measured step gives primary focus to award reliant business in priority
industries, but also demonstrates a workable model to address complexity, inconsistency and
inflexibility in the awards system.
In contrast to the status quo, after taking into account an anticipated higher rate of employers
using these provisions, the overall net regulatory saving is estimated to be up to around $4
million over 10 years.
For reasons outlined above, option two is the preferred option.
Implementation and Evaluation of Options
Implementation of the preferred option will require legislative amendments to the Fair Work
Act.
Implementation risks
The most significant risk to successful implementation is that the necessary legislative
amendments may not obtain passage through Parliament. The risk to legislative passage has
been partly addressed through the industrial relations reform consultation process, which
involved extensive consultation with key stakeholders.
The preferred option also carries the risk that drafted provisions will have unintended effects
when applied to each of the identified awards. As awards construct part-time employment,
ordinary hours, rostering and overtime in different ways, there is the possibility that some
permutation of a part-time employment arrangement will not operate as intended. This risk will
be mitigated by providing the Fair Work Commission with the power to vary awards where the
legislated provisions create uncertainty or difficulty. This would ensure that the award can be
varied to ensure effective integration with the legislation.
Transitional arrangements
The amendments will apply prospectively to employment relationships where the employee is
engaged under one of the identified awards. The amendments may change existing
arrangements but this could only be done with the agreement of the employee. Existing
arrangements will also be preserved. There will be no requirement for specific transitional
arrangements.
Monitoring and evaluation
House of Representatives xxxix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Consultation on the operation of the provisions will be undertaken through the regular
meetings of the National Workplace Relations Consultative Council (NWRCC). The NWRCC is a
forum for employer and employee representatives to consult on workplace relations and labour
market matters of national concern, and meetings are chaired by the Minister for Industrial
Relations.
Data is currently not collected concerning the use of specific industrial relations provisions at
the award level. The level of specificity required to undertake a reliable quantitative analysis of
the impact of option one is not feasible. Therefore, overall evaluation of the provisions will be
undertaken through forums established for the purpose of consulting with industrial relations
stakeholders.
The Government recognises that there are multiple forms of work in Australia and they provide
meaningful employment suited to individuals circumstances. The purpose of this reform is to
ensure that employers and employees have better choice in the type of employment they use.
This is difficult to evaluate in its own right.
Fair Work Amendment (Supporting xl House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
December 2020
Regulatory Impact Statement:
Enterprise Bargaining Reform
House of Representatives xli Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The problem
The enterprise bargaining system aims to support businesses and employees to tailor their
working arrangements to their unique circumstances. The system provides an incentive for
employers, employees and unions to pursue more productive ways of working in exchange for
higher wages and better conditions for employees. This bargaining system, governed by the Fair
Work Act 2009 (Fair Work Act), is no longer working effectively and is in decline--fewer
businesses are making new enterprise agreements or renegotiating them upon their expiry, and
fewer workers are covered by them.
Decline in enterprise bargaining
The enterprise agreement system has evolved since its introduction in 1993 through legislative
amendments and case law. The Attorney-General's Department Workplace Agreements
Database (WAD) has recorded the decline in the number of new agreements made from 2014
onwards, with only around half as many new agreements made in 2019 as were made in 2014.
Chart 1 shows that enterprise bargaining and coverage steadily increased from 1996 to 2008
while businesses moved into the bargaining system (Phase 1). From 2008 to 2012, there was a
spike in new agreements as employers sought to either 'lock in' agreements under the
Workplace Relations Act 1996 or move to agreements made under the Fair Work Act (Phase 2).
While coverage remained relatively steady between 2012 and 2014, a decline in new
agreements made was recorded from 2014 onwards (Phase 3). The increasing number of
employees covered since the start of 2018 is due to many large agreements, particularly in the
Retail Sector but also in the Education and Higher Education Sectors, which were renewed after
the parties had used their nominally expired agreements for an extended period of time.
Fair Work Amendment (Supporting xlii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Chart 1: Current (not expired or terminated) federal enterprise agreements and employees
covered - June 1996 to December 201924
There are many possible reasons for this decline, including:
employers and employees choosing not to replace existing agreements
the procedural complexity and the technical nature of the system
cost and perceptions around delays in obtaining approval of agreements, including the
potential for protected industrial action25
employers who are inclined to bargain have already done so (meaning there may be
relatively few employers interested in bargaining that don't already have an
agreement), and
declining union membership.
According to the Australian Bureau of Statistics (ABS), the proportion of employees covered by
enterprise agreements has decreased from its historical peak of 43 per cent in 2010 to 38 per
cent in 2018. Over the same period, reliance on modern awards 26 (which outline the minimum
pay rates and conditions of employment in certain industries or occupations) to set employees'
wages and conditions of employment has increased from around 15 per cent to 21 per cent.
As shown in Chart 2 enterprise agreements remain the dominant industrial instrument, setting
wages and conditions for the highest proportion of workers (despite the current decline in
bargaining). In May 2018,
24
Attorney-General's Department Workplace Agreements Database (WAD). Note: The chart shows the number of
agreements current (not expired of terminated) at the end of each quarter between June 1996 and December 2019 and
employee figures are based on number of employees on lodgment to the Fair Work Commission or its predecessors. It
does not include agreements that have passed their expiry date but are still in use, as the WAD does not have this
information.
25
Protected industrial action is industrial action that can be legally taken and must meet certain requirements specified
under the Fair Work Act, including that it is in relation to bargaining for a new enterprise agreement where the existing
agreement has passed its nominal expiry date, a majority of employees have voted for it in a secret ballot, and the action is
taken in support of matters that can be legally included in an enterprise agreement.
26
There are more than 100 industry or occupation modern awards that cover most people who work in Australia. Awards
apply to employers and employees depending on the industry they work in and the type of job worked. Every award has
information about who it covers. Awards do not apply when an employer has a registered agreement in place.
House of Representatives xliii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
this accounted for an estimated 4 million people, half of whom were on current (in-term)
agreements and half of whom were on nominally expired agreements. 27 This data is not able to
distinguish between whether pay was set under an in-term/active or nominally expired
agreement28 and only captures information on the industrial instrument which sets an
employee's pay. However, it is clear that the decline in the number of employees covered by
enterprise agreements has resulted from the reduction in new or renegotiated agreements
being made and approved.
Chart 2: Pay setting mechanisms in Australia, May 2018 29
All employees (%)
Award only
21%
Owner manager of
incorporated enterprises
[PERCENTAGE]
Collective agreement
38%
Individual arrangements
37%
A large number of employees have their pay and conditions set by nominally expired
agreements which have not been replaced--indicating that parties are choosing not to bargain.
Others have individual agreements which build upon the relevant award, perhaps through
company policies, to provide more favourable pay and conditions--indicating this may be easier
and more preferable than making an enterprise agreement. Individual agreements may also be
more attractive to parties as policies can be adjusted more easily and remain subject to
managerial prerogative. Chart 1 demonstrates that the decline in employees covered by
enterprise agreements has come from the reduction in new or renegotiated agreements being
made and approved.
This is particularly the case for small enterprises, where over 74 per cent of agreements that
nominally expired in 2018 were not replaced. Replacement rates are also low for medium and
large businesses--49 per cent of medium and 33 per cent of large businesses have not replaced
enterprise agreements that nominally expired in 2018. The industries with the highest non-
27
ABS (2018) Survey of Employee Earnings and Hours, Australia, May 2018, cat. no. 6306.0; ABS (2010) Survey of Employee
Earnings and Hours, Australia, May 2010, cat. no. 6306.0
28
Nominally expired enterprise agreements continue to operate until a new agreement is made or the expired agreement
is terminated. Under the Fair Work Act, base rates of pay payable to an employee must not be less than the base rate of
pay that would be payable under the relevant modern award if the award applied. This does not include other conditions
such as penalty rates and casual loadings. Parties may however opt to keep a nominally expired agreement in place and
make 'over agreement' pay increases outside the agreement.
29
ABS Employee Earnings and Hours (cat. no. 6306.0), May 2018.
Fair Work Amendment (Supporting xliv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
replacement rate are Accommodation and Food Services (86.4 per cent not replaced) and Retail
Trade (83.3 per cent not replaced).30 Enterprise agreements are a vehicle for enhancing labour
productivity and innovation because they allow the parties to agree to greater flexibility than
exists under awards, improving the allocation of resources within firms. Historically, enterprise
agreements have delivered equivalent, or higher, wage increases than the economy-wide Wage
Price Index, as shown in Chart 3.
Chart 3: Yearly Average Annualised Wage Increases (AAWI) and Wage Price Index (WPI) 31
Yearly AAWI and WPI
5.00
4.00
3.00
%
2.00
1.00
0.00
AAWI* (All Agreements) WPI**
Note:
AAWI is an estimate of the average annualised wage increases and is based on those federal enterprise
agreements that provide quantifiable wage increases over the life of the agreement. AAWI calculations thus
exclude agreements where wage increases cannot be quantified, for example they are linked to future
events (such as each FWC Annual Wage Review).
For WPI, the December quarter result has been used as the point of comparison with the AAWI Increases for
All Agreements
Data for 2020 is to 30 June 2020 (latest available data).
On average, employees working under a collective agreement also receive higher wages than
those working under the relevant modern award, as shown in Chart 4.
Chart 4: Average weekly earnings of all employees by employment instrument 32
Avg. weekly earnings
Method of pay
(FT and PT)
Award only $788.80
Collective agreement $1,331.20
30
Attorney-General's Department, Workplace Agreements Database (WAD) data.
31
Source: Attorney-General's Department, Workplace Agreements Database; Australian Bureau of Statistics, Wage Price
Index, Australia,
Cat. No. 6345.0, seasonally adjusted - September 2020
32
Source: ABS Employee Earnings and Hours, May 2018
House of Representatives xlv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Individual arrangement $1,506.50
Owner managers $1,486.00
Unnecessary complexity
At the highest level, there is concern from some employers that enterprise bargaining under the
Fair Work Act is too focused on process and meeting technical requirements, rather than the
end goal of making a mutually beneficial agreement in a timely way.
Much of the complexity in the bargaining system arises from prescriptive legislative
requirements under the Fair Work Act, many of which exist to ensure employee rights are
protected during the enterprise bargaining process.33 For example, when an employer agrees to
bargain or initiates bargaining for an agreement, it must take all reasonable steps to give their
current employees, will be covered by the proposed enterprise agreement, notice of their right
to be represented by a bargaining representative. The form and content of this Notice of
Employee Representational Rights (NERR) is prescribed by the Fair Work Regulations 2009 (the
regulations) and it must be provided as soon as practicable, and not later than 14 days after the
notification time (which is when the employer initiates, agrees or is required to bargain). 34
In some historical matters, applications to approve agreements were dismissed by the Fair
Work Commission (FWC) as the content or form of the NERR did not match that prescribed in
the regulations or the NERR was issued after the 14 day timeframe--this meant parties would
have to repeat parts of the agreement making process.35
Similarly, many employers argue that the prescriptive genuine agreement requirements create
too much opportunity for error and are unnecessary to achieve the purpose of the requirement,
which is to ensure that employees are fully informed about the agreement they are voting on
and they are not misled in the process. An enterprise agreement is taken to be genuinely
agreed to by the employees it covers if the FWC is satisfied, among other things, that the
employer complied with the pre-approval steps for the agreement (that is, the employer took
all reasonable steps36 to explain the terms of the agreement and their effect, notified the
employees of when and how to vote and provided a copy of the agreement and any other
33
For example, an employer made an agreement with two employees that were covered by the relevant modern award,
and went on to employ approximately 50 employees. The employer failed to explain the base rates of pay in the
agreement compared to the rates and allowances payable under the relevant modern award, including how it was
detrimental in a number of ways. The Full Bench of the FWC considered that the employer had not taken all reasonable
steps to explain the terms of the agreement to the employees: Construction, Forestry, Mining and Energy Union v Karijini
Rail Pty Ltd [2020] FWCFB 958.
34
Fair Work Act ss. 173(1)-(3).
35
Peabody Moorvale Pty Ltd [2014] FWCFB 2042; Appeal by Uniline Australia Limited [2016] FWCFB 4969
36
What constitutes 'all reasonable steps' to explain the terms of the agreement and their effects under subsection 180(5)
will depend on the circumstances. For example, in one matter concerning an agreement incorporated policies and
procedures, work health and safety (WHS) laws and industry codes of practice, the FWC found that while WHS laws were in
the public domain, industry codes of practice are not easy to find and employees were given no direction about how to
find these. The employer also failed to provide employees with copies of all workplace policies and procedures for sites to
which they were hired out. The FWC held this was a failure to take all reasonable steps by the employer; Construction,
Forestry, Mining and Energy Union - Mining and Energy Division v Sparta Mining Services Pty Ltd [2016] FWCFB 7057;
[2016] FWC 8520.
Fair Work Amendment (Supporting xlvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
material incorporated by reference),37 and there are no other reasonable grounds for believing
that the agreement has not been genuinely agreed to by the employees.38
Issues at the approval stage and increasing concern from some employer stakeholders has led
to uncertainty about the scope of the genuine agreement requirement, even where employers
try to act in compliance with the requirements.39 This extends to matters as important as
determining which employees may be eligible to vote on a proposed agreement, which can be
challenging for businesses and industries that have a large casual workforce, some of whom
may be 'on the books' but have not worked during negotiations for, or engaged during the
access period in respect of, a new agreement. For example, in one matter the employer was
unsure how to determine which employees were eligible to vote on a proposed agreement. 40
With over 21,000 casual employees of a total workforce of over 32,000, the agreement was
challenged for both casting the net too wide--allowing casuals to vote that had not worked a
shift recently enough--and casting the net too narrow--not allowing certain employees
engaged during part of the voting period to vote. This issue caused the application to be
dismissed just under 9 months after it had it been lodged with the FWC (and over 2 years since
bargaining had begun). While this decision was later quashed by a Full Bench, this initial
interpretation prompted the withdrawal of another major enterprise agreement covering over
106,000 employees, the majority being casual employees.41
Numerous reviews42 have found that the agreement making and approval process can be
complex, cumbersome and highly technical, resulting in process delays. This may also be a
factor inhibiting effective relationships between employers and employees, in turn leading to
adversarial relationships, disputes and mistrust.
In an attempt to address some of the concerns about complexity and unnecessary prescription
in the Fair Work Act, amendments passed in December 2018 provided the FWC with ability to
approve enterprise agreements despite minor procedural or technical errors made in relation to
the requirements concerning genuine agreement (including the NERR), provided the error was
not likely to have disadvantaged employees.43 Any disadvantage experienced by employees
must relate to the procedural requirements relating to reaching a 'genuine agreement' or the
requirements relating to the NERR, rather than the substance of those requirements. It may be
necessary to consider the particular circumstances of the employees concerned at the time the
37
Fair Work Act s. 180.
38
Fair Work Act s. 188(1)(c).
39
An employer gave employees details about the upcoming vote on the proposed agreement, but scheduled the vote one
calendar day before the required access period had ended. The Full Bench of the FWC quashed the initial decision by the
FWC Member to approve the agreement and dismissed the agreement: Construction, Forestry, Maritime, Mining and
Energy Union and Ors v CBI Constructors Pty Ltd [2018] FWCFB.
40
Kmart Australia Ltd [2019] FWC 6105; and Appeal by Shop, Distributive and Allied Employees Association (SDA); Appeal
by Kmart Australia Limited t/a Kmart (Kmart); Appeal by the Australian Workers' Union (AWU) [2019] FWCFB 7599.
41
In September 2019, McDonald's withdrew its application for approval of its 2019 Enterprise Agreement which was
initially lodged in June 2019. McDonald's cited the Kmart decision as a reason for its withdrawal.
42
This includes the Towards more productive and equitable workplaces - An evaluation of the Fair Work legislation
(Post-Implementation Review of the Fair Work Act 2009), June 2012, the Productivity Commission Inquiry Report into the
Workplace Relations Framework, December 2015, and two independent reviews commissioned by Attorney-General's
Department and the FWC, conducted in 2019 respectively by Boston Consulting Group and Pivot Management Group.
43
Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2018.
House of Representatives xlvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
error occurred and the impact of the error on the subsequent course of bargaining, including
any steps taken by the employer to address the adverse impact of the non-compliance.44
The 2018 amendments have, to some extent, addressed the problems identified above. As of
13 November 2020, the FWC has approved approximately 325 agreements that were affected
by minor procedural or technical errors which were not likely to have disadvantaged
employees, for which it would previously have needed to refuse approval. The FWC has found
that an error was not a minor procedural or technical error only 18 times since commencement
of the 2018 amendments.
While these figures indicate that the 2018 amendments have positively impacted on the
approval of enterprise agreements when parties have made a minor procedural or technical
error, the agreement making process is still uncertain and prolonged, as the FWC needs to
undergo an additional assessment about whether an error falls within that category and may
have affected agreement approval. If agreement approval is delayed, this may also impose
additional costs on an employer and employees.
Approval tests and process delays
The most consistently raised issue by employers in enterprise bargaining is the application of
the better off overall test (BOOT) by the FWC. The BOOT is the key mechanism in enterprise
bargaining to safeguard employee wages and conditions. It requires that each award covered
employee and each prospective award covered employee would be better off overall if they
were employed under the agreement, rather than under the relevant modern award. 45
However, both the 2012 Post-Implementation Review of the Fair Work Act and the
2015 Productivity Commission Inquiry into the Workplace Relations Framework noted issues
with the application of the BOOT which made it substantially more difficult to apply, and
discouraged agreement making.46 The Productivity Commission also found this discouraged
innovation and caused businesses to retain inefficiencies for fear of failing an unclear test.47 The
views expressed in both reviews are supported by anecdotal evidence from employers.
The BOOT was intended to be an 'on the papers' assessment of the pay and entitlements of an
agreement and was designed to 'simplify agreement processing' by avoiding 'complicated
assessment procedures' as well as the need for undertakings in most circumstances. 48
Undertakings49 may be required where the FWC has concerns that an enterprise agreement
does not meet approval requirements and are binding on the employer.
44
Huntsman Chemical Company Australia Pty Limited (t/as RMAZ Rigid Cellular Plastics) [2019] FWCFB 318 at [117].
45
Fair Work Act s. 193(1).
46
Towards More Productive and Equitable Workplaces: An evaluation of the Fair Work Legislation (Post-Implementation
Review of the Fair Work Act 2009), June 2012, p 165.
47
Productivity Commission Inquiry Report into the Workplace Relations Framework, December 2015, Vol. 2, p 695.
48
Explanatory Memorandum to the Fair Work Bill 2008, paras 160 and 192. Paragraph 160 also noted that 'undertakings
will not be a feature of the approval process except where [Fair Work Australia, now the FWC] is satisfied that the effect of
accepting the undertaking is not likely to cause financial detriment to any employee covered by the agreement or result in
substantial changes to the agreement.'
49
The FWC may approve an enterprise agreement that may not meet certain requirements of the Fair Work Act if satisfied
that a written undertaking meets the concern. The FWC will not accept an undertaking if it will result in substantial changes
Fair Work Amendment (Supporting xlviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
More recently, concerns have been raised that the BOOT is being applied as a forensic, clause-
by-clause assessment against the relevant award,50 rather than a more global test against the
award, weighing up the monetary and non-monetary elements of the agreement.51 Assessment
of monetary and non-monetary elements can be a complex process. Generally, monetary
benefits will include any benefits which provide a financial benefit to employees. This could
include, for example, rates of pay, penalties, allowances and redundancy entitlements. Often
more challenging to quantify, non-monetary elements such as access to workplace flexibility in
hours or location, certain leave types (i.e. for volunteering or being a blood donor), counselling
or support services and diversity programs, are nevertheless very important for employee
welfare. As well as calculating monetary and non-monetary benefits, the FWC must also
consider the relative value of any enhancements that are likely to be contingent on employee
circumstances. For example, enhanced redundancy is a monetary benefit that is contingent on
an employee being eligible for redundancy, and so will hold lower value than enhanced annual
leave entitlements. Contingent non-monetary benefits will also carry lower weight in
assessment.
The FWC may also choose to assess agreements for all hypothetical scenarios covered by the
relevant modern award, even where it may not be relevant to the patterns or kinds of work of
the enterprise. An example was provided of an enterprise agreement for a stationery and office
supply retailer where undertakings were sought by the FWC relating to service of alcohol,
despite these not being relevant to the enterprise.52
The FWC's current approach has seen a rise in the number of agreements requiring
undertakings generally, including to address non-compliance with the BOOT. From 2013 to
2017, the proportion of agreements approved with undertakings increased from 22 per cent to
70 per cent, declining to 63 per cent in July to December 2019. In respect of BOOT non-
compliance, in 2019, 77 per cent of the undertakings in agreements approved by the FWC
related to conditions, which includes compliance with the BOOT. While an agreement can have
multiple undertaking types, which are not exclusive of each other, conditions-related
undertakings have been the most common type of undertaking sought each year since 2015. 53
to the agreement and must be satisfied that accepting the undertaking is not likely to cause financial detriment to any
employee covered by the agreement. An undertaking is a commitment that the employer will comply with what is written
in the undertaking in addition to or instead of a term of the agreement, and forms a legally binding part of the agreement.
50
For example, the Loaded Rates matter concerned five applications to approve enterprise agreements that each provided
for 'loaded' or higher rates of pay, intended to incorporate penalty rates and other monetary benefits in relevant
comparator modern awards. The FWC confirmed that the BOOT requires every existing and prospective award covered
employee to be better off overall under the agreement than the relevant modern award. The starting point for the BOOT
assessment will be an examination of the agreement terms of the agreement, and the selection of a class of employees for
the purpose of s 193(7) will only be relevant if the agreement affects members of the class in the same way, such that
there is likely to be a common BOOT outcome: Loaded Rates [2018] FWCFB 2610.
51
Previous FWC decisions in regard to the BOOT have upheld the principle that the test is not to be applied 'line by line'
but requires a 'balancing exercise': AKN Pty Ltd [2015] FWCFB 1833; requires an overall assessment of more the beneficial
and less beneficial terms be made: Armacell Australia Pty Ltd [2010] FWAFB 9985; and requires the FWC to take an
'impressionistic' approach to the agreement when applying the BOOT: National Tertiary Education Industry Union v
University of New South Wales [2011] FWAFB 5163.
52
Officeworks Store Operations Agreement 2019 [2019] FWCA 6900.
53
Attorney-General's Department Workplace Agreements Database (WAD).
House of Representatives xlix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
A more forensic approach to interpretation of the BOOT makes the process more complex,
lengthy and challenging for parties, and may, ultimately, discourage engagement in the
agreement making process. In some circumstances, it is also denying work arrangements
agreed to, and even preferred by, employees and employers. For example, in determining
whether employees would be better off overall under an agreement with loaded rates of pay,
the FWC Full Bench has expressed this task may be particularly difficult in respect of casual
employees who could be engaged to work at any given point in time that would attract
additional penalty rates.54 For instance, in a recent case, an agreement approved by over 76 per
cent of employees and the main employee union (which included pay rises and improvements
to penalty rates) was eventually withdrawn for approval by the employer because of the 'never-
ending cycle of review and bargaining' to make the agreement fully compliant with the BOOT. 55
The BOOT is not the only matter in respect of which the FWC can and does seek undertakings.
For example, the FWC often requires undertakings regarding compliance with the National
Employment Standards (NES).56 While the Fair Work Act requires the FWC to be satisfied that
an agreement does not include terms that would exclude the NES at the agreement approval
stage, it also provides that a term of an agreement has no effect to the extent that it excludes
the NES.57 A 2019 review by the FWC of 421 agreements identifying common trends and issues
in a sample of agreement matters found NES inconsistencies to be the second most common
issue affecting applications, at 38 per cent.58 Undertakings require parties to provide additional
assurances and paperwork to the FWC. In 2019-20, the median calendar days was 46 days for all
agreement with undertakings, almost three times the median time to approve all agreements
without undertakings (17 calendar days in 2019-20).
As an agreement only comes into effect once the FWC approves it (or at a later date specified in
the agreement), stakeholders have raised concerns about the amount of time this process
takes. Delays in the approval process can affect delivery of agreed pay increases for employees
and result in uncertainty for employers, hampering their ability to plan for labour costs and
patterns of work.59 This makes employers more inclined to disengage from the process, which in
turn has a negative impact on workplace cooperation and adds to the overall decline in
bargaining.
For example, in one matter, it took more than 2 years from the commencement of bargaining,
and just under one year from lodgement with the FWC, for an agreement to be approved. In
54
Loaded Rates Agreements [2018] FWCFB 3610.
55
The Bunnings Warehouse & Smaller Format Stores Agreement 2019 was challenged at approval on a number of grounds,
including the agreement did not pass the BOOT and had not been genuinely agreed. Over 6-7 months it was opposed by
the main employee union and another non-registered employee organisation bargaining representative, but was
eventually supported by the union as it said it would leave the overwhelming majority of staff better off. The non-
registered employee organisation continued to oppose the agreement.
56
The NES are 10 minimum employment entitlements that have to be provided to all employees. The national minimum
wage and the NES make up the minimum entitlements for employees in Australia.
57
Fair Work Act ss. 55 and 56.
58
This is based on an internal review performed by the FWC in May 2020, of all agreements applications determined in
November and December 2019.
59
Fair Work Commission: Enterprise agreements update 1/2020
https://www.fwc.gov.au/documents/documents/media/enterprise-agreements-update-24-02-2020.pdf.
Fair Work Amendment (Supporting l House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
this matter, full hearing and appeal rights were exercised before the FWC. 60 During this period,
approximately 32,000 employees remained on a nominally expired 2012 agreement which left
them worse off than if the new agreement had commenced more quickly.
The above example illustrates that despite an agreement being supported by the vast majority
of employees, the employer and the relevant union, the approval process can be delayed by
individuals and unregistered organisations who challenge the approval of the agreement on
highly technical grounds. The lengthy period it took the FWC to determine this matter, including
the Full Bench's decision to ultimately approve the agreement, raises questions about whether
a more streamlined approval process could result in quicker approvals, while maintaining
important protections currently built into the system.
While each application to approve an enterprise agreement is different, and some involve more
complex operations or wage structures for the FWC to consider, a frustration for bargaining
parties is the perception that the FWC does not communicate why delays happen nor facilitate
timely approval.61 According to the FWC's triage teams, common reasons for longer approval
times are incomplete applications for approval (requiring further information), possible non-
compliance or high complexity.
In practice, while there is currently no standard timeframe to deal with an application to
approve an enterprise agreement, the FWC sets timeliness benchmarks through its annual
Budget Papers to indicate expected timeframes for parties in the majority of cases. In 2019-20,
these internal benchmarks were for 50 per cent of all simple applications (being applications
which are submitted decision ready) to be finalised within 3 weeks, and 100 per cent in 8
weeks. Complex applications (all other applications, including those that require undertakings
or follow up after lodgement) had an internal benchmark of 50 per cent finalised in 10 weeks
and 100 per cent in 16 weeks.
While the FWC's approval times have improved since 2018-19,62 data for the period of
1 July 2019 to 31 December 2019 shows that the median time for the FWC to approve all
agreements was 37 days.63 However, as per Table 5, in 2018-19 the median number of days for
the FWC to approve single-enterprise agreements with undertakings was 122 calendar days,
over 3 times longer.64
60
Kmart Australia Ltd [2019] FWC 6105; and Appeal by Shop, Distributive and Allied Employees Association (SDA); Appeal
by Kmart Australia Limited t/a Kmart (Kmart); Appeal by the Australian Workers' Union (AWU) [2019] FWCFB 7599; [2019]
FWCFB 7891.
61
For example, the employer applied for approval of the Wesley Mission Queensland Care and Support Enterprise
Agreement 2018 in October 2018. The FWC took nearly five months to contact the employer to raise concerns about the
agreement. After a prolonged approval and appeals process, predominantly initiated by the dominant industry union, the
agreement was eventually approved by the FWC with undertakings in July 2020.
62
The median calendar days from lodgement to approval: for agreements approved without undertakings has reduced
from 30 days in 2018-19, to 20 days in July-Dec 2019, 20 days; and for all agreements approved (with & without
undertakings) from 79 days in 2018-19 to 37 days in Jul-Dec 2019.
63
Fair Work Commission: Enterprise agreements update 1/2020.
https://www.fwc.gov.au/documents/documents/media/enterprise-agreements-update-24-02-2020.pdf
64
Fair Work Commission Annual Report 2018-19 https://www.transparency.gov.au/annual-reports/fair-work-
commission/reporting-year/2018-2019-17.
House of Representatives li Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Table 5: Timeliness of approval of agreements with and without undertakings 65
Time to approve without Time to approve with undertakings
Proportion
Agreement undertakings (median calendar days) (median calendar days)
of
type
approvals
2018-19 2017-18 2016-17 2015-16 2018-19 2017-18 2016-17 2015-16
Single-
enterprise 95% 34 32 15 15 122 93 48 27
agreements
Multi-
enterprise 1% 86 69 22 21 145 115 101 28
agreements
Greenfields
4% 17 32 13 11 48 54 43 21
agreements
Delays in the approval process can be exacerbated by the FWC's power to inform itself in
relation to any matter before it in such a manner as it considers appropriate.66 In agreement
approval hearings, this can include hearing from parties who are not parties to the agreement
but may have relevant information, such as industry specific information. While it does not
keep data on the number of applications for intervention by such parties at the agreement
approval stage, the FWC notes the experience of senior FWC Members is that a 'non-party'
would intervene in less than 2 per cent of matters, with the percentage being slightly higher in
the construction sector.
Analysis of the requests by unions and third parties to view the forms submitted with an
application--often, but not always, a preliminary step to seeking to intervene--shows that
there were approximately 177 requests in 2019-20. Many of these will have resulted in no
further action. Analysis of decisions issued shows that in only 36 agreement-related decisions
issued in 2019-2020, reference was made to a party intervening, noting that some Members do
not make explicit reference to involvement of a third party in their written decisions.
While noting the above, when a third party intervenes in the agreement approval process, the
impact on the approval process can be significant and leave employees and employers in limbo
despite months or even years of bargaining for better conditions. As an example, following over
3 years of bargaining, despite a significant majority vote in favour of the proposed agreement
(76.7 per cent) and union support for the agreement, a third party lodged a submission with the
FWC opposing approval. This led to a protracted approval process and a hearing where both the
supporting union and third party argued for different undertakings to further improve
entitlements. More than 8 months after lodging, the employer chose to withdraw its application
65
Fair Work Commission Annual Report 2018-19 https://www.transparency.gov.au/annual-reports/fair-work-
commission/reporting-year/2018-2019-17.
66
Fair Work Act s. 590.
Fair Work Amendment (Supporting lii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
for approval without resolution. The supporting union indicated disappointment as they argue
the majority of employees would have been better off, and the employer has indicated it did
not want to spend any more time on a 'never-ending cycle of review and bargaining'.
Consequently, over 35,000 employees who were to be covered by the proposed agreement are
still covered by the 2013 enterprise agreement which expired in 2016. 67
Other problems
The continuing preservation of agreements made under previous workplace relations laws, or
legacy agreements, is also a known problem of the current system, potentially harming
employee interests and fair market competition between employers. Of particular concern are
legacy agreements made under the former Workplace Relations Act 1996 or other predecessor
legislation that have been preserved under the Fair Work (Transitional Provisions and
Consequential Amendments) Act 2009. Legacy agreements can disadvantage workers because,
while their rates of pay need to equal the base rates of pay in relevant modern awards, other
conditions such as penalty rates and casual loadings do not need to meet award standards.
Employees are often unaware they are receiving less than the terms and conditions in a
relevant modern award and workers such as young people and migrant workers are the most
vulnerable in this regard. As legacy agreements continue to operate until replaced or
terminated, they can also provide an ongoing unfair competitive advantage to employers using
them to pay lower labour costs than the award.
There are many reasons why parties may not choose to replace a legacy agreement. For
employers, as noted above, there can be cost reasons for doing so, including for those who
regard their agreement as 'good enough', and will opt to merely provide wage increases for
employees to maintain conditions. For employees, there may be a lack of familiarity with the
process involved in terminating an agreement.68 For unions, there may not be an incentive to
apply to terminate an agreement, or start bargaining for a new agreement if the employer is
not inclined to make a new agreement, as the process may be very drawn-out and ultimately
harm employees if they were to revert to inferior wages and conditions under a modern award.
There are also concerns about employers seeking to terminate agreements during bargaining,
which may affect the dynamics of bargaining between employers and employees. While
enterprise agreements are not intended to operate forever and may be terminated in some
circumstances, union stakeholders have alleged that some employers threaten or apply to
terminate existing enterprise agreements during bargaining, as a means of shifting the
bargaining power in their favour, and that this undermines a fair and genuine agreement
67
The Bunnings Warehouse & Smaller Format Stores Agreement 2019.
68
While not exceptional, it is uncommon for employees to apply to terminate an agreement. One example occurred in
February 2018--
a teenage employee of a yoghurt shop (represented by a parent) was able to successfully apply to the FWC to terminate
The Yoghurt Shop Pty Ltd Collective Agreement Number One (2006) on the basis that it did not align with contemporary
minimum standards set by awards. The agreement passed its nominal expiry date in November 2009, and the employee's
application was not opposed by the employer (though they did request a delay of two months to canvass the views of
other impacted employees). The FWC granted a transition period of two full fortnightly periods: Application by Olivia May
Johnston-Wyly [2018] FWCA 908.
House of Representatives liii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
making process.69 Although no hard evidence for the scale of the problem exists, the perception
of the problem strains confidence in the system.
There is evidence that the framework is too inflexible in other areas, preventing employers
from using simple and common sense approaches to make and vary agreements, and therefore
minimise costs and streamline processes. One example is requiring new franchisees to
negotiate their own agreement with employees, when it may be more efficient and effective to
join an existing single enterprise agreement that covers an existing group of employers
operating under the same franchise (made under a single interest employer authorisation).
Another example of the unnecessary process for employers is a requirement to seek an order
from the FWC to stop the transfer of an industrial instrument, even when employees initiate
the transfer to an associated entity of their employer. Having multiple enterprise agreements
for employees at an enterprise may complicate operations and increase labour costs for the
business, and should not be necessary where an employee voluntarily agrees to the transfer.
Particularly following the recent COVID-19 pandemic, these additional costs and time delays are
unnecessary for the efficient operation of productive business.
The need for government action
The bargaining system requires reform to re-enliven it, to encourage employers and employees
to bargain and make new agreements, and provide incentives for productive and innovative
ways of working. Effective reform should be geared to addressing the problematic elements of
the current system, as outlined above.
Informed by a number of independent reviews, stakeholder advice and most recently,
stakeholder discussions and evidence submitted as part of the Industrial Relations Working
Group process,70 the Government has an opportunity to simplify legislative requirements and
streamline FWC procedures aiming to reduce the red tape, complexity and timeframes
currently impeding an efficient bargaining process.
Reducing regulation is a priority of the Government, particularly where it imposes an
unnecessary burden on the population. The proposed reforms will reduce unnecessary burden,
and create a bargaining system that is more attractive to employees, employers, unions and
other representatives. The reforms will ensure that the bargaining system is easy to navigate,
use and understand; reverse the decline in agreement making; and ultimately lift productivity,
wages and promote better workplace relations.
69
For example, the Streets' Minto factory (owned by parent company Unilever) was publicly accused of this by the
Australian Manufacturing Workers' Union (AMWU) in 2017. The AMWU alleged that Streets application to terminate the
Unilever Australia Trading Ltd (Trading As Streets Ice Cream, Minto) Enterprise Agreement 2013 would result in worker pay
being reduced by 46 per cent. Ultimately, the employer withdrew its application, making a new agreement with employees
in 2017: [2017] FWCA 6389.
70
Further information on the Industrial Relations Working Group process is included in the Consultation section of this
Regulatory Impact Statement.
Fair Work Amendment (Supporting liv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The Coronavirus pandemic has caused significant disruption to the labour market
The COVID-19 pandemic has significantly impacted the Australian labour market. In September
2020, just under one million Australians were looking for work and 1.6 million Australians were
receiving unemployment benefits including Jobseeker and Youth Allowance.71 The seasonally
adjusted unemployment rate was 6.9 per cent. This represents a slight decrease from the 7.5
per cent unemployment rate in July 2020, which was the highest unemployment rate
experienced in Australia since 1998. Treasury forecasts in the 2020-21 Budget released in
October are that the unemployment rate may reach 8 per cent by the end of 2020, before
falling to 6.5 per cent by the June quarter of 2022 as economic activity recovers. Payroll jobs,
where employees are entitled to receive pay from an employer, have fallen across most
industries (excluding the electricity, gas, water and waste services, and the financial and
insurance services industries). While the labour market has recovered since the depths of the
COVID-19 pandemic in May 2020 (when the number of employed people was at its lowest),
between March and October 2020, the number of accommodation and food services industry
payroll jobs reduced by approximately 18 per cent, and in the arts and recreation services
industry, payroll jobs have fallen by approximately 15 per cent. 72
This disruption occurred in a labour market that was already not performing at its peak
Even before COVID-19, labour productivity growth in Australia had been slowing, contributing
to slower real wage growth. Average annual productivity growth in the market sector from
2015-16 to 2019-20 slipped to 0.7 per cent per annum compared with growth of 2.0 per cent on
average over the past 25 years.
Treasury research shows that a significant cause of Australia's declining productivity was a
decrease in the number of people moving from low productivity firms to high productivity
firms.73 This kind of dynamism can lead to better job matching between employees and firms,
better quality jobs with higher wages, and is associated with higher aggregate productivity.74
The features of the industrial relations system are important for the operation of the labour
market in Australia. While the Productivity Commission found no direct evidence linking
productivity effect from industrial relations reforms, it noted that there is considerable 'noise'
in productivity data and it is difficult to control for other factors. 75 Additionally, taking into
71
ABS, Labour Force Statistics September 2020, https://www.abs.gov.au/statistics/labour/employment-and-
unemployment/labour-force-australia/latest-release#data-download.
72
ABS, Weekly Payroll Jobs and Wages in Australia, Week ending 17 October 2020,
https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/weekly-payroll-jobs-and-wages-australia/latest-
release.
73
Andrews, D, Deutscher, N, Hambur, J, and Hansell, D, 2019, Wage Growth in Australia: Lessons from Longitudinal
Microdata, Treasury Working Paper, 2019-04 - '... the period of low aggregate wage growth has coincided with a
slowdown in the extent to which labour is reallocated from less productive to more productive firms. Given high
productivity firms pay higher wages, slowing reallocation implies that fewer high paying jobs are being created than
otherwise. We consider this compositional effect separate from the relationship between wages and productivity, as it
implies both lower aggregate productivity and wage growth.'
74
Andrews, D, Deutscher, N, Hambur, J, and Hansell, D, 2019, Wage Growth in Australia: Lessons from Longitudinal
Microdata, Treasury Working Paper, 2019-04.
75
Productivity Commission (2015), Appendix G, p. 1134.
House of Representatives lv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
account cyclical factors, there is evidence that higher firm productivity leads to higher wages.76
Noting this, it is highly likely there is a link between the industrial relations system, labour
market adjustment and productivity.
In this context, industrial relations reforms play an important role in improving productivity, and
ultimately in supporting the growth of real wages and living standards in Australia. Enterprise
bargaining is a vehicle for achieving this.
Stakeholders agree that reform is necessary
Stakeholders agree on the scale of the economic challenge facing Australia following the COVID-
19 pandemic, and agree that the enterprise bargaining system requires reform in order to
contribute to the economic recovery and job creation. However, while unions have publicly
acknowledged that aspects of enterprise bargaining are not working effectively, they reject
some of the specific claims regarding the system's complexity and technicality. Unions argue
that the prescribed and technical requirements in the system are essential to protect the rights
and interests of employees and guarantee procedural fairness. While supporting the creation of
more and better enterprise agreements with employees, unions argue that any options for
reform must be carefully balanced against the need to ensure the system is fair. For employees,
the decline in bargaining has negative implications for wages and conditions, workplace
engagement and cooperation.
Employers, on the other hand, argue the complexity of the process and uncertain outcomes
discourage engagement in enterprise bargaining. They argue that the system cannot deliver the
benefits it intends because its procedural requirements deny parties negotiating flexibility and
productivity gains through bargaining. These requirements dictate a process that is needlessly
long, costly and may not result in agreement. In their view, using enterprise agreements as a
mechanism to tailor productivity-enhancing workplace changes77 and employment conditions is
prevented by the current framework in the Fair Work Act.
Despite the varied stakeholder positions, there is a clear impetus for change and need to amend
aspects of the bargaining system which are no longer fit for purpose. With this in mind, the
objectives of enterprise bargaining reform are to:
encourage employers to engage in the bargaining system by improving policy settings to
support parties to make new enterprise agreements
encourage more employers to renegotiate nominally expired enterprise agreements,
and
over the longer term, contribute to labour market productivity improvements, increased
workplace cooperation, flexibility and innovation, and improved wages and conditions
for workers.
76
Andrews, D, Deutscher, N, Hambur, J, and Hansell, D, 2019, Wage Growth in Australia: Lessons from Longitudinal
Microdata, Treasury Working Paper, 2019-04.
77
These might include, for example, more streamlined rostering arrangements, more flexible use of staffing through
increased span of hours, improved access to skills and training for employees, which may benefit productivity and
engagement.
Fair Work Amendment (Supporting lvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
In the absence of reform, it is likely that the decline in enterprise agreements will continue. This
will have enduring negative effects on productivity, innovation, and lower wages and conditions
for workers.
Policy Options
The Government has considered a number of possible options to address those problems
identified in the bargaining system. The options range from simplifying and streamlining current
approval processes, to ensuring core concepts such as the BOOT and genuine agreement are
simpler to apply, without undermining employee protections. Additional reforms to address
concerns regarding perceived manipulation of the system are also canvassed. It is anticipated
that the final, preferred reform package will either decrease or leave relatively static the overall
regulatory burden for parties, and improve their experience of the system - particularly for
employers who are new to enterprise bargaining. Discussion of the policy benefits and impacts
of each option are outlined in the Net Effects section of this Regulatory Impact Statement.
In addition to the regulatory reforms listed below, non-regulatory reform is being progressed in
parallel to provide the FWC with additional resourcing for online guidance and an enterprise
agreement approval application portal tool, to make the process simpler, more efficient and
easier for users. The Office of Best Practice Regulation has assessed this proposal and found
that it has nil regulatory impacts (OBPR ID 42986).
1. Objects
Option 1.1 - amend the objects of Part 2-4 of the Fair Work Act (preferred option)
This option would amend the objects of Part 2-4 of the Fair Work Act to highlight that
enterprise agreements should, in addition to the existing objects (outlined under option 10.2
below), enable business and employment growth and reflect the needs and priorities of
employers and employees. Amendments will also clarify that the FWC is to deal with approval
applications in a timely, practical and transparent manner.
Option 1.2 - maintain status quo
This option would not make changes to the objects included in section 171 in Part 2-4 of the
Fair Work Act. Currently, the objects are:
to provide a simple, flexible and fair framework that enables collective bargaining in
good faith, particularly at the enterprise level, for enterprise agreements that deliver
productivity benefits, and
to enable the FWC to facilitate good faith bargaining and the making of enterprise
agreements, including through:
o making bargaining orders,
o dealing with disputes in where the bargaining representatives request
assistance, and
o ensuring that applications to the FWC for approval of enterprise agreements are
dealt with without delay.
House of Representatives lvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
2. Notice of employee representational rights (NERR)
Option 2.1 - amend the Fair Work Act to extend the timeframe for issuing the NERR and
clarify how it can be provided (preferred option)
This option would amend 2 specific aspects of the NERR under the Fair Work Act:
extending the timeframe in which the employer must give the notice from the current
14 days to 28 days, to give employers more time to comply with the requirement to give
the notice and reduce the risk of agreements being challenged on technical grounds at
the approval stage, and
providing that the FWC must publish on its website the prescribed NERR form that
employers are required to provide to employees.
This will make compliance with the NERR requirements easier and reduce the likelihood of
errors in both providing the NERR on time and correctly.
Option 2.2 - maintain status quo
The option proposes no changes to the current Fair Work Act requirement that after the
'notification time' for a proposed agreement (for example, when an employer agrees to
bargain, or initiates bargaining for a new agreement), an employer must take all reasonable
steps to give the NERR to each employee who will be covered by the agreement and is
employed at that time, to inform them of their right to be represented by a bargaining
representative. The NERR must be provided as soon as practicable, and not later than 14 days
after the notification time. If it is not provided within the prescribed time, the agreement
cannot be genuinely agreed to by the employees. Content of the NERR is prescribed by the
regulations78 and cannot contain any other content. Failure to comply with these requirements
may mean the FWC is unable to approve the agreement.
3. Pre-approval requirements--genuine agreement
Option 3.1 - reduce prescription and red tape in genuine agreement requirements (preferred
option)
This option would replace the current pre-approval requirements that must be met for
employees to have 'genuinely agreed' to the agreement with a broad requirement that the
employer must take reasonable steps to give employees a fair and reasonable opportunity
decide whether or not to approve the agreement. The balance of 'fair' and 'reasonable' is a
necessary and appropriate safeguard for employees, taking into account the repeal of the
prescriptive steps in previous subsections 180(2), (3) and (5).
This takes a purposive approach to the pre-approval requirements, while maintaining the
protections they provide to employees when making an enterprise agreement. Employers
would still be required to provide employees a fair and reasonable opportunity to decide
whether or not to approve the agreement prior to any vote. What is a 'fair and reasonable
opportunity' would depend on the particular circumstances of the workplace and may include
78
Regulation 2.05 - Schedule 2.1 -Notice of Employee representational rights.
Fair Work Amendment (Supporting lviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
seeking advice from their union. The FWC could take into account any explanation given by an
employee organisation to the relevant employees, along with any other matter the FWC
considers appropriate.
Option 3.2 - expand and clarify genuine agreement requirements
This option would expand and clarify the existing genuine agreement requirements to provide
that:
employers can provide access to materials in paper or electronic form
employers do not need to provide employees with copies of documents referenced in
the agreement which are available in the public domain
employers only need to explain the terms of any legislation or industrial instruments
incorporated by reference in an agreement insofar as the agreement alters the effect of
the terms in the legislation or industrial instrument, and
the FWC may take into account the extent of any differences between the proposed
enterprise agreement and any previous enterprise agreements applicable to the
employees.
Option 3.3 - maintain the status quo
This option would maintain the status quo in respect of genuine agreement, which requires the
FWC to be satisfied that an employer has complied with a number of key steps, including
provision of the Notice of Employee Representational Rights (NERR)79 and that there are no
other reasonable grounds for believing that an agreement has not been genuinely agreed
upon.80 The FWC may also be satisfied that an agreement has been genuinely agreed despite
any minor procedural or technical errors made in the process, as long as the employees covered
by the agreement were not likely to have been disadvantaged by the errors. 81
4. Voting requirements
Option 4.1 - amend the Fair Work Act to clarify when a casual employee can vote for an
agreement (preferred option)
This option would amend the Fair Work Act to provide certainty as to when casual employees
are entitled to vote on an agreement. It would relevantly provide that a casual employee may
vote to approve an enterprise agreement if they performed work at any time during the access
period (which is the period of 7 calendar days before the day the request to vote is made).
Casual employees who did not perform work at any time between the start of the access period
79
For example, section 173 of the Fair Work Act provides that after an employer agrees to bargain, or initiates bargaining
for a new agreement, it must take all reasonable steps to give notice of the right to be represented by a bargaining
representative to each employee who will be covered by the agreement and is employed at that time (the 'notification
time'). This NERR must be given as soon as practicable, and not later than 14 days after the 'notification time'. If not
provided within the prescribed time, the agreement cannot be 'genuinely agreed' to by the employees.
80
Fair Work Act ss. 186(2) and 188.
81
Fair Work Act s. 188(2).
House of Representatives lix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
and the time the request to vote is made would not be eligible to vote. This approach is based
on relevant case law from the Full Court of the Federal Court and the FWC. 82
Option 4.2 - amend the Fair Work Act to enable the FWC to overlook minor errors and
omissions
This option would allow the FWC to overlook minor errors and omissions in calculating the
cohort of casual employees invited to vote on an enterprise agreement. As already noted, the
FWC already has the ability to overlook minor procedural or technical errors, so changing this to
include minor errors or omissions is not likely to make a substantive difference in the operation
of the requirement as it is broadly analogous.
What constitutes a minor error is dependent on the circumstances, the underlying purpose of
the relevant requirement and the level of non-compliance. Generally, the lower the level of
non-compliance the more likely it is to be characterised as a minor error. For example,
informing the employees of the time and place at which the vote will occur, and the voting
method that will be used,83 just after the start of the seven day access period specified in the
Fair Work Act (for instance 6 days before the start of the voting process) is likely to be a minor
error in most cases.
Option 4.3 - maintain the status quo
This option would make no amendments to the Fair Work Act regarding when casuals are
entitled to vote on an agreement. As noted under option 4.1, the authority on when casuals can
vote is established under case law,84 with recent 'genuine agreement' cases having illustrated
the difficulties users currently face in determining when casual employees are entitled to vote
on an enterprise agreement.85
5. Better off Overall Test (BOOT)
Option 5.1 - combination of amendments to the BOOT (preferred option)
This option would amend the BOOT so that it:
limits the FWC's ability to consider patterns or kinds of work to only those currently
engaged in by award covered employees for the agreement, or are in any case
reasonably foreseeable at test time
is made clear the FWC may have regard to the overall benefits (including non-monetary
benefits) an employee would receive under the agreement compared to the relevant
modern award
provides that the FWC must consider the views of employees and employers covered by
the agreement about whether the agreement passes the BOOT, and
82
National Tertiary Education Industry Union v Swinburne University of Technology [2015] FCAFC 98.
83
Fair Work Act ss. 180(3)(a) and (b).
84
National Tertiary Education Industry Union v Swinburne University of Technology [2015] FCAFC 98.
85
Kmart Australia Ltd [2019] FWC 6105; and Appeal by Shop, Distributive and Allied Employees Association (SDA); Appeal
by Kmart Australia Limited t/a Kmart (Kmart); Appeal by the Australian Workers' Union (AWU) [2019] FWCFB 7599.
Fair Work Amendment (Supporting lx House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
includes an additional provision (to sunset automatically 2 years from commencement)
allowing the FWC to approve an agreement that did not pass the BOOT where it is not
contrary to the public interest and it is appropriate to do so taking into account all the
circumstances, including:
o the views of the employees, employers and bargaining representatives for the
agreement
o the circumstances of those employees and employers and any employee
organisations
(for example, unions) covered by the agreement, including the likely effect that
approving or not approving the agreement would have on them
o the impact of COVID-19 on the enterprise to which the agreement relates, and
o the extent of employee support for the agreement as expressed in the outcome
of the vote to approve the agreement.
Option 5.2 - amend the BOOT to apply to classes or groups
This option would amend the BOOT to apply the test to specified classes or groups of
employees, removing the requirement that it be applied as against each award covered and
prospective award covered employee. For example, a class or group could include employees
within the same classification or working the same roster pattern.
Option 5.3 - maintain the status quo
This option would make no amendments to the current operation of the BOOT under the Fair
Work Act. The BOOT currently requires the FWC to be satisfied that each employee and each
prospective employee covered by a modern award would be better off overall under the
enterprise agreement compared to the relevant award. 86 If a class of employees would be
better off, the FWC is entitled to assume that an individual within the class would also be better
off, in the absence of evidence to the contrary.87 This generally allows a more practical
application of the BOOT for the FWC, but does not remove the expectation that each award
covered employee, and each prospective award covered employee, must be better off overall
under the agreement.88
6. National Employment Standards (NES) compliance requirements
Option 6.1 - amend the Fair Work Act to no longer require the FWC to be satisfied an
agreement does not include any terms excluding the NES (preferred option)
This option would amend the Fair Work Act to remove the requirement that, when determining
an application to approve an enterprise agreement, the FWC must be satisfied that the
agreement does not contain any terms that contravene or undercut the NES. The Fair Work Act
already provides that an agreement must not exclude the NES or any provisions of it, and that a
86
Fair Work Act s. 193(1).
87
Fair Work Act s. 193(7).
88
Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo [2016] FWCFB 2887 (Watson VP,
Kovacic DP, Roe C, 31 May 2016) at para. 6.
House of Representatives lxi Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
term of an agreement has no effect to the extent that it contravenes the NES. This option
removes an unnecessary procedural step with respect to NES compliance only.
Option 6.2 - amend the Fair Work Act to require agreements to include a term that explains
the interaction between the NES and the agreement (preferred option)
This option adopts option 6.1 and requires an enterprise agreement to include a model NES
interaction term, or would read one into an agreement that does not have one, to explain the
provisions of the Fair Work Act that deal with the interaction between the NES and enterprise
agreements. This is consistent with the advice currently provided in the FWC Enterprise
Agreements Benchbook.89 Where there is inconsistency between a term in the agreement and
the NES, and the NES provides a greater benefit, the NES provisions will apply. If an enterprise
agreement does not include the model NES interaction term, the model term is taken to be a
term of the agreement.
The purpose of this amendment is to simplify the enterprise agreement approval process by
avoiding the need for the FWC to examine each clause of an agreement to determine whether
it is inconsistent with the NES. Instead, the FWC only needs to consider whether the agreement
includes the model NES interaction term.
Option 6.3 - maintain the status quo
This option would make no amendments to the current requirements under the Fair Work Act
that an enterprise agreement cannot contain a term that excludes the NES or any provision of
the NES. It also provides that where there is an inconsistency between a provision in the
agreement and the NES, the term that is more beneficial to the employee shall apply. Terms of
an agreement that contravene the NES have no effect.90
7. Franchisee agreements
Option 7.1 - allow new franchisees to opt-in to existing single enterprise agreements made
with a group of employers operating under the same franchise (preferred option)
This option would allow anew franchisee employer to apply to be covered by an existing single
enterprise agreement that covers multiple employers that operate under the same franchise
that are single-interest employers, such as under a single interest employer authorisation (for
example, large fast food franchises). The option would not allow modification of the existing
agreement.
Option 7.2 - maintain status quo
This option would make no amendment to existing provisions, which only allow a new
franchisee employer to seek to be covered by a single-enterprise agreement before it is made.
For example, the FWC can vary a single-interest employer authorisation to add another
89
The NES Precedence Clause in the FWC's Enterprise Agreements Benchbook provides that: This Agreement will be read
and interpreted in conjunction with the National Employment Standards (NES). Where there is an inconsistency between
this agreement and the NES, and the NES provides a greater benefit, the NES provision will apply to the extent of the
inconsistency.
90
Fair Work Act ss. 55 and 56.
Fair Work Amendment (Supporting lxii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
employer if each employer specified in the authorisation has agreed to the employer's name
being added and the requirements which deal with franchisees and employers that may bargain
together for a proposed enterprise agreement are met.91 If an employer is not included in the
authorisation, or is otherwise not a single-interest employer with the other employers before
the agreement is made, it could make its own enterprise agreement with their employees. This
agreement may be exactly or substantially the same as the existing agreement made under the
single interest employer authorisation.
8. Terminating agreements after nominal expiry date (NED)
Option 8.1 - modify termination of agreement provisions (preferred option)
This option would make amendments to the enterprise agreement termination provisions of
the Fair Work Act to provide that a unilateral application by a party to terminate an enterprise
agreement after its NED cannot be made until at least 3 months after the nominal expiry date
of the agreement.
Option 8.2 - maintain status quo
This option would make no amendments to the termination of agreement provisions in the Fair
Work Act, which provide that when an agreement has passed its NED, an employer, employee,
or employee organisation covered by the agreement may apply to the FWC to terminate it. 92
9. How the FWC may inform itself
Option 9.1 - amend the Fair Work Act to restrict who can be heard by the FWC at agreement
approval, and allow non-bargaining representatives to be heard in exceptional circumstances
(preferred option)
This option would modify how the FWC can inform itself in relation to an application to approve
an enterprise agreement or a variation of an enterprise agreement. The FWC could only inform
itself in relation to such applications on the basis of information that is publicly available, and
accept submissions and evidence from prescribed persons (generally, the parties involved in
bargaining for an agreement). This would rectify unnecessary delays in the approval process
caused by intervention from parties which were not party to the bargaining for the agreement.
This option still allows the FWC to consider information from a party not involved in bargaining
for the enterprise agreement, if the FWC is satisfied that there are exceptional circumstances
that justify it doing so.
Option 9.2 - adopt option 9.1, but do not allow non-bargaining representatives to be heard in
any circumstances
This option would adopt option 9.1, but would not permit non-bargaining representatives to
intervene at the approval stage. Only the parties involved in bargaining for an agreement would
have capacity or standing to make submissions to the FWC at this stage.
91
Fair Work Act ss. 251 and see also 249 (2) or (3) for requirements regarding franchisees.
92
Fair Work Act s. 225.
House of Representatives lxiii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Option 9.3 - maintain the status quo
This option would make no amendments to the Fair Work Act regarding how the FWC may
inform itself in regards to, and who is able to intervene in, agreement approvals. Currently,
when determining an application to approve an enterprise agreement, the FWC may inform
itself in any manner it considers appropriate. 93 The FWC can hear also submissions from
persons not involved in bargaining.
10. Time limits for determining certain applications
Option 10.1 - amend the Fair Work Act to require the FWC to approve agreements within 21
days (preferred option)
This option would legislate that the FWC must determine applications to approve agreements
within
21 working days,94 as far as practicable. The FWC can determine an application to approve or
vary an enterprise agreement after that time but it must, as soon as practicable, give written
notice to specified persons, setting out why it was unable to determine the application during
that period, including whether any exceptional circumstances exist. The FWC would also be
required to publish the notice on its website.
This option is intended to be combined with the package of other preferred options, such as
significantly reducing red tape and prescription for employers during the bargaining and
approval processes and limiting intervention in the approval of agreements by non-bargaining
representatives. As part of the package, this option will address problems concerning the
timeframes for agreement approval by requiring the FWC to approve agreements within 21
working days, as far as is practicable.
Option 10.2 - amend the Fair Work Act to require the FWC to approve agreements within 14
days
This option would require the FWC to determine agreement approval applications within 14
days. Where this timeframe is not met, the FWC must provide explanation of the circumstances
that prevented it from meeting this timeframe to the parties.
Option 10.3 - maintain status quo
This option would make no amendments to the Fair Work Act relating to the time taken by the
FWC to determine agreement approval applications. While the Fair Work Act does not currently
specify a particular timeframe during which approval must take place, the current objects of
Part 2-4 of the Fair Work Act require the FWC to ensure that applications ' ... for approval of
enterprise agreements are dealt with without delay.'95
93
Fair Work Act s. 590.
94
Fair Work Act s. 12 - working day means a day that is not a Saturday, a Sunday or a public holiday.
95
Fair Work Act s. 171(b)(iii).
Fair Work Amendment (Supporting lxiv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
11. Transfer of business
Option 11.1 - amend the Fair Work Act to ensure instruments do not transfer for voluntary
transfers of staff between associated entities (preferred option)
This option would allow an employee to transfer more easily to another business that is an
associated entity where the employee initiates the transfer, without necessarily requiring the
new business to take on the transferring employees' industrial instrument. This would apply
only when the employee seeks employment with the new employer at their own initiative--
that is, for entirely voluntary moves.
Option 11.2 - exempt transfers of employees between associated business entities made in
order to avoid redundancies
This option would allow employees to transfer more easily between businesses within
associated entities where employees may be made redundant, without necessarily requiring
the new business to take on the transferring employees' industrial instrument.
Option 11.3 - amend the Fair Work Act to require FWC to consider the job or redundancy
implications when considering whether to grant an order relating to a transfer of business, in
the case of distressed businesses
This option would amend the statutory criteria the FWC must consider when determining
whether to grant an order under section 318 of the Fair Work Act so that the FWC must also
consider the job or redundancy implications. Orders under this section can be made that a
transferable instrument will not apply to the new employment relationship, or that an
instrument that covers the new employer will apply to the new employment relationship.
Requiring the FWC to take into account the job or redundancy implications will be particularly
relevant in the context of applications made under section 318 by distressed businesses.
Option 11.4 - maintain status quo
This option would make no amendments to current transfer of business provisions in the Fair
Work Act, which deal with the transfer of enterprise agreements and other industrial
instruments when a business transfers from one national system employer to another national
system employer. The provisions seek to balance the protection of employees' terms and
conditions of employment under enterprise agreements and other industrial instruments, with
the interests of employers in running enterprises efficiently.
12. Legacy Agreements
Option 12.1 - cease pre-Fair Work Act agreements by 1 July 2022 (preferred option)
This option would mean that agreements made prior to the commencement of the Fair Work
Act and during the Fair Work Act 'bridging period' (between 1 July 2009 to 31 December 2009,
before the commencement of the BOOT and modern awards) would automatically cease to set
the terms and conditions of employees covered by those agreements by 1 July 2022. It would
House of Representatives lxv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
be open to the employer whose business operates under such an agreement to negotiate a new
agreement or revert to the relevant modern award/s.
Option 12.2 - create a scheme for pre-Fair Work Act agreements to be re-approved by the
FWC
This option would establish a transition scheme for employers with pre-Fair Work Act
agreements and agreements made during the 'bridging period' by 1 July 2022. They would be
able to resubmit the agreement to the FWC for approval, provided it still met necessary
requirements under the Fair Work Act. It may also require current employees to vote to
reapprove the agreement. After 1 July 2022, the agreement would have no effect, unless it had
been transitioned under the scheme.
Option 12.3 - maintain status quo
This option would allow agreements made prior to the commencement of the Fair Work Act
and agreements made during the 'bridging period', to continue to operate after they have
nominally expired, by virtue of the Fair Work Act (Transitional Provisions and Consequential
Amendments) Act 2009. Employees employed under these agreements may be paid lower
penalty rates or allowances than they would otherwise receive under the relevant modern
award.
Net effects of policy options
1. Objects
Neither options 1.1 (the preferred option) or 1.2 would have any regulatory impact--while the
objects in section 171 establish the broad purpose for agreement making, they do not directly
impact the operative provisions in Part 2-4 which determine how agreement making occurs or
how the FWC performs its functions under this Part. The FWC must take into account the
objects and Parts of the Fair Work Act when exercising its powers and performing its functions,
including in respect of determining applications to approve or vary enterprise agreements.
While it may not make a substantive difference to the enterprise agreement system (absent
other reforms), it would at the very least be an important optical reform that would influence
how those functions and powers are exercised and on that basis would have significant merit.
2. Notice of employee representational rights
Option 2.1 (the preferred option) would provide that the prescribed NERR form must be
provided on the FWC's website and would have small positive regulatory impact. Ensuring
employers have a reliable source for the form will reduce uncertainty for employers when
accessing the form, noting that employers are concerned an inadvertent error in the approval
process (such as issuing the wrong version of the NERR) can require bargaining to recommence.
It will address stakeholder concerns that the current NERR requirements are overly technical. It
would also make engagement with the FWC for support in the bargaining process simpler, as it
creates a logical first resource for employers and employees new to enterprise bargaining.
Fair Work Amendment (Supporting lxvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The other component of option 2.1 is that it gives parties more time to comply with the
requirement to issue a NERR at the commencement of bargaining. This is a significant benefit as
although the overall regulatory burden for employers does not change, in practice there is often
confusion regarding when the notification period starts. Providing a greater window to alert
employees that bargaining has commenced and that they have representational rights is not
likely to harm their interests, but appropriately balances concerns from some employers that
the current 14 day timeframe is challenging to meet.
While making no amendments to the NERR provisions (option 2.2) does not technically create
additional regulatory impacts, it would not achieve the same net regulatory savings and net
benefits as option 2.1. It also does not address persistent concerns about NERR requirements
from stakeholders, outlined in the previous paragraphs.
3. Pre-approval requirements - genuine agreement
Option 3.1 (the preferred option) will minimise the current regulatory burden on users by
reducing the current prescriptive requirements relating to genuine agreement 96 in the Fair
Work Act and focusing instead on the substance of the requirements, which is to ensure that
employees understand, and are able to participate in, the agreement making process and vote
on a proposed agreement. This option would simplify the procedural steps employers must take
in order to make an enterprise agreement and the matters the FWC is required to be satisfied
of when approving an enterprise agreement. It will simplify the agreement making and approval
process by reducing the likelihood that the FWC will not approve an agreement because of
procedural errors concerning genuine agreement. This aims to increase user confidence in the
system and make bargaining more appealing, particularly for small and medium enterprises
(SMEs) and less sophisticated users. This option will provide employers with clear guidance to
assist SMEs on how to comply with the requirements, while not prescribing exact steps or
timeframes for most aspects of the process. Furthermore, this option may reduce the overall
time taken to approve agreements, and limit delays in an agreement commencing.
While this option removes the prescription around the current genuine agreement
requirements, it retains the legislative purpose of the requirement, meaning there is limited
scope for employers to misuse the option. Employers will be required to take reasonable steps
to ensure employees are given a fair and reasonable opportunity to approve the agreement or
not - however they will have discretion to choose what is fair and reasonable based on their
workplace and employees - for example, emails vs on-site meetings. The FWC must still be
satisfied that employees have genuinely agreed before approval, and may request further
information if needed. This is consistent with established case law.97
Option 3.2 does not address the underlying issue with the genuine agreement requirements,
namely that they are too prescribed. It maintains, and arguably adds to, the regulatory burden
experienced by employers in meeting the genuine agreement requirements. It would clarify
96
Fair Work Act s. 180.
97
The FWC will have scope to request additional information, and or issue guidance regarding what it expected of
employers to meet the genuine agreement requirement.
House of Representatives lxvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
areas of particular concern for employers in respect of existing prescription, but would not
make genuine agreement requirements simpler or reduce the likelihood of errors.
Employers argue that the status quo (option 3.3) is too prescriptive and more complicated than
is needed, to ensure employees have genuinely agreed to a proposed enterprise agreement.
This can, in turn, hamper effective and timely bargaining processes and approval--the level of
prescription can leave otherwise fundamentally sound agreements open to challenge, delaying
(and potentially preventing) their approval.98
Additionally, while the FWC has scope to overlook minor or technical errors, this can create
uncertainty about whether an agreement will be approved, and a determination by the FWC
may lead to future appeals. While the approval process will continue to involve a thorough
examination of the proposed agreement, timely approval should not be hindered by minor or
technical errors in an otherwise sound agreement which benefits both employers and
employees. The net effect is a system which is less user friendly and more rigid than required.
The current process creates a considerable compliance burden for employers, which may be
reduced by a more purposive and less prescribed approach.
4. Voting requirements
Option 4.1 (the preferred option) would not increase the existing regulatory requirements, as
users of the system are already required to act in accordance with applicable case law to ensure
approval by the FWC. The proposed legislative amendments would instead clarify the
requirements and provide certainty of process and criteria for employers and employees,
reducing the current confusion and risk of non-approval and having to repeat the agreement
making process. The amendments would provide greater clarity about which casuals are eligible
to vote on an enterprise agreement, and improve the likelihood of accurate and authoritative
votes occurring. The voting rights of casual employees would not be diminished as a result of
this option; rather, it ensures the validity of those casual employees who do vote.
Option 4.2 is intended to lessen the regulatory impact of having to repeat certain steps for
parties, however there would be no regulatory impact as it is effectively the status quo. It would
clarify the requirements and provide certainty of process for employers and employees,
reducing the current confusion and risk of having to repeat minor steps in the agreement
making process, non-approval and/or having to repeat the agreement making process. It should
be noted that the proposed legislative amendments of changing 'minor procedural or technical
errors' to 'minor errors or omissions' in section 188(2)(a) are unlikely to substantively change
the operation of the provision, as the phrases are broadly analogous.
98
The requirement for strict compliance has been amplified by Federal Court findings that in order for the FWC to reach
the requisite state of satisfaction in relation to these requirements it must have sufficient information before it, and if that
information is not made available, then the FWC cannot approve the agreement: CFMEU v One Key Workforce Pty Ltd
[2017] FCA 1266.The One Key case concerns 3 One Key employees, with whom it subsequently made the RECS (Qld) Pty Ltd
Enterprise Agreement 2015 (the RECS Agreement). The Federal Court concluded that One Key 'unquestionably' made the
RECS Agreement with these employees 'with the intent [to] preclude a genuine bargaining process'. The Court also stated
that '...without knowing the content of the explanation, it was not open to the Commission to be satisfied that all
reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who
voted on the Agreement or that they had genuinely agreed to the Agreement.'
Fair Work Amendment (Supporting lxviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Lack of clarity on when a casual employee is entitled to vote (as per the status quo in option
4.3) has resulted in uncertainty amongst employers and risk with determining which employees
are entitled to vote an agreement. Anecdotal evidence was presented to the Agreement
Working Group that some businesses have abandoned agreement making because of the
'minefield' caused by the lack of clarity on casuals.
5. Better off Overall Test (BOOT)
Option 5.1 (the preferred option) would make a suite of changes to streamline the BOOT, the
net effect of which would be to make the BOOT simpler to apply whilst retaining key
protections. Removing hypothetical scenarios would focus the BOOT on the realities of
employment at the time the agreement is negotiated and lodged with the FWC, ensuring that it
is fit for purpose in respect of patterns or kinds of work, or types of employment, that exist at
the time the agreement is made or are reasonably foreseeable to employers. Examples of
reasonably foreseeable circumstances may include Christmas casuals for department or retail
stores, and seasonal fruit pickers in horticulture. This would be in contrast to unlikely or
unrealistic employment scenarios (such as employees working patterns or kinds of work that
are not offered or contemplated by the employer at test time) and the resulting need for
employers to provide undertakings addressing such scenarios. This option will lead to more
consistent and predictable outcomes in how the BOOT is applied. It also aims to result in a
faster approval process through the FWC. Furthermore, in the rare circumstances where
patterns or kind of work or types of employment that were not reasonably foreseeable at the
time the agreement was approved do eventuate when the agreement is in force, the enterprise
agreement can be varied in accordance with existing variation provisions in the Fair Work Act. 99
Requiring the FWC to consider the views of the employer and employees on whether the
agreement passes the BOOT and on the overall benefits under the agreement, including both
monetary and non-monetary benefits gives legislative effect to the policy intent expressed in
the explanatory memorandum to the Fair Work Bill 2008. It provides that the subjective
preferences of the employee would be relevant in assessing the relative value of a non-
monetary benefit. There is benefit in clarifying this in legislation, to provide certainty to parties
and guidance to the FWC, and it may assist in improving confidence in enterprise bargaining.
The FWC may well continue to take an overly forensic approach to assessing the BOOT. This is
likely to be a concern for employers since the Hart v Coles Supermarkets Australia Pty Ltd and
Bi-Lo Pty Limited T/A Coles and Bi Lo100 decision in 2016, which reaffirmed that the BOOT
requires every individual employee and potential employee to be better off. Since then, the
perception has been that the application of the test has become overly technical. This option
seeks to address this issue by focusing the test on realistic patterns and kinds of work and
requiring the FWC to more broadly consider the views of the parties to the agreement.
99
The variation process is broadly similar to the enterprise bargaining process - section 208-211. An agreement to vary an
enterprise agreement may be made when a majority of the affected employees cast a valid vote to approve the variation.
The FWC must then approve the variation if certain requirements are met, including the BOOT.
100
Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo: [2016] FWCFB 2887.
House of Representatives lxix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
In addition, this option is being proposed with a package of other proposed options which are
intended to make enterprise bargaining less complex.
Overall, option 5.1 is unlikely to impact the existing regulatory requirements or rights and
protections of users of the enterprise bargaining system. Instead, the changes should make it
easier for users to navigate the system in a timely fashion. The option is designed to minimise
delays in consideration of the BOOT by the FWC, by making it simpler to apply, which will have
flow on regulatory benefits for parties because the approval process is expedited and
employers are able to pass on enhanced wages and conditions to employees under an
agreement that is approved more quickly. Limiting the FWC to considering the patterns or kinds
of work for only those currently engaged in by employees, or that are reasonably foreseeable at
the test time, should also lead to more predictable and consistent outcomes for parties
engaged in the system.
The impact of option 5.2, which would remove reference to individual employees in the BOOT
in favour of classes or groups of employees, is that the revised BOOT would become a
'majoritarian' test rather than an 'individualistic' test. This may allow agreements to
disadvantage certain employees where the group of employees is, as a whole, advantaged.
Option 5.2 would simplify the assessment of the BOOT, as broader classes or groups of
employees can be more quickly assessed against the relevant modern award, and there is less
scope for individual roster variations or technical considerations which could slow an approval
down.
If a simpler BOOT resulted in a shorter approval process, with less undertakings sought by the
FWC, arguably this would reduce the regulatory burden on parties. However, depending on how
the FWC applies the BOOT to classes or groups of employees, it could leave some employees
worse off under the agreement than the relevant modern award despite the relevant group of
employees to which they belong being, as a whole, advantaged.
Maintaining the status quo for the BOOT (option 5.3) would see no change in respect of the
complexity of agreement making, the often lengthy process it takes for the FWC to approve
agreements and the challenges users experience when attempting to apply the BOOT. Under
this option, the identified regulatory burden attached to the current BOOT would continue,
alongside uncertainty about the BOOT's application.
A significant number of stakeholders find the FWC's current approach to assessment of the
BOOT to be overly technical. Employers argue that the BOOT is being applied as a forensic,
clause by clause assessment against the relevant award, with the FWC assessing the effect of
the agreement on each award covered employee and prospective award covered employee. As
a result, bargaining is no longer flexible to a particular enterprise's circumstances, and does not
provide for productivity gains by employers and employees alike.
The FWC's current approach has seen a rise in the number of agreements requiring
undertakings to address non-compliance with the BOOT. In 2019, 77 per cent of the
undertakings sought by the FWC related to conditions which included compliance with the
BOOT. While an agreement can have multiple undertaking types, and are not exclusive of each
Fair Work Amendment (Supporting lxx House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
other, conditions-related undertakings have been the most significant type of undertakings
sought each year since 2015.101
There are significant regulatory burdens associated with the increased number of undertakings
required by the FWC. There are also costs associated for employers by a longer approval
processes. Employers and employees are also impacted by delays in approving a new
agreement which may provide for productivity gains and wage increases. Ultimately, the effect
of the current process may be discouraging engagement in the agreement making system.
6. National Employment Standards (NES) compliance requirements
Options 6.1 and 6.2 (the preferred options) would not introduce additional regulatory burdens
on parties using the enterprise bargaining system. Neither would the options remove
compliance requirements with respect to the NES, since the Fair Work Act already provides that
an agreement must not exclude the NES or any provisions of it, and a term of an agreement has
no effect to the extent that it contravenes the NES. As such, there is no risk posed by these
options to ensure ongoing compliance with the NES. Both options are designed to reduce the
need for the FWC to seek undertakings addressing NES compliance and to speed up the
approval process.
The FWC has advised that there are significant regulatory savings associated with reducing the
incidence of applications with incomplete documentation or which require undertakings, as
these options will do. ABS data (Survey of Employee, Earnings and Hours 2018) states the hourly
earnings for managers is $60.40. Modelling based on this data indicates that, for each hour of
time saved in preparation or by avoiding follow up activity, there is an estimated saving of
$214,800 for small-medium sized businesses and for $26,800 for larger businesses.102 Currently,
approximately 50 per cent of enterprise agreement applications are identified as having
incomplete documentation or requiring undertakings. While the number of applications to
approve a single enterprise agreement dipped in 2019-20 to 3,526 applications, in the 4
previous years, the FWC received an average of over 5,000 application per year.
Maintaining the status quo in relation to the NES (option 6.3) would result in continued
unnecessary regulation on business and likely see a continuation of the approach adopted by
some FWC members to seek undertakings in relation to the NES which are strictly unnecessary.
The complexity of ensuring all agreement approval requirements are met can delay wage
increases, increase costs to parties and drive perceptions of inconsistency in FWC decision
making if some Commissioners require undertakings to ameliorate concerns about one
agreement, while others in similar circumstances do not require undertakings.
The time taken for the FWC to approve agreements has increased in recent years, mainly due to
an increase in non-compliant agreements for which undertakings are sought and this includes
101
Attorney-General's Department Workplace Agreements Database (WAD).
102
Note: Agreement size is used as a proxy for the size of the employer (e.g. a single enterprise agreement application for
1-19 employees is a reflection of a small sized enterprise where 'Small' refers to employers who employ less than 20
employees (44.5%); 'Medium' refers to employers who employ between 20 and 199 employees (44.5%); 'Large' refers to
employers who employ 200 or more employees (11%); adapted from Australian Bureau of Statistics classifications of
business size. Savings are based on 4000 applications per year.
House of Representatives lxxi Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
undertakings in relation to the NES.103 This approach is viewed as excessively technical, a fetter
on fast and efficient approvals, and a disincentive to agreement making. While requiring
undertakings addressing the NES does not materially impact the operation of the agreement, it
does represent a cost to employers and delays for all parties to the agreement.
7. Franchisee agreements
Option 7.1 (preferred option) would result in a net regulatory benefit, as new franchisee
employers would be able to apply to be covered by existing enterprise agreements made with a
larger group of single interest employers that operate under the same franchise. This has net
benefits as operations and duties across all franchisees are broadly identical and pay rates are
consistent. This option would lead to a significant saving in time and resources for the
employer, as they could avoid undertaking a full bargaining process for a new agreement. It
would not result in any negative impacts for employees, as employees of the new franchisee
would be required to vote before the agreement covers them, and employees of franchisees
already covered would not be affected.
In circumstances where employees choose not to vote in favour of such an enterprise
agreement, the employer would still have the option of negotiating a single enterprise
agreement with their employees directly, or relying on the relevant modern award.
Maintaining the status quo (option 7.2) retains the existing unnecessary regulatory burden and
cost which requires new employers/franchisees to negotiate substantively identical agreements
at a new workplace, as there is no simple mechanism to extend coverage of an existing
agreement made under a single interest employer authorisation. This does not provide any
additional benefit to employees, as it makes negotiating an enterprise agreement less appealing
and may also result in employees having less favourable terms and conditions under the award.
8. Terminating agreements after nominal expiry date
Option 8.1 (the preferred option) is intended to support bargaining for new agreements by
preventing employers threatening to terminate current agreements and put employees back on
the relevant modern award(s) rates during the 3 month period after the agreement nominally
expires, when bargaining for a new agreement may be occurring.
While agreements are tested by the FWC against the relevant award, the previous enterprise
agreement is, in practice, the relevant 'baseline' against which a new agreement will be
negotiated. Employers are generally criticised for unilaterally seeking to terminate an enterprise
agreement past its NED during bargaining. The FWC must approve an application to terminate
an agreement past its nominal expiry date if it is satisfied that it is not contrary to the public
interest to do so, and it is appropriate to do so, taking into account all the circumstances,
including the views and circumstances of employees, employer/s and employee organisation/s
103
There is no single explanation for the increase in non-compliant agreements. One likely factor is developments in case
law which affect FWC processes for assessing applications to approve an agreement. For example, the Hart v Coles
Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo matter led to an increase in non-compliant BOOT
findings by the FWC. This is because the matter upheld an interpretation of the BOOT which had implications for how the
FWC would then assess subsequent approval applications to ensure compliance, leading to more undertakings being
sought adjusted to the more strict interpretation adopted by the FWC.
Fair Work Amendment (Supporting lxxii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
covered by the agreement.104 Data from 2019-20 shows that the FWC received 432 applications
to unilaterally terminate an enterprise agreement which had passed its NED, of which the
majority - 290 were approved. Employer initiated applications made up the bulk of all
applications, submitting 365 applications, with 264 applications being approved by the FWC.
This data does not show if employers are making termination applications during the course of
enterprise bargaining, nor does it provide the reasons given for termination.
The Full Bench of the FWC has found that there is nothing 'inherently inconsistent' between
terminating an agreement that has passed its NED and the continuation of bargaining for a new
agreement.105 However, unions consider this to often be a bargaining tactic used by employers
to force employees to agree to terms and conditions they would not otherwise agree to, when
faced with reverting to the relevant modern award/s under which they would be worse off. The
FWC has acknowledged that termination may disturb parties' current bargaining positions and,
in a recent decision, refused to terminate an agreement during bargaining, as it was of the view
that terminating the agreement would change the dynamics of bargaining such as to cause
unfairness to certain employees.106
This option would appropriately balance employer and employee bargaining power during the 3
month period after an agreement nominally expires. As noted above, the FWC must only
terminate an enterprise agreement past its NED if it meets certain requirements under the Fair
Work Act107. Regardless of these limitations, the act of applying for termination of an enterprise
agreement (even if the termination is not approved) may disturb efforts to genuinely engage in
enterprise bargaining. By restricting termination of agreements at the commencement of a new
bargaining period, the option ensures existing bargaining positions are not disturbed and
disproportionate industrial pressure is not exerted in the initial phase of bargaining. This option
will ensure employers engage more cooperatively with employees and their representatives in
replacing an agreement past its nominal expiry date, as well as promoting better workplace
relations and reinforcing 'fairness' within the system.
There may be some minimal costs, though no new regulatory burden, for a small number of
employers unable to apply to terminate their existing agreements for reasons unrelated to
bargaining tactics but which fall within the prohibited timeframe. This may be because for
example, they are rationalising agreements or other functions of their old agreement are no
longer competitive. However, any impact should be minimal, as the timeframe during which
termination is prohibited is relatively short and the employer may be able to achieve a similar
objective through a new enterprise agreement negotiation process with employees.
The net effect of not modifying current provisions (option 8.2) is that the behaviour of some
employers who choose to terminate an enterprise agreement past its NED will continue and
ultimately contribute to a bargaining process that is not constructive for either party. While
there is no clear evidence of the proportion of employers that may be choosing to do this, the
104
Fair Work Act s. 226.
105
Aurizon Operations Limited [2015] FWCFB 540, and upheld by the Full Federal Court in CEPU v Aurizon Operations
Limited [2015] FCAFC 126.
106
Esso Australia Pty Ltd [2020] FWCFB 1077.
107
Fair Work Act s. 226.
House of Representatives lxxiii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
ability for employers to threaten this action reduces trust and undermines constructive
bargaining between the parties. Where an agreement can be terminated during bargaining, it
would be seen as an incentive for employees to make a new agreement as soon as possible,
rather than engage in protracted bargaining or industrial action (particularly where the
employer has given an undertaking to maintain pay and certain conditions for a limited period
of time, before employees then drop to the award).108 When a new agreement is eventually
made, it may include less favourable wage and condition outcomes for employees. While
unilateral termination of enterprise agreements after the NED has passed can be done for
legitimate reasons by an employer, on balance, modifying these provisions will support more
efficient and productive agreement making.
9. How the FWC may inform itself
Option 9.1 (preferred option) would limit the rights of non-bargaining representatives to
intervene at the approval stage while preserving the FWC's power to inform itself in any
manner it considers appropriate by allowing any person to apply to the FWC to be heard in
exceptional circumstances. As a result, it will impose a small regulatory burden on non-
bargaining representative parties as it requires an additional administrative process to
demonstrate exceptional circumstances (for example, by providing evidence that an employee
would be worse off under the agreement) before standing can be granted by the FWC.
This is a proportionate and balanced response to the current issue of parties intervening in the
approval process with the objective of causing significant delay or disruption, resulting in
generally negative outcomes for employers and employees. Sometimes, a party who has not
been involved in bargaining as a bargaining representative may seek to intervene and raise an
extensive log of claims that were not provided to the employer during negotiations where they
may have been addressed. The preferred options seek to ensure that, for the most part, only
those involved in bargaining can be heard at approval. This minor regulatory impact is justified
as reducing the potential for intervention to generally only include bargaining parties at the
approval stage will assist in a faster approval process. This will help reduce the overall costs and
uncertainty for employers associated with an extended approval process, often requiring
further submissions to the FWC.
Option 9.2 has the same benefits as option 9.1, but by prohibiting non-bargaining
representatives from intervening at the agreement approval stage it would disproportionately
infringe on freedom of association and is not preferred on that basis.
Option 9.3 is the status quo and would make no change to the regulatory burden imposed on
all parties to the agreement when a person not involved in bargaining intervenes in the
approval process and engages in delaying tactics. While it may, in limited cases, provide an
additional path for deficiencies in an agreement to be brought to the FWC's attention, it does
not improve the overall concerns of parties regarding the time it takes to approve agreements
108
For example, when the Full Bench of the FWC upheld the termination of Aurizon's enterprise agreements in April 2015,
the employer and employees had agreed new enterprise agreements within 6 months. See: [2015] FWCA 5740 and [2015]
FWCA 6097.
Fair Work Amendment (Supporting lxxiv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
and the uncertainty that can result from a protracted process, which can (and has) caused some
parties to disengage with the agreement making framework.
10. Time limits for determining certain applications
Option 10.1 (the preferred option) would have an overall positive regulatory impact, with
minimal additional regulatory burden, in that it would speed up the approval processes for the
majority of enterprise agreements. The option for the FWC to determine an enterprise
agreement approval application within 21 days, as far as practicable, reflects the latest approval
data. In 2019-20, the median time to determine all agreement applications was 33 days, and 17
days for agreements without undertakings. Requiring the FWC to determine applications in a
shorter timeframe than 17 days may not be achievable, given this is a median timeframe and
only relates to relatively simple approval processes. The requirement that the FWC notify
bargaining parties in the event that it cannot approve an determine the application within 21
days mitigates the risk that it rushes its approval assessment, while simultaneously addressing
stakeholder concerns around uncertainty brought by protracted approval processes.
The proposal, when combined with the other preferred options, seeks to address lengthy delays
in the approval process. It will also provide greater certainty to parties about the likely
timeframe for approval of the enterprise agreement and faster passing on of beneficial wages
and other conditions to employees. It will also help build confidence in the agreement approval
process if the FWC is able to meet the 21 day timeframe, and will encourage users to engage
with the system again.
A faster approval process would also benefit SMEs and businesses who are new to enterprise
bargaining, and are often dissuaded from engaging in bargaining because of the cost impact and
uncertainty of approval delays on the business. While enterprise bargaining is less common
among SMEs, the benefit of getting new agreements approved and implemented faster,
increasing operational certainty and giving them and their employees faster access to flexibility
and wages is considerable. Requiring the FWC to inform the parties why the application was not
determined in this time, including whether there were any exceptional circumstances, has no
regulatory impact for users of the system. It is designed as an accountability measure for the
FWC, and allows for this option to be appropriately tracked and assessed to ensure the FWC is,
more often than not, meeting the 21 day timeframe. There are limited risks with option noting
FWC currently sets timeliness benchmarks through its annual Budget Papers to establish
expected approval timeframes for parties in the majority of cases.
Separate to option 10.1, additional non-regulatory funding is being provided to the FWC to
provide parties with an online guidance and application tool, which is designed to simplify and
help users through the bargaining and approval processes. Providing enhanced assistance to
parties at the bargaining stage is designed to equip them with the tools to make compliant
agreements, which in turn will positively impact the time the FWC needs to assess approval
applications within the 21 working day timeframe.
While option 10.2 is likely to speed up approval processes for a large proportion of enterprise
agreements, it may also have an unintended consequence if the FWC fails to meet the 14 day
timeframe. For example, if the FWC did not meet the 14 day timeframe, this could result in
increased uncertainty for businesses who may not know when their agreement would be
House of Representatives lxxv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
approved. If the FWC fails more often than not to meet the 14 day timeframe, this could result
in constant notifications from the FWC to the parties that it has not met the timeframe, which
could undermine stakeholder confidence in the simplified system and cause parties to
disengage with the process. By imposing unrealistic timeframes on the FWC, the FWC is also
more likely to adopt a lower threshold for what constitutes the concept of 'as far as
practicable', extending it to more and more applications. This reduces the likelihood that it will
generally meet legislated timeframes for approval. It will also likely increase the regulatory
burden if there are additional processes for the extension beyond the 14 days the FWC needs to
initiate for a significant proportion of approval matters. While this option also addresses
employer concerns about approval times, the FWC has advised it would require significant
additional resources and may not be a realistic timeframe.
The net effect of option 10.3 in maintaining the status quo will likely be a continuation of the
current slow approval processes experienced by users, with the attendant regulatory burden it
brings. While FWC approval times have improved since 2018-19109 and consideration of
agreements is admittedly complicated by complex legislative requirements (such as the BOOT
and genuine agreement), stakeholders have expressed concern that the process creates
uncertainty for parties who are not clear on timeframes for approval and when they can begin
to implement agreed terms under the new agreement. This results in greater burden for users
in terms of increased costs as the process continues and they must rely on less efficient
industrial instruments for longer than anticipated while waiting for their agreement to be
approved. Sometimes, the process is so long or unreasonably delayed that parties opt out of
bargaining altogether. This option does not address these reasonable concerns about the length
of time taken in bargaining. Furthermore, concerns over the proposed time limit causing a time
pressure for the FWC would be alleviated by the effect of related reforms, such as significantly
reducing red tape and prescription for employers during the bargaining and approval processes
and limiting intervention in the approval of agreements by non-bargaining representatives.
Providing that the FWC determine applications to approve agreements within 21 days will
address problems concerning the timeframes for agreement approval.
11. Transfer of business
Option 11.1 (the preferred option) would reduce the regulatory and administrative costs
associated with voluntary transfers of staff between associated entities. It would allow
employees to transfer without requiring the new business to take on the transferring
employees' industrial instrument, removing the requirement for an employer to have to apply
to the FWC for an order that the instrument not apply, or for it to be varied. As this only applies
to voluntary transfers of staff, this is unlikely to negatively affect employees. The option
removes the need for employers to secure orders from the FWC when an employee initiates a
transfer of this kind, and will simplify and improve an employer's ability to operate more flexibly
across associated entities. , in the event that the FWC declined to make an order and the
industrial instrument transferred with the employee, this amendment will mean the employer
109
Data for the period of 1 July 2019 to 31 December 2019 shows that the median time for the FWC to approve all
agreements was 37 days.
Fair Work Amendment (Supporting lxxvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
will no longer be required to maintain 2 different payroll systems to manage the transferring
employee. It also provides more certainty around fixed labour costs and facilitates
redeployment of labour.
Option 11.2 would also reduce some regulatory burdens for employers, by removing the
requirement for them to apply to the FWC for an order that a transferrable instrument not
apply, or for it to be varied, if the transfer of employees is made to avoid redundancies.
However, as these transfers are not voluntary, there is a risk that employees may be
significantly disadvantaged by such a change. A sufficient case for this amendment has not been
presented by stakeholders and it is disproportionate in its potential impact on employees. This
option would be open to misuse by employers who keep transferring employees between
associated entities so as to avoid paying redundancy entitlements.
Option 11.3 would have a limited regulatory impact--while ultimately it would not change the
process to apply for a transferrable instrument to not apply or be varied, adding it as a factor
the FWC must take into account when deciding such application adds complexity to the factors
the FWC must take into account, which could in turn lead to slight delays in the application
process. As with option 11.2, a sufficient case for this amendment has not been made by
stakeholders, noting that the FWC must already take into account whether the new employer
would incur significant economic disadvantage as a result of the transferable instrument
covering the new employer,110 and the impact option 11.3 may have on employee protections
means that it is not appropriate to pursue. Currently, redundancies are not a matter the FWC
must take into account under section 318 of the Fair Work Act when determining whether to
grant an order.
Maintaining the status quo (option 11.4) will continue to require employers to seek an order
from the FWC to stop an employee's industrial instrument transferring to the new employer
where an employee voluntarily moves between 2 employers that are associated entities. This
will continue to place an administrative burden on employers in terms of time and resources in
preparing an application to the FWC, and may diminish opportunities for employees within the
group structure due to the cost of seeking an order. Alternatively, the employer will have the
cost of having different industrial instruments applying to the same group of employees. While
the quantified costs identified are not significant, the effect of maintaining the status quo would
potentially reduce mobility for employees between associated entities and the benefits this
may have delivered to employees and their employers. Some stakeholders argue that the
transfer of business provisions may be a disincentive to transferring staff to an associated
entity. However, transfer of business provisions in the Fair Work Act play a key role in
protecting employee rights, so any reforms need to be balanced.
12. Legacy Agreements
Option 12.1 (the preferred option) will create some increased regulatory costs for a small
number of impacted businesses, by requiring them to engage in the agreement making system
again or by reverting to the relevant award. As a consequence of any pre-Fair Work Act
110
Fair Work Act s. 318 (3)(e).
House of Representatives lxxvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
agreements, and agreements made during the Fair Work Act 'bridging period', terminating by
the set date, affected employers wishing to continue to benefit from the arrangements
established under their agreement would need to negotiate a new enterprise agreement, go
through the approval process and ensure they are compliant with the current requirements in
the Fair Work Act. For the affected employers, this requirement to undertake negotiations
could disrupt their business operations, which may be a significant impact for some businesses
recovering from the impacts of COVID-19. However, noting the broader impact of the preferred
policy options is to simplify and improve the bargaining system, this impact should be
significantly lessened if it is not as onerous for parties to make for a new agreement.
There is no reliable data for the net number of employers which may be impacted by option
12.1. However, the possible impact of implementing this option is outweighed by the benefits
to employees and the broader economy of terminating legacy enterprise agreements. As at 30
September 2019, the department estimates that around 300,000-450,000 employees are
currently covered by agreements made prior to the Fair Work Act that have expired, and have
not been replaced or terminated, and which may still be operational. This may represent
between 2.7 per cent and 4.1 per cent of all employees, of which the majority (almost 95 per
cent) are in the private sector.111 This is a significant number of employees who may be
currently receiving penalty rates and allowances lower then currently provided for in the
relevant modern award (the Fair Work Act guarantees employees must receive the relevant
base rate of pay). This also has potentially serious consequences for market competition, if
there are employers that are able to undercut market rates of labour by maintaining lesser
rates in legacy agreements.
The net outcome for some employers may be that they opt to default to the relevant modern
award to avoid the costs associated with negotiating a new agreement. However, when taken
with the broader package of reforms to the agreement making system, employers overall will
be more willing and confident in re-engaging with an agreement system that is more simple,
less technical and has a faster approval process.
However, option 12.2 may also allow employers to transition their pre-Fair Work Act
agreements to the Fair Work Act system, reducing the risk of reverting to awards. It does still
impose new regulatory costs, as it would require an application process to the FWC to
reapprove. To ensure it also corrects unfair and market distorting agreements which can have
employees receive some rates and conditions lower than the award, re-approved agreements
would likely require an employee vote and assessment against the BOOT. This means the
additional regulatory and administrative imposts may be only slightly lower than option 12.1.
111
The department does not have any data regarding the actual operational status of agreements that have expired and
have not been terminated or replaced. Employers have not been approached to verify their current method of setting pay.
Employee Earnings and Hours (EEH) survey data used in these calculations is from May 2018 which is the most recent data
available, and excludes the Agriculture Forestry and Fishing industry. Employee coverage data in the Workplace
Agreements Database (WAD) reflects the coverage of an agreement at the time it is made. While the actual number of
employees covered by an agreement can vary and fluctuate (sometimes significantly) over the life of an agreement, these
changes are not recorded in WAD data. For this reason, there are likely some discrepancies between WAD data and EEH
data.
Fair Work Amendment (Supporting lxxviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Continuing to allow pre-Fair Work Act agreements to operate (option 12.3) does not create any
regulatory impacts. However, the net effect does not align with the intention of the Fair Work
Act, which is to provide a balanced framework for cooperative and productive workplace
relations that promotes national economic prosperity and social inclusion for all Australians. It
creates situations where employees can lawfully receive less than their modern award
entitlements, potentially for many years, and distorts fair competition in the market.
Consultation
On 11 June 2020, the Government established 5 working groups to consider how to improve
the operation of the Australian industrial relations system, looking at the following key areas for
reform: agreement making; modern awards; greenfields agreements; casuals and fixed term
employees; and compliance and enforcement. Discussions were facilitated by the Government,
chaired by the Attorney-General and Minister for Industrial Relations with the assistance of a
Deputy Chair, and took the form of a series of engagements between the employer and
employee representative groups. The groups identified problems in the 5 areas for discussion
and experts were invited to present to the groups to help develop an evidence base to consider
the issues identified and discuss possible reform options.
The Agreement Working Group met 5 times between 7 July and 15 September 2020, with
members meeting between formal meetings as needed. The working group comprised
representatives from the following employer and employee representatives:
Employer groups: Australian Chamber of Commerce and Industry , Australian Industry
Group, Business Council of Australia, Australian Mines and Metals Association,
Master Builders Australia.
Employee representatives: Australian Council of Trade Unions, Community and Public
Sector Union, Shop, Distributive & Allied Employees' Association, Electrical Trades
Union, Transport Workers' Union.
While noting the in-confidence nature of the Agreement Working Group, members were
presented with a broad remit to raise issues which could contribute to consensus solutions
regarding:
reforming enterprise bargaining to focus on mutual gains and productivity and improve
cooperative relationships between employers and employees in workplaces, and
reversing the decline in overall agreement making.
House of Representatives lxxix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Working Group consultations were held in-confidence to promote increased engagement and
assist negotiations. In general, employer organisations advocated for changes that improved
the simplicity and increased the efficiency of the bargaining and approval process while unions
considered that any changes needed to ensure workers were not disadvantaged or employee
protections diminished. The views of the working groups were the primary mechanism for
putting forward the above policy options. Where agreement was reached between working
group members, this strongly influenced final proposals for reform. Where agreement could not
be reached, views of stakeholders were taken into account in the final design of the options to
balance all stakeholders' needs. As the discussions of the working groups were held in-
confidence and the final outcomes non-binding, this RIS will not discuss in detail the proposals
put forward, concessions made or agreement reached to respect confidentiality and not
prejudice future discussions.
Preferred Options
For the reasons outlined above, the following are the preferred options:
amend the objects of Part 2-4 of the Fair Work Act (option 1.1)
amend the Fair Work Act to extend the extend the time for giving the NERR and clarify
how the NERR can be provided (option 2.1)
reduce prescription and regulation in genuine agreement requirements in the Fair
Work Act (option 3.1)
amend the Fair Work Act to clarify when a casual employee can vote for an agreement
(option 4.1)
combination of amendments to the BOOT (option 5.1)
amend the Fair Work Act to no longer require the FWC to be satisfied an agreement
does not include any terms excluding the NES (option 6.1), and require agreements to
include a term that explains the interaction between the NES and the agreement
(option 6.2)
allow new franchisees to opt-in to existing single enterprise agreements made with a
group of employers operating under the same franchise (option 7.1)
modify termination of agreement provisions in the Fair Work Act (option 8.1)
amend the Fair Work Act to restrict who can be heard by the FWC at agreement
approval and allow the FWC to consider information from other persons only in
exceptional circumstances (option 9.1)
amend the Fair Work Act to provide that the FWC to determine applications to approve
agreements within 21 days as far as is practicable (option 10.1)
amend the Fair Work Act to ensure instruments do not transfer for voluntary transfers
of staff between associated entities (option 11.1), and
cease pre-Fair Work Act agreements by 1 July 2022 (option 12.1).
As outlined above, the Government has worked closely with the Agreement Working Group to
find consensus positions and compromises to improve the enterprise bargaining system. The
employer organisations and unions involved in the working group represent a large number of
businesses and employees, and the government is committed to implementing pragmatic
Fair Work Amendment (Supporting lxxx House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
solutions to address the current issues identified in agreement making, and reversing its
trending decline.
This balanced package represents the most proportionate and effective response to the issues
raised. When compared to other options considered above, where there is either no or minimal
net benefit or the option has been judged as unsupported by the evidence or too heavy-
handed, this preferred package ensures that there is an improved focus on productivity and
mutual gains for employers and employees. It addresses a number of technical complexities and
will make the system simpler and faster to engage with for all parties, while maintaining
important safeguards for employees. These options will also be supported by additional non-
regulatory reforms described above.
Implementation and Evaluation of Options
Implementation risks: The most significant risk to successful implementation is that the
necessary legislative amendments may not obtain passage through Parliament. The risk to
legislative passage has been partly addressed through the industrial relations working group
process, which involved extensive consultation with key stakeholders to develop balanced
recommendations.
There is also a risk that the benefits resulting from these reforms may be subject to a time
delay, reflecting the time taken by employers and employees to understand the new system(s).
This will be mitigated through the educational and technical support solutions designed to
support implementation. This includes through the non-regulatory FWC practice changes
already outlined above. As part of the broader IR Reforms, the government is also progressing a
communications package for stakeholders. This will inform and provide support for
stakeholders about amendments to industrial relations, including enterprise bargaining.
A further risk, albeit minimal, is that the legislation is not applied in the way it is intended,
resulting in unintended consequences. This will be mitigated by a post-implementation review
which will assess whether the improvement have met their objectives and are having their
intended effect.
Transitional arrangements: Employers, employees and representative organisations will need
sufficient time to review changes made to the bargaining system and adapt to the new rules for
agreement making. While the proposed options will change the way in which parties have
previously bargained, challenges will be mitigated by the non-regulatory FWC practice changes
outlined above. In addition to technological solutions which will reduce red tape and assist first-
time and experienced users of the bargaining system alike, the FWC will develop user-friendly
education and guidance for the parties. This will be important to ensure employers, employees
and representative organisations understand the changes and feel confident to overcome any
challenges.
Monitoring and evaluation: Difficulties in measuring industrial relations characteristics at the
enterprise level inhibits analysis of the extent to which improvements to bargaining are likely to
improve firm-level, and ultimately, aggregate productivity. The volatility of aggregate indicators
of macroeconomic performance also makes it difficult to pinpoint the effects of discrete and
often minor changes in industrial relations policy settings on productivity. Nonetheless, the fact
House of Representatives lxxxi Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
that enterprise agreements set the pay and conditions for nearly 40 per cent of the labour
force, implies improvements in process should benefit significant numbers of Australian
workplaces and reduce the current regulatory burden on the large number of businesses which
currently rely on bargaining to find arrangements which suit their specific circumstances.
Reform options will be evaluated by a post-implementation review which will assess whether
the policies have had their intended effect, and most importantly, if employers are more willing
to bargain. This will be assessed by the number of new enterprise agreements approved by the
FWC--data which is held by the Attorney-General's Department (the Workplace Agreement
Database) and the FWC itself. The FWC provides its reasons for approval and dismissal which
will also provide insight on how the amended provisions are understood by parties and
interpreted by the FWC. The use of technological solutions will also provide more data to assess
performance and allow the FWC to assist parties as appropriate.
Fair Work Amendment (Supporting lxxxii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
December 2020
Regulatory Impact Statement:
Greenfields Agreements Reform
House of Representatives lxxxiii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The problem
What is a greenfields agreement?
A greenfields agreement is an enterprise agreement relating to a genuine new enterprise
(including a new business, activity, project or undertaking), which is made at a time when the
employer(s) have not yet employed any of the employees who will be necessary to conduct the
enterprise and will be covered by the agreement.112
Typically, greenfields agreements are made between the relevant employer or employers and
the relevant union or unions. When agreement is reached, in the majority of circumstances, the
relevant union(s) will sign the agreement.
In approving the agreement, the Fair Work Commission (FWC) must be satisfied that the
agreement relates to a genuine new enterprise and that the unions to be covered by the
agreement (taken as a whole) are entitled to represent the industrial interests of the majority of
employees who will be covered by the agreement. The FWC also applies the Better off Overall
Test and other tests for single enterprise agreements, except the requirement for genuine
agreement.113 Relevant unions who were bargaining representatives for the agreement have
standing in the FWC to oppose the agreement if they wish.
However, a greenfields agreement can be made without union agreement. At the end of a six-
month notified negotiation period, and if the employer(s) gave each of the unions that were
bargaining representatives for the agreement a reasonable opportunity to sign the agreement,
the employer(s) can apply to the FWC for approval of the agreement without the union(s)
having signed the agreement.114 To date, no agreements have been approved under these
provisions.
Greenfields agreements are used extensively on major projects in industries such as
construction, mining, infrastructure, and oil and gas production. The current maximum nominal
expiry date of a greenfields agreement is four years from the day the FWC approves the
agreement, consistent with arrangements for all enterprise agreements.
The current four year limit means agreements can expire mid-construction
Following the nominal expiry of a greenfields agreement, and if bargaining has commenced for
a replacement enterprise agreement, employees can access protected industrial action subject
to certain requirements being met (i.e. legal industrial action as permitted under the Fair Work
Act 2009 (FW Act), that may be taken by employees in support of their claims under a proposed
enterprise agreement).
The current four year limitation on the term of greenfields agreements means that agreements
can nominally expire part way through the construction of a major project, which often lasts
112
See s. 172(2) and s. 12 of the Fair Work Act 2009.
113
See s.188 of the Fair Work Act 2009 - which applies only when bargaining for an eneterprise agreement occurs with
employees who will be covered by the proposed agreement.
114
See s.182(4) of the Fair Work Act 2009 for provisions relating to greenfields agreement approvals using a notified
negotiation period.
Fair Work Amendment (Supporting lxxxiv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
longer than four years. According to Deloitte Access Economics' Investment Monitor (June
2020), 27 per cent of projects categorised as 'under construction' and 'committed' are
projected to have construction lives of five or more years. 115
The risk of agreements nominally expiring during the construction of a major project introduces
uncertainty for investors by potentially exposing parties to unexpected delays caused by
protracted negotiations for a new enterprise agreement and potential exposure to protected
industrial action. Overall, the risk of exposure to renegotiating wages and other conditions
during the critical build of a project, introduces cost and timing uncertainty, which can affect
the project's ability to attract investment.
While not specific to industrial relations, a 2019 survey of infrastructure market participants
indicates concern about the level of regulatory burden in Australia. Specifically, 79 per cent of
investors said North America provides compelling investment opportunities, whereas only 49
per cent said the same about Australia, and 83 per cent agreed uncertainty in Australia's policy
and regulatory settings is limiting their willingness to invest. 116 Similarly, in submissions
responding to a 2019 discussion paper117 on longer greenfields agreements, employer groups
emphasised the strong global competition for major project investment and their concerns that
publicised cases of industrial disputes diminish Australia's reputation as an investment
destination for new major projects.
The need for government action
Opportunities for improved productivity
In addition to increasing investment and facilitating job creation, changes to industrial relations
policy settings on major projects will also encourage improvements in productivity. Increased
foreign direct investment (FDI) in high productivity sectors can support wages growth and
generally improve the technical capability of a sector. The Productivity Commission has
observed that FDI:
benefits Australians ... through 'spillover' benefits that ultimately improve living
standards. This is particularly the case with commercial direct investment, which comes
with greater engagement from multinationals, including use of their intellectual
property, international logistics networks and management expertise. The technology,
innovation and technical know-how of these multinationals tends to leak into the rest of
the economy as a spillover effect, leading to improved productivity for local firms
through the direct transfer of advanced technology, enhanced competitive pressures on
domestic firms, and greater human capital development. Although these spillover
benefits are hard to accurately quantify, decades of economic research suggest they are
118
significant.
115
Deloitte Access Economics, Investment Monitor, June 2020 [NOTE: data on construction length is not publically
available]
116
Australian Infrastructure Investment Report 2019, pp.3-4.
117
This discussion paper is accessible at: https://www.ag.gov.au/industrial-relations/consultations/attracting-major-
infrastructure-resources-and-energy-projects-increase-employment-project-life-greenfields-agreements.
118
Productivity Commission 2020, Foreign Investment in Australia, Commission Research Paper, Canberra, p. 7.
House of Representatives lxxxv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Hence, policy settings aimed at attracting investment will in turn encourage higher productivity
and higher living standards. The Productivity Commission has also noted the high level of
inward FDI in the mining sector. For example, 'the largest stock of inward FDI in 2018 was in
mining ($365 billion, or 38 per cent of the economy-wide total)'.119 However, while mining and
quarrying increased its share of total FDI stocks over the past decade, 'FDI inflows to the mining
and quarrying sector have recently slowed, from a peak inflow of $55 billion in 2014 to only $17
billion in 2018.'120 While this is likely influenced by the completion of construction associated
with the mining boom of the early 2000s, the Government intends to create the optimal
regulatory settings to support the next wave of major resource project investment, which is
particularly critical in Australia's recovery from the economic impacts of COVID-19.
Issues with greenfields agreement making
Employers and employer groups have over many years and in various forums raised concerns
that the construction of new large scale projects often lasts longer than the four-year maximum
nominal expiry date for greenfields agreements.
The Productivity Commission's Inquiry Report into the Workplace Relations Framework (2015)
noted the significant risks associated with greenfields agreements that have a nominal expiry
date that occurs earlier than the expected completion date of the project. It stated that, 'where
an employer can demonstrate that a project will take longer than five years to complete the
construction, there are clear grounds for the FWC to approve greenfields agreements with an
expiry date that matches the construction of a major project. This proposal was supported by
numerous employer participants.'121
In consultation undertaken in 2019 via the public release of a discussion paper 122 on longer
greenfields agreements, submissions from employer groups argued that Australia would be a
more attractive place to invest if greenfields agreements for major projects had a nominal
duration that covered the length of the construction of a project, so that certainty of labour
arrangements - and ultimately of the length and cost of the project overall - could be
guaranteed.
Benefits from major projects
A key part of Australia's recovery from the economic impact of COVID-19 will entail attracting
investment in major projects, which create thousands of jobs, and make large contributions to
GDP, as well as considerable contributions through state and federal taxation and royalties.
In September 2020, mining made up 247,300 jobs,123 many of those located in our regional and
rural communities, and accounted for 8.9 per cent of Australia's GDP over the year to June
2020.124 Over the 2019-2020 financial year, the resources and energy sector accounted for 59
per cent of Australia's good and services exports and 74 per cent of Australia's merchandise
119
Productivity Commission 2020, Foreign Investment in Australia, Commission Research Paper, Canberra, p. 34.
120
Productivity Commission 2020, Foreign Investment in Australia, Commission Research Paper, Canberra, p. 34.
121
Productivity Commission 2015, Workplace Relations Framework, Final Report, Canberra, p. 690.
122
Ibid 4.
123
ABS, 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, Sep 2020 - Seasonally Adjusted.
124
ABS, 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Jun 2020 - Seasonally Adjusted.
Fair Work Amendment (Supporting lxxxvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
exports.125 Additionally, over 2017-18, the minerals sector contributed 'about $19 billion in
company taxes and $12 billion in royalties', while the 'oil and gas sector contributed about $5
billion in taxes, royalties and other fees in 2016-17'.126
There are around 1.2 million people employed in construction, which is 9.2 per cent of all
people employed in Australia.127 The Gross Value Add of the construction industry is $130.3
billion per year and the industry is the fourth largest contributor to GDP at 6.9 per cent.128
Major projects in these sectors inject money into local economies, boost economic productivity
and create thousands of high quality jobs. For example, the WestConnex project is expected to
deliver around 16,000 jobs during construction and deliver more than $20 billion in economic
benefits to NSW.129
In the resources sector, Chevron Australia estimates that its Wheatstone natural gas project in
Western Australia will create 30,000 direct and indirect jobs over its 2009-2040 life cycle at a
rate of 1,000 jobs per year.130 The project will also add $180 billion to GDP over the same
period.131 Similarly, Woodside's Burrup Hub natural gas project is estimated to support the
creation of an average of 4,000 full-time equivalent jobs per annum over a 40-year timeframe,
while boosting GDP by $414 billion between now and 2063.132 However, the future pipeline of
major projects is at risk due to the global economic downturn and uncertainty created by the
COVID-19 pandemic.
Attracting investment
In a competitive global market for capital, Australia must have appropriate regulatory settings
to attract investment and create jobs. Industrial relations arrangements are an important factor
in investment decisions. At a global level, Australia's industrial relations policy arrangements are
more complex and rank in the bottom half of countries. For example, the World Economic
Forum's Global Competitiveness Report 2019 ranked Australia 57 th in labour market flexibility,
95th in flexibility of wage determination and 53rd in cooperation between employers and
employees.133
Most specific investment decisions are made at board level and are commercial in confidence,
which restricts the department's ability to provide forensic analysis of the drivers behind
individual scenarios. However, in submissions to the 2019 greenfields agreements discussion
paper, employers and employer groups emphasised that uncertainty around costs, such as
125
Resources and Energy Quarterly, Department of Industry, Science, Energy and Resources, September 2020
126
Draft Report into Resource Sector Regulation, Productivity Commission, March 2020.
127
ABS, 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, Sep 2020 - Seasonally Adjusted.
128
ABS, 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Jun 2020 - Seasonally Adjusted.
129
https://investment.infrastructure.gov.au/projects/ProjectDetails.aspx?Project_id=048726-12NSW-NP.
130
Economic forecasts are based on the period 2009 - 2040. Source: ACIL Allen Consulting independent research report
October 2015 / https://australia.chevron.com/our-businesses/wheatstone-project.
131
Economic forecasts are based on the period 2009 - 2040. Source: ACIL Allen Consulting independent research report
October 2015 / https://australia.chevron.com/our-businesses/wheatstone-project.
132
Economic forecasts are based on the period 2019-2063. Source: ACIL Allen Consulting independent research report June
2019 / https://files.woodside/docs/default-source/news-and-media-documents/speeches/coo-speech-at-amcham-
perth.pdf.
133
Schwab, K. (2019) The Global Competitiveness Report 2019, World Economic Forum
House of Representatives lxxxvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
labour costs, and timing of major projects can cause significant damage to Australia's reputation
and attractiveness as an investment destination.
The Australian Chamber of Commerce and Industry, for example wrote in its submission, "[a]ny
agreement with a life less than the expected duration of the construction of a particular project
exposes the business to substantial risks, and risks the negative implications for investment, job
creation and the community".134
Similarly, AMMA (Australian Resources and Energy Group) noted in its submission that it "has
long contended that uncompetitive aspects of Australia's approach to industrial relations under
the FW Act has been a significant contributing factor to a loss of investment attractiveness in
the nation's resources and energy industry." 135
Policy Options
Options for consideration
Option one
Option one would introduce a mechanism in the FW Act to allow extended term greenfields
agreements on major projects. This would allow parties to make a greenfields agreement with a
nominal duration longer than the current maximum of four years, subject to certain criteria
being met and with safeguards for employees to ensure their interests are protected.
If the FWC is satisfied that the work to be performed under a greenfields agreement relates
only to the construction of a major project, parties to the agreement would be able to agree a
maximum nominal expiry date of up to eight years from the commencement of the agreement.
Eight years was chosen as the maximum nominal expiry date as it provides greater flexibility for
parties to cover the full length of construction of major projects without unduly limiting an
individual's right to bargain.
A major project would be defined as (a) any project where the total expenditure of a capital
nature that is being incurred, or is reasonably likely to be incurred, in carrying out the project is
at least $500 million, or (b) any project declared by the responsible Minister to be a major
project.
The Minister could only declare a project to be a major project if satisfied that the total
expenditure of a capital nature that has been incurred, or is reasonably likely to be incurred, in
carrying out the project is at least $250 million and less than $500 million. In deciding whether
to make a major project declaration, the Minister would be required to take into account the
following matters:
the national significance (if any) of the project
the regional significance (if any) of the project
the contribution the project is expected to make to job creation, and
134
Australian Chamber of Commerce and Industry "Submission to Greenfields Discussion Paper" 2019
135
AMMA (Australian Resources and Energy Group) "Submission to Greenfields Discussion Paper" 2019
Fair Work Amendment (Supporting lxxxviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
any other matter considered relevant.
Where an agreement with a nominal life of longer than four years is made, there will be a
requirement that the agreement includes annual increases to the base rate of pay for each
employee over the nominal life of the agreement.
When approving an extended term greenfields agreement, the FWC would still need to be
satisfied that the agreement meets all existing approval tests that apply to greenfields
agreements (e.g. the better off overall test).
Option two
Option two would maintain the status quo. This would mean that all greenfields agreements,
including greenfields agreements on major projects, would continue to have a maximum
nominal expiry date of four years. This option fails to mitigate the risk of disruptive and
potentially costly industrial action and protracted bargaining during the construction of
major projects, which will be key to Australia's post-COVID-19 recovery. Businesses will also
continue to incur administrative costs from having to re-negotiate an agreement that has
expired and support the approval process through the FWC.
As noted above, the risk of mid-project disruptions is one factor that influences decisions
about whether to invest in major projects in Australia.
Option three
Option three is a non-regulatory option that would involve providing additional resources to
enhance the FWC's major project national practice area. The FWC's eight national practice
areas cover specialist case types and are overseen by a national practice leader. The practice
leader has responsibility for allocating cases that fall within their practice area. For the purposes
of the major projects national practice area, a major project is a project with a value of at least
$1 billion. However, projects of particular regional significance may be allocated to the practice
area despite falling below the $1 billion threshold.
Additional funding could be allocated to the FWC to enhance the services it provides to projects
in the major projects national practice area, with the following features:
A dedicated outreach program to assist employers and employee organisations on
major projects in negotiating greenfields agreements and enterprise agreements.
Increased FWC support to resolve disputes between parties during agreement
renegotiations.
A specific target for the approval time for greenfields agreements and replacement
enterprise agreements on major projects, for example, of 21 days.
To enable this, the FWC would need to adjust the criteria it currently uses to determine
major projects that fall into this major project national practice area. Given these criteria are
not legislatively prescribed, this option could be achieved without regulatory change.
Net benefits of policy options
Option one
House of Representatives lxxxix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
This option will increase the attractiveness of Australia as a destination for major project
investment, particularly for major resources and construction projects. Encouraging increased
investment in major projects in these sectors makes it likely that more will go ahead, with the
benefits flowing to the communities and governments that benefit from such projects.
For the 191 projects in the database for the September 2020 release of Deloitte Access
Economics' Investment Monitor with a cost of at least $500 million, and listed as 'committed',
'under consideration' and 'possible', the total value of projects is $437.866 billion. For the 133
projects with a cost of at least $250 million and less than $500 million, and listed as
'committed', 'under consideration' and 'possible', the total value of projects is $46.147 billion.
This does not include those projects for which a predicted cost is not currently available. 136
This pipeline represents significant potential investment in Australia's economy, with large
employment creation potential. The reform is aimed at ensuring those projects listed as 'under
consideration' and 'possible' ultimately receive financing and become large job creators across
Australia's cities and regions. Expert evidence obtained by the department during this year's
Industrial Relations Reform Working Group process suggests that potential Australian projects
are competing for finance with comparable projects in other jurisdictions, and that concerns
about Australia's industrial relations settings could tip the balance in favour of investments
outside Australia when companies are making investment decisions. 137 The department has
considered the potential for comparisons of the proposed greenfields agreement arrangements
with comparable international jurisdictions. We note, however, Australia's industrial relations
system is highly unique comprising a multi-tier system of awards and enterprise-based
bargaining, underpinned by a set of 10 national employment standards. In particular, no other
OECD country contains an award system that is used as the comparator in the assessment and
approval of any form of collective agreement. For this reason, a comparison of greenfields like
arrangements across comparable international jurisdictions is not possible.
In addition to the benefits associated with increased investment, and therefore increased
economic activity, employment growth and productivity, the reform would also likely create
savings for businesses that operate under greenfields agreements on major projects. This is
because major project employers will be able to enjoy the benefits of having a greenfields
agreement without needing to bargain multiple times.
Hence, the compliance and administrative costs associated with the bargaining process will be
lessened. The reform will ensure that staff otherwise involved in protracted bargaining can be
productively engaged elsewhere in the organisation. Other bargaining costs will also be
reduced, such as the cost of hiring industrial relations practitioners or more generally, costs
associated with lost production while bargaining is on foot. Potential administrative cost savings
associated with staff wages are calculated below.
Administrative cost savings
The administrative costs identified by the Attorney-General's Department are based on a
calculation of the average length of time it takes for a nominally expired greenfields agreement
136
Meaning the potential total value of the pipeline of projects is likely to be higher.
137
Evidence from experts as part of the Industrial Relations Working Group process, provided on a confidential basis.
Fair Work Amendment (Supporting xc House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
to be replaced by an enterprise agreement. This was calculated by extracting relevant data from
a sample of Form F17 declarations completed by employers at the time of lodgement. The
bargaining period is calculated as the difference between the notification time (the time the
employer initiates, agrees to or is compelled to bargain) and the date the replacement
agreement was voted up.
According to the WAD, there were 404 approved enterprise agreements that replaced
greenfields agreements between 2011 and 2019. Of these 404 agreements, a total of 215 had
recorded notification dates (and thus the bargaining period could be calculated).
For these 215 enterprise agreements, the average bargaining period was 146 days (a little
under five months). Broken down by the size of the agreement (using the number of
employees), the average bargaining period was:
236 days - 100+ employees
155 days - 20 to 99 employees
105 days - less than 20 employees
While it took about five months on average to negotiate the replacement agreements, it took a
further two months on average for FWC approval.138 Thus, it took a total of 210 days, or around
7 months, to negotiate and have approved a replacement agreement.
It is expected that the proposed reform, by extending the maximum nominal agreement
duration to eight years, would allow an employer to avoid (at least) one round of bargaining for
a replacement agreement, saving costs in resources, particularly labour, devoted to bargaining
for each agreement. Based on this data, we can calculate the administrative cost savings based
on one business avoiding the replacement of one nominally expired greenfields agreement.
Using the methodology developed in the RIS for the Fair Work Amendment Bill 2014 139 as the
basis for these calculations, the department has estimated that each staff member on a
bargaining team would spend approximately 23 hours per week on the negotiations. Twenty-
three hours a week is commensurate to about 60 per cent of an employee's ordinary weekly
working hours and is a reasonable assumption based on the labour intensive nature of
enterprise bargaining. In effect we are assuming based on observations of the bargaining
process that a relevant participant is likely to spend at least 50 percent (and more like 60
percent of their time) attending to the bargaining process, with the remainder of their time
spent on attending to usual work duties. This estimated figure takes into account not just the
direct negotiations, but also the planning, preparation and costing required to negotiate and
conclude a replacement agreement. Furthermore, organisations making greenfields agreements
tend to be large, often multinational or joint venture corporations. In these circumstances,
while this has not been specifically costed, it is likely that considerable time and resources
would be devoted to additional tasks such as meeting with senior executives, liaising with
representatives of parent companies and seeking finance and approval from board members.
138
The FWC approval time is based on the difference between the date the replacement agreement was voted up and the
approval date by the FWC. The business is required to lodge the enterprise agreement no later than 14 days after it was
successfully voted up.
139
Fair Work Amendment Bill 2014, Explanatory Memorandum.
House of Representatives xci Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Table 1 below sets out the average weekly earnings before tax for a number of roles expected
to be involved in negotiations for major mining and construction projects. The department has
used ABS ANZSCO 4-digit Classifications and corresponding before tax earnings drawn from the
latest available May 2018 ABS Employee Earnings and Hours publication (unpublished
Tablebuilder data). Weekly earnings have been calculated at 37.5 hours per working week (5
days).
Table 1 - Employee earnings
Classifications Hourly full-time ordinary cash earnings**
1323 - Human resource $80.67 ($141.17 incl. non-wage labour costs)
managers
2231 - Human resource $47.02 ($82.29 incl. non-wage labour costs)
professionals
2336 - Mining engineers $79.94 ($139.89 incl. non-wage labour costs)
1331 - Construction managers $62.47 ($109.32 incl. non-wage related labour
costs)
* Source: ABS Employee Earnings and Hours, May 2018, unpublished Tablebuilder data
** Hourly earnings for each occupation were calculated by dividing average weekly earnings by average weekly
hours worked.
Savings from avoiding one bargaining round for a replacement agreement in mining
The department has assumed that for the replacement of one mining greenfields agreement,
three employees (one Human Resource Manager, one Human Resource Professional and one
Mining Engineer) would each undertake approximately 23 hours per week of work relating to
the negotiation and development of a replacement agreement. The calculation of savings in
wages is in Table 2 below. It shows that the total likely savings in wages from avoiding one
round of bargaining for one replacement agreement is $244,024.
Table 2 - Savings from avoiding replacement of one mining greenfields agreement, 146 days
bargaining period (29.2 working weeks), 23 hours per week per employee
Employee Calculation Savings
1 x Human Resource Manager $141.17 x 23 x 29.2 $94,809 (a)
1 x Human Resource $82.29 x 23 x 29.2 $55,265 (b)
Professional
1 x Mining Engineer $139.89 x 23 x 29.2 $93,950 (c)
Total (3 employees above) (a) + (b) + (c) $244,024
Savings from avoiding one bargaining round for a replacement agreement in
construction/infrastructure
The department has assumed that for the replacement of one construction/infrastructure
greenfields agreement, three employees (one Human Resource Manager, one Human Resource
Professional and one Construction Manager) would each undertake approximately 23 hours per
week of work relating to the negotiation and development of a replacement agreement. The
calculation of savings in wages is in Table 3 below. It shows that the total likely savings in wages
from avoiding one round of bargaining for one replacement agreement is $223,493.
Fair Work Amendment (Supporting xcii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Table 3 - Savings from avoiding replacement of one construction/infrastructure greenfields agreement,
146 days bargaining period (29.2 working weeks), 23 hours per week per employee
Calculation Savings
Employee
1 x Human Resource Manager $141.17 x 23 x 29.2 $94,809 (a)
1 x Human Resource $82.29 x 23 x 29.2 $55,265 (b)
Professional
1 x Construction Manager $109.32 x 23 x 29.2 $73,419 (c)
Total (3 employees above) (a) + (b) + (c) $223,493
Savings from avoiding one bargaining round for a replacement agreement in mining, 100+
employees
As outlined above, according to the WAD, the average bargaining period for a replacement
agreement for an employer with 100+ employees is 236 days (from a sample of 40 replacement
agreements between 2011 and 2019). Using the same classifications as outlined in Table 1,
Table 4 below shows that for these larger employers in mining the total likely savings in wages
from avoiding one round of bargaining for one replacement agreement is $394,452.
Table 4 - Savings from avoiding replacement of one mining greenfields agreement with 100+
employees, 236 days bargaining period (47.2 working weeks), 23 hours per week per employee
Employee Calculation Savings
1 x Human Resource Manager $141.17 x 23 x 47.2 $153,254 (a)
1 x Human Resource $82.29 x 23 x 47.2 $89,334 (b)
Professional
1 x Mining Engineer $139.89 x 23 x 47.2 $151,864 (c)
Total (3 employees above) (a) + (b) + (c) $394,452
Savings from avoiding one bargaining round for a replacement agreement in
construction/infrastructure, 100+ employees
Using the average bargaining period for a replacement agreement for an employer with 100+
employees, Table 5 below shows that for these larger employers in construction/infrastructure
the total likely savings in wages from avoiding one round of bargaining for one replacement
agreement is $316,265.
Table 5 - Savings from avoiding replacement of one construction/infrastructure greenfields
agreement with 100+ employees, 236 days bargaining period (47.2 working weeks), 23 hours per
week per employee
Employee Calculation Savings
1 x Human Resource Manager $141.17 x 23 x 47.2 $153,254 (a)
1 x Human Resource $82.29 x 23 x 47.2 $89,334 (b)
Professional
1 x Construction Manager $109.32 x 23 x 47.2 $118,677 (c)
Total (3 employees above) (a) + (b) + (c) $316,265
The likely savings in wages from avoiding one round of bargaining have been calculated for a
single replacement agreement. Savings are likely to be larger on major projects where there is a
high usage of greenfields agreements. Some of these major projects can be covered by dozens
House of Representatives xciii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
or even hundreds of greenfields agreements. If even a small number of these are replaced, then
the savings across a single major project will be considerably larger than the calculations
provided above.
The department has considered the extent to which robust data can be provided that might
show for example, the average number of greenfields agreements by sector/project value
which may provide more practical context to the given regulatory cost compliance analysis.
Due to the way agreement and project data are collected, however, it is not possible, with any
level of consistency, to accurately identify the projects to which particular agreements apply,
and therefore it is highly difficult to ascertain any meaningful and robust account of the average
number of agreements on any particular project. For instance, the primary way of identifying
the project to which an agreement might apply is by using the title of an agreement. However,
not all agreement titles reflect the project to which they apply.
Moreover, some agreements may cover more than a single project. Further, there is no
universal or agreed definition of what constitutes a "project", complicating any attempt to
match agreements and projects. This is compounded by the fact that the average number of
greenfields agreements likely differs on different types of projects by sector. For instance,
anecdotally, it appears that mining construction projects use a much higher number of
greenfields agreements than transport projects (although this is difficult to verify, due to the
data issues already outlined above).
For these reasons, this Regulation Impact Statement focuses on the savings associated with
avoiding a round of bargaining for a single replacement agreement, rather than assessing the
costs and benefits for a larger project. This is appropriate, as it may be somewhat misleading to
discuss the potential benefits accruing to a project, as it is often individual subcontractors that
undertake discrete packages of work on a project, who will most benefit from an extended
agreement duration. If projects benefit, it would be primarily in the form of more easily being
able to attract investment (consistent with the primary objective of the reform).
Other cost savings
In addition to the savings in wages outlined above, the reform will also minimise costs
associated with industrial action, such as lost production, reputational damage and further
interest payments on loans due to delays. (Notwithstanding the KPMG estimate below, the
department notes the difficulty of accurately quantifying costs associated with industrial
action.)
KPMG has reported that industrial action on large resource projects can have 'significant
financial implications', with costs ranging 'from $1 million to $10 million per day of action.' 140
The KPMG report provides the example of a dispute on Woodside's Pluto project that
potentially caused the loss of $3.5 million each day.141 While industrial disputation remains at
historic lows, disputes in the construction industry remain above the average for all industries.
For example, ABS data shows that the rate of industrial disputation over the last two years was
140
KPMG, Workplace Relations and the Competitiveness of the of the Australian Resources Sector, 2015. Page 96.
141
KPMG, Workplace Relations and the Competitiveness of the of the Australian Resources Sector, 2015, page 103.
Fair Work Amendment (Supporting xciv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
41.0 days lost per thousand workers in the construction industry compared to 12.8 days lost per
thousand workers across the economy.142
By enabling the nominal expiry date of greenfields agreements on major projects to be
extended, the reform would avoid potentially costly industrial action mid-construction,
minimising the costs associated with that industrial action for particular projects, but also
ensuring Australia has a reputation as a good place to invest in major projects.
Minor regulatory burden
For those projects with a capital expenditure of at least $250 million and less than $500 million
that seek a major project declaration, there will be some minor regulatory burden associated
with the application process. Using CoreLogic's Cordell Connect project database (as at 10
November 2020), there are approximately 10 "firm" projects and 76 "possible" projects in the
$250 - 500 million range due to commence each year in 2021 and 2022. However, as it is
unlikely that all "possible" projects will commence in those years, the department for the
purposes of these calculations, has estimated that approximately one third will not commence
until a later date (if at all). This would leave an estimated 50 potential projects per year in the
relevant cost range.
We assume that a further 10 projects will likely not use greenfields agreements (given that not
all projects would be established in the absence of a workforce and therefore would not be
genuine new enterprises), and an additional 15 projects will not pursue an extended term
greenfields agreement (to allow for a proportion that would, through the bargaining process,
determine a longer term agreement was not warranted/desirable for their project), leaving an
estimated 25 projects per year that are likely to apply for a major project declaration.
There will be a very minor additional regulatory cost for proponents of the approximately 25
projects that apply for major project declarations. These include the time taken to prepare the
application material, and the time taken (if any) to liaise with the relevant agency regarding the
application and provide additional information as required. On the assumption that one Human
Resource Manager prepares the application over eight hours, and then spends an additional
four hours discussing the application with the relevant agency and preparing additional
material, this will cost a business $1694.04 in wages. At 25 applications per year, this will result
in an annual cost for employers of $42,350.00.
On the assumption that employers on projects subject to a major project declaration would also
miss one round of bargaining as a consequence of being able to access extended term
greenfields agreements, the savings calculations will be the same as those provided above.
Assuming these projects are successful in their applications, these savings will far outweigh the
minor costs associated with making a major project declaration application (noting that in many
cases, employers working on major projects will benefit from the savings associated with
extended term greenfields agreements without having to incur the minor costs associated with
making a major project declaration, as these applications will likely be made by the project
proponent or head contractor).
142
Australian Bureau of Statistics, Industrial Disputes (Cat No. 6321.0.55.001).
House of Representatives xcv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Benefits and costs for workers
Under this proposal, workers will not be able to bargain as regularly for improved pay and
conditions. However, data from the WAD indicates that workers do not necessarily achieve
wage benefits from negotiating a replacement enterprise agreement. Between 2011 and 2019,
404 nominally expired greenfields agreements were replaced by an enterprise agreement. The
data shows no trend of spikes in Average Annualised Wage Increases (AAWI) when greenfields
agreements nominally expire and are replaced by an enterprise agreement - for all industries,
there is little difference between the AAWI for the original greenfields agreement and the
replacement enterprise agreement.
In fact, workers in the construction and mining sectors between 2011 and 2019 have, on
average, lower AAWIs in enterprise agreements that replace a greenfields agreement than in
the initial greenfields agreement. Between 2011 and 2019, replacement enterprise agreements
in construction have, on average, a 0.4 percentage point lower AAWI than the greenfields
agreements they replace. Over the same period, replacement enterprise agreements in mining
have, on average, a 1 percentage point lower AAWI than the greenfields agreement they
replaced. If this trend were to continue, the reform would likely enable workers to lock in
higher wage increases for an extended period of time.
Both construction greenfields agreements and construction enterprise agreements have
consistently included above-average AAWIs in recent years. In 2019, the AAWI for approved
construction greenfields agreements was 5.1 per cent, compared to 3.6 per cent for approved
enterprise agreements in construction, and 2.7 per cent for approved enterprise agreements in
all industries. Under extended term greenfields agreements, workers are likely to benefit from
these higher wage increases for even longer.
While workers do not appear to achieve improved wage increases from agreement
renegotiations, workers may achieve improved conditions from renegotiations that are not
captured in wages data (e.g. improved roster arrangements).
The reform will require extended term greenfields agreements to contain annual wage
increases for the nominal life of the agreement, which is an enhancement of the current
provisions in favour of employees.
Additionally, unlike for enterprise agreements generally, there is a requirement that greenfields
agreements are initially attempted to be made between unions and employers, meaning there
is union oversight of the agreement's content and the interests of employees are
represented.143 Overall, the involvement of unions in negotiating greenfields agreements can
act as a safeguard for employee pay and conditions - regardless of whether the agreement has
a nominal life of four or eight years. It should be noted that eight years would be the maximum
nominal expiry date for greenfields agreements on eligible major projects - parties to
agreements can still agree to a reduced agreement length.
143
Note, this is subject to the employer option of seeking approval of a greenfields agreement following use a Notified
Negotiation Period . Please refer to the more detailed discussion on this alternative approval process above at Page 3.
Fair Work Amendment (Supporting xcvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Option two
Maintaining the status quo will mean that greenfields agreements for all projects will continue
to have a nominal expiry date that is not more than four years after the day of FWC approval.
Employers undertaking time-sensitive major projects that take longer than four years will
continue to be subject to the potential threat of protected industrial action and protracted
bargaining periods once their greenfields agreements expire during the construction of the
project, potentially making Australia a less attractive investment option in a competitive global
market.
If an employer agrees to bargain to renegotiate the agreement or there is a successful majority
support determination, employees will be able to engage in negotiations regarding their pay
and conditions at a maximum of four years from the approval of the agreement. As outlined,
this will not necessarily result in improved wage increases - and indeed the evidence suggests
agreements replacing Greenfield agreements have reduced wage increases. However,
outcomes regarding wages and conditions will depend on the circumstances of the particular
negotiations and the prevailing economic conditions at the time negotiations are undertaken.
As noted above, under extended term greenfields agreements, workers are likely to benefit
from the higher wage increases in greenfields agreements for even longer - a benefit they may
not receive under option two. However, they may have less opportunity to renegotiate the
conditions in their greenfields agreement.
Finally, the administrative savings associated with avoiding one round of bargaining under
Option 1 will, under this option, continue to be costs associated with undertaking bargaining for
a replacement agreement.
Option three
Option three would involve providing the FWC with additional funding to enhance the services
it provides to projects in the major projects national practice area. The main benefit of this
option is that it is non-regulatory and therefore does not fundamentally alter the bargaining
framework with which stakeholders are familiar.
It also has the potential to improve workplace cooperation and productivity, as evidence
suggests has been achieved through enhanced FWC support in its "New Approaches"
program.144 New Approaches is a program to help parties find ways to build cooperative
working relationships. The program supports parties in reaching agreement and establishing
processes for future negotiations through training, workshops, discussion and facilitation. It also
includes the facilitation of "interest-based bargaining", which is an approach to bargaining in
which the parties to a negotiation approach the process by identifying their individual or shared
interests, rather than focusing on their positions or log of claims. By identifying individual or
shared interests, the interest-based bargaining process uncovers ways that each party's
interests can be met without disadvantaging the other party.
144
Mark Bray, Johanna Macneil and Andrew Stewart, Cooperation at Work: How Tribunals Can Help Transform Workplaces,
2017, The Federation Press, Sydney.
House of Representatives xcvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
The services the FWC can provide via its New Approaches program include:
training in interest-based bargaining
help with enterprise bargaining
help with developing joint processes to implement enterprise agreements
training in interest-based dispute resolution
training and assistance in collaborative workplace change, including training for
consultative committees.
Cooperative workplace relationships and FWC-supported renegotiations could lead to more
efficient agreement making and shorter approval processes. Research suggests that more
cooperative approaches to workplace relations, such as those facilitated by the FWC's New
Approaches program, can lead to mutual gains for employers and employees, as well as
increased productivity, improved workplace culture, and more efficient agreement making. 145
However, it is difficult to quantify the likely impact of FWC support on the length of bargaining
and frequency of industrial disputes due to a lack of quantitative data on the impact of
cooperative approaches to workplace relations.
Accordingly, it cannot be said with certainty that increased FWC support would reduce the
length of bargaining or by how much. Moreover, as it would be voluntary to seek these services
provided by the FWC, there is no guarantee that the services would be used. Some stakeholders
have concerns about third party involvement in their workplace relations, and these
stakeholders are unlikely to voluntarily access the services of an industrial relations tribunal.
Moreover, this option is unlikely to meet the policy objective of delivering certainty for
investors and therefore increasing major project investment and the associated jobs and
economic growth. This is because greenfields agreements on major projects will continue to
have a nominal expiry date that is not more than four years after the day of FWC approval,
meaning employers will be subject to the potential threat of protected industrial action and
protracted bargaining periods once their greenfields agreements expire during the construction
of a major project. Accordingly, Australia will not be able to provide the cost and timeframe
certainty needed to attract additional investment.
As with option two, the administrative savings associated with avoiding one round of bargaining
will, under this option, continue to be costs associated with undertaking bargaining for a
replacement agreement.
Consultation
On 19 September 2019, a discussion paper was released that sought views from stakeholders
on a proposed reform to allow the duration of greenfields agreements to match the life of
major infrastructure, resources and energy projects. The Attorney-General's Department
received 18 submissions. Nine submissions were from employer groups and five were from
unions. There were also submissions from an employer, a law firm, an industrial relations
145
Ibid.
Fair Work Amendment (Supporting xcviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
consultant and a former Fair Work Commissioner. All submissions are publically available on the
Attorney-General's Department's website.146
On 11 June 2020, the Australian Government constituted five working groups to consider
how to improve the operation of the industrial relations system, one of which related to
greenfields agreements. The purpose of the Greenfields Agreements Working Group was to
explore options for making Australian major projects more attractive to investors, by
providing greater certainty of costs and delivery timeframes.
The Greenfields Agreements Working Group met seven times. Working group meetings
lasted between two to four and a half hours, with additional out of session discussions held
between working group members and with the Deputy Chair. In total, working group
members spent approximately 18.5 hours in formal discussions (which does not include the
time committed to the additional out of session discussions).
Membership of the working group
Employer organisations: Australian Chamber of Commerce and Industry (ACCI),
AMMA Australian Resources and Energy Group, Minerals Council of Australia (MCA),
Australian Constructors Association (ACA), Master Builders Australia (MBA).
Unions: Australian Council of Trade Unions (ACTU), Construction Forestry Mining
Maritime and Energy Union (CFMMEU), Australian Workers' Union (AWU), Australian
Manufacturing Workers' Union (AMWU), Electrical Trades Union (ETU).
Principal views of stakeholders
The consultations undertaken as part of the working groups were held in-confidence to
promote increased engagement and assist negotiations. In general, employer groups advocated
for changes which would prolong the nominal life of greenfields agreements covering major
projects to reduce investment uncertainty, while unions wanted to ensure that major project
jobs remained of high quality and that workers were not disadvantaged. Unions, argue that the
proposed reform is unnecessary as they indicate the majority of projects do not go over four
years and industrial relations arrangements are not a determining factor in investment
decisions. Union's also argue that the reform places a restriction on the ability of workers to
bargain for better pay and conditions.
However, there was agreement that there was scope to extend the nominal duration of
greenfields agreements on major projects, but differing views about how best to implement this
change.
How views of the working group were taken into account
The views of the Greenfields Agreements Working Group were taken into account when
developing final policy proposals. Where consensus was reached between Working Group
members, this strongly influenced final proposals for reform. Where consensus could not be
146
Accessible at https://www.ag.gov.au/industrial-relations/publications/submissions-received-project-life-
greenfields-agreements-consultation
House of Representatives xcix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
reached on a particular issue, the views of stakeholders were taken into account in the final
reform design.
As the discussions of the Greenfields Agreements Working Group were held in-confidence and
the final outcomes were non-binding, this RIS will not discuss in detail the proposals put
forward, concessions made or agreement reached. This decision has been made to respect the
confidentiality of members and not prejudice future discussions.
Preferred Options
For the reasons outlined in the assessment of benefits above, option one is the preferred
option. The status quo, as outlined in option two, will not address the current problem
regarding the nominal duration of greenfields agreements, and while the non-regulatory
approach outlined under option three may have some positive impact, it fails to adequately
mitigate the risks associated with exposure to mid-project agreement renegotiations - most
notably, the potential to deter mega projects.
Option 1 reflects findings made during the 2019 discussion paper process and the 2020
Greenfields Agreements Working Group process. It strikes an appropriate balance by making
the necessary changes to encourage investment, while maintaining existing safeguards in the
current greenfields bargaining framework, and also introducing an additional safeguard (a
requirement that annual wage increases must be included over the full term of any agreement
with a nominal duration of longer than four years) to ensure employees' interests are
protected.
Employees will retain access to all protections and rights under the FW Act, including general
protections, freedom of association and right of entry provisions. As discussed above,
greenfields agreements have tended to provide higher wage increases than other agreements
in comparable industries, and equivalent or slightly higher wages than the agreements that
replace them.
Implementation and Evaluation of Options
Implementation of the preferred option will require minimal legislative amendments to the FW
Act.
Implementation risks
The most significant risk to successful implementation is that the necessary legislative
amendments may not obtain passage through Parliament. The risk to legislative passage has
been partly addressed through the industrial relations reform consultation process, which
involved extensive consultation with key stakeholders to develop balanced recommendations.
There is also a possibility, as with any new amendment to the Fair Work Act, that there can be
disputation in the Fair Work Commission which can contribute to delays. This is often the case
until case law and precedents are developed, which provide more certainty to parties about the
interpretation of the new amendments.
Fair Work Amendment (Supporting c House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Regulatory Impact Statement
Transitional arrangements
The amendments will apply after the commencement of the amendments. The amendments
will not change employment arrangements on existing major projects which are utilising in-
term greenfields agreements.
Monitoring and evaluation
The Attorney-General's Department will monitor ABS and Deloitte Access Economics data on
the uptake of major projects in conjunction with FWC data on the use of greenfields
agreements on major projects with a nominal life of longer than four years. The department will
also continue to engage in stakeholder consultation with employer and employee groups to
gauge the impact of the reform. In particular, consultation can be undertaken through the
regular meetings of the National Workplace Relations Consultative Council (NWRCC). The
NWRCC is a forum for employer and employee representatives to consult on workplace
relations and labour market matters of national concern, and meetings are chaired by the
Minister for Industrial Relations
House of Representatives ci Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill
2020
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
This Bill will progress industrial relations reform to drive employment, wages and
productivity growth in a post-COVID-19 economy. It will generate benefits for both
employers and employees, focusing on productivity achieved through cooperative working
relationships, supported by appropriate protections that balance the needs of employers and
employees.
Casual employees
Schedule 1 to this Bill amends Part 1-2 and inserts new Division 4A of Part 2-2 of the
Fair Work Act 2009 (Fair Work Act) to provide for a statutory definition of casual
employment and a minimum standard casual conversion right for eligible casual employees.
This Schedule also provides for casual employees to be provided with a Casual Employment
Information Statement prepared by the Fair Work Ombudsman (FWO) and for an amendment
to Part 4-1 of the Fair Work Act to provide in certain circumstances for a court to offset
casual loading amounts paid to an employee against claims for amounts for leave and other
entitlements.
Modern awards
Part 1 of Schedule 2 to this Bill inserts new Division 9 to Part 2-3 into the Fair Work Act to
enable additional hours agreements between employers and part-time employees to be made
where an identified modern award applies to the employer and employee. These can provide
(subject to various safeguards) for an employer to offer, and for a part-time employee to
accept or reject, additional hours at ordinary rates of pay in certain circumstances.
Part 2 of Schedule 2 inserts new Part 6-4D into the Fair Work Act to extend in identified
modern awards (subject to various safeguards) flexible work directions in relation to duties
and location of work. The Fair Work Commission (FWC) will be able to resolve disputes in
accordance with existing dispute resolution terms of modern awards. Part 3 of Schedule 2
repeals new Part 6-4D to cease provision for these directions after 2 years.
Enterprise agreements etc.
Parts 1 to 11 of Schedule 3 to this Bill amend Part 2-4 of the Fair Work Act and make
consequential amendments to other parts of the Fair Work Act.
Part 1 amends the objects of Part 2-4 to better reflect the intended operation and outcomes of
the enterprise agreement framework.
Part 2 extends the time for an employer to provide the notice of employee representational
rights (NERR) and requires the FWC to publish the NERR on its website.
Fair Work Amendment (Supporting cii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Part 3 amends pre-approval requirements for enterprise agreements to require employers to
take reasonable steps to ensure employees are given a fair and reasonable opportunity to
decide whether or not to approve a proposed enterprise agreement.
Part 4 amends voting requirements for approving or varying enterprise agreements to clarify
that casual employees are entitled to vote if they worked during the 'access period'.
Part 5 clarifies the matters the FWC is required to have regard to when assessing enterprise
agreements against modern awards when applying the better off overall test (BOOT) to:
provide that the FWC may only take into account patterns or kinds of work, or types of
employment, that are currently engaged in, or are reasonably foreseeable;
provide that the FWC may have regard to the overall benefits (including non-monetary
benefits) employees would receive under the agreement compared to the relevant modern
award;
require the FWC to have regard to the views of the employees, employer, and bargaining
representatives for the agreement as to whether the agreement passes the BOOT; and
allow the FWC to approve agreements that do not comply with the BOOT in limited
circumstances for a time limited period.
Part 6 provides that the FWC will no longer need to be satisfied that the terms of an
enterprise agreement does not exclude the National Employment Standards (NES) and
instead, the agreement must include the new model NES interaction term, which explains
interaction between the NES and enterprise agreements.
Part 7 enables franchisees to opt-in to a current single-enterprise agreement that covers a
larger group of employers that operate under the same franchise.
Part 8 provides that an application to terminate an enterprise agreement after its nominal
expiry date cannot be made until 3 months after that date.
Part 9 limits who can be heard by the FWC in relation to applications to approve or vary
enterprise agreements and provides that persons not otherwise prescribed can only be heard
in exceptional circumstances.
Part 10 provides that the FWC must determine applications to approve enterprise agreements
or variations to enterprise agreements, as far as practicable, within 21 days. If the FWC does
not determine the application in this time, it must notify the relevant parties as to the reasons
why, including whether any exceptional circumstances exist.
Part 11 amends the functions of the FWC under Part 2-4 to provide that the FWC must
recognise the outcome of bargaining at the enterprise level.
Part 12 amends Part 2-8 of the Fair Work Act to provide that a transfer of business does not
occur when an employee seeks, at their own initiative, to transfer between employers that are
associated entities.
Part 13 amends the Fair Work (Transitional Provisions and Consequential Amendments) Act
2009 to provide that all agreement based transitional instruments preserved under that Act,
including Division 2B State employment agreements, and enterprise agreements and
workplace determinations made during the Fair Work Act 'bridging period' from 1 July 2009
to 31 December 2009, will cease on 1 July 2022.
House of Representatives ciii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Greenfields agreements
Schedule 4 to this Bill amends the Fair Work Act to enable greenfields agreements made in
relation to the construction of a major project to specify a nominal expiry date of up to
eight years after the day the agreement comes into operation. Where the greenfields
agreement specifies a nominal expiry date more than four years after the day on which the
FWC approves the agreement, the agreement must include a term that provides for annual
pay increases for the nominal life of the agreement.
Compliance and enforcement
Part 1 of Schedule 5 to this Bill amends Part 4-1 of the Fair Work Act to:
increase the maximum civil penalties the court may impose for remuneration-related
contraventions;
introduce a new 'value of the benefit' alternative civil penalty for remuneration-related
contraventions by bodies corporate (other than small business employers). As the
proposed 'value of the benefit' alternative civil penalty only targets bodies corporate, not
individuals, it is not considered further here; and
clarify that orders the court may make under subsection 545(2) of the Fair Work Act
include adverse publicity orders.
Part 2 of Schedule 5 amends Part 4-1 of the Fair Work Act and makes consequential
amendments to increase the small claims cap from $20,000 to $50,000, provides for the
Federal Circuit Court or a magistrates court to refer small claims matters to the FWC for
conciliation, provides for consent arbitration of small claims matters if conciliation is
unsuccessful, and provides for the court (and the FWC when arbitrating) to award filing fees
as costs to successful small claims applicants.
Part 3 of Schedule 5 inserts new Division 4 to Part 3-6 of the Fair Work Act to prohibit
employers from publishing (or causing to be published) job advertisements with pay rates
below the relevant national minimum wage (see table 1, below).
Part 4 of Schedule 5 amends Parts 4-1 and 5-2 of the Fair Work Act to increase the maximum
penalty for not complying with a compliance notice (see table 1, below); allow for an
increase to the maximum penalty able to be imposed under an infringement notice; and
codify the factors that the FWO may take into account when deciding whether to accept an
enforceable undertaking. It also amends the Building and Construction Industry (Improving
Productivity) Act 2016 (BCIIP Act) to empower the Australian Building and Construction
Commissioner (ABC Commissioner) to accept an enforceable undertaking in relation to a
suspected remuneration-related contravention that relates to building work.
Part 5 of Schedule 5 amends Part 4-1 of the Fair Work Act to increase the maximum civil
penalty for sham arrangements (see table 1, below).
Part 6 of Schedule 5 amends Part 5-2 of the Fair Work Act to require the FWO to publish
information relating to when it will commence or defer commencing litigation. It also amends
the BCIIP Act to make similar provision with respect to the ABC Commissioner.
Part 7 of Schedule 5 amends Part 2-9 of the Fair Work Act and makes consequential
amendments to provide for a criminal offence for dishonestly engaging in a systematic
pattern of underpaying one or more employees.
Fair Work Amendment (Supporting civ House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Table 1--Summary of civil penalty increases and new civil remedy provisions under
Schedule 5 to the Bill
Fair Work Act 2009
Ordinary contravention (civil) Serious contravention (civil)
Contravention Individual Body Corporate Individual Body
Corporate
Penalty units/$ Penalty units/$ Penalty units/$
Penalty units/$
Remuneration- 90 ($19,980) 450 ($99,900) 600 ($133,200) 3,000
related ($666,000)
(50% increase) (50% increase) (No change)
contraventions (No change)
(see s 12) Or for a body
corporate that is Or for a body
larger than a small corporate that is
business employer, larger than a
and the penalty is small business
greater: employer, and
the penalty is
--2 times the value
greater:
of the benefit
obtained --3 times the
value of the
benefit
obtained
Sham 90 ($19,980) 450 ($99,900) N/A N/A
contracting- (50% increase) (50% increase)
related
contraventions
(ss 357(1), 358
and 359)
Non- 45 ($9,990) 225 ($49,950) N/A N/A
compliance (50% increase) (50% increase)
with a
compliance
notice
(s 716(5))
Advertising 60 ($13,320) 300 ($66,600) N/A N/A
employment (new civil (new civil remedy
below rate of remedy provision)
national provision)
minimum
wage (new
s 536AA)
House of Representatives cv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Fair Work Commission
Schedule 6 to the Bill includes measures to support more efficient FWC processes, including
to enable the FWC to:
hear appeals 'on the papers' where the FWC considers a matter can be adequately
determined without oral evidence and submissions;
vary decisions to approve enterprise agreements more easily, to correct minor errors; and
expand the grounds on which the FWC may dismiss applications and provide for the
FWC to order a vexatious applicant not to make further applications to the FWC of a kind
specified in the order (including applications of a particular type or against a particular
person), unless permission is given.
Application, saving and transitional provisions
Schedule 7 to this Bill amends Schedule 1 to the Fair Work Act to insert application, saving
and transitional provisions in relation to the measures in this Bill.
Human rights implications
The definition of 'human rights' in the Human Rights (Parliamentary Scrutiny) Act 2011
relates to the seven core United Nations human rights treaties. This Bill engages the
following rights:
the right to work and the right to just and favourable conditions of work contained in
Articles 6(1) and 7 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR);
the right of the child to be protected from economic exploitation and from performing
work that is likely to interfere with the child's education in Article 32 of the United
Nations Convention on the Rights of the Child (UNCRC);
the right to freedom of association, including the right to form and join trade unions and
the right of trade unions to function freely contained in Article 8 of the ICESCR and
Article 22 of the International Covenant on Civil and Political Rights (ICCPR);
the right to a fair hearing in a civil matter in Article 14 of the ICCPR; and
the criminal process rights contained in Articles 14 and 15 of the ICCPR.
The content of the right to work, the right to just and favourable conditions of work and the
right to freedom of association in the ICESCR and ICCPR can be informed by specific
obligations in treaties of the International Labour Organisation (ILO), such as the Freedom of
Association and Protection of the Right to Organise Convention, 1948 (No.87) (ILO
Convention 87), the Right to Organise and Collective Bargaining Convention, 1949 (No. 98)
(ILO Convention 98) and the Employment Policy Convention 1964 (No.122) (ILO
Convention 122).
Rights to work and rights in work
Article 6(1) of the ICESCR recognises the right to work and obliges States Parties to take
appropriate steps to safeguard this right. The United Nations Committee on Economic, Social
and Cultural Rights has stated that the right to work in Article 6(1) encompasses the need to
provide the worker with just and favourable conditions of work.
Fair Work Amendment (Supporting cvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
The United Nations Committee on Economic, Social and Cultural Rights has stated that the
right to work also encompasses the right not to be unjustly deprived of work. This right may
be subject only to such limitations 'as are determined by law only in so far as this may be
compatible with the nature of these rights and solely for the purpose of promoting the general
welfare in a democratic society'.
Article 7 of the ICESCR requires that States Parties recognise the right of everyone to the
enjoyment of just and favourable conditions of work which ensure, in particular,
remuneration that provides all workers with fair wages, a decent living and rest, leisure and
reasonable limitation of working hours and periodic holidays with pay, as well as
remuneration for public holidays.
Casual employees
The Bill provides a statutory definition of a casual employee, a minimum standard casual
conversion right and a statutory casual loading offset mechanism.
These measures promote rights in work by providing certainty as to the entitlements and
obligations for up to 2.3 million casual employees through a statutory definition of casual
employment.
The measures promote rights to work by providing a right to be offered or to request
conversion from casual employment to permanent employment for eligible employees. They
promote the right to just and favourable conditions of work for up to 1.3 million 'regular'
casual employees who have been with their employer for 12 months or more, making
available, if they choose to convert, entitlements such as annual leave and personal leave that
are conditions of permanent employees.
The measures are aimed at achieving the legitimate objective for the purposes of international
human rights law of promoting full, productive and freely chosen employment (Article 1 of
ILO Convention 122). They give employers the confidence to create jobs by using casual
employment as a flexible employment option and encourage the re-hiring of casuals who lost
their jobs due to the impact of COVID-19 by eliminating uncertainty around casual
employment.
The definition provides certainty as it does not rely on an ongoing assessment of the
employment based on post-contractual conduct, ensuring certainty of status and entitlements
at all times. The assessment of the offer of employment must be made on the basis of there
being no firm advance commitment to continuing and indefinite work according to an agreed
pattern of work, which is the key element of the common law test.
As a result of the application of Schedule 7 to the Bill, existing employees whose offer and
acceptance of employment fall within the terms of the Bill's definition of casual employee
will be casuals within the meaning of that definition for the duration of their employment
unless and until they either convert or accept employment on another basis. This will ensure
certainty of that status at all times and the resulting rights, obligations and entitlements that
apply for the employment relationship.
The inclusion of a safeguard against double-dipping through a statutory offset mechanism
does not limit rights in work. The measure requires a court to deduct the casual loading from
amounts payable by an employer to an employee for one or more of the relevant entitlements
for which the casual loading is intended to compensate, where the employee is later found not
to be a casual employee. The measure allows the court to reduce a claim for relevant
House of Representatives cvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
entitlements by an amount equal to the proportion of the loading amount the court considers
appropriate, to ensure fairness between the parties.
Modern awards
Simplified additional hours agreements
The Bill will provide for simplified additional hours agreements between employers and part-
time employees to whom one of 12 modern awards applies. These awards cover employers
and employees in the accommodation and food services and retail trade industries. This
measure will provide a new, clear process (in addition to existing arrangements under modern
awards) for additional hours to be offered to part-time employees at ordinary instead of
overtime rates of pay.
This measure is aimed at achieving the legitimate objective for the purposes of international
human rights law of supporting Article 1(1) of ILO Convention 122: With a view to
stimulating economic growth and development, raising levels of living, meeting manpower
requirements and overcoming unemployment and underemployment, each Member shall
declare and pursue, as a major goal, an active policy designed to promote full, productive
and freely chosen employment.
Article 1(3) of ILO Convention 122 provides that such policies shall take due account of,
relevantly: the mutual relationships between employment objectives and other economic and
social objectives, and shall be pursued by methods that are appropriate to national
conditions and practices.
The measure is directed to this objective as it is intended to remove barriers to part-time
employment by providing more flexibility around the deployment of part-time employees in
response to changing business needs. It will give employers the confidence to engage part-
time rather than casual employees.
The measure is compatible with and promotes the right to work. While it may operate to limit
the right to just and favourable conditions of work, it is reasonable, necessary and
proportionate in the context of overcoming unemployment and underemployment.
Simplified additional hours agreements will be subject to a range of protections. An
employee will not be required to enter into an agreement. The employee's regular hours must
be at least 16 ordinary time hours per week and there will be a minimum requirement of work
of at least 3 continuous hours. If the agreement to work additional hours is not in writing, the
employer must make a record of the fact that the agreement has been entered into.
In addition, entering into, not entering into, terminating, or not terminating a simplified
additional hours agreement will be a workplace right within the meaning of the Fair Work
Act's general protections (Part 3-1). Dispute settlement terms of identified modern awards
will apply to disputes about the interaction of simplified additional hours agreement
provisions and terms of an identified modern award. Overtime will continue to be payable for
time worked outside the relevant span of ordinary hours or daily/weekly maximum ordinary
hours. Additional agreed hours will be deemed to be 'ordinary hours' for specified purposes,
including in relation to the superannuation guarantee and the accrual and taking of annual
leave and paid personal leave. Simplified additional hours agreements may be terminated by
providing at least seven days' written notice, or at any time if agreed in writing by the
employer and employee.
Fair Work Amendment (Supporting cviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Extension of certain JobKeeper flexibilities
The Bill will temporarily continue the ability of employers covered by identified modern
awards to direct employees to work at different locations, including at home, and to perform
a broader range of duties. This measure is also directed at the accommodation and food
services and retail trade industries. It provides a straightforward mechanism (in addition to
existing processes in modern awards) that allows employers to direct their employees to
perform different functions and perform work at alternative locations.
The legitimate objective of the measure is to facilitate ongoing employment and support the
Australian economy during the COVID-19 pandemic. It is designed to support a limited
range of employers to manage their workplace during the COVID-19 pandemic and
maximise employee retention rates.
The measure is subject to a range of safeguards such as minimum rates of pay and the ability
of parties to have disputes settled in accordance with an identified modern award dispute
settlement procedure. Duties must be reasonably within scope of the employer's business
operations. A flexible work direction must be in writing and must not be unreasonable in all
the circumstances. The employer must have information that supports a reasonable belief that
the direction is a necessary part of a reasonable strategy to assist in the revival of the
employer's enterprise. Written notice of intention to give a flexible work direction will be
required, as will consultation with the employee or the employee's representative in relation
to the direction. Changes can only be made to an employee's duties where the new duties are
safe, including having regard to the nature and spread of COVID-19, and all existing work
health and safety protections continue to apply. The additional capacity for employers to
temporarily alter conditions will be time limited and will cease to operate two years after the
commencement of the provisions.
The measure is compatible with and promotes the right to work. While it limits the right to
just and favourable conditions of work, it is reasonable, necessary and proportionate in the
context of the extreme economic impacts of the COVID-19 pandemic.
Enterprise agreements
Better off overall test
The temporary measure for the FWC to approve an agreement that does not pass the BOOT
provides an avenue for agreement-approval in the context of the recovery from the impact of
COVID-19. This includes appropriate employee safeguards to ensure that the views and
circumstances of employees, employers and bargaining representatives, and the extent of
employee support and their employee organisations are taken into account, and the approval
of the agreement must not be contrary to the public interest. Agreements made under this
mechanism will nominally expire no longer than two years after approval by the FWC and
the temporary measure will sunset after 2 years.
While this mechanism may limit rights to just and favourable conditions of work, it is
reasonable, necessary and proportionate to achieving the legitimate objective of preserving
employment impacted by the COVID-19 pandemic and the recovery of Australian jobs by
allowing the FWC to approve such agreements only after taking into account the views and
circumstances of the parties covered by the agreement, the impact of COVID-19 on the
business and the extent of employee support for the agreement.
Transfer of business
House of Representatives cix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Measures that amend Part 2-8 of the Fair Work Act engage the right to just and favourable
conditions at work. Depending on the particular facts and circumstances of each case, the
amendments will either limit or promote the right. The provisions will limit rights in work in
circumstances where the new employer's industrial instrument has terms and conditions that
are less favourable than the old employer's instrument. Conversely, rights in work will be
promoted where the new employer's industrial instrument has terms that are more favourable
than the old employer's instrument.
Amending the transfer of business provisions in this way removes red tape by ensuring
instruments do not transfer for voluntary movements of staff between associated entities. This
will make it easier for employees, if they wish to do so, to transfer between associated
entities. It will reduce administrative burden for employers as an employer will no longer
need to deal with multiple instruments in the workplace or go to the FWC for orders when an
employee chooses to move to an associated entity.
Any limitation of rights to just and favourable conditions of work is proportionate as the
provision only applies where an employee seeks to become employed by the new employer at
the employee's initiative. The amendments will not operate in circumstances where the
employee's movement to another employer is in response to a direction by the old employer.
Nor would they operate if the movement comes about as a result of the old employer taking
or threatening to take action against the employee. The normal rules concerning an
employee's continuity of service in section 22 are not affected by these measures.
Legacy agreements
The measures in Part 13 to Schedule 3 to sunset agreement based transitional instruments,
enterprise agreements and workplace determinations made during the Fair Work Act
'bridging period' on 1 July 2022 promote the right to just and favourable conditions of work
at Article 7 of the ICESCR. These legacy agreements set the pay and conditions of between
300,000 to 450,000 employees and many provide take home pay and conditions inferior to
those provided by the relevant modern award. Ceasing these agreements following the
extended transitional period provided upon the commencement of the Fair Work Act more
than a decade ago is expected to uplift terms and conditions of employment for many
employees in the event they make a new enterprise agreement or are engaged under a
relevant modern award.
Ceasing these agreements will also mean that employers will no longer have to compete with
businesses operating under terms and conditions of employment that were not assessed as
leaving employees covered by the agreement better off overall compared to the relevant
modern award. This removes the unfair competitive advantage that the continued operation of
these agreements may facilitate by allowing some employers to provide entitlements less
beneficial than the relevant modern award.
Businesses have the option to use the modern award to set employees' pay and conditions
alone or in combination with contracts of employment, or to bargain for a new agreement
better suited to their circumstances. This will level the playing field, reduce complexity and
encourage agreement making.
While there may be a small number of employees who may become reliant on terms and
conditions provided by the safety net of the NES, the national minimum wage order and
modern awards less beneficial than those contained in their preserved transitional instrument,
this will be counterbalanced by increases in wages and enhanced conditions of employment
for the vast majority of employees.
Fair Work Amendment (Supporting cx House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Variation and revocation of decisions relating to enterprise agreements and workplace
determinations
The amendments made by Schedule 6 will allow the FWC to vary or revoke certain decisions
relating to the approval of enterprise agreements and workplace determinations. The exercise
of this power may engage the right to just and favourable conditions of work, as it confers a
broad discretion on the FWC to vary or revoke decisions that determine the terms and
conditions of employment and similarly engage the right to freedom of association, as
enterprise agreements that were agreed by a process of collective bargaining can be affected
by the exercise of this discretion by the FWC.
However, this discretion will be exercised in light of the FWC's obligation to perform its
functions and exercise its powers in a manner that, relevantly, is fair and just, open and
transparent, and promotes harmonious and cooperative workplace relations. In performing its
functions or exercising powers, the FWC must take into account, among other things, the
objects of the Act and any objects of a Part of the Act, equity, good conscience and the merits
of the matter.
In this context, this amendment is reasonable, necessary and proportionate to achieving the
legitimate objective of improving the efficiency of FWC ensuring that applications to the
FWC are dealt within in a timely, practical and transparent manner consistent with the objects
of Part 2-4 of the Fair Work Act.
Greenfields agreements
The Fair Work Act requires the FWC to approve an enterprise agreement if the Act's
approval requirements are satisfied.
Schedule 4 to the Bill engages the right to just and favourable conditions of work by
providing an additional new approval requirement for greenfields agreements made in
relation to the construction of a major project. Where this type of greenfields agreement
specifies a nominal expiry date that is more than four years after the day on which the FWC
approves the agreement, the FWC must also be satisfied that the agreement provides for
annual pay increases to each employee who will be covered by the agreement, for the
nominal life of the agreement.
This amendment promotes the right to just and favourable conditions of work by ensuring
that employees receive annual pay increases for the nominal life of the greenfields agreement
where the agreement includes a nominal expiry date longer than four years.
Compliance and enforcement
Increases in civil penalties and the small claims cap, and conciliation and arbitration
The compliance and enforcement measures promote rights in work by increasing the
likelihood that employees receive their full entitlements, and in particular by introducing and
increasing penalties for employers that do not comply with their workplace obligations under
the Fair Work Act and relevant employment instruments. Rights in work are also promoted
for those employees who do not receive their full entitlements by changes to the small claims
process, which will improve access and, through the option of referral to the FWC for
conciliation (and alternatively consent arbitration in certain circumstances) provide a faster
process to recover entitlements from employers.
Automatic disqualification from managing corporations
House of Representatives cxi Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
A conviction under the proposed offence relating to underpayments will lead to automatic
disqualification of a person from managing corporations as a result of the operation of
subparagraph 206B(1)(b)(ii) of the Corporations Act 2001. As a result, this measure may
operate to limit the right not to be unjustly deprived of work.
The measure addresses a gap in the existing disqualification regime as it operates in relation
to the Fair Work Act and will provide a new enforcement tool to address dishonest and
deliberate contraventions of the Fair Work Act by individuals. It supports the legitimate
objectives of the Fair Work Act, and is reasonable as it addresses the need to adequately
safeguard workers and others against those found to have dishonestly and systematically
exploited employees in contravention of the Fair Work Act. It is proportionate as it targets
only those individuals who have been found by a court to have dishonestly engaged in a
systematic pattern of underpayments of employees. This captures only the most serious
conduct involving underpayments under the Fair Work Act, so the sanction of
disqualification is commensurate with the seriousness of the wrongdoing.
Individuals facing disqualification are also protected by a court-based process, including due
process. In particular, the sanction may only follow a conviction for an offence which may
only be exercised judicially. Additionally, there is a court-based process for lifting the ban in
certain circumstances under the Corporations Act, which may mitigate the harshness of
disqualification in a particular case.
The measure is appropriate insofar as it achieves the legitimate objective of strengthening
enforcement options for use against contraveners under the Fair Work Act. It is rationally
connected to the objective by providing a preventative remedy that specifically targets the
problem of individuals' serious, repeated misconduct. It is also proportionate, as it responds
to the seriousness of the misconduct with a commensurately serious penalty, while providing
court-based procedural safeguards for persons potentially facing the sanction.
Rights of the child
Article 32 of the UNCRC recognises the right of a child to be protected from economic
exploitation and from performing work that is likely to interfere with the child's education.
Modern Awards
The measure to provide for additional hours agreements promotes the right of a child to be
protected from economic exploitation and performing work that is likely to interfere with a
child's education as the measure provides that a parent or guardian of an employee under the
age of 18 must give consent in writing to the employee entering into additional hours
agreements.
Right to freedom of association
Article 8(1)(c) and (d) of the ICESCR protects the right of trade unions to function freely
subject to no limitations other than those prescribed by law and which are necessary in a
democratic society in the interests of national security or public order or for the protection of
the rights and freedoms of others.
Article 8(1)(d) of the ICESCR protects the right to strike, provided that it is exercised in
conformity with the laws of the particular country.
Part 1 of ILO Convention 87 protects the autonomy and independence of workers' and
employers' organisations in relation to the public authorities, in their establishment and in
their functioning and dissolution.
Fair Work Amendment (Supporting cxii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Enterprise agreements
Restricting third-party intervention in agreement approval and variation applications may
limit the right of trade unions to function freely, as prescribed at Article 8(1)(c) of the
ICESCR, by limiting the FWC's capacity to accept submissions, evidence, or other
information from trade unions that are not bargaining representatives to inform itself in
relation to the application unless the FWC is satisfied there are exceptional circumstances.
This measure is aimed at avoiding unnecessary delays in the agreement approval process by
ensuring that, for the most part, only those parties involved in bargaining can be heard.
Relevantly, the ILO has commented that in relation to recognition of organisations for the
purposes of involvement in the collective bargaining process, 'the representativity threshold
must be assessed on the basis of the specific characteristics of the industrial relations system'.
This measure is proportionate in addressing the concerns of the ILO as it allows third party
intervention where exceptional circumstances exist.
Greenfields agreements
The Fair Work Act permits employers and employees to engage in protected industrial action
in support of claims for an enterprise agreement provided that certain requirements are
satisfied. One of these requirements is that protected industrial action must not be organised
or engaged in before the nominal expiry date of an enterprise agreement has passed.
Currently, the nominal expiry date of an enterprise agreement must not be more than four
years after the day on which the FWC approves that agreement.
While the Bill does not directly amend the protected industrial action provisions of the
Fair Work Act, Schedule 4 to the Bill amends the Fair Work Act to enable greenfields
agreements made in relation to the construction of a major project to specify a nominal expiry
date of up to eight years after the day the agreement comes into operation.
This may operate to extend an existing limitation on the right to strike. However, where this
type of greenfields agreement specifies a nominal expiry date that is more than four years
after the day on which the FWC approves the agreement, the FWC must also be satisfied that
for the nominal life of the agreement the agreement provides for annual pay increases to each
employee who will be covered by the agreement. Further, employees that are employed under
greenfields agreements (including this type) have access to representation when they
commence employment and can agree with employers to vary the terms of an agreement,
including the nominal expiry date.
To the extent that the amendments limit the right to strike, they are reasonable, necessary and
proportionate as the limitation on this right responds to achieving the legitimate objectives of
encouraging investment to promote conditions for productive and increased employment and
the realisation of the right to work.
Right to collective bargaining
ILO Convention 98 protects the right of employees to collectively bargain for terms and
conditions of employment. It requires States Parties (among other things) to take measures
appropriate to national conditions to encourage and promote machinery for voluntary
negotiation between employers or employers' organisations and workers' organisations, with
a view to the regulation of terms and conditions of employment by means of collective
agreements.
House of Representatives cxiii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
Enterprise agreements
Schedule 3 to the Bill promotes the right to collective bargaining by streamlining and
clarifying certain aspects of the agreement-making and approval process to encourage
collective bargaining at the enterprise level, and completing the transition of employers and
employees covered by legacy agreements into the current Fair Work framework.
The amendment to the objects of Part 2-4 expand upon those objects to better reflect the
intended operation and outcomes of the enterprise agreement framework, which the FWC
must take into account when exercising powers and performing functions under that Part. The
amendments also provide that the FWC will be required to exercise powers and perform
functions under Part 2-4 in a manner that recognises the outcome of bargaining at the
enterprise level, thereby promoting the primacy of bargained outcomes between employers
and employees in the enterprise agreement framework.
The current level of prescription in relation to pre-approval requirements for enterprise
agreements is complex, onerous, and a disincentive to agreement making. The amendments
in Part 3 take a purposive approach to the pre-approval requirements, while maintaining the
protections they provide to employees when making an enterprise agreement. Employers
would still be required to give employees a fair and reasonable opportunity to decide whether
or not to approve the agreement prior to any vote, which may include seeking advice from
their union.
The amendments also clarify which casual employees can vote to approve an enterprise
agreement is based on current case law and will provide certainty to employers as to which
employees are entitled to vote to approve an agreement.
Amendments preventing applications to terminate enterprise agreements within the 3 months
after the nominal expiry date are further intended to promote good faith collective bargaining
during the period immediately following the nominal expiry of an enterprise agreement.
Allowing franchisee employers to seek to be covered by an existing single enterprise
agreement that was made with a larger group of employers operating under the same
franchise may limit the right to collective bargaining under ILO Convention 98. While under
this measure employees may be asked to approve an application that would have the effect of
bringing them within coverage of an agreement they did not bargain for, it would also enable
franchisee employers and employees to benefit from an agreement tailored to the conditions
of employers and employees operating under the same franchise. The FWC may only vary an
agreement to cover a franchisee employer and its employees if the agreement has not passed
its nominal expiry date (i.e. it was approved by the FWC and passed the BOOT within the
last 4 years) and a majority of the employees have agreed to be covered by the agreement
after they have been given a fair and reasonable opportunity to do so. The FWC would also
need to be satisfied there are no serious public interest grounds against making the variation.
Greenfields agreements
Currently, the nominal expiry date of an enterprise agreement must not be more than four
years after the day on which the FWC approves that agreement.
The amendments in Schedule 4 to the Bill engage Article 4 of ILO Convention 98 by
enabling greenfields agreements to specify a nominal expiry date that must not be more than
eight years after the day the agreement comes into operation, where the FWC is satisfied that
the work to be performed under the agreement relates only to the construction of a major
project. While employers and employees may jointly seek to vary the terms of greenfields
Fair Work Amendment (Supporting cxiv House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
agreements (including this type) including the nominal expiry date, the amendments
potentially impact the timing for renegotiating a new enterprise agreement.
Negotiations for a replacement agreement can cause delays and cost overruns during the
construction of the project. Extending the nominal term of greenfields agreements on major
projects will make Australian major projects more attractive to investors by providing greater
certainty of construction costs and delivery timeframes. Increased investment will mean
greater job creation. Any limitation of the right to collective bargaining by this measure is
reasonable, necessary and proportionate to achieving the legitimate objectives of promoting
employment by improving certainty of labour costs and minimising delays during
construction on major projects, which in turn is anticipated to increase job creation and attract
greater investment into Australia.
This measure supports Article 1 of ILO Convention 122 by promoting increased employment
and, as such, is aimed at achieving a legitimate objective for the purposes of international
human rights law. The ILO Committee of Experts on the Application of Conventions and
Recommendations has noted in relation to ILO Convention 122 that there is a wide array of
possible measures aimed at creating employment, and that a country's employment policy
may take a variety of forms, including addressing the 'duty of the State to promote conditions
for the realisation of the right to work'.
Right to a fair hearing
Article 14 of the ICCPR protects the right to a fair and public hearing by a competent,
independent and impartial tribunal in the determination of rights and obligations in a suit at
law.
Preventing vexatious proceedings
Expanding the grounds on which the FWC may dismiss applications to include those that are
misconceived, lack substance or are otherwise an abuse of process and allowing the FWC to
order a person whose application is dismissed for such reasons not to make a further
application to the FWC of a kind specified in the order without permission may operate to
limit the right to a fair and public hearing in a civil proceeding.
Unmeritorious applications to the FWC can cause significant costs to be incurred to
respondents and to the public, as well as diverting the FWC's time and resources from other
matters. While this measure may limit the right to a fair hearing, it is reasonable, necessary
and proportionate to achieving the legitimate objective of the Bill of allowing the FWC to
deal with unmeritorious applications more effectively than is currently permitted.
This is because the measure includes the safeguard that the applicant must be given a
reasonable opportunity to make submissions to the FWC in relation to whether the
application should be dismissed or whether an order should be made. Also, the measure does
not apply to applications for the FWC to deal with a termination of employment dispute
under the general protections provisions in Part 3-1 or the additional provisions in Part 6-4 of
the Fair Work Act, which protect against termination of employment on the basis of
prohibited reasons. While Full Bench orders cannot be appealed within the FWC, judicial
review of such decisions may be available.
Allowing appeals 'on the papers'
Allowing the FWC to hear appeals 'on the papers' where the FWC considers a matter can be
adequately determined without oral evidence and submissions does not limit the right to a
House of Representatives cxv Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
public hearing in Article 14.1 of the ICCPR. This is because an appeal under section 604 of
the Fair Work Act is an appeal by way of rehearing and the material on which the FWC will
base its appeal decision will be publicly available, as will the decision itself.
Criminal process rights
Articles 14 and 15 of the ICCPR protect criminal process rights which may also apply to civil
penalty provisions regardless of the distinction between criminal and civil penalties in
domestic law:
Article 14(2) protects against anything other than the normal standard of proof applying
in relation to a criminal penalty.
Article 14(7) protects against the risk of double punishment.
Article 15(1) protects against criminal penalties applying retrospectively.
Compliance and enforcement
Existing civil remedy provisions
Current maximum monetary penalties for remuneration-related contraventions that can be
sought by the FWO under the Fair Work Act are low compared to those that can be sought by
other business regulators such as the Australian Competition and Consumer Commission and
the Australian Securities and Investment Commission, and do not act as an effective
deterrent. Increased penalties ensure that civil penalties for individuals (such as company
directors, officers and professional advisers) and bodies corporate who have an obligation to
employees proportionately align with the increase in civil penalties for bodies corporate, and
act as a sufficient deterrent for non-compliance. Increased maximum penalties will increase
the incentive for businesses to comply with their workplace obligations, in recognition of the
harm and disadvantage experienced by employees and competing businesses when non-
compliance occurs.
The increased penalties (and new civil remedy provisions) will apply prospectively to
contraventions that are committed after the Bill commences, therefore upholding article 15 of
the ICCPR (to the extent that it may be considered to apply).
While the civil penalty amounts are intended to deter non-compliance, no civil remedy
provisions under the Fair Work Act carry a penalty of imprisonment. Some are at or below
the level usually considered to be severe enough to be classified as criminal (that is, below 60
penalty units for individuals). In any event, the civil remedy provisions should not be
considered 'criminal' for the purpose of human rights law due to their application in the
regulatory environment for industrial relations.
Prohibition on advertising employment opportunities at below minimum wages
The measure to prohibit employers from advertising jobs with pay rates specified below the
national minimum wage fills a gap in the compliance and enforcement provisions of the Fair
Work Act.
Concerns were expressed to the Migrant Workers' Taskforce that migrant workers are
specifically targeted with jobs advertised at below national minimum wage pay rates. The
Taskforce recommended the introduction of a prohibition on advertising jobs with pay rates
that would breach the Fair Work Act (recommendation 4).
This measure is appropriate and rationally connected to the aim of ceasing worker
exploitation. It will send a clear message to employers that they must verify the correct
Fair Work Amendment (Supporting cxvi House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
entitlements prior to advertising. It will help promote a culture of compliance with industrial
relations laws by encouraging employers to consider their workplace obligations before
hiring employees, which should help to reduce unintentional underpayments of employees.
Criminal offence provision
The Fair Work Act does not currently criminalise conduct involving underpaying employees.
Remuneration-related contraventions are subject to civil pecuniary penalties and other
sanctions under the Fair Work Act (see sections 545 and 546 for the kinds of orders courts
can make).
The Bill would implement the Government's commitment to further deter the most egregious
and persistent kinds of underpayments by criminalising conduct where an employer
dishonestly engages in a systematic pattern of underpaying one or more employees. The fault
element for the offence is dishonesty, which necessarily involves intention to engage in (or
knowledge of) wrongdoing. The offence provision would apply in relation to national system
employers and employees only.
The criminal law framework would be provided for under the Crimes Act 1914 and the
Criminal Code Act 1995 (for example, applying the criminal standard of proof to the offence
and making provision for ancillary liability).
The Bill would set the maximum penalty for individuals at 4 years' imprisonment or 5,000
penalty units, or both. For a body corporate, the maximum penalty would be 25,000 penalty
units.
Consideration has been given to the interaction between the existing civil and proposed
criminal enforcement mechanisms under the Fair Work Act, particular as to any risk of
'double penalty'. Article 14(7) of the ICCPR prohibits an individual from being tried or
punished again for an offence for which they have already been finally convicted or acquitted
in accordance with the law and penal procedure of each country. This prohibition is limited to
proceedings relating to a criminal charge. Despite this limitation, the approach under
international and comparative human rights law has been to look at the substance and the
effect of the proceedings themselves rather than their label under domestic law when
determining whether a proceeding relates to a civil or criminal charge. From an international
perspective, therefore, it is possible for a civil penalty provision which subjects a person to a
significantly high penalty that is intended to be punitive or deterrent in nature to constitute a
'criminal charge' for the purposes of the prohibition on double jeopardy.
The Fair Work Act addresses this risk in section 552, which ensures that a person cannot be
subject to both criminal and civil penalties. In particular, a person cannot be subject to a civil
penalty if they have been convicted of an offence relating to conduct that is the same, or
substantially the same, as the conduct that contravened the civil penalty provision. This
protects a person from being penalised twice for the same conduct under the Fair Work Act.
In addition, the Fair Work Act makes further provision to protect the integrity of criminal law
proceedings, by providing for the stay of any related civil penalty proceedings while the
criminal proceedings are on foot (see section 553). This protection is in addition to any
general powers the courts have to control their own proceedings, to protect the integrity of
criminal law proceedings, and does not prevent the court from ordering a person to make
monetary reparation to any other person in respect of any loss suffered by reason of the
offence.
House of Representatives cxvii Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
State-based offence provisions will be inoperable in relation to national system employers
and employees as the Fair Work Act continues to cover the field in relation to sanctions for
underpayments. As a result, any risk of the same conduct being prosecuted under both state
and Commonwealth offence provisions will be mitigated.
Civil penalties and criminal offences - summary
To the extent that Schedule 5 to the Bill limits the rights under article 14 of the ICCPR, it is
compatible with human rights. The civil liability and offence provisions are appropriate
because they seek to achieve the legitimate objective of protecting employee entitlements
under the Fair Work Act and are rationally connected and proportionate to this objective by
reducing the risk of non-compliance with the law by imposing proportionate penalties where
there is non-compliance.
Conclusion
This Bill is compatible with human rights because it includes measures that promote rights to
work and rights in work including the right to just and favourable conditions of work, and
promotes rights of the child. To the extent that it may limit rights in work, the right not to be
unjustly deprived of work, the right to collective bargaining, the right to freedom of
association and the right to a fair hearing, those limitations are reasonable, necessary and
proportionate in effectively addressing the legitimate objectives of the Bill.
Fair Work Amendment (Supporting cxviii House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Human Rights Compatibility Statement
[This page is intentionally blank]
House of Representatives cxix Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Notes on Clauses
NOTES ON CLAUSES
In these notes on clauses, the following abbreviations are used:
ABC The person referred to as the Australian Building and Construction
Commissioner Commissioner under subsection 15(1) of the Building and Construction
Industry (Improving Productivity) Act 2016
Act Fair Work Act 2009
AWA Australian Workplace Agreement
BCI(IP) Act Building and Construction Industry (Improving Productivity) Act 2016
Bill Fair Work Amendment (Supporting Australia's Jobs and Economic
Recovery) Bill 2020
BOOT Better off overall test
CDPP Commonwealth Director of Public Prosecutions, established under
the Director of Public Prosecutions Act 1983
Corporations Corporations Act 2001
Act
Crimes Act Crimes Act 1914
Criminal Criminal Code Act 1995, Schedule 1
Code
Federal Federal Circuit Court of Australia Act 1999
Circuit Court
of Australia
Act
Federal Court Federal Court of Australia Act 1976
of Australia
Act
Fair Work A person appointed as a Fair Work inspector under section 700 of the Fair
inspector Work Act 2009; the Fair Work Ombudsman in their capacity as a Fair Work
Inspector under section 701 of the Fair Work Act 2009
FWC Fair Work Commission
FWO Fair Work Ombudsman
Judiciary Act Judiciary Act 1903
House of Representatives 1 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Notes on Clauses
NERR Notice of employee representation rights
NES National Employment Standards
Penalty unit Defined under section 4AA of the Crimes Act 1914 (Cth), subject to
indexation under subsection 4AA(3) of that Act. A penalty unit is $222 as at
December 2020.
Procedural The procedural rules of the FWC made under section 609 of the Fair Work
rules Act 2009
Small Defined in section 23 of the Fair Work Act 2009
business
employer
TPCA Act Fair Work (Transitional Provisions and Consequential Amendments) Act
2009
Clause 1 - Short title
1. This is a formal provision specifying the short title.
Clause 2 - Commencement
2. The table in this clause sets out when the provisions of the Bill commence.
Clause 3 - Schedules
3. Clause 3 provides that each Act that is specified in a Schedule is amended or repealed
as set out in that Schedule, and any other item in a Schedule to the Bill has effect
according to its terms.
Fair Work Amendment (Supporting 2 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
SCHEDULE 1 - CASUAL EMPLOYEES
Overview
4. Schedule 1 amends the Fair Work Act to:
insert a definition of casual employee that provides both parties to an employment
relationship with certainty about an employee's status and entitlements from
commencement and at all times during the employment relationship;
insert a casual conversion entitlement in the National Employment Standards that
provides eligible casual employees with a pathway to convert to ongoing full-
time or part-time employment;
require an employer to provide all new casual employees with a Casual
Employment Information Statement, published by the FWO;
allow a court to offset casual loading amounts paid to an employee against certain
entitlements that the casual loading was paid in compensation for, during a period
when that employee was not a casual employee; and
make consequential amendments.
Part 1 - Main amendments
Amendments to the Fair Work Act 2009
Item 1 - Section 12
Item 2 - At the end of Division 3 of Part 1-2
5. These items define the meaning of 'casual employee'.
6. Item 2 inserts new section 15A, which establishes the statutory definition. This would
override the meaning of casual employee that has evolved over time at common law.
Item 1 signposts this definition in the Dictionary (section 12).
7. The definition incorporates elements of the common law meaning but provides the
parties with greater certainty as to an employee's status on commencement of
employment and at all times during the employment relationship, and the entitlements
that flow from that status.
8. New subsection 15A(1) provides that a person is a casual employee if:
an offer of employment is made on the basis that the employer makes no firm
advance commitment to continuing and indefinite work according to an agreed
pattern of work for the person (paragraph 15A(1)(a)); and
the person accepts the offer on that basis (paragraph 15A(1)(b)); and
the person is an employee as a result of that acceptance (paragraph 15A(1)(c)).
9. The requirement in new paragraph 15A(1)(a) reflects the common law principle that the
essence of casual employment is the absence of a 'firm advance commitment to
continuing and indefinite work according to an agreed pattern of work': WorkPac v
Skene [2018] FCAFC 131 (Skene) and WorkPac v Rossato [2020] FCAFC 84
(Rossato). The indicators of the absence of a firm advance commitment are set out in
subsection 15A(2).
House of Representatives 3 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
10. New paragraph 15A(1)(b) requires that the person accepts the offer of employment on
the basis of there being no such firm advance commitment. The negotiation of other
terms and conditions since the initial offer (such as rates of pay) does not affect whether
the acceptance satisfies paragraph 15A(1)(b).
11. The requirement in paragraph 15A(1)(c) makes clear that a person will only become a
casual employee once they have commenced employment with the employer (that is,
once they are an employee).
12. The elements of the absence of a firm advance commitment may be expressly specified
in the terms of a written offer of employment. However, there is no requirement for the
offer and acceptance to be in writing, and the definition is intended to apply to informal
arrangements.
13. New subsection 15A(2) provides the following exhaustive list of factors against which
the absence of a firm advance commitment to continuing and indefinite work according
to an agreed pattern of work in paragraph 15A(1)(a) is assessed at the time the offer is
made:
whether the employer can elect to offer work and whether the person can elect to
accept or reject work;
whether the person will work only as required;
whether the employment is described as casual employment;
whether the person will be entitled to a casual loading or a specific rate of pay for
casual employees under the terms of the offer or a fair work instrument (this term
is defined in existing section 12 and includes the national minimum wage order).
14. The factors are drawn from the existing common law test of casual employment,
including as expressed in recent cases of Skene and Rossato.
15. The exhaustive list narrows the factors a Court can consider in assessing whether an
offer of employment has the requisite absence of a firm advance commitment to
continuing and indefinite work according to an agreed pattern of work, in order to
provide the greatest degree of certainty. All of the factors may be relevant and none are
determinative.
16. For example, if an offer of employment describes the employment as casual and
includes payment of a casual loading, but provides for guaranteed hours on a
continuing and indefinite basis according to an agreed pattern of work and the
employee has no right to accept or reject work that is offered, the employment would
not be casual.
Illustrative example - absence of firm advance commitment
José works as a shop assistant in a boutique clothing store owned by Lucy.
Lucy advertised a casual position because she needed a shop assistant to help out in periods
of peak demand and when other staff are on leave, but cannot guarantee work every week.
Casual employment suits José who lost his job due to COVID-19 and wants the freedom to
refine his invention when he is not working.
Fair Work Amendment (Supporting 4 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
José's offer of employment provides that his hours of work will depend on the needs of the
business and he is free to accept or reject any shift Lucy offers to him. The offer describes the
position as casual and provides that Lucy will pay him as a Retail Employee Level 1 under
the General Retail Industry Award 2020, including the 25 per cent casual loading in addition
to the minimum hourly rate for this classification. José accepts the position on this basis.
As such, José's offer and acceptance satisfy the terms of the definition in section 15A and he
is therefore a casual employee.
Illustrative example - employment described as casual but existence of firm advance
commitment to continuing and indefinite work
Jaqueline owns and runs a dental practice. She hires Marie as a receptionist to work on the
front desk. The position is described as casual in Marie's written offer of employment. The
offer provides that Jaqueline will pay Marie a casual loading on top of her hourly rate of pay.
The offer says Marie's employment can only be terminated by the employer or by Marie by
two weeks' notice in writing and that she will work from 9am to 5pm Monday to Friday with
a one hour lunch break each day for the foreseeable future unless advised otherwise. At the
time of providing the written offer, Jaqueline informs Marie that she will not be able to refuse
shifts and will need to seek Jaqueline's prior approval to take time off work.
Even though Marie is described as a casual and is entitled to a loading, she will not meet the
definition of casual employee in new section 15A. This is because Marie's fixed weekly
hours, the indefinite nature of her engagement and the absence of a requirement to work only
as required indicate that Jaqueline has made a firm advance commitment to continuing and
indefinite work according to an agreed pattern of work.
Illustrative example - verbal employment offer and contract
Jack is a university student. Jack wants to find a job with flexible hours so he can attend
lectures and tutorials at various different times during the week.
Jack has a meeting with Li Min, who owns a local café. Li Min is expecting customer
numbers to increase over coming months as government restrictions in response to the
COVID-19 pandemic ease and she wants to hire an additional waiter to help with increased
demand. Li Min says the job would be perfect for Jack because he could work around his
university commitments. Li Min says she will offer Jack shifts on different days and times
depending on customer numbers and she might ask him to cover for other waiters from time
to time. Li Min assures Jack that he can always refuse a shift, for instance if it clashes with a
lecture, tutorial or exam. Li Min explains that Jack would be paid as a grade 2 Food and
Beverage Attendant under the Restaurant Industry Award 2020. She says Jack would be a
casual employee, which means, per the Award, he would also receive a loading of 25 per cent
in addition to the minimum hourly rate applicable under the Award.
At the end of their meeting, Li Min says the job is Jack's if he wants it. Jack says the job
sounds perfect and they both agree Li Min will add Jack to her next shift roster. As a result,
Jack is an employee at Li Min's café.
Even though the offer, acceptance and resulting contract of employment are not in writing, on
the basis of their meeting, the offer and acceptance meet the terms of the definition and Jack
House of Representatives 5 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
is a casual employee.
17. The note to new subsection 15A(2) refers the reader to the rights of a casual employee
to casual conversion under new Division 4A of Part 2-2 if they have worked for their
employer for at least 12 months, and during at least the last 6 months have worked a
regular pattern of hours on an ongoing basis. This note highlights that Division 4A
contemplates the possibility of a casual employee performing work on a regular basis,
and that there may be consequential rights that arise for such an employee.
18. New subsection 15A(3) provides, for avoidance of doubt, that a regular pattern of hours
does not, of itself, indicate the requisite firm advance commitment. A casual can be
expected to work a regular pattern of hours and still meet the statutory definition when
taking all the circumstances of their offer and acceptance into account.
19. New subsection 15A(4) makes clear that the absence of a firm advance commitment is
only to be assessed on the basis, and at the time, of the offer and acceptance of
employment, and any subsequent conduct is irrelevant. This means a person's
employment status cannot unintentionally change over time.
20. New subsection 15A(5) makes clear the employee's status for the duration of their
employment, providing that a person employed as a casual in accordance with
subsection 15A(1) will remain a casual employee until either:
the employee's employment is converted to full-time or part-time employment
under Division 4A of Part 2-2; or
the employee accepts an alternative offer of employment (other than as a casual
employee) by the employer and commences work on that basis.
Illustrative example - employment commences on the basis of irregular hours but later
develops into a regular pattern of hours
Anika owns a hairdressing salon. Anika's business is doing very well and her clientele list is
rapidly growing. Anika hires Ollie, an experienced hair stylist, to help the business cope with
increasing client bookings. Ollie's offer of employment specifies that he will only be offered
shifts as required to meet increasing business demand. The offer describes the position as
casual, and provides that he will be paid as a level 5 Hair and Beauty Employee under the
Hair and Beauty Industry Award 2010, and will receive the required 25 per cent loading for
casuals. It is clear from Ollie's offer of employment that he is free to refuse shifts. Ollie
negotiated a higher rate of pay, but his acceptance of the offer otherwise incorporate these
terms. When Ollie first starts working for Anika, his shift patterns are irregular and change
significantly week to week.
After several months, one of Anika's part-time hair stylists quits and rather than advertising
for a new employee Anika asks Ollie to cover those shifts, as he has demonstrated himself to
be a skilled stylist and great addition to the team. Ollie agrees and thereafter works shifts
from 10am to 3pm Thursday to Saturday each week.
Ollie is a casual employee within the meaning of section 15A. This is because the absence of
the requisite firm advance commitment is only assessed on the basis, and at the time, of the
offer and acceptance of employment, not subsequent conduct. The fact that Ollie ultimately
works a regular pattern of hours does not change this. However, if these working
Fair Work Amendment (Supporting 6 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
arrangements continue, Ollie may become eligible to convert to ongoing part-time
employment in accordance with new Division 4A (assuming other requirements of that
Division are met).
Item 3 - After Division 4 of Part 2-2
21. Item 3 inserts new Division 4A - Offers and requests for casual conversion, as part of
the NES in Part 2-2 of the Act. The inclusion of this Division in the NES engages
existing NES interaction rules, including that a modern award or enterprise agreement
must not exclude any provision of the NES (section 55).
22. New Division 4A has four subdivisions:
Subdivision A, which sets out the general application rule for Division 4A;
Subdivision B, which requires an employer to offer (subject to reasonable
grounds not to offer) eligible casual employees conversion to ongoing full-time or
part-time employment within 21 days after the end of the 12 month period from
the employee's commencement of employment;
Subdivision C, which provides casual employees with a residual right (if they are
eligible) to request conversion to ongoing full-time or part-time employment (and
sets out the employer's rights and obligations if a request is so made); and
Subdivision D, which deals with other provisions relevant to casual conversion,
including its effect and dispute resolution arrangements.
Subdivision A - Application of Division
23. New section 66A sets out application rules for new Division 4A. New subsection
66A(1) provides that Division 4A applies in relation to an employee who is a casual
employee. New subsection 66A(2) specifies that for the purposes of Division 4A, a
reference to full-time employment or part-time employment does not include
employment for a specified period of time, for a specified task or for the duration of a
specified season. This means an employee cannot be converted to a fixed term contract
under this Division, but does not prevent an employer and employee from agreeing
(outside Division 4A) to enter into a new fixed term arrangement.
Subdivision B - Employer offers for casual conversion
24. New section 66B requires an employer to make an offer of full-time or part-time
employment to an eligible casual employee within 21 days of the employee having
been employed for 12 months, subject to the exceptions in section 66C.
25. Under subsection 66B(1) a casual employee will be eligible if the employee:
has been employed by the employer for a period of 12 months beginning the day
the employment started (paragraph 66B(1)(a)); and
during at least the last 6 months of that period, the employee has worked a regular
pattern of hours on an ongoing basis which, without significant adjustment, the
employee could continue to work as a full-time employee or a part-time
employee, as the case may be (paragraph 66B(1)(b)).
House of Representatives 7 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
26. Whether a person has been employed for a period of 12 months will depend on the
particular circumstances. For example, a person who is employed to perform an
afternoon of casual work in March, and is then employed to perform another afternoon
of casual work in the April of the following year will not have been employed 'for a
period of 12 months', so that employer will not have to consider whether to make an
offer in relation to that employee at that time.
27. The term 'regular pattern of hours' is adopted from the FWC's model casual conversion
term. Whether an employee meets this requirement will depend on the particular
circumstances and involves consideration of the pattern of hours worked during the
relevant 6 month period. For example, if an employee has worked shifts of 8 hours each
on every Monday and Tuesday for the most recent 9 months of their employment, it
will be clear they have worked a regular pattern of hours for the requisite 6 months.
Depending on the circumstances of any particular case, the employee may still have
worked a regular pattern of hours even with some fluctuation or variation in specific
times and days worked, including (for example) if the employee took time away from
work when ill or on holiday.
28. Additionally, the assessment of whether the employee worked a 'regular pattern of
hours' is qualified by the contextual requirement that the pattern of hours must be able
to be continued as a full-time or part-time employee without significant adjustment.
29. The note to new subsection 66B(1) explains that an employee who is eligible for
conversion would also be a 'regular casual employee' (item 9 inserts this definition in
section 12, which requires such an employee to have been employed on a regular and
systematic basis). This is because an employee who has worked the required regular
pattern of hours for a period as required by section 66B would also necessarily have
been employed on a regular and systematic basis for that period.
30. New subsection 66B(2) provides for the form of the offer, which must be in writing and
be an offer to convert to either:
full-time employment, if the employee has worked the equivalent of full-time
hours in the relevant 6 month period; or
part-time employment that is consistent with the regular pattern of hours worked
during the relevant 6 month period, if the employee has worked less than the
equivalent of full-time hours in that period.
31. The requirement for the offer of part-time employment to be consistent with the regular
pattern of hours worked during the relevant period is intended to ensure that the offer is
not made only on the basis that the employee would have to significantly change their
working patterns in order to accept the offer.
32. The offer must be given to the employee within 21 days after the end of the employee's
12 month anniversary of commencing employment (new paragraph 66B(2)(c)).
Subsection 36(1) of the Acts Interpretation Act 1901 as in force on 25 June 2009 that
applies to the Act (see section 40A of the Fair Work Act) makes clear that for the
purpose of calculating the 21 day period, the day the offer was made is not counted.
Fair Work Amendment (Supporting 8 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
33. The note to subsection 66B(2) directs the reader to section 66K, which provides that
following conversion, an employee is taken to be a full-time or part-time employee for
the purposes of Commonwealth and state and territory laws, an applicable fair work
instrument and the employee's contract of employment.
34. For the purpose of determining whether an employee whose terms and conditions of
employment are not provided in a modern award or enterprise agreement has worked
the requisite 'full-time hours', regard can be had to the hours of work of other full-time
employees of the employer who work in the same or a comparable position (new
subsection 66B(3)). For example, in a workplace where full-time employees work 35
hours per week, an employee to whom no modern award or enterprise agreement
applies will satisfy the full-time hours requirement for their workplace if they have
worked a regular pattern of 35 hours per week over the relevant period.
Illustrative example - offer of conversion to eligible employee
Marcella commenced work as a casual employee in the fashion retail industry for Très Chic
Boutique. On the one year anniversary of Marcella's employment, Marcella's employer
assesses whether Marcella is eligible to convert under Division 4A. Over the previous six
months, Marcella has regularly worked 8 hours on Monday, Tuesday and Friday each week.
Marcella's employer considers that over that period Marcella has worked a regular pattern of
hours on an ongoing basis which, without significant adjustment, she could continue to work
as a part-time employee. There are no reasonable grounds to not make Marcella an offer to
convert.
Two weeks after the 12 month anniversary of Marcella's employment (within the 21 day
timeframe in section 66B(2)(c)), Marcella's employer sends an email to Marcella making an
offer of ongoing part-time employment consistent with the hours Marcella has worked over
the previous six month period.
When employer offers not required
35. New section 66C provides for when an employer is not required to make an offer to
convert. Despite section 66B, an employer is not required to make an offer if there are
reasonable grounds not to do so (paragraph 66C(1)(a)). The reasonable grounds must be
based on facts that are known or reasonably foreseeable at the time of deciding not to
make the offer (paragraph 66C(1)(b)).
36. Reasonable grounds for deciding not to make an offer include (but are not limited to):
the employee's position will cease to exist in the period of 12 months after the
time of deciding not to make the offer (paragraph 66C(2)(a));
the hours of work the employee is required to perform will be significantly
reduced in that 12 month period (paragraph 66C(2)(b));
there will be a significant change in either or both of the days on which or times
at which the employee will be required to perform work in that period which
cannot be accommodated within the days or times the employee is available to
work (paragraph 66C(2)(c));
House of Representatives 9 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
making the offer would not comply with a recruitment or selection process
required by or under a law of the Commonwealth or a State or a Territory
(paragraph 66C(2)(d)).
37. New paragraph 66C(2)(d) is included for the avoidance of doubt. For example, the
Public Sector Employment and Management Act 1993 (NT) and the associated Public
Sector Employment and Management Regulations 2011 (NT) provide requirements for
selecting employees within the Northern Territory Public Service, such as merit
selection principles. There is nothing in new Division 4A that would require the
Northern Territory Public Service to make an offer for casual conversion under
Division 4A if this would be inconsistent with its statutory obligations. In such a case,
new paragraph 66C(2)(d) should be read in conjunction with section 40 relating to the
interaction between fair work laws and public sector employment laws.
38. There may be other reasonable grounds on which an employer can decide not to make
an offer, including those specific to their workplace or the employee's role. Whether a
ground is reasonable is to be assessed taking into account all of the circumstances,
including the needs of the employer's business and the nature of the employee's role.
39. New subsection 66C(3) requires an employer to give written notice to a casual
employee if they decide not to make an offer because:
there are reasonable grounds not to make the offer in subsection 66C(1); or
the employee has been employed by the employer for the 12 month period
referred to in paragraph 66B(1)(a) but does not meet the requirement in paragraph
66B(1)(b) that the employee has worked a regular pattern of hours on an ongoing
basis which the employee could continue to work without significant adjustment
after conversion.
40. The note to subsection 66C(3) refers readers to the residual right to request casual
conversion that is available in certain circumstances.
41. Under new subsection 66C(4) the notice required by subsection 66C(3) must:
advise the employee that the employer is not making an offer under section 66B;
and
include reasons for not making the offer, including grounds on which the
employer has decided not to make the offer (so if the offer is not made because of
a reasonable ground, this notice must include details of that ground, and if the
offer is not made because the employee has not satisfied the eligibility
requirement in s 66B(1)(b), the notice must include details of that reason); and
be given to the employee within 21 days after the end of their 12 month
anniversary of commencing employment.
Illustrative example - notice of no offer to convert because of reasonable grounds
Zeynab is a casual office cleaner at Corporate Clean Pty Ltd, which contracts cleaning
services to the Greenspace office building. On the one year anniversary of Zeynab's
employment, her employer assesses her employment against the conversion criteria.
Fair Work Amendment (Supporting 10 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
Zeynab's employer considers her to be eligible for conversion on the basis that she has
worked the same shifts Monday to Friday over the previous six months pursuant to Corporate
Clean's contract with Greenspace. However, her employer is aware that the Greenspace
contract will not be renewed beyond the end of the current financial year and without that
contract there will be no work available for Zeynab.
Within 21 days after the 12 month anniversary of Zeynab's employment, her employer
provides written notice to her that Corporate Clean is not going to offer conversion on the
reasonable ground that there will be a significant reduction in her hours of work in the next
12 months, on the basis of the Greenspace contract ending and no other work being available.
If, however, Zeynab does ultimately continue to be employed by Corporate Clean and
satisfies the relevant eligibility criteria in future, she may be entitled to request to convert
under section 66F (but cannot make such a request until at least 6 months after she was
provided with the notice of no offer of conversion).
Employee response
42. An employee must respond in writing to an employer's offer made under section 66B
within 21 days after the offer is given to the employee, stating whether the offer is
accepted or declined (new subsection 66D(1)). An employee who fails to do so is taken
to have declined the offer (new subsection 66D(2)).
43. New subsection 66E(1) specifies that if the employee accepts the offer, the employer
must, within 21 days after the acceptance is given to the employer, give the employee
written notice of:
the employee's new employment status (whether full-time or part-time);
the employee's hours of work after the conversion takes effect; and
the day on which the conversion takes effect.
44. Provision of this notice to the employee will ensure both parties understand these key
features of the employment relationship following conversion.
45. An employer must discuss with the employee the matters it intends to specify in the
written notice under new subsection 66E(1) before giving the notice, including the
employee's hours of work after conversion and the day the conversion will take effect
(new subsection 66E(2)). The 21 day notice period in subsection 66E(1) provides time
for the employer and employee to have discussions about the particulars of the
conversion.
46. The day specified in the notice on which conversion takes effect must be the first day of
the employee's first full pay period starting after the day the notice is given, unless
otherwise agreed between the employer and employee (new subsection 66E(3)). This
means that an employer cannot delay the commencement of the employee's conversion
to full-time or part-time employment without the employee's agreement.
Subdivision C--Residual right to request casual conversion
47. Subdivision C sets out the residual right to request casual conversion available to casual
employees in certain circumstances who have not received or accepted an employer
offer to convert. Eligibility criteria, grounds for refusal and formal requirements
House of Representatives 11 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
broadly reflect those applying to the obligation to offer conversion under
Subdivision B.
Employee requests
48. A casual employee is eligible to make a request if:
the employee has been employed by the employer for at least 12 months
(paragraph 66F(1)(a)); and
the employee has, in the period of 6 months before giving the request to the
employer, worked a regular pattern of hours on an ongoing basis which, without
significant adjustment, the employee could continue to work as a full-time
employee or part-time employee (paragraph 66F(1)(b)); and
all of the following apply:
- the employee has not, in the 6 months before giving the request to the
employer, refused an offer to convert to full-time or part-time employment
under section 66B (subparagraph 66F(1)(c)(i)); and
- the employer has not, in the 6 months before the employee gave the request,
given the employee a notice of a decision not to make an offer for
conversion on reasonable grounds (subparagraph 66F(1)(c)(ii)); and
- the employer has not, in the 6 months before the employee gave the request,
given a response to the employee refusing a previous request (subparagraph
66F(1)(c)(iii)); and
- the request is not made during the 21 days after the 12 month period since
the employee commenced employment with that employer (subparagraph
66F(1)(c)(iv)).
49. The requirement for the employee to have been employed by the employer for at least
12 months ensures that the residual right to request does not arise before the employer's
obligation to offer.
50. The requirement in paragraph 66F(1)(b) that the employee has worked a regular pattern
of hours on an ongoing basis which, without significant adjustment, the employee could
continue to work following conversion is the same as that under paragraph 66B(1)(b),
as explained above in relation to that provision.
51. Additional circumstances in paragraph 66F(1)(c) that prevent an employee from
making a request to convert are intended to minimise the regulatory burden on an
employer.
52. If an employer fails to comply with the requirement to provide a notice under paragraph
66C(3)(a) within the required 21 days, an eligible employee will be able to request
conversion (and will not have to wait a further 6 months after the 12 month anniversary
of their employment).
53. Further, if an employer gave notice that the employee did not meet the regular pattern
of hours requirement under paragraph 66B(1)(b), the employee will be entitled to
request conversion at the point when that requirement has been met, without having to
wait a further 6 months after receiving the notice. For example, if the employer did not
Fair Work Amendment (Supporting 12 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
make the offer because at the relevant time the employee had only satisfied the regular
pattern of hours requirement for the previous 4 months, but that pattern continues, they
may be eligible to request conversion after 2 more months (for a total of 6 months of
working a regular pattern of hours, as required).
54. The request must be in writing and given to the employer (new paragraphs 66F(2)(a)
and (c)). An employee may request to convert to full-time or part-time employment in
the same circumstances as paragraph 66B(2)(b) (new paragraph 66F(2)(b)). The note to
subsection 66F(2) directs readers to section 66K, which provides that the conversion
has effect for all purposes.
55. For the purpose of determining the 'equivalent of full-time hours' of an award and
agreement free employee, regard may be had to the hours of work of other full-time
employees of the employer in the same or comparable position to the employee (new
subsection 66F(3), which is in identical terms to subsection 66B(3)).
56. An employer must respond in writing to an employee's request to convert made under
section 66F within 21 days after the request is given to them, stating whether the
request is granted or refused (new section 66G).
Refusals of requests
57. New section 66H provides for when and how a conversion request can be refused on
the same grounds as those for not making an offer under section 66C, with one
addition. An employer must not refuse a request unless they have consulted the
employee and there are reasonable grounds to refuse the request (new subsection
66H(1)). As with offers of conversion, the reasonable grounds must be based on facts
that are known, or are reasonably foreseeable, at the time of refusing the request.
58. This consultation requirement enables an employer and the employee to discuss matters
relating to the request, including reasons for a proposed refusal or alternative
arrangements that suit the needs of both the employer and employee. For example,
where an employer may not be able to offer an ongoing full-time position due to a
foreseeable reduction in workload after six months, the employer may refuse the
request, but separately propose an alternative arrangement outside the process in
Division 4A that suits both parties.
59. New subsection 66H(2) sets out the same non-exhaustive list of reasonable grounds for
refusing a request as subsection 66C(2), with the addition of paragraph 66H(2)(a),
which provides the additional reason that granting the request would require a
significant adjustment to the employee's hours of work in order for the employee to be
employed as a full-time or part-time employee.
60. This additional ground in paragraph 66H(2)(a) reflects eligibility criteria to request
conversion under paragraph 66F(1)(b), such that if the ground in paragraph 66H(2)(a) is
satisfied then the employee was not actually eligible to make a request under section
66F. However, because the question of whether an employee could continue to work
their regular pattern of hours on an ongoing basis without significant adjustment is a
matter within the particular knowledge of the employer, paragraph 66H(2)(a) is
House of Representatives 13 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
included in the event that an employee requests conversion on a misapprehension that
they were eligible.
61. If an employer refuses a conversion request, the written response must include the
reasons for the refusal (new subsection 66H(3)).
Illustrative example - refusal of request for conversion
Chen works as a casual waiter at the Seashells Beachfront Restaurant. Although Chen has a
full-time job at another restaurant, she enjoys working occasionally for Seashells and the
supplementary income. Within 21 days after the 12 month anniversary of her employment at
Seashells, Chen receives notice that she will not be offered casual conversion as she has not
worked a regular pattern of hours of work in the previous six months.
Shortly after receiving that notice, Chen loses her full-time job and starts working regular
eight hour shifts every Monday to Friday at Seashells, which has been experiencing
increasing demand over the spring and summer period. After working in this manner for six
months, Chen assesses that she is eligible for conversion, in that she has worked a regular
pattern of hours on an ongoing basis which, without significant adjustment, she could
continue to work as a full-time employee. She sends her employer a request to convert to
full-time employment.
Due to the work being seasonally based, Seashells struggles financially each year in the
winter months, when customer patronage significantly decreases. The end of summer has
also coincided with the opening of Healthy Utopia, a nutrition store and café located next
door to Seashells, featuring a seasonal menu, takeaway options and healthy groceries; all
factors which have significantly eroded Seashells' business. Due to these reasons, her
employer can reasonably foresee that Chen's working hours will be significantly reduced in
the following 12 month period.
Within 21 days of receiving Chen's request, the employer meets with Chen to discuss these
circumstances and subsequently responds to Chen's request in writing that her request has
been refused, and outlining the grounds why. However, in order to retain Chen, who is an
efficient and valuable worker, the employer decides it wants to offer her a part-time position
instead outside the Division 4A framework.
Grants of requests
62. New section 66J sets out steps that must be taken by an employer when granting a
request. The requirements regarding providing a notice (subsection 66J(1)), discussing
the matters specified in the notice (subsection 66J(2)) and the timing of the conversion
date (subsection 66J(3)) are broadly the same as those in relation to an employer offer
under section 66E, and are intended to ensure clarity about these key details of
employment following conversion.
63. New subsection 66J(4) clarifies that the notice required in subsection 66J(1) may be
included in the written response to the employee's request. This minimises the
regulatory burden on employers by allowing one notice to be given both granting the
request and specifying the required information.
Fair Work Amendment (Supporting 14 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
Subdivision D--Other provisions
Effect of conversion
64. New section 66K specifies that, on and after the day specified in the written notice
required under subsections 66E(1) or 66J(1), the employee is taken to have been
converted to a full-time or part-time employee for the purposes of the following:
the Act, and any other law of the Commonwealth;
a law of a State or Territory;
any fair work instrument that applies to the employee; and
the employee's contract of employment.
65. This ensures that when a conversion takes effect, the employee's new employment type
(full-time or part-time) will be the same for all purposes. For example, if a request to
convert to full-time employment made under new Division 4A is granted, the employee
will be a full-time employee for the purposes of the Act (including the NES), as well as
any relevant modern award or enterprise agreement and their employment contract.
This means it will not be possible for the employee to become, for instance, a full-time
employee for the purposes of the Act, but to remain a casual employee for the purposes
of a modern award that applies to their employment.
66. The conversion is similarly intended to take effect for all Commonwealth, State and
Territory laws. This section will not alter whether or not a casual, full-time or part-time
employee has any rights or obligations under applicable State or Territory laws, but
merely ensures the employee's employment type is consistent for all purposes.
Other rights and obligations
67. New section 66L sets out certain rights and obligations additional to those already
found in the general protections in Part 3-1 of the Act.
68. An employer cannot vary or reduce an employee's hours of work, or terminate an
employee's employment, in order to avoid any right or obligation under new Division
4A (new subsection 66L(1)). This means an employer cannot deprive an employee of
their new entitlement, for example, by deliberately changing the employee's roster to
defeat the employee's eligibility to receive an offer to convert under section 66B.
69. The note to subsection 66L(1) alerts the reader to the general protections in Part 3-1 of
the Act, which may also prohibit adverse action by an employer against an employee,
including a casual employee, because of their workplace right under the new Division.
70. New subsection 66L(2) provides that nothing in the new Division:
requires an employee to convert to full-time or part-time employment; or
permits an employer to require an employee to convert; or
requires an employer to increase the hours of work of an employee who requests
conversion to full-time or part-time employment under the Division.
71. This clarifies that an employee who does not wish to convert to full-time or part-time
employment (for example because they prefer greater flexibility of work and the
House of Representatives 15 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
payment of a casual loading) can remain employed on a casual basis even if they satisfy
the requirements for an offer to convert. It also makes clear that if an employee does
convert under Division 4A, the employer is not required to provide them with a greater
number of hours of work (for example, an employer of an employee whose pre-
conversion hours were around 20 hours per week is not required to provide that
employee with post-conversion work of 30 hours per week).
Disputes
72. New section 66M provides a procedure that parties must follow to resolve any dispute
that arises about the operation of the new Division, unless another dispute resolution
procedure applies. The FWC must deal with a dispute that is unable to be resolved at
the workplace level. The dispute resolution procedure broadly mirrors dispute
resolution terms of modern awards.
73. Section 66M applies to a dispute between an employer and employee about the
operation of Division 4A (subsection 66M(1)), but not if a term providing a procedure
for dealing with the dispute is included in a fair work instrument that applies to the
employee, the employee's contract of employment, or another written agreement
between the employer and employee (subsection 66M(2)).
74. This means that disputes will ordinarily be dealt with in accordance with existing
dispute resolution processes available to the parties. For example (as highlighted in the
note to subsection 66M(2)), modern awards and enterprise agreements must contain
dispute settlement terms, which would be capable of dealing with any disputes that
arise under the NES (which includes new Division 4A). The dispute resolution
procedure in section 66M will therefore only apply if the employee is award and
agreement-free and does not otherwise have access to a procedure capable of dealing
with a dispute about Division 4A.
75. In the first instance the parties must attempt to resolve the dispute at the workplace
level by discussion (subsection 66M(3)), which could include discussion between an
employee and their supervisor, or more senior levels of management if appropriate.
This obliges both the employer and employee to attempt an agreed resolution of the
dispute.
76. If discussions at the workplace level do not resolve the dispute, a party may refer the
dispute to the FWC (subsection 66M(4)). New paragraph 66M(5) requires the FWC to
deal with a dispute so referred to it, and may arbitrate the dispute if the parties notify
the FWC of their agreement to arbitration. The note refers readers to subsection 595(2)
which sets out ways in which the FWC may deal with disputes (such as by mediation,
conciliation, making a recommendation or expressing an opinion).
77. In accordance with section 595, subsection 66M(5) authorises the FWC to deal with
disputes about the operation of Division 4A. The FWC's power to arbitrate only with
the parties' consent is consistent with dispute settlement terms of modern awards.
78. Either party to the dispute may appoint a person or industrial association to provide
them with support or representation for the purposes of resolving, or having the FWC
deal with, the dispute (subsection 66M(6)). A representative may provide such support
Fair Work Amendment (Supporting 16 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
or representation when the dispute is dealt with at the workplace level or by the FWC.
However, this is subject to section 596 of the Act, which provides that a person may be
represented in a matter before the FWC by a lawyer or paid agent only with the FWC's
permission (see note).
Item 4 - Division 12 of Part 2-2 (heading)
Item 5 - At the end of Division 12
79. Item 5 inserts new section 125A at the end of Division 12 in Part 2-2, requiring the Fair
Work Ombudsman (FWO) to prepare and publish a Casual Employment Information
Statement (Statement), which employers must provide to new casual employees. Item 4
consequentially amends that Division's heading to reflect this change.
80. The FWO must prepare the Statement and publish it in the Gazette (subsection
125A(1)). The note observes that any changes to the Statement must be published as a
new version in the Gazette.
81. New subsection 125A(2) provides that the Statement must contain information about
casual employment and offers and requests for casual conversion under Division 4A of
Part 2-2, including:
the meaning of 'casual employee' under section 15A;
an employer offer for casual conversion must generally be made to certain casual
employees within 21 days after the employee has completed 12 months of
employment;
an employer can decide not to make an offer for casual conversion if there are
reasonable grounds to do so, but the employer must notify the employee of these
grounds;
certain casual employees will have a residual right to request casual conversion;
and
the FWC may deal with disputes about the operation of that Division.
82. This list is not exhaustive and the FWO may decide to include other information about
casual employment and conversion in the Statement, including information about
transitional arrangements.
83. New subsection 125A(3) makes clear that the Statement is not a legislative instrument
(within the meaning of section 8 of the Legislation Act 2003).
84. Matters relating to the content and form of the Statement, or the manner in which
employers may give the statement, may be prescribed by regulation
(subsection 125A(4)).
85. Item 5 also inserts new section 125B, outlining when an employer must provide an
employee with the Statement. An employer must give each casual employee this
Statement before, or as soon as practicable after, the employee starts employment as a
casual employee with the employer (subsection 125B(1)).
86. This requirement ensures that employees are aware of their casual employment status
and consequential rights and entitlements, including casual conversion. An employer
House of Representatives 17 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
may provide an employee with this Statement together with the Fair Work Information
Statement (as required by section 125 of the Act). An employer is not required to give
an employee the Statement more than once in any 12 month period (subsection
125B(2)). The note explains that this clarification is relevant if the employer employs
the employee for multiple engagements in the space of 12 months. This may be the case
for irregular and intermittent casual engagements under separate employment contracts
over a period.
Item 6 - After section 545
87. Item 6 inserts new section 545A, which sets out a statutory rule for offsetting amounts
payable by an employer to a person for relevant entitlements by the amount of a casual
loading previously paid by the employer to compensate the person for not having those
entitlements.
88. The statutory offset rule is intended to apply in circumstances where a person has been
employed and paid on the understanding they were a casual employee, but is later
found not to be a casual employee and a claim is made for amounts for entitlements
casual employees do not receive (as occurred in Rossato). When making orders in
relation to such a claim, a court must reduce any amounts payable by the employer for
relevant entitlements against casual loading amounts paid to the person. This is
intended to achieve a balance between ensuring that employees are appropriately
classified and receive their correct entitlements, and that employers do not have to
effectively pay for such entitlements twice.
89. Many enterprise agreements and modern awards provide that a casual employee is one
who is engaged and paid as such, or a similar 'designation' approach (see Telum Civil
(Qld) v Construction, Forestry, Mining and Energy Union [2013] FWCFB 2434).
Employers have relied on this long-standing industrial practice and the accompanying
payment of a casual loading (as provided for in such instruments) when employing
casual employees. The Full Federal Court concluded in Rossato (as it did in Skene)
that, despite the parties indicating at the outset of their relationship that the employee
was a casual employee, it does not necessarily follow that the employee should be so
characterised. This has resulted in a risk that a significant number of employers and
employees have been left in a precarious position of uncertainty as to their rights and
obligations. This is particularly so where the Full Court in Rossato and Skene endorsed
an approach where determination of a casual employment relationship could be
assessed by reference to the totality of the circumstances at some point during or at the
end of the relationship.
90. The Attorney-General's Department has conducted an analysis of enterprise agreements
and modern awards that indicates these 'designation' terms for identifying casual
employment and the incidence of provision for payment of a casual loading is
widespread. Indeed, 77 per cent of enterprise agreements the Department analysed
(which cover over 140,000 casual employees) used a designation approach for casual
employment. Further, 88 per cent of a possible 121 modern awards analysed by the
Department adopted the designation approach. Of the enterprise agreements and
modern awards that were analysed, over 95 per cent provided for a casual loading.
Fair Work Amendment (Supporting 18 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
91. As a result, the Department has estimated that widespread reliance on these terms
means that employers who have paid employees a casual loading in the mistaken belief
they are casual could be liable to pay those employees up to approximately $18 billion
to $39 billion (over a six year period) for entitlements casual employees do not get.
92. The likely widespread mistakes by employers and employees, and associated
consequences and costs, give rise to the genuine need for legislation to affect the
adjustment of their rights, claims and obligations. Without these amendments,
employers would need (on a case by case basis) to litigate any possibly available
restitution claims in order for courts to conclusively determine liabilities outstanding to
employees who have already been paid a casual loading.
93. These provisions, in conjunction with the new statutory definition and conversion
mechanism in new Division 4A, will address the issue of widespread reliance on a
mistaken belief about the nature of their casual employment relationships, and form
part of a broad overall adjustment of relations between employers and employees.
Without these amendments, significant costly and time-intensive court processes would
be needed to determine the appropriate rights and obligations of employers and
employees in these situations. This will impose significant burdens on both employers
and employees.
94. Section 545A applies if:
a person is employed by an employer in circumstances where the employment is
described as casual employment (paragraph 545A(1)(a)); and
the employer pays the person an identifiable amount (the loading amount) to
compensate the person for not having one or more relevant entitlements (as
defined in subsection 545A(4)) during a period (the employment period)
(paragraph 545A(1)(b)); and
during that period, the person was not a casual employee (paragraph 545A(1)(c));
and
the person (or another person for the benefit of the person) makes a claim to be
paid an amount for one or more of those entitlements with respect to the
employment period (paragraph 545A(1)(d)).
95. New paragraph 545A(1)(a) means the statutory offset will only apply if a person has
been employed in circumstances where their employment is described as casual
employment. The terms of the employment contract or other evidence of agreement
between the parties may contain a description of the person's employment. After
commencement of these amendments, the new statutory definition of casual employee
will provide further guidance as to whether the person is employed as a casual.
96. The loading amount in new paragraph 545A(1)(b) must be an identifiable amount paid
as compensation for the absence of the relevant entitlements during the employment
period. This may be the case, for example, where a modern award or enterprise
agreement, or an employment contract, provides for a clearly identifiable casual
loading. This would not include circumstances where an employee is paid a flat hourly
rate and it is not clear from the terms of the applicable instrument whether that rate
House of Representatives 19 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
includes a casual loading. The instrument does not need to state precisely which
entitlements the loading is compensating for, but it must identify an amount that is paid
to compensate a casual employee for the absence of one or more of the relevant
entitlements.
97. New paragraph 545A(1)(c) requires that the person was not a casual employee during
the employment period. That is, the basis on which the employee was employed and
therefore paid the loading amount did not reflect their status at law.
98. The statutory offset will only be available where the person, or another person for the
benefit of the person, has made a claim for an amount for one or more of the relevant
entitlements (paragraph 545A(1)(d)). This recognises that a claim may be brought by a
person other than the person who was paid the loading amount. The note to subsection
545A(1) states that this could include an inspector or an employee organisation.
99. New subsection 545A(2) requires a court, when making orders in relation to the claim,
to reduce any amount payable by the employer for the relevant entitlements (the claim
amount) by an amount equal to the loading amount, but not below nil. The requirement
that the claim amount cannot be reduced below nil makes explicitly clear that an
employee cannot be required to make a positive payment to the employer as a result of
this provision. The note to subsection 545A(2) refers readers to the availability of the
small claims procedure in section 548, in relation to claims below a certain amount.
100. New subsection 545A(3) provides that despite subsection 545A(2), the court may
reduce the claim amount by an amount equal to a proportion of the loading amount the
court considers appropriate, having regard only to the factors listed in paragraphs
545A(3)(a) to (c). This assessment of proportionality is intended to provide fairness
between the parties in the adjustment of their rights, claims and obligations.
101. The only factors to which the court may have regard in determining the proportionate
reduction in the claim amount are:
if a term of the fair work instrument or contract of employment under which the
loading amount is paid specifies the relevant entitlements the loading amount is
compensating for and specifies the proportion of the loading amount attributable
to each such entitlement - that term (including those proportions); or
if such a term specifies the relevant entitlements the loading amount is
compensating for but does not specify the proportion of the loading amount
attributable to each such entitlement - that term, and what would be an
appropriate proportion of the loading amount attributable to each of those
entitlements in all the circumstances; or
if paragraph (a) or (b) does not apply - the entitlements referred to in subsection
545A(4) and what would be an appropriate proportion of the loading amount
attributable to each of those entitlements in all the circumstances.
102. For example, if an enterprise agreement that applied to the person stipulated that casual
employees are to be paid a loading of 25 per cent, and attributed proportions of that
loading to specific entitlements, the court must have regard to those proportions under
paragraph 545A(3)(a) in determining the proportionate reduction of the claim amount.
Fair Work Amendment (Supporting 20 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
103. The chapeau to subsection 545A(3) makes clear that the proportion of reduction may be
nil. The court may determine that the appropriate amount by which to reduce the claim
amount is nil (no reduction in the claim amount). However, such an assessment must be
consistent with the strict requirements of paragraphs 545A(3)(a) to (c). For example, if
the person's contract of employment specifies they were to be paid a loading of 25 per
cent instead of paid annual leave and personal/carer's leave, but the claim amount is for
payment in relation to absence on a public holiday and redundancy pay, it would be
appropriate for the court not to offset the claimed amount at all because the loading was
not provided as compensation for absence of the claimed entitlements.
104. New subsection 545A(4) specifies that a relevant entitlement refers to an entitlement
under the NES, a fair work instrument or contract of employment to any of the
following:
paid annual leave;
paid personal/carer's leave;
paid compassionate leave;
payment for absence on a public holiday;
payment in lieu of notice of termination;
redundancy pay.
105. The entitlements listed at subsection 545A(4) are those that casual employees do not
receive under the NES, and for which a casual loading - usually 25 per cent - has
historically been paid as compensation for under the terms of industrial instruments.
While there is no definitive formula setting out what any particular casual loading
compensates for, general principles have been established in a number of tribunal
decisions.
106. In Re Metal, Engineering & Associated Industries Award (2000) 110 IR 247 (the
Metals Casuals Decision), the Australian Industrial Relations Commission (AIRC)
determined that the rationale for the casual loading (and calculation of components)
should reflect the safety net of benefits applicable to full-time employees but not
applicable to casuals, even though not all could be precisely quantified. The AIRC
decided to vary the relevant award to increase the casual loading to 25 per cent, payable
as compensation for paid leave (annual and sick leave, public holidays, and long service
leave) and a component for notice of termination, severance pay and the itinerant
effects of casual employment.
107. In its 2008 Award Modernisation decision [2008] AIRCFB 1000, the AIRC Full Bench
standardised the casual loading at 25 per cent, consistent with the Metals Casuals
Decision. The Full Bench considered that the 25 per cent loading was sufficiently
common to qualify as a minimum standard and that it included compensation for annual
leave, but did not address the proportionate value of its components.
108. Long service leave is not included as a relevant entitlement as defined in new
subsection 545A(4), as many casual employees are entitled to long service leave in
accordance with applicable State and Territory laws in this area.
House of Representatives 21 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
109. New subsection 545(5) provides, for avoidance of doubt, that a relevant entitlement
includes any such entitlement that has accrued but is untaken (for example, accrued
annual leave that has not been taken but becomes payable on termination under
subsection 90(2)).
PART 2 - OTHER AMENDMENTS
Amendments to the Fair Work Act 2009
Item 7 - Section 12 (definition of long term casual)
Item 8 - Section 12
Item 9 - Paragraph 23(2)(b)
Item 11 - Subparagraph 65(2)(b)(i)
Item 14 - Paragraph 67(2)(a)
Item 22 - Subparagraph 384(2)(a)(i)
110. These items amend the Act to make consequential amendments, including:
repealing the definition of 'long term casual' in section 12 and insert the new
definition of 'regular casual employee'; and
clarifying how conversion to full-time or part-time employment affects eligibility
for, and the calculation of, other NES entitlements.
111. Items 7 and 8 repeal the definition of 'long term casual' and insert a new definition of
'regular casual employee'. The purpose of these amendments is to ensure references to
casual employees throughout the Act are more consistent and therefore easier to
understand and apply. These amendments do not change any entitlements or obligations
relating to long term casual employees or casual employees who have been employed
on a regular and systematic basis, but only affect signpost labels used throughout the
Act.
112. A national system employee of a national system employer is defined in section 12 as a
'regular casual employee' at a particular time, if at that time the employee is a casual
employee who has been employed by the employer on a regular and systematic basis.
113. The definition of regular casual employee incorporates the criterion of employment on
a regular and systematic basis from the repealed definition of 'long term casual', but it
does not include the timeframe of 12 months. This is because while some provisions in
the Act relevant to casual employees who have been employed by their employer on a
regular and systematic basis include a 12 month time frame, other provisions require a
reduced time frame or no timeframe at all. The new definition provides a consistent
meaning of 'regular casual employee' throughout the Act to refer to those who perform
work on a regular and systematic basis, with any particular time frames included in the
provisions to which they are relevant.
114. For this purpose, items 9, 11, 14 and 22 vary relevant existing provisions of the Act to
replace references to 'long term casual employee', or to an employee who performs
Fair Work Amendment (Supporting 22 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
work on a regular and systematic basis, with the new defined term 'regular casual
employee' and any relevant time frames. This includes:
paragraph 23(2)(b) - when a casual employee is to be counted as an employee of
the employer for the purpose of determining whether the employer is a small
business employer (item 9);
subparagraph 65(2)(b)(i) - when a casual employee is eligible to request flexible
working arrangements (item 11);
paragraph 67(2)(a) - when a casual employee is entitled to take unpaid parental
leave (item 14); and
subparagraph 384(2)(a)(i) - when casual employment counts towards periods of
employment for the purpose of protection from unfair dismissal (item 22).
115. The requirement for a casual employee to have been employed for 12 months in the
repealed definition of long term casual is incorporated into two provisions that
previously used that term (subparagraph 65(2)(b)(i) and paragraph 67(2)(a)).
Item 10 - After paragraph 61(2)(b)
116. Subsection 61(2) of the Act lists the minimum standards that comprise the NES. Item
10 is consequential on new casual conversion provisions in new Division 4A, and
introduces new paragraph 61(2)(ba), which refers to offers and requests for casual
conversion in new Division 4A, to that list.
Item 12 - After subsection 65(2)
Item 13 - After subsection 67(1)
117. These amendments ensure that employees who have converted to full-time or part-time
employment under new Division 4A are not disadvantaged by such conversion for the
purpose of eligibility to request flexible working arrangements or for parental leave by
ensuring that periods of service as a regular casual employee count for the purposes of
'continuous service' for these entitlements.
118. Subsection 65(2) of the Act sets out the categories of employees who are entitled to
request flexible working arrangements under Division 4 of Part 2-2 of the Act.
Paragraph 65(2)(a) provides an employee who is not a casual employee may only
request flexible working arrangements after having completed at least 12 months of
continuous service. Item 12 inserts new subsection 65(2A), which enables an employee
who has converted to full-time or part-time employment under new Division 4A to
count the time they were a regular casual employee as continuous service for this
purpose.
119. The amendment made by item 12 ensures that such conversion does not break an
employee's period of continuous service for the purposes of their eligibility to request
flexible working arrangements, and that certain periods of pre-conversion service are to
be counted. The employee will still be required to satisfy criteria in subsection 65(1)
and comply with formal requirements for making a request under subsection 65(3).
120. Section 67 sets out the general rule for when an employee is entitled to parental leave
and related entitlements under Division 5 of Part 2-2 of the Act. Subsection 67(1)
House of Representatives 23 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
provides that an employee who is not a casual employee is not entitled to leave under
that Division (other than unpaid pre-adoption leave or unpaid no safe job leave) unless
the employee has completed at least 12 months' continuous service immediately before
the relevant date specified in subsection 67(3). Item 13 inserts new subsection 67(1A),
which enables an employee who has converted to full-time or part-time employment
under new Division 4A to count the time they were a regular casual employee as
continuous service for this purpose.
121. The effect of this amendment (like the amendment made by item 12) is that conversion
to full-time or part-time employment does not break an employee's period of
continuous service for the purposes of their eligibility to take unpaid parental leave, and
that certain periods of pre-conversion service are to be counted. This ensures that an
employee will not lose an entitlement to unpaid parental leave as a result of conversion
to full-time or part-time employment.
Item 15 - Subsection 87(1)
Item 16 - Subsection 87(2)
122. Division 6 of Part 2-2 of the Act relates to annual leave. Section 86 provides that the
Division applies to employees 'other than casual employees'. In other words, casual
employees are not entitled to accrue, take or be paid for annual leave. Section 87
provides that for each year of service, an employee is entitled to four weeks of annual
leave (or five weeks for shiftworkers).
123. For the avoidance of doubt, items 15 and 16 amend subsections 87(1) and (2) to
confirm that references to a year of service in those provisions do not include periods of
employment as a casual employee of the employer. In other words, these items provide
further clarity, consistent with section 86, that periods of casual employment prior to
conversion to full-time or part-time employment do not count towards a full-time or
part-time employee's accrual of annual leave entitlements, post-conversion.
Item 17 - Subsection 96(1)
Item 18 - Subsection 96(2)
124. Subdivision A of Division 7 of Part 2-2 of the Act relates to paid personal/carer's leave.
Section 95 provides that the Subdivision applies to employees 'other than casual
employees'. In other words, casual employees are not entitled to accrue, take or be paid
for paid personal/carer's leave. Section 96 provides that for each year of service, an
employee is entitled to 10 days of personal/carer's leave.
125. The purpose of items 17 and 18 is the same as for items 15 and 16. For the avoidance of
doubt, items 17 and 18 amend subsections 96(1) and (2) of the Act to confirm that
references to a year of service in those subsections do not include periods of
employment as a casual employee of the employer prior to conversion.
Fair Work Amendment (Supporting 24 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 1 - Casual employment
Item 19 - At the end of section 117
Item 20 - At the end of section 119
Item 21 - Paragraph 121(1)(a)
126. Division 11 of Part 2-2 of the Act relates to notice of termination and redundancy pay,
which rely on periods of continuous service with an employer for calculation of the
relevant entitlement. Paragraph 123(1)(c) of the Act provides that the Division does not
apply to casual employees. In other words, casual employees are not entitled to notice
of termination and redundancy pay under the Division.
127. The purpose of items 19, 20 and 21 is the same as for items 15 to 18 above. For the
avoidance of doubt, items 19, 20 and 21 amend sections 117 and 119, and paragraph
121(1)(a), to confirm that references to a period of continuous service do not include
periods of employment as a casual employee of the employer prior to conversion.
House of Representatives 25 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
SCHEDULE 2 - MODERN AWARDS
Overview
128. Part 1 of Schedule 2 amends the Act to insert new Division 9 into Part 2-3 of the Act.
New Division 9:
contains facilitative provisions for eligible part-time employees and their
employers to agree to work additional agreed hours at ordinary time rates as an
alternative to entering into an arrangement under the existing terms of their
identified modern award;
provides for provisions of Division 9 to operate as terms of a relevant identified
modern award (allowing them to be enforced as award terms, with disputes to be
resolved in accordance with the dispute settlement terms of the award); and
provides the FWC with power to vary existing terms of an identified modern
award to resolve uncertainty or difficulty, or to ensure the effective operation of
the award with the new Division 9 provisions.
129. Part 2 of Schedule 2 amends the Act to insert new Part 6-4D for a temporary period of
2 years. New Part 6-4D:
enables employers to whom an identified modern award applies to issue 'flexible
work directions' to their employees relating to duties and location of work; and
provides for provisions of Part 6-4D to operate as terms of a relevant identified
modern award.
PART 1 - ADDITIONAL HOURS FOR PART-TIME EMPLOYEES
Amendments to the Fair Work Act 2009
Item 1: Section 12
Item 2: Section 132
Item 3: After paragraph 136(1)(b)
Item 4: At the end of Subdivision B of Division 5 of Part 2-3
Item 5: At the end of Part 2-3
Item 6: After paragraph 344(c)
130. These items amend the Act to support increased flexibility in part-time employment,
and make related changes.
131. Item 5 inserts new Division 9 of Part 2-3, which supplements existing award flexibility
arrangements in 12 specified modern awards (called 'identified modern awards') by
providing a new mechanism for employers and eligible part-time employees to agree to
additional hours of work at ordinary time rates of pay. These provisions will operate as
terms of relevant awards and cannot be varied or revoked (see new paragraph
136(1)(ba) and notes to new section 168S).
132. Item 2 consequentially amends section 132 (the Guide to Part 2-3), and item 3 amends
section 136 (terms that may be included in modern awards) to reflect this mechanism.
Fair Work Amendment (Supporting 26 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
To ensure the effective integration of part time flexibilities introduced by new Division
9 with existing award terms, item 4 inserts new section 161A, which enables the FWC
to vary an award to resolve an uncertainty or difficulty relating to the interaction of
award terms with Division 9, or make the award operate effectively with those
provisions.
133. Subdivision A of new Division 9 deals with conditions for entering into a 'simplified
additional hours agreement' (item 1 inserts a signpost in the Dictionary at section 12 to
this definition), and the effect of such an agreement. An employer and employee can
enter into a simplified additional hours agreement for the employee to work 'additional
agreed hours' (see item 1) at ordinary time rates if the following conditions are met
(new subsection 168M(1)). An identified modern award (called the 'relevant identified
modern award' - see item 1) must apply to the employer and employee. The note to
subsection 168M(1) refers readers to section 47 of the Act, which sets out when a
modern award applies to an employee and employer.
134. An employee must be employed as a part-time employee under the modern award and
the employee's ordinary hours of work must be at least 16 hours per week, or at least
16 hours per week averaged over a period (such as a roster cycle), if the modern award
provides for such an averaging arrangement.
135. A modern award may include terms specifying or providing for the determination of
ordinary hours of work (section 147) (for example, the regular pattern of hours agreed
on engagement) and for averaging ordinary hours.
136. An employer must not require an employee to enter into a simplified additional hours
agreement (new subsection 168M(2)). This operates as a term of a modern award
(subsection 168S(1)), and the prohibition against contravention of a modern award is a
civil remedy provision under Part 4-1 of the Act.
137. The notes observe that entering or not entering into a simplified additional hours
agreement is a workplace right for the purposes of the general protections in Part 3-1 of
the Act (see section 168T), and section 344 of the Act prohibits the exertion of undue
influence or pressure on an employee to enter into a simplified additional hours
agreement (see item 6).
138. New paragraphs 168M(3)(a)-(l) provide that 'identified modern award' means the
following modern awards, as in force from time to time:
the Business Equipment Award 2020;
the Commercial Sales Award 2020;
the Fast Food Industry Award 2010;
the General Retail Industry Award 2020;
the Hospitality Industry (General) Award 2020;
the Meat Industry Award 2020;
the Nursery Award 2020;
the Pharmacy Industry Award 2020;
the Restaurant Industry Award 2020;
House of Representatives 27 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
the Registered and Licensed Clubs Award 2010;
the Seafood Processing Award 2020;
the Vehicle Repair, Services and Retail Award 2020.
139. Item 1 inserts a signpost in the Dictionary (section 12) to this definition.
140. The inclusion of 'in force from time to time' would ensure that variations made to
identified modern awards by the FWC, including variations to the terms of the award
and variations to the name of the award, will be captured.
141. New paragraph 168M(3)(m) and subsection 168M(4) enable the Minister to make
regulations prescribing whether a modern award is, or is not, an identified modern
award. This is necessary to effectively adapt this framework to changing circumstances,
which may warrant the inclusion or exclusion of a particular award. This could occur,
for example, if the FWC were to remake one of the identified modern awards with
different coverage from current arrangements. Any regulation made under this power
would be subject to disallowance as set out in the Legislation Act 2003.
142. New subsection 168M(5) makes clear that Subdivision A does not prevent employers
and employees from utilising current arrangements, under which they may agree to an
employee working additional hours consistent with any terms of an identified modern
award that permits this (for example, terms that permit a part-time employee to vary
their regular pattern of hours in relation to a particular rostered shift).
143. However, where an employee and employer do decide to enter into a simplified
additional hours agreement, the provisions in new Subdivision A of Division 9 prevail
over other identified modern award terms to the extent of any inconsistency (new
subsection 168M(6)).
Process for simplified additional hours agreement
144. New section 168N establishes the process for entering into a simplified additional hours
agreement. A simplified additional hours agreement must identify additional agreed
hours to be worked on one or more days (paragraph 168N(1)(a)), and must be entered
into before the start of the first such period of those hours (paragraph 168N(1)(b)).
These agreements may apply to a single day, or identify additional hours to be worked
on a future day or days, including on multiple separate occasions.
145. The employer must inform the employee that the agreement is a simplified additional
hours agreement before entering into it (paragraph 168N(2)(a)). This distinguishes
these agreements from other forms of agreement permitted by some modern awards.
146. New paragraphs 168N(2)(b) and (c) require that:
if the simplified additional hours agreement is not in writing, the employer must
make a written record of the agreement that has been entered into, before the
employee finishes working the first period of additional agreed hours; and
the employer keep a copy of the simplified additional hours agreement or record,
and provide a copy to the employee if requested.
147. A written record need not be formal, and may be electronic (such as an email).
Fair Work Amendment (Supporting 28 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
148. A simplified additional hours agreement has no effect if the employer fails to comply
with these requirements (subsection 168N(3)).
149. New subsection 168N(4) clarifies that additional agreed hours may include part hours
(e.g. half an hour), subject to subsection 168P(1), which requires additional agreed
hours to be, or be part of, a period of continuous work of at least 3 hours.
150. New subsections 168N(5) and (6) provide that an employer may only enter into a
simplified additional hours agreement with an employee under 18 years of age if the
employee's parent or guardian has consented in writing (subsection 168N(5)). This
aligns with existing safeguards around similar award-based processes, such as
agreements to enter into individual flexibility arrangements. Parental or guardian
consent has effect until withdrawn (subsection 168N(6)).
Requirements for simplified additional hours agreements
151. Simplified additional hours agreements are subject to minimum engagement of a
continuous period of at least three hours, or part of a period of continuous work of at
least three hours (subsection 168P(1)). This reflects a common minimum shift standard
in most of the identified modern awards. The note to subsection 168P(1) provides an
example of a period of one hour of additional agreed hour of work after the end of a
two hour shift as a period of continuous work of at least three hours. A period may still
be 'continuous' under subsection 168P(1) regardless of whether a meal break or other
break required by the identified modern award takes place during that period
(subsection 168P(2)).
152. Modern awards contain terms that limit the maximum number of consecutive days an
employee may be required to work, or that require an employee not to work on a day.
In some cases, these are strict limitations that cannot be varied or displaced. New
subsection 168P(3) ensures that such limitations cannot be circumvented by a
simplified additional hours agreement.
153. For example, a provision of an identified modern award that requires an employee to
work no more than 6 consecutive days, without exceptions, would prevent additional
agreed hours being worked in contravention of that requirement. However, a provision
of an identified modern award that prevents an employee working outside certain hours
unless the employee agrees to do so would not prevent additional agreed hours being
worked outside those hours.
Effect of simplified additional hours agreement
154. New subsection 168Q(1) gives legal effect to simplified additional hours agreements by
providing that additional agreed hours under a simplified additional hours agreement
may be worked subject to any modern award requirement for the employee to take a
break after a certain period of work.
155. Additional agreed hours are to be paid without overtime (subsection 168Q(2)).
However, new subsection 168Q(3) provides exceptions in certain circumstances.
156. Subsection 168Q(3) provides that overtime is payable in respect of agreed additional
hours where these hours result in the employee working outside the span or spread of
House of Representatives 29 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
hours, for which the relevant identified modern award requires any part-time employee
to be paid overtime (paragraph 168Q(3)(a)).
157. A span or spread of hours is a period set by the modern award that applies generally, or
to a particular category of employee (such as day workers). For example, clause 15.1 of
the General Retail Industry Award 2020 provides that the span of ordinary hours on
Monday to Friday is 7:00 am to 9:00 pm, and clause 21.2 provides that an employer
must pay an employee overtime for any hours worked outside of this span.
158. Subsection 168Q(3) also provides that overtime is payable in respect of agreed
additional hours where an employee's ordinary hours, together with other hours worked
by the employee, result in the employee working more than the maximum number of
hours specified in the relevant identified modern award that any part-time employee
may work in a day without being paid overtime (subparagraph 168Q(3)(b)(i)). For
example, clause 26.2(a)(iii) of the Fast Food Industry Award 2010 requires a part-time
employee to be paid overtime for all work in excess of 11 hours on any one day.
159. New subparagraphs 168Q(3)(b)(ii) and (iii) further provide that overtime is payable in
respect of agreed additional hours where an employee's ordinary hours, together with
other hours worked by the employee, result in the employee working more than 38
hours in a week (or averaged over a period, as provided for by the identified modern
award). For the purposes of paragraph 168Q(3)(b) other hours worked by the employee
include additional hours, but not hours that attract overtime payments.
160. New paragraph 168Q(3)(c) permits the Minister to prescribe by regulation additional
circumstances where overtime is payable in respect of additional agreed hours. There is
considerable variation in awards as to the types of payments that are expressed to be in
the nature of overtime payments and the circumstances in which overtime is paid. This
regulation-making power operates as an appropriate safeguard for employees to ensure
that additional circumstances that attract overtime payments in respect of additional
agreed hours can be prescribed. However, the regulations could not reduce the
availability of overtime payments.
161. Additional agreed hours are to be treated as ordinary hours for certain purposes. New
subsection 168Q(4) provides that, except for additional agreed hours worked in
situations where overtime is payable under new subsection 168Q(3), additional agreed
hours are to be treated as ordinary hours of work for the purposes of:
paying penalty rates that apply to ordinary hours of work;
accruing and taking annual leave and paid personal/carer's leave under the Act;
the definition of ordinary time earnings in subsection 6(1) of the Superannuation
Guarantee (Administration) Act 1992; and
any purposes prescribed by the regulations.
162. This ensures that employees working agreed additional hours have the benefit of these
entitlements that apply to ordinary hours of work.
163. Additional agreed hours may be treated as ordinary hours of work for any other
purposes prescribed by the regulations (paragraph 168Q(4)(e)). This is necessary
Fair Work Amendment (Supporting 30 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
because there is considerable variation across modern awards as to the types of hours
particular entitlements are expressed to attach to. Further, award entitlements can be
expected to change over time. If further purposes are identified for which additional
agreed hours are to be treated as ordinary hours, they can be prescribed.
Illustrative example - span of hours
Meg is a part-time employee who works at a large department store. The General Retail
Industry Award 2020 provides that the span of ordinary hours on Monday to Friday is
between 7:00 am and 9:00 pm. Coming into Christmas, Meg enters into a simplified
additional hours agreement to work an additional shift on Thursday nights from 5:00 pm until
10:00 pm for a 6 week period. The store closes at 9:00 pm but Meg helps to replenish stock
for the next day's trading for an hour after trading ceases.
Meg's additional hours will mean that she works one hour each Thursday outside the set span
of ordinary hours provided under her award. As such, she will be paid at overtime rates for
the additional one hour between 9:00 pm and 10:00 pm each Thursday.
Other payments not affected
164. Notwithstanding subsection 168Q(2), an employee must be remunerated for any
additional pay (other than overtime) required by an identified modern award when
working additional agreed hours (subsection 168Q(5)). Such additional amounts
include (but are not limited to) penalty rates, incentive-based payments and bonuses,
loadings and monetary allowances.
Terminating a simplified additional hours agreement
165. New section 168R establishes a process for terminating simplified additional hours
agreements. An employee or employer may terminate a simplified additional hours
agreement by giving at least 7 days written notice of the termination date (paragraph
168R(1)(a)). An employer and employee may also terminate the agreement at any time
without notice, if they agree in writing to the termination (paragraph 168R(1)(b)).
166. New subsection 168R(2) requires the employer to keep a copy of the notice or
agreement to terminate a simplified additional hours agreement, and provide a copy to
the employee if requested.
167. The notes observe that terminating or not terminating a simplified additional hours
agreement is a workplace right for the purposes of the general protections in Part 3-1 of
the Act (see section 168T), and section 344 of the Act prohibits the exertion of undue
influence or pressure on an employee to terminate, or not terminate a simplified
additional hours agreement (see item 6).
Other provisions
168. New subsection 168S(1) provides that each provision in Subdivision A of Division 9
(other than subsections 168M(3) and (4), which specify the identified modern awards
covered by the provisions) is taken to be a term of an identified modern award. This
means that those terms will be relevant for the purposes of the BOOT. The note
highlights that a person must not contravene a term of a modern award.
House of Representatives 31 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
169. The FWC must not vary or revoke a term of an identified modern award mentioned in
new subsection 168S(1) (subsection 168S(2)).
170. Disputes relating to the interaction between an existing term of an identified modern
award and a provision taken to be a term of an identified modern award under
subsection 168S(1), or arising as a result of the operation of such a provision, may be
resolved in accordance with dispute settlement terms of identified modern awards
(subsection 168S(3)).
171. To avoid doubt, new subsection 168S(4) confirms that provisions taken to be a term of
an identified modern award under subsection 168S(1) operate subject to the National
Employment Standards (Part 2-2).
172. Employees are free to choose whether or not to enter into a simplified additional hours
agreement. To avoid doubt, subsection 168T confirms that entering or not entering into
and terminating or not terminating a simplified additional hours agreement are
workplace rights within the meaning of Part 3-1 of the Act (general protections).
173. Item 6 inserts paragraph 344(ca) into section 344 to provide that an employer must not
exert undue influence or pressure on an employee in relation to a decision by the
employee to enter into or not enter into, or terminate or not terminate a simplified
additional hours agreement.
PART 2 - FLEXIBLE WORK DIRECTIONS
Amendments to the Fair Work Act 2009
Item 7 - Before paragraph 136(1)(c)
Item 8 - After Part 6-4C
174. Item 7 inserts new paragraph 136(1)(bb) with the effect that modern awards may
include terms permitted or required by new Part 6-4D. This amendment is
consequential on new subsection 789GZO, which deems certain provisions of new
Part 6-4D to be terms of each of the identified modern awards.
175. Item 8 inserts new Part 6-4D, which deems identified modern awards to include terms
that enable employers to direct their employees about duties to be performed, and the
location of their work.
Guide to Part 6-4D
176. New section 789GZC is a Guide to Part 6-4D.
177. Part 6-4D provides for identified modern awards to include terms that allow an
employer to give a direction to their employee about the duties to be performed by the
employee, as well as the location of the employee's work.
178. The Guide also notes that the FWC may deal with disputes about the operation of Part
6-4D via existing dispute resolution terms in modern awards.
Fair Work Amendment (Supporting 32 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
Application
179. New Part 6-4D applies in relation to employers and employees to whom an identified
modern award applies (section 789GZD). Note 1 refers readers to section 47 of the Act,
which provides that a modern award applies to an employee and employer if the
modern award covers the employee and employer, is in operation, and no other
provision prevents its application. Note 2 to new section 798GZD refers readers to the
definition of 'identified modern award' in subsections 168M(2) and (3) as inserted by
item 5 of Part 1 of Schedule 2 to the Bill.
Definitions
180. Section 789GZE provides definitions for Part 6-4D as follows:
employee and employer - these are references to the definitions of national
system employee and national system employer (see sections 13, 14, 30C, 30D,
30M and 30N of the Act);
flexible work direction - which means a flexible work duties direction or a
flexible work location direction;
flexible work duties direction - which means a direction referred to in section
789GZG;
flexible work location direction - which means a direction referred to in section
789GZH; and
licence - which includes a registration and a permit.
Flexible work directions
181. Division 2 prevails over an inconsistent provision of an identified modern award to the
extent of any inconsistency (section 789GZF).
182. New section 789GZG establishes prerequisites for an employer to be able to direct an
employee to perform any duties during a period that are within their skill and
competency (a 'flexible work duties direction'). A flexible work duties direction may
be given if:
the duties are safe having regard (without limitation) to the nature and spread of
COVID-19;
the employee is licensed and qualified to perform the duties (if a licence or
qualification is required); and
the duties are reasonably within scope of the employer's business operations.
183. New section 789GZH establishes prerequisites for an employer to be able to direct an
employee to perform duties during a period at a place (including the employee's home)
that is different from the employee's normal workplace (a 'flexible work location
direction'). The flexible work location direction may be given if:
the place is suitable for the employee's duties;
if the place is not the employee's home - it does not require the employee to
travel a distance that is unreasonable in all the circumstances (including those
surrounding the COVID-19 pandemic); and
House of Representatives 33 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
performance of the employee's duties at the place is safe (having regard, without
limitation, to the nature and spread of COVID-19), and is reasonably within scope
of the employer's business operations.
184. A direction given by an employer is effective until withdrawn or revoked by the
employer, or replaced by a new direction given to the employee by the employer (new
section 789GZI). The duration of a direction is subject to any order made by the FWC
concerning a flexible work direction (new subsection 789GZI(2)). A flexible work
direction ceases to have effect when the provisions are repealed, which is the day after
2 years from the day on which this Bill receives the Royal Assent (new subsection
789GZI(3)).
185. A flexible work direction given by an employer to an employee must not be
unreasonable in all the circumstances, otherwise it does not apply to an employee (new
section 789GZJ). The note indicates that a direction may be unreasonable based on the
impact it may have on an employee's caring responsibilities.
186. For a flexible work direction to have effect, an employer must have information to
support a reasonable belief that the direction is a necessary part of a reasonable strategy
to assist in the revival of the employer's enterprise, which may for example arise
because of the continuing impact of COVID-19 (new subsection 789GZK(1)). In this
context it is irrelevant whether a similar direction could have been given to another
employee (new subsection 789GZK(2)).
187. New subsection 789GZL(1) provides that a flexible work direction does not apply to an
employee unless the employer:
gives the employee at least three days written notice of the intention to give a
direction (or a lesser period by genuine agreement); and
before giving the direction, consults the employee or the employee's
representative about it.
188. An employer's obligation to consult does not apply if the employer previously
complied with that subsection in relation to a proposal to give the employee another
flexible work direction and considered the view of the employee or their representative
as part of the consultation process for giving the relevant direction (new subsection
789GZL(2)).
189. An employer must keep a written record of consultation (new subsection 789GZL(3)).
190. A flexible work direction must be in writing, which may include by electronic means
such as email (new section 789GZM).
191. A flexible work direction cannot reduce an employee's hourly base rate of pay. New
subsection 789GZN(1) requires an employer to ensure that where an employee is given
a flexible work duties direction under section 789GZG, the employee's hourly base rate
of pay is not less than the greater of:
the base rate of pay on an hourly basis that would have applied if the direction
had not been given; or
Fair Work Amendment (Supporting 34 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
the base rate of pay on an hourly basis applicable to the duties performed.
192. A note under subsection 789GZN(1) alerts the reader that the section guarantees an
employee's hourly rate of pay. Base rate of pay is defined in section 16 and does not
include overtime or penalty rates, monetary allowances or any other separately
identifiable amounts. However, monetary allowances, including the payment of
monetary allowances in relation to higher duties, must be paid to an employee in
accordance with the obligation to pay amounts payable to the employee under section
323.
193. If an employee is paid other than on an hourly basis (or by reference to an hourly pay
rate) and the applicable identified modern award specifies the employee's base rate of
pay for the purposes of the NES or sets a method for working out the employee's base
rate of pay for that purpose, the employee's base rate of pay is the amount specified in
the identified modern award, or the amount worked out using the method specified by
the identified modern award (new subsection 789GZN(2)).
194. This ensures that employees paid other than by reference to hours, such as on an
annualised salary arrangement, have clear rules about how their pay arrangements are
treated for the purpose of the hourly rate of pay guarantee.
195. Each provision of new Division 2 of Part 6-4D is taken to be a term of an identified
modern award (new subsection 789GZO(1)). This means that those terms will be
relevant for the purposes of the BOOT. The note observes that a person must not
contravene a term of a modern award (section 45), and this is a civil remedy provision
under Part 4-1 of the Act.
196. New subsection 789GZO(2) provides that the FWC must not vary or revoke a term of
an identified modern award mentioned in new subsection 789GZO(1).
197. Disputes about the interaction between a term of an identified modern award and a
provision taken to be a term of an identified modern award under subsection
789GZO(1), or arising as a result of its operation, may be resolved in accordance with
dispute settlement terms of identified modern awards (new subsection 789GZO(3)).
The note refers readers to section 146 of the Act, which requires modern awards to
include a term that provides a procedure for settling disputes about matters arising
under the award.
198. To avoid doubt, new subsection 789GZO(4) confirms that provisions taken to be a term
of an identified modern award under Division 2 operate subject to the NES (Part 2-2).
199. To ensure the effective integration of flexible work direction provisions in new
Division 2 of Part 6-4D with existing terms of an identified modern award, new
subsection 789GZP(1) authorises the FWC (on its own initiative, or on application by
an affected employer, employee or organisation), to vary an identified modern award to
resolve an uncertainty or difficulty relating to the interaction between these provisions
and any terms of the identified modern award, or make the identified modern award
operate effectively with those provisions. Variations made under new section 789GZP
House of Representatives 35 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 2 - Modern awards
operate from the day specified in the determination, which may be a day before the
determination is made.
PART 3 - REPEAL OF THE CORE PROVISIONS OF PART 6-4D OF THE FAIR
WORK ACT 2009
Amendments to the Fair Work Act 2009
Item 9 Paragraph 136(1)(bb)
Item 10 Part 6-4D
200. Items 9 and 10 repeal the amendments made by Schedule 2, Part 2 to the Fair Work
Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 (Bill).
The repeal occurs the day after 2 years from the day on which this Bill receives the
Royal Assent (see subsection 2(1) of the Bill, table item 4).
Fair Work Amendment (Supporting 36 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
SCHEDULE 3 - ENTERPRISE AGREEMENTS ETC.
Overview
201. Schedule 3 to the Bill amends the Act to:
change the objects of Part 2-4 to better reflect the intended operation and
outcomes of the enterprise agreement framework (Part 1);
extend the time for an employer to provide the notice of employee
representational rights (NERR) and require the FWC to publish the NERR on its
website (Part 2);
replace prescriptive steps employers must take before asking employees to vote to
approve an enterprise agreement with a requirement that employers take
reasonable steps to ensure employees are given a fair and reasonable opportunity
to decide whether or not to approve a proposed agreement (Part 3);
clarify the circumstances in which casual employees may vote to approve an
enterprise agreement (Part 4);
modify the operation of the BOOT for enterprise agreements and variations of
agreements by:
- permitting the FWC to take into account only patterns or kinds of work, or
types of employment, that employees currently perform or could reasonably
be foreseen to perform;
- enabling the FWC to have regard to overall benefits (including non-monetary
benefits) employees would receive under an agreement compared to a relevant
modern award; and
- requiring the FWC to give significant weight to any views of the employees,
employer, and bargaining representatives for the agreement that have been
expressed as to whether the agreement passes the BOOT (Part 5);
provide a new temporary mechanism for the FWC to approve an enterprise
agreement that does not pass the BOOT where appropriate to do so taking into
account all the circumstances (Part 5);
require agreements to include a new model term that explains the interaction
between the NES and enterprise agreements (Part 6);
enable an eligible franchisee employer to apply to the FWC to be covered by an
existing single-enterprise agreement that covers a group of employers who
operate under the same franchise (Part 7);
permit an application to terminate an enterprise agreement after its nominal
expiry date only to be made three months after that date (Part 8);
limit who can be heard by the FWC in relation to an application to approve or
vary an enterprise agreement (Part 9);
require the FWC, as far as practicable, to determine an application to approve or
vary an enterprise agreement within 21 working days after the application is made
- otherwise the FWC must notify relevant parties of the reasons why, including
any exceptional circumstances (Part 10);
House of Representatives 37 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
require the FWC to perform its functions and exercise its powers in a manner that
recognises bargaining outcomes at the enterprise level (Part 11);
amend Part 2-8 of the Act to ensure industrial instruments do not transfer in
relation to voluntary transfers of staff between associated entities (Part 12); and
provide for the sunsetting on 1 July 2022 of agreement-based transitional
instruments, including Division 2B State employment agreements, and enterprise
agreements and workplace determinations made during the Fair Work Act
'bridging period' from 1 July 2009 to 31 December 2009 (Part 13).
PART 1 - OBJECTS
Amendments to the Fair Work Act 2009
Item 1 - Section 171
202. This item repeals and replaces section 171, which sets out the objects of Part 2-4 of the
Act. This amendment expands upon the objects of Part 2-4 to better reflect the intended
operation and outcomes of the enterprise agreement framework.
203. The FWC must take into account the objects of Part 2-4 when performing functions or
exercising powers under this part (see paragraph 578(a)).
PART 2 - NOTICE OF EMPLOYEE REPRESENTATIONAL RIGHTS
Amendments to the Fair Work Act 2009
Item 2 - Subsection 173(3)
Item 3 - After subsection 174(1B)
Item 4 - After paragraph 625(2)(a)
204. Item 2 amends subsection 173(3) to replace the reference to 14 days with a reference to
28 days, which means that employers must now give employees who will be covered
by an enterprise agreement notice of the right to be represented by a bargaining
representative as soon as practicable, but not later than 28 days after the notification
time (see subsection 173(2)) for the agreement.
205. Item 3 inserts new subsection 174(1C), which requires the FWC to publish the NERR
prescribed in the Fair Work Regulations 2009 in accordance with section 174(1A) on
its website.
206. Item 4 inserts new paragraph 625(2)(aa), which enables the President of the FWC to
delegate the function of publishing the NERR on the FWC's website (in accordance
with new subsection 174(1C)) to the FWC General Manager, FWC Senior Executive
Service (SES) staff or acting SES staff, or FWC staff prescribed by the regulations.
Fair Work Amendment (Supporting 38 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
PART 3 - PRE APPROVAL REQUIREMENTS
Amendments to the Fair Work Act 2009
Item 5 - Section 180 (heading)
Item 6 - Subsection 180(1)
Item 7 - At the end of subsection 180(1)
Item 8 - Subsections 180(2) and (3)
Item 9 - Subsection 180(4)
Item 10 - Subsections 180(5) and (6)
Item 11 - Subparagraph 188(1)(a)(i)
Item 12 - Paragraph 211(3)(a)
Item 13 - Paragraph 211(3)(e)
207. These items make changes to the steps employers must take before asking employees to
decide whether or not to approve a proposed agreement, and related amendments.
208. Item 8 repeals and replaces current subsections 180(2) and (3), and inserts a note. New
subsection 180(2) requires an employer to take reasonable steps to ensure that relevant
employees are given a fair and reasonable opportunity to decide whether or not to
approve the proposed agreement. 'Relevant employees' are those the employer requests
under new subsection 181(1) to approve a proposed enterprise agreement (see the
amendment to subsection 180(1) made by item 6 and the note added by item 7).
209. The reasonableness of the steps to provide a fair and reasonable opportunity to decide
whether or not to approve the agreement will depend on the particular facts and
circumstances. This requirement refers to actions the employer takes to enable
employees to make an informed decision, and ultimately, to genuinely agree to the
agreement (see section 188).
210. The opportunity will be fair if employees were treated equally, without favouritism or
discrimination. The opportunity will be reasonable if it was objectively sensible,
rational, practical and logical in the circumstances.
211. New subsection 180(3) provides that an employer is taken to have complied with new
subsection 180(2) if the employer takes reasonable steps to ensure that:
during the access period for the agreement (i.e. the period of 7 calendar days
before vote commences), the relevant employees can access a copy of the written
text of the agreement and any other material incorporated by reference in the
agreement that is not publicly available - if incorporated material is publicly
available (for example, a modern award), the employer is not required to provide
it to employees (paragraph 180(3)(a));
by the start of the access period, the employer has notified the employees of the
time and place that the vote to approve the agreement will occur, and the voting
method that will be used (paragraph 180(3)(b)); and
House of Representatives 39 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
the terms of the agreement, and the effect of those terms, are explained to the
relevant employees taking into account their particular circumstances and needs
(paragraph 180(3)(c)) - the note to paragraph 180(3)(c) provides examples of
employees whose particular circumstances and needs may need to be taken into
account.
212. New subsections 180(2) and (3) do not limit the steps an employer may take for the
purpose of giving employees a fair and reasonable opportunity to decide whether or not
to approve an agreement under subsection 180(2).
213. Item 9 amends subsection 180(4) to make clear that the access period is the 7 calendar
day period ending immediately before the day the voting process referred to in
subsection 181(1) starts. This period does not include the day on which the employer
makes the request to approve the agreement by voting for it under subsection 181(1).
This is a technical amendment that clarifies this provision and reflects relevant case law
(see Construction, Forestry, Maritime, Mining and Energy Union and Ors v CBI
Constructors Pty Ltd [2018] FWCFB 2732).
214. Item 10 repeals current subsections 180(5) and (6). Matters concerning the explanation
of enterprise agreement terms are contained in new paragraph 180(3)(c).
Illustrative example - ensuring employees are given a fair and reasonable opportunity
to decide whether or not to approve the agreement
Renate Engineering Pty Ltd (Renate) is a mid-sized civil engineering firm, which is
bargaining for an enterprise agreement proposed to cover all of its employees including
managers, clerical staff, mechanical and electrical engineers. The firm employs a group of
longstanding employees, working a number of different shifts and locations, including some
employees working from home. During bargaining, some employees have been on long
leave, including long service leave and parental leave.
The proposed new agreement is substantially identical to the previous agreement, except for
increases to the rates of pay and some changes to rostering arrangements.
Renate's human resources manager emails all staff at their work email address with an
intranet link to the proposed agreement and says the vote will take place in two weeks by
electronic ballot, which will be accessible in an email to be sent at a later date. The email is
accompanied by an explanation that the proposed agreement is largely the same as the current
agreement, except for these two changes. The email explains these changes in detail, but does
not explain the terms of the agreement that are staying the same.
The agreement also incorporates terms of the relevant modern awards (like the previous
agreement), but the email does not provide links to the awards, as they are available on the
internet.
Renate's human resources manager sends this information to the home email addresses of
employees on leave or otherwise out of the office during this time, but does not post it to their
home addresses.
The FWC is satisfied that Renate took reasonable steps to give employees a fair and
reasonable opportunity to decide whether or not to approve the agreement in accordance with
the requirement at subsection 180(2).
Fair Work Amendment (Supporting 40 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
215. Item 11 is consequential on the repeal of subsections 180(2), (3) and (5) and changes
one of the requirements in section 188 (about when employees have genuinely agreed
to an enterprise agreement) to reflect new subsection 180(2).
216. Item 13 amends section 211 (which regulates variation of enterprise agreements),
consequential on amendments to section 180. This reflects that section 180 no longer
refers to 'employees employed at the time who will be covered by the proposed
enterprise agreement'. Modification of the agreement approval requirements for
agreement variation at paragraph 211(3)(e) only deals with references in subsection
186(2) and section 188 to employees covered by the agreement.
PART 4 - VOTING REQUIREMENTS
Amendments to the Fair Work Act 2009
Item 14 - Subsection 181(1)
Item 15 - Paragraphs 207(1)(a) and (b)
Item 16 - Subsection 207(2)
217. These items repeal and replace current subsection 181(1) and make related amendments
to clarify when casual employees can vote to approve a proposed enterprise agreement.
218. New subsection 181(1) provides that an employee may vote to approve an enterprise
agreement if they will be covered by it and are employed:
other than as a casual employee (e.g. as a full-time or part-time employee) at the
time of the request to vote; or
as a casual employee and performed work at any time during the access period for
the agreement.
219. An employee will not be entitled to vote on an agreement if they commenced
employment after the time the request to vote is made, or if they are a casual employee
who only performed work before or after the access period, but not during the access
period.
220. The amendment at item 9 makes clear that the access period is the 7 calendar day
period ending immediately before the day the voting process referred to in subsection
181(1) starts. Any casual employee who performed work during this period is therefore
entitled to vote to approve the agreement. This approach also ensures that employers
can clearly identify which casual employees are entitled to vote to approve an
agreement, in the period between the end of the access period and immediately before
the request to vote is made.
221. For example, if a voting process commences at 12:00 pm, Monday, 8 July (i.e. makes
the request under subsection 181(1)), then the access period is the seven calendar day
period before that date, being Monday 1 July to Sunday 7 July. The employer would
then have the period before 12:00 pm on Monday, 8 July to determine which casual
employees worked the preceding 7 calendar days and are entitled to vote to approve the
agreement, before commencing the voting process.
House of Representatives 41 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
222. This approach is informed by relevant decisions of the Full Court of the Federal Court
of Australia and the FWC which considered current subsection 181(1) and the question
of which employees may vote to approve an agreement (see National Tertiary
Education Industry Union v Swinburne University of Technology [2015] FCAFC 98
and Appeal by Shop, Distributive and Allied Employees Association [2019] FWCFB
7599).
223. Subection 181(3) makes clear that, without limitation, an employer may request the
employees to vote by ballot or by an electronic method. The Act does not prescribe the
method or duration of the voting process, meaning that an employer may request
employees to vote to approve an agreement using any voting method or over a duration
that is appropriate in the circumstances, on condition that the employer requested the
employees described in subsection 181(1) to approve the agreement and the FWC is
satisfied that the employees genuinely agreed to the agreement (section 188).
224. Items 15 and 16 are consequential on the amendment to subsection 181(1).
225. Item 16 repeals and replaces subsection 207(2) to introduce a new definition of
'affected employees' for the purposes of a variation of an enterprise agreement, which
is consequential on the amendment to subsection 181(1).
226. 'Affected employees' for a variation of an agreement are the employees who:
are covered by the agreement or will be covered by the agreement if the FWC
approves the variation; and
are employed as non-casual employees at the time the request to approve the
variation is made, or as casual employees who performed work at any time during
the access period.
227. The note refers readers to subsection 180(4) (as it has effect in accordance with
subsection 211(3)) for the access period for a variation.
228. Item 15 repeals and replaces paragraphs 207(1)(a) and (b) to provide that the following
may jointly make a variation of an enterprise agreement:
if the agreement covers a single employer - the employer and the affected
employees; or
if the agreement covers 2 or more employers - all of the employers and the
affected employees.
Fair Work Amendment (Supporting 42 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
PART 5 - BETTER OFF OVERALL TEST
Amendments to the Fair Work Act 2009
Division 1 - Main amendments
Item 17 - Subsection 186(2) (note 2)
Item 18 - Paragraph 189(1)(a)
Item 19 - After the heading to subsection 189(2)
Item 20 - Subsection 189(2)
Item 21 - Subsection 189(2) (note)
Item 22 - At the end of subsection 189(3)
229. These items make amendments relating to circumstances when the FWC can approve
an enterprise agreement that does not pass the BOOT.
230. Item 19 inserts new subsection 189(1A), which sets out a new circumstance in which
the FWC may approve an enterprise agreement that does not pass the BOOT, in
addition to the existing capacity to do so where this would not be contrary to the public
interest (sub0section 189(2)). Items 17-18 and items 20-22 make related consequential
amendments.
231. Under new subsection 189(1A), the FWC can approve an enterprise agreement (not
being a greenfields agreement) that does not pass the BOOT if the FWC is satisfied that
it is appropriate to do so taking into account all the circumstances, including:
the views of the employees and each employer covered by the agreement, and
each bargaining representative for the agreement;
the circumstances of those employees and employers, and any employee
organisation that has applied to be covered by the agreement, including the likely
effect of approval or non-approval;
the impact of COVID-19 on the enterprise or enterprises to which the agreement
relates;
the extent of employee support for the agreement as expressed in the outcome of
the voting process; and
because of these circumstances, approving the agreement would not be contrary
to the public interest.
Illustrative example - FWC may approve an enterprise agreement that does not pass
the better off overall test where it is appropriate to do so taking into account all the
circumstances and it would not be contrary to the public interest
During negotiations for a new enterprise agreement for office administrative staff,
employee representatives request that the span of hours be expanded to allow employees
more flexibility to start work later and finish at 10:00 pm.
As the Clerks - Private Sector Award 2020 provides that ordinary hours are between 7.00
am and 7.00 pm on Monday to Friday, the employer must provide overtime for work
performed outside of this span of hours.
House of Representatives 43 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
As the employer has been significantly affected by COVID-19 they cannot provide another
benefit which offsets the detriment of not receiving overtime for working outside of those
hours.
The employees understand that this change would not result in them being better off
overall under the agreement compared to the award, but consider that it is important to
have a new agreement that provides greater flexibility and helps maintain the viability of
their workplace. Over 90 per cent of the employees voted to approve the agreement.
While the agreement does not pass the BOOT due to the expanded span of hours, the FWC
takes into account the views and circumstances of the parties, including the benefit of a
greater span of hours in the current context; the impact of COVID-19 on the business; and
the extent of support for the agreement as expressed in the vote to approve it. As it would
not be contrary to the public interest to approve the otherwise compliant agreement
because of these reasons, the FWC approves the agreement with a nominal expiry date of
two years after approval.
232. An agreement approved under this provision can have a nominal expiry date not longer
than two years after the day on which the FWC approves the agreement (see
paragraph 189(4)). This measure will automatically repeal two years after
commencement (see items 27-31), but this does not affect the validity of agreements
approved during the two year period it was in operation (see Schedule 7, item 1).
233. These measures are time limited for two years, to assist recovery from the impact of
COVID-19 (see items 27-31).
234. This provision operates in the broader agreement-making context. Even if an agreement
does not pass the BOOT, the FWC will still be required to be satisfied (among other
things) that the employees genuinely agreed to the agreement, the group of employees
covered by the agreement was fairly chosen, and the agreement does not contain any
unlawful terms. Additionally, the FWC can hear from any employer, employee, or
bargaining representative for the agreement (as well as other persons, in exceptional
circumstances) when determining whether to approve the agreement.
Item 23 - Subsection 190(2)
235. Item 23 amends subsection 190(2) to ensure that the FWC can approve an enterprise
agreement with undertakings under either section 186 or section 189 (when an
agreement does not pass the BOOT).
Item 24 - Subsection 193(2)
Item 25 - At the end of section 193
Item 26 - Subsection 211(4)
236. Item 25 inserts new subsection 193(8), which identifies matters to which the FWC
must, or must not, have regard when deciding whether an enterprise agreement passes
the BOOT, and identifies matters the FWC may take into account. Item 25
consequentially amends section 211(4) to reflect this change in requirements for FWC
approval of agreement variations.
Fair Work Amendment (Supporting 44 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
237. Paragraph 193(8)(a) provides that, when determining whether an agreement passes the
BOOT, the FWC may have regard to patterns or kinds of work, or types of
employment:
where the agreement is not a greenfields agreement - only if these are engaged in
by the award covered employees who are employed at the test time; or
in any case - only if it is reasonably foreseeable by the employer at the test time
that they will be engaged in by award covered employees or prospective award
covered employees.
238. When considering patterns of work, the FWC may have regard (for example) to the
rosters, ordinary hours of work, span of hours, and shift patterns that can be worked
under the agreement. When considering kinds of work, the FWC may have regard (for
example) to the nature of the work, levels of skill or responsibility involved in the
work, and the conditions under which work is done. When considering types of
employment, the FWC may have regard to whether the agreement provides for full-
time, part-time, casual, and shift work.
239. For example (in the case of an agreement that is not a greenfields agreement):
if an employer only operated Monday to Friday, and the employer could not
reasonably foresee that it would start operating on weekends, the FWC could not,
in deciding whether an enterprise agreement passes the BOOT, have regard to
any patterns of work that included weekend working hours; and
if an employer did not engage any casual employees, and could not reasonably
foresee that it would engage such employees, the FWC could not have regard to
casual employment in conducting the BOOT.
Illustrative example - the FWC may have regard to patterns or kinds of work or
types of employment if they are engaged in by award covered employees for the
agreement
Dom has run a lawn-mowing business called 'Dom's Lawns' in Dubbo for ten years.
Dom's Lawns only operates Monday to Friday and does not operate on the weekends and
does not intend to do so in the future. Felicia and Abdul both work as full-time employees
of Dom's Lawns. Dom's daughter Aimee works part-time as she is studying at the local
university. Dom also anticipates that when Aimee finishes her degree and finds other
employment, he may engage one or two more employees on a casual basis.
Dom's Lawns made an enterprise agreement with these three employees, who are all award
covered employees. Dom's Lawns and its employees agreed to the agreement, and Dom
applied to the FWC for approval.
When deciding whether an enterprise agreement passes the better off overall test, the FWC
may have regard to the full-time hours of Felicia and Abdul and the part-time hours of
Aimee. None of Dom's Lawn's employees work any weekend hours. The FWC does not
have to consider any weekend working hours as it is not reasonably foreseeable that Dom's
Lawns will broaden its operations to run over the weekend.
However, because Dom reasonably anticipates that he will engage casual employees in the
House of Representatives 45 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
future, the FWC does need to be satisfied that a casual employee who works on weekdays
would be better off overall under the agreement compared to the modern award.
240. Paragraph 193(8)(b) provides that the FWC may have regard, in determining whether
an enterprise agreement passes the BOOT, to the overall benefits (including
non-monetary benefits) an award covered employee or prospective award covered
employee would receive under the agreement when compared to the relevant modern
award.
241. Non-monetary benefits may include, for example:
flexible working arrangements;
time off in lieu;
time off to participate in community service activity;
provision of training; or
health care benefits.
242. This provision makes clear that the BOOT requires consideration of agreement terms
that are more beneficial and less beneficial, and an overall assessment of whether an
employee would be better off under an agreement compared to the award, and that non-
monetary benefits are to be taken into account in this exercise. This reflects case law
concerning the BOOT (see for example Armacell Australia Pty Ltd [2010] FWAFB
9985, Solar Systems Pty Ltd [2012] FWAFB 6397).
243. Paragraph 193(8)(c) provides that, in determining whether an agreement passes the
BOOT, the FWC must give significant weight to any views in that regard expressed by:
the employer or employers that are covered by the agreement; or
if the agreement is not a greenfields agreement - the award covered employees
for the agreement; or
in any case - a bargaining representative for the agreement.
244. Such views may inform the FWC about the subjective value of particular terms of the
agreement, including terms that confer non-monetary benefits. While the FWC must
have regard to such views, this does not mean the FWC is obliged to decide that an
agreement passes the BOOT on that basis.
245. Item 24 repeals current subsection 193(2), as the requirement for the FWC to disregard
an individual flexibility arrangement when conducting the BOOT is now included in
paragraph 193(8)(d).
Fair Work Amendment (Supporting 46 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
Division 2 - Repeal of subsection 189(1A) and related consequential amendments
Item 27 - Subsection 186(2) (note 2)
Item 28 - Subsection 189(1A)
Item 29 - Subsection 189(2)
Item 30 - At the end of subsection 189(2)
Item 31 - Subsection 189(3) (note)
246. These amendments reflect the temporary nature of provisions enabling the FWC to
approve an enterprise agreement that does not pass the BOOT and related consequential
amendments. The repeals made by these provisions occur two years after the day the
Amendment Act commences (see commencement information at subsection 2(1) of the
Bill, table item 7).
PART 6 - NES INTERACTION TERMS
Amendments to the Fair Work Act 2009
Item 32 - Section 12
Item 33 - Subsection 55(7) (note)
Item 34 - Section 169 (paragraph beginning "Division 5")
Item 35 - Subsection 186(2) (heading)
Item 36 - Paragraph 186(2)(c)
Item 37 - Subsection 186(2) (note 3)
Item 38 - Paragraph 201(1)(b)
Item 39 - At the end of paragraph 201(1)(b)
Item 40 - Before section 202
Item 41 - Before section 205
Item 42 - At the end of Division 5 of Part 2-4
Item 43 - Paragraph 211(3)(ha)
247. These items amend the Act to require enterprise agreements to include a model term
that explains the interaction between the NES and enterprise agreements (the model
NES interaction term), and to make related changes.
248. Item 36 repeals paragraph 186(2)(c). When deciding whether to approve an enterprise
agreement, the FWC no longer needs to be satisfied that the terms of the agreement do
not contravene section 55 (which governs the interaction between the NES and
enterprise agreements). Item 35 reflects this change in the heading to subsection 186(2).
249. Instead of this process, new section 205A (explained below) requires enterprise
agreements to include the model NES interaction term.
House of Representatives 47 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
250. While this may result in agreement terms appearing to contravene section 55, such
terms have no effect to that extent because of section 56, and employees covered by the
agreement will be entitled to the NES in accordance with section 61.
251. Item 42 inserts new section 205A, which requires an enterprise agreement to include
the model NES interaction term (this must be prescribed by the regulations). Item 34
reflects this change in the Guide to Part 2-4, and item 32 inserts a signpost in the
Dictionary (section 12) to the definition of model NES interaction term in new
subsection 205A(3).
252. This amendment simplifies the enterprise agreement approval process by avoiding the
need for the FWC to examine each term of an agreement to determine whether it
contravenes section 55. Instead the FWC will only need to consider whether the
agreement includes the model NES interaction term.
253. The model NES interaction term must explain the provisions of the Act that regulate
interaction between the NES and enterprise agreements. Those provisions include
section 55 (which concerns the interaction between the NES and a modern award or an
enterprise agreement), section 56 (which provides that a term of a modern award or
enterprise agreement has no effect to the extent that it contravenes section 55), and
section 61 (which provides that the NES are the minimum standards that apply to the
employment of employees which cannot be displaced, even if an agreement includes
terms that have the same or substantially the same effect as provisions of the NES).
254. If an agreement does not include the model NES interaction term, the model term is
taken to be a term of the agreement.
255. Items 38 and 39 consequentially amend subsection 201(1) to provide that if the FWC
approves an enterprise agreement and the model NES interaction term (or the existing
model flexibility term or model consultation term) are taken to be a term of the
agreement, the FWC must note this in its decision.
Item 44 - Subsection 272(5)
Item 45 - At the end of section 273
256. Consistent with amendments concerning NES interaction terms of enterprise
agreements, these items make similar amendments in relation to workplace
determinations (which can be made by the FWC in certain circumstances, including
after the termination of protected industrial action, and operate in a similar way to
enterprise agreements).
Fair Work Amendment (Supporting 48 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
PART 7--VARIATION OF SINGLE ENTERPRISE AGREEMENTS TO COVER
ELIGIBLE FRANCHISEE EMPLOYERS AND THEIR EMPLOYEES
Amendments to the Fair Work Act 2009
Item 46 - Section 12 (definition of affected employees)
Item 47 - Section 12 (definition of agreed to)
Item 48 - Section 12
Item 49 - At the end of section 58
Item 50 - Subdivision A of Division 7 of Part 2-4 (at the end of the heading)
Item 51 - After Subdivision A of Division 7 of Part 2-4
Item 52 - After subsection 278(1)
257. These items amend the Act to provide a process for an enterprise agreement to be
varied to cover an eligible franchisee employer and its employees, and make related
amendments (including to the Dictionary in section 12 of the Act).
258. Item 51 inserts new Subdivision AA of Division 7 of Part 2-4, which establishes a new
variation mechanism to enable an eligible franchisee employer to apply to the FWC to
vary an existing single-enterprise agreement that covers other employers operating
under the same franchise, so that it also covers the eligible franchisee employer and its
employees.
259. An eligible franchisee employer may request its employees to vote to approve an
application to the FWC for this purpose (new subsection 216A(1)). Employees already
covered by the existing agreement are not required to vote to approve the application.
260. Under new subsection 216A(2) an employer is an 'eligible franchisee employer' for a
single-enterprise agreement if:
the agreement does not cover the employer, but covers two or more other
employers that are single interest employers (see subsection 172(5));
the employer carries on similar business activities under the same franchise as
those other employers; and
the employer and those other employers are either franchisees of the same
franchisor, or are related bodies corporate of the same franchisor, or any
combination of these.
261. Item 48 signposts this definition in the Dictionary (section 12).
262. New subsection 216A(3) provides that the employer may request the following
employees of the eligible franchisee employer who will, if the FWC makes the
variation, be covered by the single-enterprise agreement:
non-casual employees employed at the time the request is made;
casual employees who performed work at any time during the 7 day period
ending immediately before the day the voting process referred to in subsection (1)
starts.
House of Representatives 49 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
263. This is consistent with provisions about who may vote to approve an enterprise
agreement (reflecting amendments in item 14 to subsection 181(1)).
264. The 'affected employees' for a variation under Subdivision AA are the employees who
are asked to vote on the variation, referred to in paragraphs 216A(3)(a) and (b) (new
subsection 216A(4)). Affected employees can be asked to vote by means including
ballot or an electronic method (new subsection 216A(5)).
265. Before applying to the FWC to vary an agreement under subsection 216A(1), the
eligible franchisee employer must take reasonable steps to notify affected employees of
the time and place of the vote and the voting method to be used, and which employees
will be covered by the agreement if the FWC makes the variation. The eligible
franchisee employer must also take reasonable steps to ensure the affected employees
are given a fair and reasonable opportunity to decide whether they want to approve the
proposed application (new subsection 216A(6)). Similar considerations to those
relevant to new section 180(2) (see item 8) will be relevant in this context.
266. An application under subsection 216A(1) is agreed when a majority of the affected
employees who cast a valid vote approve the application (new subsection 216A(7)). If
the affected employees have agreed to the application the employer must apply to the
FWC for the variation (new subsection 216B(1)). The application must be accompanied
by any declarations that are required by the procedural rules (new subsection 216B(2)).
The application must be made within 14 days after employee approval or a further
period allowed by the FWC (new subsection 216B(3)).
267. Under new section 216C, if an eligible franchisee employer has applied for a variation
under subsection 216B(1), the FWC must vary the single-enterprise agreement to cover
the eligible franchisee employer and employees specified in the application if satisfied
that:
the agreement has not passed its nominal expiry date;
no person coerced, or threatened to coerce, the eligible franchisee employer to
request the affected employees to approve the application;
the eligible franchisee employer gave affected employees a fair and reasonable
opportunity to decide whether they want to approve the application;
the application was agreed to in accordance with subsection 216A(7); and
there are no other reasonable grounds for believing that the affected employees
have not agreed to the variation;
unless it is satisfied there are serious public interest grounds for not varying the
agreement.
268. The variation operates from the day specified in the FWC decision to vary the
agreement (new section 216D). A single-enterprise agreement that is varied under this
Subdivision remains a single-enterprise agreement, despite the variation (new
section 216E).
269. Item 49 inserts new subsection 58(4), the effect of which is that if an enterprise
agreement (the earlier agreement) applies to an employee in relation to particular
Fair Work Amendment (Supporting 50 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
employment and another agreement is varied under section 216A to cover the employee
in relation to that employment, that varied agreement displaces the earlier agreement
(which can never apply again). Item 52 makes a similar amendment in relation to the
displacement of an earlier workplace determination following variation of the coverage
of an enterprise agreement under section 216A.
PART 8 - TERMINATING AGREEMENTS AFTER NOMINAL EXPIRY DATE
Amendments to the Fair Work Act 2009
Item 53 - Section 225
270. Section 225 currently allows any of the following to apply to terminate the enterprise
agreement if the agreement has passed its nominal expiry date.
one or more of the employers covered by the agreement;
an employee covered by the agreement; or
an employee organisation covered by the agreement.
271. This item amends section 225 so that an application to terminate an agreement under
this section cannot be made until at least three months after the agreement's nominal
expiry date.
PART 9 - HOW THE FWC MAY INFORM ITSELF
Amendments to the Fair Work Act 2009
Item 54 - After section 254
Item 55 - At the end of subsection 590(1)
Item 56 - At the end of subsection 625(1)
272. Item 54 inserts new section 254AA, which sets out how the FWC may inform itself in
relation to applications for approval or variation of enterprise agreements.
273. Subsection 254AA(2) qualifies how the FWC may inform itself in relation to such
applications to the following, unless the FWC is satisfied there are exceptional
circumstances:
information that is publicly available;
submissions made by a volunteer body under section 254A;
submissions, evidence or other information provided by or requested from:
- the person who makes the application to approve or vary the enterprise
agreement to the FWC;
- the employer or employers covered by the agreement;
- an employee covered by the agreement;
- a bargaining representative for the agreement;
- in the case of a variation, an employee who will be covered by the
agreement if the FWC approves the variation;
House of Representatives 51 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
- in the case of a variation, an employee organisation covered by the
agreement; or
- the Minister or a Minister of a State or Territory who has responsibility for
workplace relations matters.
274. Exceptional circumstances that may justify the FWC receiving or requesting
submissions from another person or body (such as a registered or unregistered
employee organisation that was not a bargaining representative for the agreement) may
include circumstances (for example) where there are significant public interest concerns
about the enterprise agreement (e.g. possible human rights issues, or implications for
the economy or public health and safety).
275. Section 254AA qualifies section 590 (which enables the FWC to inform itself in a
manner it considers appropriate) in relation to applications for agreement approval or
variation. The limitation only relates to information that can be provided to or requested
from the FWC and the circumstances in which it can be provided or requested (in
addition to publicly available information and submissions made by a volunteer body
under section 254A).
276. Item 55 inserts a note at the end of subsection 590(1) reflecting the limitation to section
590, and item 56 inserts a related note to subsection 625(1).
PART 10 - TIME LIMITS FOR DETERMINING CERTAIN APPLICATIONS
Amendments to the Fair Work Act 2009
Item 57 - After section 255
Item 58 - Before paragraph 625(2)(b)
277. Item 57 inserts new section 255AA, which provides a timeframe for the FWC to
determine applications to approve or vary enterprise agreements.
278. Subsection 255AA(1) provides that the FWC must, as far as practicable, determine an
application to approve or vary an agreement within 21 working days (the 'decision
period') after the application is made. The FWC can determine an application to
approve or vary an agreement after the decision period if it was not practicable to
determine the application within that period.
279. If the FWC does not determine an application within the decision period, subsection
255AA(2) requires it to give written notice as soon as practicable to the following,
setting out why it was unable to determine the application during that period, including
because of any exceptional circumstances:
each employer covered by the agreement;
for an application to approve an enterprise agreement:
- if the agreement is a greenfields agreement - each relevant employee
organisation the agreement is expressed to cover;
Fair Work Amendment (Supporting 52 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
- if the agreement is not a greenfields agreement - each employee
organisation that has given notice under subsection 183(1) stating that the
organisation wants to be covered by the agreement;
for an application to approve a variation of an enterprise agreement - each
employee organisation covered by the agreement; or
in any case--the applicant (if not covered by the preceding paragraphs).
280. Subsection 255AA(3) requires the FWC to publish this notice on its website or by any
other means it considers appropriate.
281. Item 58 inserts new paragraph 625(2)(ab), which enables the President of the FWC to
delegate the function of publishing this notice on the FWC's website to:
the General Manager of the FWC;
a member of staff of the FWC who is an SES employee or acting SES employee;
a member of staff of the FWC who is in a class of employees prescribed by the
regulations.
PART 11- FWC FUNCTIONS
Amendments to the Fair Work Act 2009
Item 59 - After section 254A
Item 60 - At the end of section 578
282. Item 59 inserts new section 254B, which requires the FWC to perform its functions and
exercise its powers under Part 2-4 in a manner that recognises the outcome of
bargaining at the enterprise level. This new requirement operates together with section
578, which sets out matters the FWC must take into account when performing functions
or exercising powers, including the objects of the Act and any objects of the parts of the
Act. Item 60 consequentially amends section 578 to insert a note referring to this
requirement.
PART 12 - TRANSFER OF BUSINESS
Amendments to the Fair Work Act 2009
Item 61 - Section 12 (paragraph (a) of the definition of transfer of business)
Item 62 - After subsection 311(1)
283. As a general rule, Part 2-8 of the Act provides, in a transfer of business situation, for an
old employer's enterprise agreement or other relevant industrial instrument to continue
to cover a transferring employee and their new employer in relation to transferring
work, regardless of how the employee came to be employed by the new employer. The
only way continued instrument coverage does not occur is if there is an order to that
effect from the FWC.
House of Representatives 53 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
284. Item 62 inserts new subsection 311(1A), which 'turns off' the transfer of business rules
in Part 2-8 of the Act in the case of an employee who becomes employed with an
associated entity (as defined by section 50AAA of the Corporations Act 2001) of their
former employer after seeking that employment on their own initiative before the
termination of the employee's employment with the old employer. That employee will
then be covered by the relevant industrial instrument (if any) that covers the type of
work performed by the employee for the new employer. This means the new employer
is not required to seek orders from the FWC to achieve that outcome. The rules
concerning an employee's continuity of service in section 22 are not affected by this
amendment. Item 61 amends the definition of 'transfer of business' in the Dictionary
(section 12) to reflect new subsection 311(1A).
285. The reference in paragraph 311(1A)(b) to termination of employment is intended to
capture all circumstances in which employment ceases, including resignation and
termination by operation of law (for example, a contract for a fixed term).
286. The circumstances giving rise to the new employment relationship need to be
considered to determine whether an employee sought to become employed on their own
initiative before termination of employment with the old employer. For example, this
may be satisfied where an employer provides information about job opportunities
within the corporate group which the employee then chooses to pursue for career
progression or lifestyle reasons.
Illustrative example - at the initiative of the employee
Anne is employed full time as an engineer with Mega Engines Pty Ltd (Mega). Her
employment with Mega is covered by the Mega Engines Pty Ltd Enterprise Agreement
2019-2021 (Mega Agreement). Super Engines Pty Ltd (Super) and Mega are part of the
same corporate group and are associated entities.
Super conducts a recruitment and selection process for a senior engineer position. Super's
relevant industrial instrument is the Super Engines Pty Ltd Enterprise Agreement 2018-
2022 (the Super Agreement) Anne voluntarily applies for the position with Super in order
to progress her career as a senior engineer and to work on a larger range of projects in a
bigger team. She is offered and accepts the position.
Under the new rules, Super, Anne or the relevant employee association will no longer be
required to apply to the Fair Work Commission for an order that the Mega Agreement not
transfer with Anne and apply to her work with Super. Anne's work with Super will
automatically be covered by the Super Agreement as she has decided to move across at her
own initiative.
287. However, it is not intended that an employee who accepts alternative employment
within a corporate group with an associated entity in the context of an organisational
restructure would be covered by the new provision (for example, in a redundancy,
redeployment or stand down scenario). In such cases, the employee's move from one
employer to another arises from an operational decision of the employer, and is not
Fair Work Amendment (Supporting 54 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
properly characterised as being at the employee's initiative. For example, new
subsection 311(1A) would not apply to a situation where:
the old employer stands down an employee without pay, who then takes up
employment with an associated entity of the old employer; or
an employee seeks employment with a new employer on the basis that their
current employment is to be terminated or otherwise significantly altered.
288. In these circumstances the transfer of business rules would apply and an order from the
FWC under section 318 would be required to displace coverage of the old employer's
industrial instrument.
Illustrative example - operational decision by first employer
Bob is employed full-time as a warehouse manager with Cardboard Boxes R Us Limited
(Boxes). His employment with Boxes is covered by the Cardboard Boxes R Us (Sydney,
Brisbane and Melbourne Warehouses) Enterprise Agreement 2020-2024 (the Boxes
Agreement). Boxes is restructuring its business as a result of increased competition in the
packaging industry. As part of the restructure, Bob's position is to be made redundant.
Boxes' subsidiary is Streamline Your Packages Pty Ltd (Streamline). Boxes and
Streamline are associated entities.
Boxes indicates to Bob that Streamline has a full-time warehouse assistant manager role on
offer. Streamline's relevant industrial instrument is the Storage Services and Wholesale
Award 2020. Bob applies for, is offered, and accepts the role with Streamline.
Bob's work with Streamline will continue to be covered by the Boxes Agreement, subject
to Streamline, Bob or a relevant employee association applying to the Fair Work
Commission for an order under section 318 that the Boxes Agreement not transfer. This is
because Bob did not decide to move to Streamline at his own initiative, rather, it was the
result of an operational decision by Boxes.
PART 13 - CESSATION OF CERTAIN INSTRUMENTS
Amendments to the Fair Work (Transitional Provisions and Consequential Amendments)
Act 2009
Item 63 - Item 20 of Schedule 3 (heading)
289. This item omits and replaces the heading of item 20 of Schedule 3 to reflect the
insertion of additional sunsetting rules for particular transitional instruments currently
preserved by the Fair Work (Transitional Provisions and Consequential Amendments)
Act 2009 (TPCA Act).
Item 64 - After item 20 of Schedule 3
Item 65 - After item 26 of Schedule 3A
290. These items provide for the sunsetting of various transitional instruments on 1 July
2022. This will not affect any accrued rights, liabilities or extant investigations, and any
investigation, legal proceeding or remedy in relation to such rights or liabilities may be
House of Representatives 55 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
instituted, continued or enforced as if the transitional instrument had not terminated or
ceased to apply (see the Schedule 3, item 7 of the TPCA).
291. Employers and employees covered by instruments that terminate on 1 July 2022 may
transition to the current framework by making new enterprise agreements. If a
replacement enterprise agreement is not in place by 1 July 2022, from this date a
relevant modern award would apply.
292. Item 64 inserts new item 20A to provide that an agreement-based transitional
instrument terminates on 1 July 2022 if it was not terminated before that day.
293. Agreement-based transitional instruments are collective agreement-based transitional
instruments made under predecessor legislation to the Act (including collective
agreements, workplace determinations, preserved collective State agreements, pre-
reform certified agreements, old IR agreements, section 170MX awards) and individual
agreement-based transitional instruments (individual transitional employment
agreements, preserved individual State agreements, Australian Workplace Agreements
(AWAs) and pre-reform AWAs).
294. The TPCA Act provides that once an agreement-based transitional instrument
terminates, it ceases to cover (and can never again cover) any employees, employers or
other persons (Schedule 3, item 21).
295. Item 65 inserts new item 26A in Schedule 3A to the TPCA Act, which provides that a
Division 2B State employment agreement terminates on 1 July 2022 if it was not
terminated before that day.
296. Division 2B State employment agreements are comprised of collective Division 2B
State employment agreements and individual Division 2B State employment
agreements, established and approved under state industrial relations laws, then
recognised in the national workplace relations system following the referral of powers
by Division 2B referring states.
297. Once a Division 2B State employment agreement terminates, it ceases to cover (and
can never again cover) any employees, employers or other persons (Schedule 3A, item
28).
Item 66 - At the end of Part 3 of Schedule 7
Item 67 - At the end of Part 5 of Schedule 7
298. Item 66 inserts new Division 5 of Part 3 of Schedule 7 and new item 17A(1), which
provides that an enterprise agreement made during the bridging period will cease to
operate on 1 July 2022 if it has not ceased to operate before that day in accordance with
subsection 54(2) of the Act.
299. Enterprise agreements made during the bridging period (from 1 July 2009 to
31 December 2009) needed to pass a no disadvantage test and were not assessed against
the BOOT, as modern awards did not commence operation until 1 January 2010.
300. New subitem 17A(2) provides that if an enterprise agreement ceases to operate in
accordance with subitem 17A(1) the cessation does not affect:
Fair Work Amendment (Supporting 56 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 3 - Enterprise agreements etc.
any right or liability that a person acquired, accrued or incurred before the
instrument ceased to operate; or
any investigation, legal proceeding or remedy in respect of any such right or
liability.
301. New item 17A(3) provides that any such investigation, legal proceeding or remedy may
be instituted, continued or enforced as if the enterprise agreement had not ceased to
operate.
302. Relevant provisions of the Act provide that once an agreement ceases to operate it can
never operate again (subsection 54(3)), and can no longer cover an employee, employer
or employee organisation (subsubsection 53(5)).
303. Employers and employees covered by these instruments may transition to the current
framework by making new enterprise agreements by 1 July 2022. If a replacement
enterprise agreement is not in place by 1 July 2022, from this date the relevant modern
award would apply.
304. Item 67 adds new item 26A, which makes the same sunsetting arrangements for all
remaining workplace determinations made during the Fair Work Act 'bridging period'
from 1 July 2009 to 31 December 2009.
305. Relevant provisions of the Act provide that once a workplace determination ceases to
operate, it can never operate again (subsection 276(3)), and can no longer cover an
employee, employer or employee organisation (subsection 277(4)).
House of Representatives 57 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 4 - Greenfields agreements
SCHEDULE 4 - GREENFIELDS AGREEMENTS
Overview
306. Schedule 4 to the Bill amends the Act to:
enable the FWC to approve a greenfields agreement made in relation to the
construction of a major project, which specifies a nominal expiry date of up to
eight years after the day the agreement comes into operation (instead of the
current maximum nominal expiry date of four years after the date of approval) to
improve cost certainty and minimise delays for projects;
provide a definition of a 'major project' and enable the Minister prescribed by the
regulations to declare, by legislative instrument, that a particular project is a
'major project'; and
require the FWC to be satisfied that a greenfields agreement provides for annual
increases to the base rate of pay for each employee covered by the agreement for
its nominal life, if work to be performed under the agreement relates only to the
construction of a major project, and the agreement specifies a nominal expiry date
more than four years after the day on which the FWC approves the agreement.
Amendments to the Fair Work Act 2009
Item 1 - Section 12
Item 2 - At the end of Division 4 of Part 1-2
307. These items insert relevant definitions. Item 1 provides:
a signpost in the Dictionary referring readers to the definition of major project in
new section 23B, which is relevant to requirements for the FWC to approve
certain greenfields agreements under sections 186 and 187; and
that responsible Minister means the Minister who is prescribed by the regulations
for the purposes of this definition (in the Dictionary at section 12).
308. Item 2 inserts new section 23B. New subsection 23B(1) provides that a project is a
'major project' if:
the total expenditure of a capital nature that has been incurred in carrying out the
project, or is reasonably likely to be incurred, is at least $500 million; or
a declaration is made by the responsible Minister under new subsection 23B(2)
that the project is a major project.
309. Total expenditure of a capital nature is intended, for example, to cover expenditure for
acquisition of assets such as land, equipment and technology or construction of
structures.
310. New subsection 23B(2) enables the responsible Minister to declare by legislative
instrument that a project is a major project. The responsible Minister cannot make such
a declaration unless satisfied that total expenditure of a capital nature in carrying out
the project incurred, or reasonably likely to be incurred, is at least $250 million but less
than $500 million (new subsection 23B(3)). The making of a declaration can be used
Fair Work Amendment (Supporting 58 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 4 - Greenfields agreements
by, for example, multiple employers, to enable them to make greenfields agreements
that relate only to the construction of the major project.
311. New subsection 23B(4) sets out the following matters that the responsible Minister
must take into account in deciding whether or not to make a declaration under new
subsection 23B(2):
the national and regional significance (if any) of the project (new
paragraphs 23B(4)(a) and (b));
the contribution the project is expected to make to job creation (new
paragraph 23B(4)(c)); and
any other matter the responsible Minister considers relevant (new
paragraph 23B(4)(d)).
312. For these purposes the responsible Minister could consider, for example, the
contribution (if any) the project is expected to make to Australia's recovery from the
economic impact of the COVID-19 pandemic.
313. Section 42 of the Legislation Act 2003 (which deals with disallowance of legislative
instruments by the Parliament) will not apply to declarations made by the responsible
Minister (new subsection 23B(5)). This is to avoid commercial uncertainty for parties
negotiating greenfields agreements and the enterprise bargaining framework generally.
314. Requiring an employer to wait until the disallowance period had passed before
bargaining in reliance of a declaration that would effectively enable a proposed
greenfields agreement to include a longer nominal expiry date, could unreasonably
delay its approval, engagement of new employees and commencement of work on the
project. The risk that a declaration could be disallowed could also affect the parties'
capacity to bargain consistent with the good faith bargaining requirements in
section 228.
Item 3 - Paragraph 186(5)(b)
315. Section 186 requires the FWC to approve an enterprise agreement if the requirements in
sections 186 and 187 are met.
316. Subsection 186(5) requires the FWC to be satisfied that an enterprise agreement
specifies a nominal expiry date (paragraph 186(5)(a)) and that the nominal expiry date
will not be more than four years after the day on which the FWC approves the
agreement (paragraph 186(5)(b)).
317. This item repeals and substitutes paragraph 186(5)(b) so that the nominal expiry date
cannot be more than:
eight years after the day the agreement will come into operation - if the
agreement is a greenfields agreement and the FWC is satisfied that work to be
performed under the agreement relates only to the construction of a major project
(new subparagraph 186(5)(b)(i)); or
otherwise, four years after the day on which the FWC approves the agreement
(new subparagraph 186(5)(b)(ii)).
House of Representatives 59 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 4 - Greenfields agreements
318. It is intended that new subparagraph 186(5)(b)(i) will apply (for example) to
greenfields agreements where the work to be performed under the agreement relates
only to the construction of a new mining venture and agreements that apply to the
performance of ancillary work, such as security, transportation or catering, insofar as
that work relates only to the construction of that new mining venture.
319. This item also inserts a note at the end of new paragraph 186(5)(b) referring readers to
subsection 54(1), which provides that an enterprise agreement approved by the FWC
operates from seven days after the agreement is approved or, if a later day is specified
in the agreement, that later day.
Item 4 - At the end of section 187 (after the note)
320. Section 187 sets out additional requirements that must be met before the FWC approves
an enterprise agreement, and contains specific requirements in relation to greenfields
agreements about which the FWC must be satisfied.
321. This item adds new subsection 187(7), which contains an additional approval
requirement for certain greenfields agreements. Where work to be performed under a
greenfields agreement relates only to construction of a major project, and the agreement
specifies a nominal expiry date more than four years after the day on which the FWC
approves the agreement, the FWC must be satisfied that the agreement includes a term
providing for at least annual increases to the base rate of pay for each employee
covered by the agreement. The annual increase must occur on or before each
anniversary of the day the agreement comes into operation, occurring before the
agreement's nominal expiry date.
322. This gives negotiating parties appropriate flexibility on the exact dates of pay increases,
which could (for example) be scheduled to align with pay cycles, as long as the pay
increase occurs on or before the anniversary of the day the agreement comes into
operation each year before the nominal expiry date of the agreement.
323. An agreement term that provides a mechanism for an increase to the base rate of pay
(for example, that the quantum of the pay increase will be determined following a wage
review) may satisfy this requirement, as long as it at least results in an increase to the
base rate of pay for each employee who will be covered by the agreement.
324. Where the approval requirements have not been met, the amendments made by this
item do not modify the existing position that the FWC may approve the agreement with
undertakings (section 190) or not approve the agreement.
Item 5 - Paragraph 211(1)(b)
325. Section 211 deals with when the FWC must approve a variation of an enterprise
agreement. In general, the requirements for approval of agreements apply equally to
variations. Section 211 applies those requirements by reference, but makes some
modifications to ensure they work appropriately for variations. Relevantly, existing
paragraph 211(1)(b) provides that the FWC must approve a variation if the FWC is
satisfied that the agreement as proposed to be varied does not specify a nominal expiry
Fair Work Amendment (Supporting 60 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 4 - Greenfields agreements
date of more than four years after the day on which the FWC initially approved the
agreement.
326. This item repeals and substitutes paragraph 211(1)(b). The effect of new
paragraph 211(1)(b) is that the FWC must approve a variation if the FWC is satisfied
that the agreement as proposed to be varied does not specify a nominal expiry date
which is more than:
if subparagraph 186(5)(b)(i) applied in relation to the approval of the greenfields
agreement - eight years after the day on which the agreement came into operation
(new subparagraph 211(1)(b)(i)); or
otherwise - four years after the day on which the FWC approved the agreement
(new subparagraph 211(1)(b)(ii)).
327. This amendment is consequential on the amendment made by item 3 of Schedule 4.
Item 6 - Subsection 211(1) (note)
328. This item is consequential on item 7 of Schedule 4, which inserts a second note at the
end of subsection 211(1).
Item 7 - At the end of 211(1)
329. This item inserts a note at the end of new paragraph 211(1)(b) referring to
subsection 54(1), under which an enterprise agreement approved by the FWC operates
from seven days after the agreement is approved, or, if a later day is specified in the
agreement, that later day.
House of Representatives 61 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
SCHEDULE 5 - COMPLIANCE AND ENFORCEMENT
Overview
330. Schedule 5 amends the Fair Work Act's compliance and enforcement framework by:
increasing civil pecuniary penalties for ordinary remuneration-related
contraventions and sham arrangements by 50 per cent;
introducing a new penalty for remuneration-related contraventions by bodies
corporate (other than small business employers) based on a multiple of the 'value
of the benefit' of the contravention;
increasing the cap for amounts that can be awarded in small claims proceedings
from $20,000 to $50,000;
making provision for courts to refer small claims matters to the FWC for
conciliation and, if conciliation is unsuccessful, enabling the FWC to
subsequently arbitrate such matters with consent of the parties;
introducing a new civil contravention that prohibits employers publishing (or
causing to be published) job advertisements with pay rates specified at less than
the relevant national minimum wage;
increasing civil pecuniary penalties for non-compliance with a compliance notice
and the maximum penalty payable under an infringement notice by 50 per cent;
requiring the FWO to publish information relating to the circumstances in which
enforcement proceedings will be commenced or deferred;
codifying factors the FWO may take into account in deciding whether to accept
an enforceable undertaking; and
introducing a new criminal offence for employers who dishonestly engage in a
systematic pattern of underpaying employees.
331. Schedule 5 also amends the Building and Construction Industry (Improving
Productivity) Act 2016 (BCI(IP) Act) by:
enabling the Australian Building and Construction (ABC) Commissioner to
accept an enforceable undertaking in relation to a suspected remuneration-related
contravention within their jurisdiction;
requiring the ABC Commissioner to publish information relating to the
circumstances in which enforcement proceedings will be instituted or deferred;
and
ensuring the ABC Commissioner has the same role as the FWO in relation to
investigating, etc., the new criminal underpayments offence in the building and
construction sector.
Fair Work Amendment (Supporting 62 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
PART 1 - ORDERS RELATING TO CIVIL REMEDY PROVISIONS
Division 1 - Main amendments
Amendments to the Fair Work Act 2009
Item 1 - Section 12
Item 2 - Subsection 539(2) (after note 3)
Item 3 - At the end of subsection 545(2)
Item 4 - Subsection 546(2) and (3)
Item 5 - After section 546
332. These items increase the base maximum civil penalties for ordinary
remuneration-related contraventions by 50 per cent and introduce an alternative new
penalty calculation method for remuneration-related contraventions by bodies corporate
(other than small business employers) based on a multiple of the 'value of the benefit'
obtained from the contravention.
333. Item 1 inserts a definition of 'remuneration-related contravention' into the Dictionary at
section 12. The definition lists remuneration-related contraventions drawing from the
table in subsection 539(2). In general, paragraph (a) of the definition lists
contraventions that are by nature remuneration-related. Paragraph (b) lists table items in
subsection 539(2) that generally involve contravention of industrial instruments.
Subparagraphs (b)(i) to (iv) narrow this list to capture only contraventions generally
considered remuneration-related. The new 'value of the benefit' calculation method for
civil penalties would only apply to remuneration-related contraventions. Item 1 also
inserts a signpost in the Dictionary (section 12) to the definition of 'value of the
benefit' in new subsection 546A.
334. Item 3 amends subsection 545(2) to make clear that the kinds of orders courts may
make under subsection 545(1) includes adverse publicity orders.
335. Item 4 repeals subsection 546(2) and inserts a table in subsection 546(2) for determining
the maximum amount of a pecuniary penalty for contraventions, including for
remuneration-related contraventions. This item also repeals and reinserts subsection 546(3),
subject to new subsection 546(3A). New subsection 546(3A) provides that any penalty
based on the new 'value of the benefit' method may only be payable to the Commonwealth.
336. Items 1 and 2 of the table in new subsection 546(2) reflect the status quo, subject to
higher penalties prescribed in items 3 to 6 of the table. That is, the maximum available
penalty is specified in penalty units in column 4 of the table in subsection 539(2) for the
kind of contravention committed (being either an ordinary or 'serious contravention'
under section 557A). The penalty for bodies corporate is 5 times higher than the penalty
for individuals. Item 3 of the table sets the maximum penalty for a remuneration-related
contravention that is not a serious contravention for individuals at 1.5 times the amount
that would otherwise apply under item 1.
337. There are no base penalty increases for serious contraventions, as that regime was
introduced relatively recently in late 2017 by the Fair Work Amendment (Protecting
House of Representatives 63 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
Vulnerable Workers) Act 2017, and its full effect is yet to be realised. However the new
alternative 'value of the benefit' method for penalty calculation will apply to serious
contraventions of remuneration-related contraventions.
338. Item 4 of the table sets the maximum penalty for a remuneration-related contravention
by a body corporate that is not a serious contravention at 7.5 times the amount that
would apply to an individual. This comprises a multiple of 5 to convert the penalty for a
body corporate, and again by 1.5 because the contravention is remuneration-related.
339. Items 5 and 6 of the table set the maximum penalty for a remuneration-related
contravention by a body corporate that is not a 'small business employer' (see
section 23). The test for whether an employer is a small business employer is applied
when the application for a pecuniary penalty is first made.
340. The maximum pecuniary penalty for a remuneration-related contravention by a body
corporate (other than a small business employer) is, for an ordinary contravention, the
greater of the following:
7.5 times the amount that would otherwise apply to an individual; or
if the court can determine the value of the benefit of the contravention--
two times the value of the benefit.
341. The maximum pecuniary penalty for a remuneration-related contravention by a body
corporate (other than a small business employer) is, for a serious contravention, the
greater of the following:
the amount that would usually apply for a serious contravention by a body
corporate (that is, the relevant amount specified in column 4 of the table in
subsection 539(2) times 5); or
if the court can determine the value of the benefit of the contravention--
three times the value of the benefit.
342. The new 'value of the benefit' penalty (see below) is only available if the court can
determine on the available evidence the value of the benefit of the contravention to the
body corporate.
343. The new 'value of the benefit' penalty is only available in relation to primary
contraveners who are employers, and does not extend to accessories (see section 550).
344. Item 5 inserts new section 546A and sets out how the value of the benefit of a
remuneration-related contravention by a body corporate (other than a small business
employer) is worked out. This value is derived by reference to the amount of
remuneration employees of the body corporate would have received, retained or been
entitled to if the contravention had not occurred. The term 'remuneration' is intended to
be read beneficially to include all remuneration entitlements including wages,
allowances, superannuation, etc., for work, and does not include non-remuneration
amounts such as interest on amounts of remuneration that would have been earned from
a bank had the contravention not occurred.
Fair Work Amendment (Supporting 64 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
345. New subsection 546A(2) makes clear that a particular amount obtained from a
remuneration-related contravention by a body corporate cannot be double counted. New
subsection 546A(3) deals with the situation where multiple contraventions forming part
of a course of conduct are grouped and taken to be a single contravention under
section 557. It clarifies that, if contraventions are 'grouped' in this way, then all
amounts (including underpayments) derived from those contraventions are likewise
aggregated. No amounts (falling within scope of the provision) are double counted, and
none are disregarded for the purposes of this exercise. The provision does not otherwise
affect the operation of the grouping rule in section 557.
House of Representatives 65 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
Illustrative example - 'Value of the benefit' penalty
An employer with 50 employees admits to underpaying 10 employees, and to contraventions of
the following sections of the Act outlined in the table below (after the commencement of the new
provisions). The contraventions are ordinary contraventions - not serious contraventions - for the
purposes of section 557A:
Provision(s) Description Remuneration- Ordinary 'Value of Applicable
contravened related maximum penalty the penalty
contravention (based on a penalty benefit'
value unit of $222) maximum
penalty
Section 357 Misrepresentation No $99,900 -- Ordinary
(50% uplift)*
Section 50 Failure to pay Yes $99,900 $150,000 Value of
minimum hourly (50% uplift) the benefit
rate
Section 50 Failure to pay Yes $99,900 $110,000 Value of
overtime rates (50% uplift) the benefit
Section 50 Failure to pay Yes $99,900 $500 Ordinary
uniform (50% uplift)
allowance
Section 50 Failure to pay Yes $99,900 $80,000 Ordinary
superannuation (50% uplift)
Section 44 Failure to provide No $66,600 -- Ordinary
a Fair Work (no uplift)
Information
Statement
Section 536 Failure to provide No $66,600 -- Ordinary
pay slips (no uplift)
* See Part 5 (Sham arrangements) below, which provides for a 50% uplift for contraventions of
subsection 357(1).
To determine which maximum penalty applies it is necessary to:
Step 1--work out whether the contravention is a remuneration-related contravention. If not, the
ordinary penalty applies.
Step 2--for a remuneration-related contravention, add a 50 per cent uplift to the ordinary penalty
that would apply to the contravention (see the table in section 539(2)).
Step 3--for a remuneration-related contravention, work out the value of the benefit obtained
from each contravention, based on the amount of remuneration employees would have received,
retained or been entitled to if the contravention had not occurred. For multiple breaches arising
from part of a single course of conduct, which are taken to be a single contravention, the benefit
obtained from each breach is aggregated. Disregard if there is no evidence as to the value of the
benefit obtained.
Step 4--if two maximum penalties are determined, the higher one applies.
Fair Work Amendment (Supporting 66 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
Division 2 - Consequential amendments
Amendments to the Building and Construction Industry (Improving Productivity) Act
2016
Item 6 - Paragraph 49(c)
346. This makes a consequential amendment as a result of the amendment to the Act made
by item 4 above.
PART 2 - SMALL CLAIMS PROCEDURE
Division 1 - Main amendments
Amendments to the Fair Work Act 2009
Item 7 - Section 12
Item 8 - Paragraph 548(2)(a)
Item 9 - At the end of section 548
Item 10 - After section 548
Item 11 - Subsection 570(1)
Item 12 - Subsection 570(1) (note)
347. These items amend the Act to expand access to the small claims procedure, enable
successful small claims applicants to recover filing fees, empower the Federal Circuit
Court and magistrates courts to refer small claims matters to the FWC for conciliation
and, if conciliation is unsuccessful, enable the FWC to subsequently arbitrate such
matters with consent of the parties.
348. Item 7 inserts a definition of 'small claims proceedings' into the Dictionary at
section 12 as those dealt with under section 548. Item 8 amends paragraph 548(2)(a) to
increase the jurisdictional limit for small claims from $20,000 to $50,000, which
broadens access to this simpler enforcement process (note that pecuniary penalties are
not available in this jurisdiction (see paragraph 548(1)(a))). Item 9 inserts new
subsection 548(10), which enables the court to award a successful applicant their filing
fee from the respondent, and new subsection 548(11), which clarifies that the costs rule
in section 570 does not affect this discretion. Items 11 and 12 make consequential
amendments consistent with these changes.
349. Item 10 inserts new sections 548A to 548D, which enable courts to refer matters in
dispute in small claims proceedings for conciliation by the FWC. If unsuccessful,
consent arbitration may follow (that is, by agreement of both parties).
Court consideration of referral for conciliation
350. New section 548A requires a court to consider whether it is appropriate to refer any
matter in dispute in small claims proceedings for conciliation by the FWC. This must
be done as soon as practicable after small claims proceedings commence, taking into
account the available information. This enables the court to consider competing options
for dispute resolution as soon as practicable in the proceedings, including the new
House of Representatives 67 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
option of conciliation by the FWC. A legislative note alerts readers to related
requirements about other available dispute resolution processes under the Federal
Circuit Court of Australia Act 1999 (Federal Circuit Court Act), sections 22 and 23.
351. New subsection 548B(1) enables the court to refer any matter in dispute in small claims
proceedings for conciliation by the FWC if the court considers this appropriate, having
regard to the matters in new subsection 548B(3). A note alerts readers to the fact that, if
conciliation is unsuccessful, the parties may agree to the FWC conducting consent
arbitration to settle the matter (which does not require any further court order or
direction). Subsection 548B(2) enables the court to make the order referring a matter in
dispute to the FWC on its own initiative or on application by a party to the proceedings.
352. New subsection 548B(3) sets out matters the court must consider in determining
whether to make the order, but these are not exhaustive (new subsection 548B(4)).
There is no requirement for the court to conduct a hearing or any other additional court
event as part of the court's consideration or determination of whether to make the order.
New subsection 548B(5) requires the court to notify the FWC of the referral order as
soon as possible.
353. If a referral order is made, the court may order specified information given in the
proceedings be provided to the FWC for the purposes of the conciliation, or make any
other order in relation to the proceedings while the conciliation is occurring (new
subsection 548B(6)). This facilitates the transfer of relevant information between the
two bodies, and avoids the need for the parties to resubmit materials already before the
court.
354. This new ability for the court to refer small claims matters in dispute to the FWC does
not affect any other power a court may have to refer a matter in dispute to conciliation,
mediation or other form of dispute resolution (new subsection 548B(7)).
355. Item 9 inserts new subsection 548(10), to enable the court in small claims proceedings
to award a successful applicant their filing fee in the matter. This would be recovered
from the respondent. New subsection 548(11) clarifies that the costs rule in section 570
does not affect this discretion.
Conciliation by FWC
356. New subsection 548C(1) requires the FWC to deal with a dispute in a small claims
proceeding by conciliation (see also new subsection 548C(4)). This engages the FWC's
existing conciliation powers.
357. A note to new subsection 548C(1) describes how existing rules in sections 611 and 570
as to costs operate in this context - including that a court may order costs against a
party that unreasonably refuses to participate in an FWC process.
358. The FWC's procedural rules may regulate the conduct of conciliation (new
subsection 548C(2)). For example, the procedural rules may provide for:
the manner in which the FWC conducts the conciliation;
the manner in which the parties are to appear in a conciliation conference; and
Fair Work Amendment (Supporting 68 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
when the parties must provide information or take certain actions in relation to
the conciliation.
359. New subsection 548C(3) requires any conference conducted for the purposes of the
conciliation to be conducted in private, despite subsection 592(3) (which would
otherwise allow the person conducting the conference to direct it be held in public).
360. These new provisions do not affect existing restrictions on representation by lawyers
and paid agents in matters before the FWC in section 596.
End of conciliation and conciliation outcomes
361. Conciliation may be ended if the parties jointly request this, or if the FWC considers
the matter resolved, or considers that conciliation will be unsuccessful (new
subsection 548C(5)). The note to this subsection alerts readers that consent orders (for
example, as available under section 32 of the Federal Circuit Court Act) may also be
available. The court can make an order ending the conciliation (new
subsection 548C(6)). If the FWC ends the conciliation under subsection (5) (that is,
because the parties jointly request this, or if the FWC considers the matter resolved, or
considers that conciliation will be unsuccessful), it must issue a certificate to that effect
to the parties and the court (new subsection 548C(7)). This provides a clear statement
about the outcome of the process.
362. If a matter settles, the parties may best determine how and when to finalise or
discontinue proceedings before the court, or take any other action, consistent with the
terms of settlement.
363. In situations where conciliation ends because the FWC is satisfied that all reasonable
attempts to resolve the proceedings are likely to be unsuccessful, the FWC must advise
the parties if it considers a party has no reasonable prospects of success in the
proceedings (new subsection 548C(8)). This aligns with arrangements for the FWC's
handling of disputes about termination of employment in contravention of the Act's
general protections (section 368).
364. New subsection 548C(9) prevents the FWC from facilitating a conciliation outcome
that would be inconsistent with the Act, or a fair work instrument, that applies to the
parties to the proceedings, as these rights and obligations can only be finally
determined by a court. However, this does not affect the parties' ability to come to a
genuine agreement outside the FWC conciliation process or court process.
Arbitration by FWC
365. New section 548D enables the FWC to arbitrate small claims matters by consent of the
parties if conciliation has been unsuccessful and a certificate has been issued under new
subsection 548C(7). The FWC must be notified of the parties' agreement to arbitration
within 14 days after the new subsection 548C(7) certificate is issued, or a longer period
permitted by the FWC. New subsection 548D(2) requires the FWC to notify the court
in the proceedings whether it is arbitrating the matter.
House of Representatives 69 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
366. New subsection 548D(3) sets out the kinds of orders the FWC may make by consent
arbitration. Consistent with the nature of the small claims jurisdiction, the FWC may
only award an amount that relates to the 'disputed amount' referred to in new
subsection 548(1A), which cannot exceed the jurisdictional limit specified in
subsection 548(2), any interest that a court could have ordered (had a court made the
order), and any filing fees the applicant has paid to the court, that related to the disputed
amount. The FWC may order the amount to be paid in instalments (new
subsection 548D(4)). New subsection 548D(5) caps the maximum amount that may be
awarded by reference to the jurisdictional limit specified in subsection 548(2).
367. New subsection 548D(6) makes clear that no other order can be made. This reflects the
nature of the small claims jurisdiction, which delivers compensatory but not other kinds
of relief. New subsection 548D(7) (like new subsection 548C(9)) prevents the FWC
from facilitating an outcome that would be inconsistent with the Act, or a fair work
instrument, that applies to the parties to the proceedings. These rights and obligations
can only be finally determined by a court.
Appeal under section 604
368. New subsection 548D(8) makes clear that section 604, which concerns appeals to a Full
Bench of the FWC, applies to an arbitration order under new section 548D.
Court order in terms of arbitration order
369. New section 548E enables the court in the small claims proceedings to make an order in
terms of the arbitration order, on application by a party to the proceedings. This means
that the arbitration order may be enforced as an order of the court. A note following the
section alerts readers to another enforcement option (arbitration awards) that may be
available to the Federal Circuit Court.
Item 13 - After paragraph 576(2)(aa)
Item 14 - Subsection 592(3) (note)
Item 15 - At the end of subsection 592(3)
Item 16 - After paragraph 601(5)(f)
Item 17 - After paragraph 675(2)(i)
370. These items are consequential on the FWC's new small claims dispute resolution
function. Item 13 amends the list of FWC functions in section 576 to add new functions
in relation to conciliation and consent arbitration of small claims disputes under new
sections 548C and 548D. Items 14 and 15 amend the notes to subsection 592(3) to alert
readers to the fact that conferences carried out for this function are private (and cannot
be directed otherwise).
371. Item 16 is consequential on the certification process in new subsection 548C(7), and
clarifies the FWC is not required to publish a decision to issue a certificate under the
subsection. Item 17 amends subsection 675(2) to include an order under new
subsection 548D(3) to the list of FWC orders that are not subject to a criminal sanction
for non-compliance.
Fair Work Amendment (Supporting 70 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
Amendments to the Federal Circuit Court of Australia Act 1999
Item 18 - At the end of subsection 102(2)
372. This item amends subsection 102(2) of the Federal Circuit Court Act, which enables
certain powers of the Federal Circuit Court to be exercised by a Registrar, if the Court
or a Judge so directs. The amendment adds the power to refer matters in dispute in
small claims proceedings for conciliation by the FWC under new section 548B to this
list.
Division 2 - Amendments contingent on the commencement of the Federal Circuit and
Family Court of Australia Act 2020
Amendments to the Fair Work Act 2009
Item 19 - Section 548A (note)
Item 20 - Subsection 548C(5) (note)
Item 21 - Subsection 548E(2) (note)
373. These items update the references to the courts legislation in the specified notes, should
the Federal Circuit and Family Court of Australia Bill be enacted.
Amendments to the Federal Circuit and Family Court of Australia Act 2020
Item 22 - At the end of subsection 254(2)
374. This item makes a contingent amendment, should the Federal Circuit Court and Family
Court of Australia Bill be enacted, so registrars may continue to refer matters in dispute
in small claims proceedings to the FWC for conciliation by the FWC.
PART 3 - PROHIBITING EMPLOYMENT ADVERTISEMENTS WITH PAY RATE
LESS THAN THE NATIONAL MINIMUM WAGE
Amendments to the Fair Work Act 2009
Item 23 - At the end of section 528
Item 24 - At the end of Part 3-6
Item 25 - Subsection 539(2) (after table item 29)
Item 26 - After paragraph 557(2)(o)
Item 27 - After paragraph 716(1)(f)
375. These items amend the Act to introduce a new civil contravention that prohibits an
employer from publishing a job advertisement that specifies a pay rate below the
relevant national minimum wage.
376. Item 24 amends the Act to insert new Division 4 into Part 3-6, including new
section 536AA, which prohibits employers (including prospective employers) from
advertising, or causing to be advertised, a job with the employer specifying a rate of
pay less than the national minimum wage or special national minimum wage (as the
case requires). This is a civil remedy provision. New subsection 536AA(2) permits a
base rate of pay that is below the national minimum wage to be advertised by an
employer if it is the base rate of pay the employer is legally required to pay. This could
House of Representatives 71 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
occur, for example, where the lawful rate under an award is lower than the minimum
wage. Any liability for breaching this provision falls on the employer, rather than an
employee or the publisher.
377. The national minimum wage and special minimum wages are published annually in the
national minimum wage order (see Part 2-6).
378. Item 23 amends the guide to Part 3-6 to reflect the prohibition in new section 536AA.
Item 25 adds new section 536AA as a civil remedy provision to the table in
subsection 539(2), which sets out standing requirements, the courts that may grant
relief, and the maximum penalty for contraventions. Here, the maximum penalty would
be 60 penalty units for individuals (5 times higher for bodies corporate). This is
commensurate with penalties for misrepresentations under section 345.
379. Item 26 amends the 'course of conduct' rule in section 557 to ensure that two or more
contraventions of the advertising prohibition in new section 536AA are treated as a
single contravention (and penalised once) if the contraventions are committed by the
same person and arose out of a course of conduct by that person. This could apply (for
example) if an employer arranges for the same non-compliant employment
advertisement to be published on two websites, in which case there is just one
contravention arising from a single course of conduct.
380. Item 27 amends subsection 716(1) to enable a Fair Work inspector to issue a
compliance notice to a person the inspector reasonably believes has contravened new
section 536AA. A compliance notice could require an employer (for example) to
remove or revise a non-compliant employment advertisement.
381. This new contravention commences at the end of six months after the Bill receives the
Royal Assent.
Illustrative example - Non-compliant job ad
Esme is asked by her employer, a fast food operator, to place a job ad with the local
newsletter, which she does. The job ad states that a local employer is looking for a kitchen
hand and will pay $10 per hour, and includes contact details for the employer.
By placing the ad, Esme's employer (not Esme and not the local newsletter) has breached
the new contravention under section 536AA by advertising a rate of pay below the
applicable national minimum wage. The FWO could issue her employer with a compliance
notice, requiring the ad to be rectified, or could seek a civil penalty.
Fair Work Amendment (Supporting 72 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
PART 4 - COMPLIANCE NOTICES, INFRINGEMENT NOTICES AND
ENFORCEABLE UNDERTAKINGS
Amendments to the Building and Construction Industry (Improving Productivity) Act
2016
Item 28 - Section 5
Item 29 - Section 98 (at the end of the heading)
Item 30 - Subsection 98(1)
Item 31 - After subsection 98(4)
Item 32 - Application of amendments
382. Item 28 inserts a definition of 'remuneration-related contravention' in section 5 of the
BCI(IP) Act. It provides that the term has the meaning given by the Fair Work Act.
383. Item 29 is a consequential amendment to the heading of section 98 of the BCI(IP) Act
to reflect that the section also relates to certain remuneration-related contraventions.
384. Item 30 repeals current subsection 98(1) of the BCI(IP) Act and inserts a new
subsection which provides that the section applies if the ABC Commissioner
reasonably believes a person has committed:
a contravention of a BCI(IP) Act civil remedy provision; or
a remuneration-related contravention that relates (whether directly or indirectly) to
building work.
385. This amendment supplements the ABC Commissioner's existing capacity to accept
written undertakings in relation to contraventions of BCI(IP) Act civil remedy
provisions by providing that such undertakings may also be accepted from a person if
the ABC Commissioner reasonably believes that the person has committed a
remuneration-related contravention.
386. Item 31 inserts new subsection 98(4A), which provides that an inspector must not under
section 111 of the BCI(IP) Act institute proceedings under the Act against a person in
relation to a remuneration-related contravention if that person has given an undertaking
in relation to the contravention under section 98 of the BCI(IP) Act and that
undertaking has not been withdrawn.
387. Item 32 provides that section 98 of the BCI(IP) Act, as amended by this Part, applies in
relation to contraventions that occur before, on or after the commencement of this item.
Amendments to the Fair Work Act 2009
Item 33 - subsection 539(2) (table item 33, column 4)
Item 34 - subsection 558(2)
Item 35 - After subsection 715(2)
388. These items amend the Act to improve the effectiveness of FWO compliance notices,
infringement notices and enforceable undertakings.
House of Representatives 73 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
389. Subsection 716(2) enables a Fair Work Inspector to give notice requiring a person to
take specified action to remedy the direct effects of a contravention listed in
subsection 716(1) - for example, a contravention of the NES or a modern award. An
inspector must reasonably believe that the person has contravened one or more of the
relevant provisions.
390. Item 33 increases the maximum pecuniary penalty specified in subsection 539(2) (table
item 33, column 4) for failure to comply with a compliance notice issued by a Fair
Work Inspector by 50 per cent, from 30 penalty units to 45 penalty units for an
individual (5 times higher for a body corporate).
391. Section 558 permits the regulations to establish an infringement notice scheme for
contraventions of civil remedy provisions in Part 4-1 as an alternative to court
proceedings. Subsection 558(2) caps the maximum penalty amount an infringement
notice may specify at one-tenth of the maximum penalty that could have been imposed
by a court for the contravention. Item 34 increases the cap from one-tenth (or 10 per
cent) to three-twentieths (or 15 per cent) of the maximum penalty that could be
imposed by a court.
392. An enforceable undertaking is an alternative to court action and could include (for
example) a commitment by an employer to provide back pay or compensation to an
employee. An undertaking that is accepted becomes enforceable against the person who
provides it (subsection 715(7)).
393. Item 35 inserts new subsection 715(2A) to clarify the matters the FWO may take into
account for the purpose of deciding whether to accept an enforceable undertaking from
a person in relation to a contravention of a civil remedy provision. This provides more
certainty about the decision-making process the FWO follows in relation to
undertakings. New subsection 715(2A) sets out a non-exhaustive list of factors
(including the circumstances, nature and gravity of the contravention, and the person's
willingness to address its impact) the FWO may take into account when determining
whether to accept an undertaking.
PART 5 - SHAM ARRANGEMENTS
Amendments to the Fair Work Act 2009
Item 36 - Subsection 539(2) (table item 11, column 1)
Item 37 - Subsection 539(2) (table item 11, column 1)
Item 38 - Subsection 539(2) (table item 11, column 1)
Item 39 - Subsection 539(2) (before table item 12)
394. Item 39 amends the table in subsection 539(2) to insert new item 11B, which increases
the maximum penalty for sham contracting contraventions in subsection 357(1),
section 358 and section 359 by 50 per cent from 60 to 90 penalty units (5 times higher
for bodies corporate). Items 36 to 38 make consequential amendments that group all
sections dealing with sham arrangements in new item 11B.
Fair Work Amendment (Supporting 74 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
PART 6 - FUNCTIONS OF THE ABC COMMISSIONER AND THE FAIR WORK
OMBUDSMAN
Amendments to the Building and Construction Industry (Improving Productivity) Act
2016
Item 40 - Before paragraph 16(1)(d)
395. This item inserts new paragraph 16(1)(cb) to add to the ABC Commissioner's functions
a requirement to publish information relating to the circumstances in which the ABC
Commissioner will institute proceedings in accordance with the BCI(IP) Act or,
alternatively, defer proceedings to deal with suspected non-compliance through other
compliance mechanisms.
396. The amendment provides employers with greater certainty about possible enforcement
outcomes, to further encourage identification of remuneration-related and other
contraventions.
397. This new function commences at the end of six months after the Bill receives the Royal
Assent.
Amendments to the Fair Work Act 2009
Item 41 - After paragraph 682(1)(d)
398. This item inserts new paragraph 682(1)(da) to add to the FWO's functions a
requirement to publish information relating to the circumstances in which the FWO will
commence proceedings in accordance with the Act or, alternatively, defer proceedings
to deal with suspected non-compliance through other compliance mechanisms.
399. The amendment provides employers with greater certainty about possible enforcement
outcomes, to further encourage identification of remuneration-related and other
contraventions.
400. This new function commences at the end of six months after the Bill receives the Royal
Assent.
House of Representatives 75 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
PART 7 - CRIMINALISING UNDERPAYMENTS
Amendments to the Fair Work Act 2009
Division 1 - Main Amendments
Item 42 - Section 12
Item 43 - After paragraph 26(2)(d)
Item 44 - Paragraph 26(2)(g)
Item 45 - At the end of subsection 323(1)
Item 46 - Before section 325
Item 47 - Section 536CA
Item 48 - After subsection 536D(2)
401. These items amend the Act to introduce a new criminal offence for the dishonest and
systematic underpayment of employees by employers and to make related changes.
Relationship with State and Territory laws
402. Item 43 inserts new paragraphs 26(2)(da) and (2)(db) to clarify the Act's interaction
with State and Territory industrial laws in relation to underpayments and records
offences for national system employers and national system employees, in light of the
underpayment offence established by new section 324B.
403. Section 26 provides that the Act is intended to exclude the application of State and
Territory industrial laws to national system employers and national system employees.
For this purpose:
new paragraph 26(2)(da) specifies a State or Territory law that provides for a
national system employer, or an officer, employee or agent of such an employer,
to be liable to be prosecuted for an offence relating to underpaying a national
system employee an amount payable to the employee in relation to the
performance of work (including incentive-based payments and bonuses, loadings,
monetary allowances, overtime or penalty rates, leave payments (e.g. public
holidays, annual leave, personal/carer's leave) and meal breaks); and
new paragraph 26(2)(db) specifies a State or Territory law that provides for a
national system employer, or an officer, employee or agent of such an employer,
to be liable to be prosecuted for an offence relating to an employee record that is
required to be made or kept under the Act.
404. Paragraphs 26(2)(da) and (2)(db) confirm that State or Territory laws that criminalise
underpayment or record-keeping failures by national system employers in relation to
their employees, but not general criminal laws of theft or fraud, are intended to be
excluded.
405. This item does not alter the current framework for excluding or preserving State and
Territory laws. That is, section 26 (including new paragraphs 26(2)(da) and (2)(db))
will not apply in relation to any State or Territory law:
Fair Work Amendment (Supporting 76 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
that is specified in subsection 27(1A) (that is, a specified anti-discrimination or
equal opportunity law), or that deals with rights or remedies incidental to such a
law; or
that is prescribed by the regulations as a law to which section 26 does not apply,
or that deals with rights or remedies incidental to such a law; or
that deals with any non-excluded matters (for example, long service leave,
superannuation or child labour), or that deals with rights or remedies incidental to
such a law;
unless the State or Territory law is prescribed under section 28.
406. Item 44 makes a consequential amendment to paragraph 26(2)(g) by adding a reference
to new paragraphs 26(2)(da) and (2)(db). This ensures that any instruments made under
laws excluded by those provisions are also excluded.
Offence relating to underpayments
407. Item 46 inserts new section 324B into the Act. New section 324B makes it a criminal
offence for an employer to dishonestly engage in a systematic pattern of underpaying
one or more employees. This does not apply to one-off underpayments, genuine
mistakes or miscalculations, as the conduct must be intentional, dishonest and
systematic.
408. This offence covers conduct that may also be subject to a civil remedy provision under
the Act, including:
subsection 44(1) (Contravening the National Employment Standards);
section 45 (Contravening a modern award);
section 50 (Contravening an enterprise agreement);
section 280 (Contravening a workplace determination);
section 293 (Contravening a national minimum wage order);
section 305 (Contravening an equal remuneration order);
subsections 323(1), (3) (Method and frequency of payment);
subsections 325(1), 325(1A) (Unreasonable requirements to spend or pay
amount); and
subsections 328(1), (2), (3) (Employer obligations in relation to guarantee of
annual earnings).
409. The offence invokes a level of seriousness above the current civil penalties regime in
the Act for serious contraventions (see section 557A of the Act).
410. The maximum penalty for an individual offender is imprisonment of up to 4 years or
5,000 penalty units, or both. For a corporation, the maximum penalty is 25,000 penalty
units.
411. Part 2.6 of the Criminal Code Act 1995 (Criminal Code) (which deals with proof of
criminal responsibility) applies to an offence under new section 324B. The prosecution
bears the legal burden of proof which must be discharged beyond reasonable doubt.
House of Representatives 77 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
Illustrative example - Underpayments arising from a mistake
Amir starts a new job and, over the next few months, realises he has been classified
incorrectly under the applicable award, and underpaid. He raises the issue with his
supervisor, who was unaware of the inadvertent error, and the matter is quickly rectified -
Amir is repaid the amount of the underpayment, his employer has made adjustments to the
payroll process to ensure the error does not occur again, and Amir is paid his full
entitlements going forward. This resulted in unlawful, but not criminal, conduct as the
conduct was not dishonest.
Illustrative example - Underpayments arising from negligence or reckless conduct
Kate is the sole director and shareholder of a company that operates a fast-food takeaway.
The company employs staff at a flat rate of $20 per hour, irrespective of any penalty rates,
loadings or allowances that apply under the applicable award. Kate understands this is the
'going rate' for the industry in the local area. This means many employees have been
underpaid penalty rates under the applicable award.
Kate is relatively new to the industry, and has not checked the company's workplace
obligations with the FWO or any other reliable source.
David, one of Kate's employees, complains to her about his incorrect rate of pay. Kate
realises her mistake and quickly rectifies the situation for all her employees. Her conduct is
not dishonest because it was not intentional. Kate simply failed to give the matter proper
consideration and attention and failed to seek appropriate advice. This resulted in unlawful,
but not criminal, conduct as the conduct was not dishonest.
412. New subsection 324B(2) provides that for the purpose of subsection 324B(1) an
underpayment occurs if an employer fails to pay the employee an amount payable in
relation to the performance of work:
in full, except as provided by section 324 (which permits deductions in certain
circumstances); or
in money; or
at least monthly.
413. This provision is intended to operate broadly and cover (for example) underpayment of
base rates of pay as well as unlawful deductions from wages payable to employees in
relation to the performance of work.
414. A note provides examples of the kinds of amounts that may, in addition to base rates of
pay, become payable to an employee in relation to the performance of work. Failing to
pay any of these may constitute an offence, in the circumstances set out in new
section 324B.
415. For the purpose of new subsection 324B(2), new paragraph 324B(3)(a) provides that
anything given or provided other than in money (for example, 'payment in kind' of
goods, food, beverages or accommodation) is taken never to have been given or
provided to the employee.
416. However, this does not affect the operation of section 324, which permits an employer
to deduct certain amounts from amounts payable under subsection 323(1) to an
Fair Work Amendment (Supporting 78 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
employee if the deduction is authorised in writing by the employee and is principally
for the employee's benefit. Amounts payable to employees must be paid in full, except
as provided by section 324.
417. New paragraph 324B(3)(b) deals with situations where an employee has been required
by their employer to spend or pay an amount contrary to subsection 325(1), or under a
term of an instrument or contract deemed by section 326 to have no effect. The amount
in question is taken to be an unlawful deduction for the purposes of the new offence.
Amount payable to employee 'in relation to the performance of work'
418. The phrase 'an amount payable to the employee in relation to the performance of work'
in new subsection 324B(2) derives from subsection 323(1) and is intended to have the
same meaning, informed by the notes to those sections.
419. The phrase does not cover non-monetary benefits, amounts not payable directly to an
employee (for example, compulsory superannuation contributions), or payments that do
not relate to the performance of work (for example, income replacement payments
under workers' compensation schemes).
Payment 'in full' and deductions
420. The reference to payment 'in full' in new paragraph 324B(2)(a) derives from
subsection 323(1), and is intended to have the same meaning.
421. The Act contemplates that while payments in relation to the performance of work must
be made in full, lawful deductions may be made in accordance with section 324. There
is no offence (and no civil contravention) if an employer makes a lawful deduction in
accordance with section 324--for example, because the deduction is authorised in
writing by the employee and is principally for their benefit, such as a salary sacrifice
arrangement.
422. Additionally, there is no offence (but there could be a civil contravention) if a
deduction or series of deductions is made unlawfully because of a genuine mistake as to
whether the deduction could be made. For conduct to be caught under new
section 324B, it must form part of a dishonest and systematic pattern of underpayments.
Payment 'in money'
423. The reference to payment 'in money' in new paragraph 324B(2)(b) derives from
subsection 323(1), and is intended to have the same meaning. Payment 'in money'
includes payment in cash, cheque, money order, postal order or similar order payable to
the employee, electronic funds transfer, or some other method authorised under a
modern award or enterprise agreement.
424. There is no requirement, for the purposes of new section 324B, for payment to be made
by any particular method, providing that the payment is made in money. After any
lawful deductions permitted by section 324 are made, the amount payable must be paid
in money, and payments 'in kind' are not permitted.
House of Representatives 79 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
Payment at least monthly
425. The phrase 'at least monthly' in new paragraph 324B(2)(c) derives from
subsection 323(1), and is intended to have the same meaning. The term 'month' has the
meaning specified in section 2G of the Acts Interpretation Act 1901, as in force on
25 June 2009 (see section 40A of the Fair Work Act).
426. In the case of an intermittent or conditional payment in relation to the performance of
work, for example a monetary bonus, the amount must be paid in full, in money and
within a month of the date the amount becomes payable to the employee. New
section 324B does not require these intermittent or conditional amounts to be paid in
monthly instalments.
427. The new offence does not capture late payment due to disorganised finances or similar
reasons. For conduct to be caught under new section 324B, it must form part of a
dishonest and systematic pattern of underpayments.
Determination of dishonesty
428. Dishonesty is the fault element for the offence in new section 324B, and item 42
amends the Dictionary at section 12 to define 'dishonest' as meaning dishonest
according to the standards of ordinary people, and known to be so by the defendant. If
conduct is not intentional (including if it is accidental, inadvertent or otherwise a
genuine mistake), it cannot be dishonest by this standard.
429. A defendant is not dishonest if they genuinely believed they paid relevant amounts in
full (or that there was no underpayment), even if this belief is unreasonable or
unfounded. Nevertheless, the reasonableness of the defendant's claim will be a factor in
determining whether they actually held such a belief. New subsection 324B(4) makes
clear that whether or not a defendant has been dishonest is ultimately a matter for the
trier of fact (that is, judge or jury).
Illustrative example - Underpayments arising from dishonest conduct (e.g. false
records and 'cashback' requests)
Lee is an international student on a student visa who works in a convenience store. Lee's
employment records and pay slips show that his rate of pay is in accordance with the
applicable award, but the business owner requires him to give $500 in 'cash back' every
fortnight, which he does.
The conduct is dishonest because the business owner systematically requested 'cash back'
knowing the conduct was dishonest by the standards of ordinary people.
The fact that Lee understands he is being underpaid, and may be perceived by some as
having 'consented' to the cashback request by acceding to it, does not affect that
assessment.
Lee's employer could be found guilty of the proposed offence as their conduct involved
both dishonesty and a systematic pattern of underpaying.
Fair Work Amendment (Supporting 80 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
Systematic pattern of underpayment
430. 'A systematic pattern of underpaying' refers to a recurring pattern of conduct or a series
of methodical acts over time. It does not encompass inadvertent or one-off conduct. It
does not require mathematical precision, frequency or regularity.
431. New subsection 324B(5) prescribes a list of factors that may be taken into account in
determining whether a systematic pattern of underpaying is established. The list is
indicative and not intended to be exhaustive (new subsection 324B(6)).
432. A systematic pattern of underpaying may affect one or more employees. Whether a
series of underpayments meets this threshold will depend on all relevant circumstances,
including an employer's attitude to complaints about alleged underpayments and their
willingness to provide wages redress, if required. A cooperative and timely response
may negate any inference that the underpayments were part of a systematic pattern of
underpaying.
Illustrative example - Non-payment of wages
Hubert starts working as an early childhood educator for a small home-based business
operated by Janelle. He is assured that although the childcare is a brand new business with
only a small number of enrolments, he will be paid for his work. At first, he is not paid at
all. Whenever Hubert complains to Janelle, he is paid a token amount. Janelle tells Hubert
she will pay him the rest of what he is owed as soon as her cash-flow improves. Hubert
works for a further three months (without pay, as it turns out) before quitting.
Even though Hubert was paid nominal amounts sporadically, this does not change the fact
that he has been subject to a 'systematic pattern of underpayment'.
Whether or not Janelle's conduct is dishonest will be determined by the trier of fact. It will
be dishonest if it can be shown that Janelle intentionally deceived Hubert to keep him
working for little or no pay.
Reparation orders
433. Note 1 to new section 324B refers readers to the court's power to make a reparation
order following a conviction under section 21B of the Crimes Act 1914 (the Crimes
Act). This power would enable prosecutors of the new offence provision to seek orders
(in effect) for timely wages redress, so affected workers do not need to institute
separate civil proceedings to recover unpaid wages.
Ancillary liability
434. Note 2 to new section 324B refers readers to the ancillary liability provisions under
Part 2.4 of the Criminal Code and section 6 of the Crimes Act. Maximum penalties for
ancillary offences in Part 2.4 of the Criminal Code are, in the context of the proposed
offence:
in the case of attempt (section 11.1), complicity and common purpose
(section 11.2), commission by proxy (section 11.3), conspiracy (section 11.5)--
the same penalty as for an offence against the substantive offence in new
section 324B;
House of Representatives 81 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
in the case of incitement (section 11.4)--imprisonment for three years, noting this
may be converted into a monetary fine under subsection 4B(2) of the Crimes Act;
in the case of joint commission (section 11.2A)-- this provision does not create
an offence, but extends primary criminal responsibility to all those who enter into
an agreement to commit an offence.
435. The maximum penalty for an offence against section 6 (accessory after the fact) of the
Crimes Act is imprisonment for two years.
Corporate criminal responsibility
436. Note 3 to new section 324B refers readers to the Act's corporate liability rules in
section 793. This provision applies in lieu of Part 2.5 of the Criminal Code (see
subsection 793(4)).
Illustrative example - Underpayments arising from corporate conduct
The executive team of a small hotel operator decide as a group that the company should cut
labour costs by re-engaging in-house cleaning employees as independent contractors. The
company's external advisers recommend against this approach, advising that the proposed
arrangement would contravene the Act, including protections against sham contracting
arrangements. The executive team acts against this advice and implements the proposal,
which involves paying 'outsourced' staff substantially less than they were previously paid
under the applicable award, without making any other changes to working arrangements.
The changes are knowingly misrepresented to the staff as lawful.
As a result, the employers are involved in a systematic pattern of underpaying the cleaners
because the cleaners still meet the definition of employee.
If it can be proven beyond reasonable doubt that one or more of the executives implemented
the changes knowing (or intending) that this would involve a systematic pattern of
underpaying staff, in a way that was dishonest by the standards of ordinary people, the
company would be found to have contravened the offence provision. Proceedings could also
be brought against the individuals involved, for an ancillary offence, like complicity.
Civil wages redress
437. Note 4 to new section 324B refers readers to the availability of civil proceedings under
the Act to recover underpayments. The interaction between related criminal and civil
proceedings may be regulated by sections 552 to 555 of the Act.
Standing to commence proceedings for underpayment offence
438. The FWO and the ABC Commissioner, their respective inspectors, and the Australian
Federal Police, may investigate a possible substantive offence against new
subsection 324B(1), using their existing powers. No additional powers have been
included in the Bill for this purpose.
439. Proceedings for an offence against new subsection 324B(1) may only be commenced
by the FWO or the ABC Commissioner, if the proceedings relate to a matter that
involves a 'building industry participant' or 'building work' within the meaning of the
BCI(IP) Act (new subsection 324C(1)). This does not affect the Commonwealth
Director of Public Prosecution's (CDPP) ability to institute criminal proceedings
Fair Work Amendment (Supporting 82 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
(subsection 324C(2)). This is in line with the usual practice in Commonwealth
prosecutions for investigating agencies to commence proceedings, with the CDPP
subsequently carrying on the proceedings.
440. Proceedings may be brought before the Fair Work Division of the Federal Court of
Australia (see section 562 and subsection 563(e), and item 58 below) or an appropriate
state or territory court invested with federal jurisdiction.
441. New subsection 324C(1) also applies to proceedings in relation to an offence against
section 6 of the Crimes Act or a provision of Part 2.4 of the Criminal Code that relates
to an offence against new subsection 324B(1) (collectively, a related offence
provision).
Time limit for prosecution
442. New subsection 324C(3) limits when proceedings may be commenced in relation to an
offence against new subsection 324B(1) or a related offence provision. Proceedings in
respect of particular conduct (which is defined to include an omission) may only be
commenced within seven years after that conduct occurred, unless the Minister
consents to a later timeframe. The seven-year timeframe is consistent with employer
obligations in relation to employee records under section 535.
443. Any particular conduct that falls outside the prescribed period must be disregarded for
the purposes of establishing an offence under new subsection 324B(1) or a related
offence provision. However, evidence of dishonesty outside that period may be relevant
in establishing whether an offence occurred within the prescribed period.
Dishonesty-based offences may disqualify individuals from managing corporations
444. A person becomes disqualified from managing corporations for 5 years under
subparagraph 206B(1)(b)(ii) of the Corporations Act 2001 (Corporations Act), if they
are convicted of an offence that involves dishonesty and is punishable by imprisonment
for at least three months.
445. An offence against new section 324B (or an ancillary offence that is taken to be such an
offence) triggers this disqualification. The Corporations Act also makes provision for
lifting, or extending, this disqualification in certain circumstances.
Consequential amendments
446. Item 47 repeals the existing definition of dishonesty in section 536CA consequential on
this change.
447. This item is consequential on the repeal of subsection 536CA(2), and reinstates the part
of the section which clarifies that the determination of dishonesty is a matter for the
trier of fact (that is, judge or jury).
House of Representatives 83 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
Item 49 - Paragraphs 682(1)(c) and (d)
Item 50 - Paragraph 706(1)(a)
Item 51 - Subsection 711(1)
Item 52 - Paragraph 712AA(1)(a)
Item 53 - Subsections 793(1) and (2)
Item 54 - At the end of subsection 793(4)
448. These items amend various provisions to ensure that the FWO and Fair Work
Inspectors can investigate and prosecute ancillary offences related to a substantive
offence against the Act, even if the ancillary offence provision is in a different Act.
449. This is achieved by amending powers that are expressed narrowly to apply in relation to
'a 'civil remedy provision' or 'the Act' (that is, both civil and criminal provisions under
the Act), so they also extend to 'a related offence provision'.
450. Item 42 inserts a definition of 'related offence provision' into the Dictionary at
section 12. The term is defined to mean section 6 of the Crimes Act, which deals with
accessory after the fact, and the following provisions in Part 2.4 of the Criminal Code,
insofar as they relate to an offence against the Act:
section 11.1 (attempt);
section 11.2 (complicity and common purpose);
section 11.2A (joint commission);
section 11.3 (commission by proxy);
section 11.4 (incitement); and
section 11.5 (conspiracy).
451. Items 49 to 54 insert or amend provisions in the Act that use the term 'related offence
provision', to clarify the operation of ancillary liability provisions. This clarification
affects:
the FWO's general function of inquiry and investigation in paragraph 682(1)(c);
the FWO's general power to commence proceedings in a court etc. in
paragraph 682(1)(d);
Fair Work Inspectors' general compliance powers in paragraph 706(1)(a);
Fair Work Inspectors' power to ask for a person's name and address in
section 711; and
the FWO notice power in paragraph 712AA(1)(a).
452. The amendment to section 711(1) ensures that Fair Work inspectors' power to ask for a
person's name and address can be used in relation to any relevant contravention
(whether civil or criminal), not just a civil remedy provision, which is currently the
case.
453. Items 53 and 54 amend the corporate liability provisions in section 793 of the Act to
make clear that:
Fair Work Amendment (Supporting 84 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
in addition to applying for the purposes of the Act and FWC procedural rules--
they also apply for purposes of a related offence provision; and
Part 2.5 of the Criminal Code does not apply, whether to a civil or criminal
contravention of the Act, or an offence against a related offence provision.
454. This ensures that a single model of corporate responsibility applies consistently,
whether for a civil or criminal contravention of the Act, or a related ancillary offence
that sits outside the Act.
Division 2 - Consequential amendments
Amendments to the Building and Construction Industry (Improving Productivity) Act
2016
Item 55 - Section 5 (paragraph (a) of the definition of designated building law)
Item 56 - Section 5
Item 57 - After paragraph 16(1)(c)
455. These items make consequential amendments to the BCI(IP) Act, to ensure that the
FWO and the ABC Commissioner have equivalent functions and powers to investigate
and enforce the new underpayment offence (section 324B).
456. The existing functions and powers of the ABC Commissioner and Inspectors appointed
under the BCI(IP) Act (building inspectors) are generally expressed broadly, and may
be exercised in relation to both civil and criminal matters, including those arising under
the Act (referred to as the 'FW Act', under the BCI(IP) Act).
457. These items make amendments that have a similar effect to those made in relation to
the Act to ensure the ABC Commissioner and building inspectors may also exercise
their existing functions and powers in relation to 'FW Act related offence provisions'.
This is achieved by:
inserting a definition of 'FW Act related offence provision' into section 5 of the
BCI(IP) Act; and
amending the definition of 'designated building law' to include 'an FW Act
related offence provision'.
458. These amendments ensure, for example, that the ABC Commissioner can exercise the
existing functions of the ABC Commissioner in relation to 'FW Act related offence
provisions' (section 16 of the BCI(IP) Act) and may apply for an examination notice in
respect of an investigation that involves suspected contraventions of 'FW Act related
offence provisions' (section 61B of the BCI(IP) Act). The amendments also ensure that
building inspectors can exercise their existing compliance powers in relation to
investigating suspected contraventions of the Act to also investigate suspected
contraventions of 'FW Act related offence provisions' (Division 3, Part 3 of Chapter 7
of the BCI(IP) Act).
House of Representatives 85 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 5 - Compliance and enforcement
459. Item 57 makes a consequential amendment to the BCI(IP) Act, to insert a new function
for the ABC Commissioner into section 16 of the BCI(IP) Act, to support new
section 324C.
460. It ensures that the ABC Commissioner's statutory functions include initiating
proceedings for an offence against new subsection 324B(1), or for a related offence
provision, where the matter involves a building industry participant or building work.
Amendments to the Federal Court of Australia Act 1976
Item 58 - After paragraph 23AB(4)(a)
461. This item makes a consequential amendment to the Federal Court of Australia Act
1976 (Federal Court of Australia Act) so that criminal procedures under that Act are
available to the Federal Court in relation to an indictable offence against the Act.
Fair Work Amendment (Supporting 86 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 6 - The Fair Work Commission
SCHEDULE 6 - THE FAIR WORK COMMISSION
Overview
462. This Schedule broadens the grounds on which the FWC may dismiss unmeritorious
applications and enables it to deal effectively with applicants who demonstrate a pattern
of initiating unmeritorious proceedings. The Schedule also enables the FWC to vary or
revoke decisions relating to enterprise agreements and workplace determinations more
easily and confers greater discretion on the FWC to decide when a matter on appeal or
review may be determined without a hearing.
Amendments to the Fair Work Act 2009
Item 1 - Section 587
Item 2 - Paragraphs 603(3)(b) and (c)
Item 3 - Paragraph 607(1)(b)
Item 4 - After subsection 616(4)
Item 5 - Before paragraph 675(2)(j)
463. Under existing section 587, the FWC can dismiss an application that is frivolous,
vexatious or has no reasonable prospects of success. These items amend the Act to
align the FWC's powers to deal with unmeritorious applications with those available to
the Administrative Appeals Tribunal (AAT) under section 42B of the Administrative
Appeals Tribunal Act 1975 (AAT Act).
Dismissing applications
464. Item 1 repeals and replaces section 587. New subsection 587(1) provides that the FWC
may dismiss an application that is not made in accordance with the Act, retaining the
ground for dismissal under existing paragraph 587(1)(a).
465. New paragraph 587(2)(a) broadens the existing grounds upon which the FWC may
dismiss an application. It enables the FWC to dismiss an application at any stage in
dealing with a matter if the FWC is satisfied that the application:
is frivolous, vexatious, misconceived or lacking in substance; or
has no reasonable prospects of success; or
is otherwise an abuse of the processes of the FWC.
466. This provides additional grounds on which the FWC may dismiss unmeritorious
applications by including instances where a proceeding is misconceived, lacking in
substance or is otherwise an abuse of FWC processes as grounds for dismissal.
An application may be misconceived or lack substance if the applicant has made
repetitious claims based on substantially the same facts but is dissatisfied with the
outcome (see Commonwealth v Snell [2019] FCAFC 57).
An application which uses legal procedure to oppress the other party may be
dismissed on the basis that it is an abuse of process (for example, see USB AG v
Tyne [2018] HCA 45).
House of Representatives 87 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 6 - The Fair Work Commission
467. An application cannot be dismissed by the FWC unless the applicant is given a
reasonable opportunity to make submissions in relation to whether the application
should be dismissed (new paragraph 587(2)(b)).
468. New subsection 587(3) provides that applications made under existing sections 365 or
773, which trigger FWC dispute resolution processes in relation to disputes involving
termination of employment, may not be dismissed on the grounds set out in new
subsection 587(2). This ensures that applicants are not prevented from applying for
remedies from a court as a result of the FWC dismissing an application in the course of
exercising conciliation/mediation functions in relation to disputes about termination of
employment (see sections 368, 370, 776 and 778).
469. The FWC can dismiss an application on the grounds set out in new subsection 587(2)
on its own initiative or on application (new subsection 587(4)).
470. New subsection 587(5) makes clear that the FWC's power to dismiss an application for
other reasons are not limited by new section 587. By way of example, the note refers
readers to the FWC's power under section 399A to dismiss an application for an unfair
dismissal remedy under Division 5 of Part 3-2.
Orders preventing future applications
471. Item 1 also inserts new section 587A, which enables the FWC to order a person whose
application has been dismissed in accordance with section 587 not to make a
subsequent application to the FWC of a kind or kinds specified in the order, without
permission of an FWC presidential member (subsection 587A(2)). Note 1 provides
examples of orders the FWC could make. Item 4 inserts new subsection 616(4A),
which requires the power to make orders under subsection 587A(2) to be exercised by a
Full Bench of the FWC.
472. This provides an effective way for the FWC to deal with applicants who demonstrate a
pattern of initiating unmeritorious proceedings. Like the amendment to section 587, this
provision is consistent with the AAT's power under subsection 42B(2) of the AAT Act
to restrict future applications after an application has been dismissed.
473. The FWC cannot make an order under new subsection 587A(2) unless the applicant is
given a reasonable opportunity to make submissions to the FWC in relation to whether
the order should be made (new subsection 587A(3)). The FWC can make an order
under new subsection 587A(2) on its own initiative or on application (new subsection
587A(4)).
474. New subsection 587A(5) provides that an order given by the FWC under subsection
587A(2) has effect despite any other provision of the Act or any other Act (for
example, where a provision of an Act confers a right to apply to the FWC). New
subsection 587A(6) nullifies any application made in contravention of an order given
under new subsection 587A(2).
475. New subsection 587(7) provides that an order to refuse to permit a further application
made under subsection 587A(2) cannot be appealed under section 604. This prevents an
applicant from using the FWC appeal process to continue to extend unmeritorious
Fair Work Amendment (Supporting 88 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 6 - The Fair Work Commission
proceedings. However, decisions of the FWC are subject to judicial review (e.g.
pursuant to s 39B of the Judiciary Act 1903).
476. Item 5 inserts new paragraph 675(2)(ib), which ensures that a person who contravenes
an FWC order made under section 587A does not commit an offence under subsection
675(1). These amendments ensure the FWC has effective means to prevent repeated
unmeritorious applications, but do not criminalise the making of misguided
applications.
Varying and revoking the FWC's decisions
477. Item 2 repeals current paragraphs 603(3)(b) and (c).
478. These amendments enable the FWC to vary or revoke a decision of the FWC (on its
own initiative, or on application by an affected person or a person prescribed in the
regulations) where the decision is made under:
section 235 or Division 4, 7, 9, or 10 of Part 2-4 (which deal with enterprise
agreements); or
Part 2-5 (which deals with workplace determinations).
479. For example, if the FWC approved an enterprise agreement under section 186 in
circumstances where the employer mistakenly lodged the wrong version of the
agreement (such as an earlier draft), the FWC could revoke or otherwise vary the
decision to approve the agreement.
Conduct of appeals and reviews
480. Under existing paragraph 607(1)(b) of the Act, an appeal or review of a decision may
only be conducted by the FWC without a hearing if persons making submissions in the
matter consent (provided also that the FWC considers the appeal or review can be
adequately determined without oral submissions: paragraph 607(1)(a)).
481. Item 3 repeals and replaces paragraph 607(1)(b). New paragraph 607(1)(b) enables the
FWC to conduct an appeal or review without a hearing, provided it takes into account
the views of persons making submissions in the matter as to whether a hearing is
appropriate.
House of Representatives 89 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Application, savings and transitional provisions
SCHEDULE 7 - APPLICATION, SAVING AND TRANSITIONAL PROVISIONS
Overview
482. Schedule 7 amends the Act to make application, saving and transitional provisions
arising from the amendments made by the Bill.
Amendments to the Fair Work Act 2009
Item 1 - In the appropriate position in Schedule 1
483. Item 1 inserts new Part 10 into Schedule 1 (Application, saving and transitional
provisions relating to amendments to this Act) of the Act.
Division 1 - Definitions
484. Clause 44 contains the definitions used in Part 10.
Division 2 - Amendments made by Schedule 1 to the amending Act
485. This Division inserts clauses 45, 46, 47 and 48 into Division 2 of Part 10 of Schedule 1
to the Act, which provides the application and transitional provisions for amendments
made by Schedule 1 to the Bill concerning casual employees. In particular, these
clauses:
provide a process for the FWC to resolve interaction issues between the statutory
definition and Division 4A of Part 2-2 (concerning casual conversion) of the
amended Act with terms of enterprise agreements made before commencement
(clause 45);
provide rules for the application of amendments made by Schedule 1 to this Bill
(clause 46);
provide a transition period of 6 months from commencement during which time
employers must assess all existing casual employees against eligibility conversion
criteria and offer conversion, unless they have reasonable grounds not to (clause
47); and
require the FWC to review all modern awards within a 6 month period and vary
any award terms that are inconsistent with the new statutory definition of casual
employee or Division 4A or Part 2-2 (clause 48).
Clause 45 - Resolving uncertainties and difficulties about interaction between enterprise
agreements and the definition of casual employee and casual conversion rights
486. New clause 45 provides a process for employers, employees or employee organisations
covered by an enterprise agreement made before commencement of the amendments to
resolve any uncertainties or difficulties relating to how the agreement interacts with the
new statutory definition and new Division 4A of Part 2-2 (casual conversion), or to
make the agreement operate effectively with those provisions.
487. New subclause 45(1) provides that, on application by an employer, employee or
employee organisation covered by an enterprise agreement that was made before the
commencement of the amendments, the FWC may make a determination varying the
agreement to:
Fair Work Amendment (Supporting 90 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Applications, savings and transitional provisions
resolve an uncertainty or difficulty relating to the interaction between the
agreement and any of the following:
- definition of casual employee in new section 15A of the amended Act,
including to deal with uncertainty or difficulty arising from the
circumstances in which employees are to be employed as casual employees
under the agreement; or
- the provisions of new Division 4A of Part 2-2 of the amended Act; or
make the agreement operate effectively with section 15A or those provisions.
488. New subclause 45(2) specifies that a variation of an enterprise agreement under this
clause operates from the day specified in the determination (which may be a day before
the determination is made).
489. This process may be utilised where it is unclear whether an agreement is attempting to
define casual employee in a way that does not align with the new statutory definition,
or appears to limit the circumstances in which employees are to be employed as
casuals. It may also be utilised where it is unclear how a right to request conversion
under an agreement interacts with the new NES obligation on an employer to offer
conversion under Division 4A of Part 2-2.
Clause 46 - Application of certain amendments
490. New clause 46 contains a number of application provisions for various provisions in
Schedule 1 to the Bill.
491. New subclause 46(1) provides that the new statutory definition of casual employee in
section 15A of the amended Act applies on and after commencement in relation to
offers of employment that were given before, on or after commencement.
492. The effect of subclause 46(1) is that existing casual employees in employment
relationships that would have met the statutory definition in section 15A at the time of
the offer of employment, will be casual employees for the purposes of section 15A on
commencement. This provides parties to existing employment relationships with the
certainty of the statutory definition. To determine whether an existing casual employee
meets the statutory definition will require looking back to the terms of the initial offer
and acceptance of employment. As is the case for offers and acceptances of
employment after commencement, for the purposes of this clause it is similarly not
relevant to the determination of whether there was a lack of the requisite firm advance
commitment whether that offer and acceptance were formally or informally given, or
reduced to writing or not.
493. However, new subclause 46(2) ensures that employees who have either been the subject
of a binding court decision before commencement that they are not a casual employee
of the employer, or who have converted before commencement to other than casual
employment under a term of a fair work instrument or contract of employment, are not
inadvertently reverted to casual employment simply because the terms of their original
offer and acceptance of employment would have met the requirements of the new
statutory definition in section 15A.
House of Representatives 91 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Application, savings and transitional provisions
494. In addition to subclause 46(1), new subclause 46(3) provides that section 15A of the
amended Act, as well as the addition of the signpost to the definition of casual
employee in section 12 of the Act, applies before commencement in relation to offers of
employment that were given before commencement. Similarly to subclause 46(2), this
will not affect a person who is or was an employee of the employer, and who either is
the subject of a binding court decision made before commencement that they are not a
casual employee of the employer, or who converted before commencement to other
than casual employment under a term of a fair work instrument or contract of
employment.
495. New subclause 46(4) provides that, to avoid doubt, if, apart from subclause 46(3), an
employee could have made a claim for accrued relevant entitlements (within the
meaning of subsection 545A of the amended Act), the effect subclause 46(3) is that the
employee has not accrued, and cannot make a claim for, those entitlements.
496. Together with new section 545A and the new casual conversion mechanism in Division
4A to be inserted into the NES, subclauses 46(3) and (4) form part of a broad overall
adjustment of relations between employers and employees. As explained in relation to
section 545A, this package will address the issue of widespread reliance by employers
and employees on a mistaken belief about the nature of the parties' casual employment
relationships. Without these amendments, significant costly and time-intensive court
processes would be needed to determine the appropriate rights and obligations of
employers and employees in these situations, imposing significant burdens on both
employers and employees.
497. New subclause 46(5) provides that subject to clause 47, Division 4A of Part 2-2 of the
amended Act applies in relation to periods of employment starting before, on or after
commencement.
498. This ensures that periods of employment as a casual prior to the commencement of the
amendments can count towards the eligibility requirements for the purposes of the new
casual conversion rights in Division 4A of Part 2-2. Clause 47 modifies the effect of
Division 4A of Part 2-2 for a transitional period of 6 months for employees who started
their employment with their employer before commencement of the amendments.
499. New subclause 46(6) provides that section 545A of the amended Act applies in relation
to entitlements that accrue, and loading amounts paid, on or after commencement. This
is relevant both for existing employment relationships and for those starting after
commencement.
500. New subclause 46(7) provides, in addition to subclause 46(6), that section 545A also
applies in relation to entitlements that accrue, and loading amounts paid, before
commencement. This is relevant to existing employment relationships as well as former
employment relationships that ended prior to commencement.
501. New subclause 46(8) makes clear, for the avoidance of doubt, that section 545A
extends to claims brought by or for the benefit of former employees, in addition to
existing employees. This subclause provides that section 545A of the amended Act
applies:
Fair Work Amendment (Supporting 92 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Applications, savings and transitional provisions
to periods of employment starting before, on or after commencement (regardless
of whether the employment period ended before commencement); and
regardless of whether a person is, or is not, an employee of the relevant employer
at the time a claim to which that section relates is made.
502. As with subclauses 46(3) and (4) above, together with new section 545A and the new
casual conversion mechanism in Division 4A of Part 2-2 to be inserted into the NES,
subclauses 46(6) to (8) form part of a broad overall adjustment of rights and obligations
between employers and employees. As explained in relation to section 545A, this
package will address the issue of widespread reliance by employers and employees on a
mistaken belief about the nature of the parties' casual employment relationships.
503. New subclause 46(9) provides that a reference to periods of employment as a casual
employee in sections 87, 96, 117, 119 and 121 of the amended Act applies to periods of
employment starting before, on or after commencement of the new provisions.
504. New subclause 46(10) provides that a reference to a regular casual employee in sections
23, 65, 67, or 384 of the amended Act applies to periods of employment starting before,
on or after commencement. This ensures that the use of the term regular casual
employee in those provisions does not prevent an employee's period of pre-
commencement service from being counted for the purposes of those provisions.
505. New subclause 46(11) provides, for avoidance of doubt, that nothing in subclause 46(1)
is taken to change the time at which the person became an employee of the employer.
This clarifies that applying the statutory definition to an existing employment
relationship does not have the effect of altering the employee's start date.
Clause 47 - Transitioning casual employees
506. New clause 47 varies the application of the casual conversion rights and obligations in
new Division 4A of Part 2-2 of the amended Act in relation to existing casual
employees over a 6 month transition period. The provision ensures that all existing
casual employees, even if they do not satisfy the statutory definition of casual employee
in section 15A, have the opportunity (subject to reasonable grounds) to convert under
Division 4A if the relevant requirements are met.
507. New subclause 47(1) provides that the clause applies in relation to an employee and an
employer if any or all of the following apply:
the employee was, immediately before commencement (and disregarding
subclause 46(3)), a casual employee of the employer;
the employee was, immediately before commencement (and disregarding
subclause 46(3)), designated as a casual employee by the employer for the
purposes of:
- any fair work instrument that applies to the employee; or
- the employee's contract of employment;
House of Representatives 93 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Application, savings and transitional provisions
the employee is a casual employee of the employer within the meaning of section
15A of the amended Act because of an offer of employment made before
commencement.
508. The note to subclause 47(1) explains that the effect of this application provision is to
require an employer to assess whether to offer conversion under Division 4A of Part 2-
2 of the amended Act (as amended by clause 47) to any employee who was, or may
have been, a casual employee immediately before commencement as well as to any
employee who at commencement is a casual employee within the meaning of the
statutory definition in section 15A.
509. New subclause 47(2) provides modified rules for the operation of Division 4A of
Part 2-2 for employers of casual employees who began employment before
commencement of the provisions during a 6 month transition period. The subclause
provides that Division 4A (other than Subdivision C, which contains the residual right
to request) is taken to apply in relation to the employee and employer for the transition
period of 6 months after commencement, but only as modified by the following
paragraphs:
the employer was required under section 66B of the amended Act to assess at a
time during the transition period whether the employer was required to make an
offer to the employee under that section;
paragraph 66B(1)(a) of the amended Act were a requirement for the employee to
have been employed by the employer for a period of 12 months ending the day
the assessment is made;
paragraph 66B(2)(c) of the amended Act were a requirement to give the offer to
the employee within 21 days after making the assessment;
subsection 66C(3) of the amended Act included a requirement to give a notice
under that subsection if, when the assessment is made, the employee does not
meet the requirement in paragraph (b) of this subclause; and
paragraph 66C(4)(c) of the amended Act were a requirement to give the notice
within 21 days of making the assessment but no later than the end of the
transition period.
510. The effect of subclause 47(2) is that, by the end of the transition period, an employer
must, in relation to all casual employees who started their employment with the
employer before commencement:
assess all existing casual employees against the conversion criteria at a time
during the transition period (instead of the normal requirement in section
66B(1)(a) to make the assessment when the employee has been employed by the
employer for 12 months); and either
offer conversion to all eligible casual employees (unless the employer has
reasonable grounds not to); or
provide a notice to any employee who is not offered conversion that includes the
reasons the employer has not provided the offer, including whether those reasons
are that:
Fair Work Amendment (Supporting 94 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Applications, savings and transitional provisions
- the employee has not met the eligibility criteria to be made an offer (either
because they have not been employed for at least 12 months or the
employee does not satisfy the regular pattern of hours requirement in
paragraph 66B(1)(b)); or
- the employer has reasonable grounds for not making an offer.
511. These modifications mean that the usual operation of Division 4A of Part 2-2 will not
apply to these employers and employees until after the end of the transition period. This
includes the residual right to request, which will become available to these employees
who are eligible after the end of the 6 month transition period. This is intended to
ensure the obligation on an employer to offer conversion under Subdivision B of
Division 4A Part 2-2 is the primary conversion mechanism during the transition period.
512. The transition period provides an employer with an appropriate timeframe to
incorporate the new obligation to offer casual conversion in relation to their casual
employees who began their employment before commencement of the amendments.
Employers are free to comply with their obligations under this clause at any stage
during the transition period.
513. New subclause 47(2) also has the effect of extending the obligation to consider whether
an offer of conversion should be made under Division 4A of Part 2-2, as modified, to
casual employees who have been employed for more than 12 months on
commencement, and who would therefore not otherwise be entitled to receive a
conversion offer (if no reasonable grounds exist) under section 66B. This ensures those
employees are not disadvantaged by having been employed by the employer for a
longer period.
514. New subclause 47(3) provides that Subdivision C of Division 4A of Part 2-2 of the
amended Act, which sets out the residual right to request casual conversion, does not
apply in relation to the employee and employer for the 6 month transition period after
commencement.
515. New subclause 47(4) provides that Division 4A (including Subdivision C) of Part 2-2
of the amended Act applies in relation to the employee and employer to whom
paragraph (1)(a) or (b) apply after the transition period as if the employee were a casual
employee of the employer within the meaning of section 15A of the amended Act. This
ensures that, after the transition period, the full casual conversion rights and obligations
under Division 4A of Part 2-2 apply to all employees and employers to whom this
clause applies, including existing employees who may not have met the statutory
definition in section 15A on commencement of their employment.
516. New subclause 47(5) provides employers referred to in subclause 47(1) (i.e. employers
of all casual employees, including employees designated as casuals, who started their
employment before commencement of the amendments) must give each of those
employees a Casual Employment Information Statement (as provided for in section
125A of the amended Act) as soon as practicable after the end of the transition period.
This ensures that existing casual employees are notified about the new statutory
House of Representatives 95 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Application, savings and transitional provisions
definition and casual conversion rights and obligations under new Division 4A of
Part 2-2.
Clause 48 - Variations to modern awards
517. Clause 48 requires the FWC, within 6 months after commencement, to review modern
award terms dealing with casual employment or casual conversion and vary any terms
that are inconsistent with the definition of casual employee in new section 15A, or
Division 4A of Part 2-2, or where there is an uncertainty or difficulty relating to the
interaction between the award and the amended Act.
518. Subclause 48(1) provides that the FWC must, within 6 months after commencement,
review certain terms of modern awards in accordance with subclause 48(2) where:
the modern award is made before commencement; and
the modern award is in operation on commencement; and
immediately before commencement, the modern award includes a term (the
relevant term) that:
- defines or describes casual employment; or
- deals with the circumstances in which employees are to be employed as
casual employees; or
- provides for the manner in which casual employees are to be employed; or
- provides for the conversion of casual employment to another type of
employment.
519. Subclause 48(2) provides that the review must consider whether the relevant term is
consistent with this Act as amended by Schedule 1 to the amending Act, and whether
there is any uncertainty or difficulty relating to the interaction between the award and
the Act as so amended.
520. The FWC may determine the process it undertakes to review any such award terms
within its existing powers under the Act and consistent with the modern awards
objective in section 134.
521. Subclause 48(3) provides that if the review of a relevant term under subclause (1) finds
that the relevant term is not consistent with the Act as amended by Schedule 1 to the
amending Act, or there is a difficulty or uncertainty relating to the interaction between
the award and the Act as so amended, then the FWC must make a determination
varying the modern award to make the relevant term consistent or operate effectively
with the Act as so amended.
522. Subclause 48(4) requires the FWC to make the determination as soon as reasonably
practicable after the review is conducted.
523. Subclause 48(5) provides that a determination varying an award under subclause (2)
comes into operation and takes effect from the start of the day the determination is
made.
524. Subclause 48(6) provides that section 168 applies to a determination made under
subclause (2) as if it were a determination made under Part 2-3. Section 168 requires
Fair Work Amendment (Supporting 96 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Applications, savings and transitional provisions
the FWC to publish a varied award as soon as practicable after making a determination
under Part 2-3 of the Act.
Division 3 - Amendments made by Schedule 2 to the amending Act
Clause 49 - Transitional - flexible work directions
525. This clause makes clear, for the avoidance of doubt, that the effect of the repeal of Part
6-4D is that:
no further flexible work directions can be given;
any directions in effect at the time of the repeal cease to have effect from the
repeal time; and
the provisions listed in subsection 789GZO(1) which comprise Division 2 of
Schedule 2 will no longer be deemed as terms of an identified modern award.
526. This means that once the provisions are repealed, and any directions made under those
provisions cease, employees' terms and conditions will revert back to what they were
without the directions in place.
Division 4 - Amendments made by Schedule 3 to the amending Act
Clause 50 - Application of amendments relating to enterprise agreements
527. New subclause 50(1) provides that except as provided by new subclauses 50(2) to
50(8), the amendments to Part 2-4 made by Schedule 3 apply in relation to:
enterprise agreements, or proposed enterprise agreements, for which the access
period begins on or after commencement; and
variations, or proposed variations, of enterprise agreements for which the access
period for the variation, or proposed variation, begins on or after commencement.
528. New subclause 50(2) provides that new sections 171 and 254B, concerning the objects
of Part 2-4 and FWC functions, apply in relation to the performance of a function or
exercise of a power on or after commencement.
529. New subclause 50(3) provides that new subsection 173(3), concerning the NERR,
applies in relation to a proposed enterprise agreement for which the notification time is
on or after commencement.
530. New subclause 50(4) provides that the repeal of new subsection 189(1A) made by
Division 2 of Part 5 of Schedule 3 to the amending Act, concerning the mechanism that
provides for the approval of enterprise agreements that do not pass the BOOT, applies
in relation to an enterprise agreement for which the access period begins on or after that
repeal. New subsection 189(1A) will be repealed the day after the period of 2 years
after the amending Act receives the Royal Assent.
531. New subclause 50(5) provides that new subdivision AA of Division 7 of Part 2-4,
concerning the variation of single enterprise agreements to cover eligible franchisee
employers and their employees, applies in relation to an eligible franchisee employer
for a single enterprise agreement whether the employer becomes a franchisee of the
relevant franchise, or the agreement is made, before or after commencement.
House of Representatives 97 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Application, savings and transitional provisions
532. New subclause 50(6) provides that new section 225, concerning the termination of an
enterprise agreement after its nominal expiry date, applies in relation to enterprise
agreements that pass their nominal expiry date on or after commencement.
533. New subclause 50(7) provides that new sections 254AA, and 255AA, concerning how
the FWC may inform itself and time limits for the FWC determining certain
applications, apply in relation to an application made on or after commencement.
534. New subclause 50(8) provides that new subsections 272(5) and 273(6), concerning the
inclusion of the model NES interaction term in workplace determinations, apply in
relation to workplace determinations made on or after commencement.
Clause 51 - Transfer of business
535. New clause 51 provides that new subsection 311(1A) applies in relation to an employee
who becomes employed by the new employer after commencement.
Division 5 - Amendments made by Schedule 4 to the amending Act
536. New clause 52 provides that the amendments made by Schedule 4 apply in relation to
enterprise agreements made on or after commencement. That commencement is the day
after the day the Act receives the Royal Assent (see item 9 of the table in clause 2 of the
Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill
2020 (Bill) for that commencement day).
Division 6 - Amendments made by Schedule 5 to the amending Act
537. New clause 54 provides that the new penalty increase for non-compliance with a
compliance notice only applies to a notice given on or after commencement.
538. New clause 55 provides that the new 'value of the benefit' penalty only applies
prospectively, that is to conduct engaged in, on or after commencement. If that occurs
in relation to a continuous course of underpayment that starts before commencement,
any pre-commencement underpayments are penalised under previous rules.
539. Courts would apply the totality principle to ensure that penalties to be imposed on a
contravener, considered as a whole, are just and appropriate.
540. New clause 56 provides that the new penalty increase for infringement notices only
applies to conduct occurring on or after commencement.
541. New clause 57 provides that the criminal underpayments offence in new section 324B
only applies to conduct that occurs after commencement.
Division 7 - Amendments made by Schedule 6 to the amending Act
542. New clause 60 provides that the amendments to current section 603 only applies to
decisions made by the FWC on or after commencement.
543. New clause 61 provides that section 607 of the amended Act, which deals with the
FWC's conduct of matters on appeal and review, applies in relation to appeals and
reviews notified, or applied for, on or after commencement.
Fair Work Amendment (Supporting 98 House of Representatives
Australia's Jobs and Economic Recovery)
Bill 2020
Schedule 7 - Applications, savings and transitional provisions
Item 2 - Before clause 54 of Schedule 1
544. New clause 53 provides that the prohibition on advertising employment with a rate of
pay less than the national minimum wage or special minimum wage under new
section 536AA applies to advertisements first published on or after the commencement
of this clause. The prohibition would not cover advertisements first published before
the commencement of this clause but in place at and after the commencement of this
clause.
Item 3 - At the end of Division 6 of Part 10 of Schedule 1
545. New clause 58 provides that, for small claims proceedings on foot at commencement,
this clause permits courts (as a matter of discretion) to allow applicants to amend
claims to seek relief up to the new $50,000 jurisdictional limit.
546. New clause 59 provides that arrangements for FWC conciliation and consent arbitration
for the small claims proceedings in new sections 548A to 548E apply in relation to
proceedings commenced on or after commencement of this clause (that is, six months
after general commencement).
House of Representatives 99 Fair Work Amendment (Supporting
Australia's Jobs and Economic Recovery)
Bill 2020