Many Modern Awards in Australia require employers to give a notice period to employees if they intend to shut down the business over a...
Penalty RatesFebruary 2, 2017
The beginning of a new year brings a sense of vitality and optimism to the workplace and is the perfect time to shape up for the year ahead. Whilst pondering your personal and professional New Year’s resolutions, check out the top workplace relations issues and trends that we envisage will continue to impact employers this year.
Renovations to the Fair Work Act.
Business groups continue to pressure for changes to the Fair Work Act after voicing concerns over the complexity of the system. In approximately 900 pages, the Fair Work Act covers most aspects of the ways in which employers and employees should deal with each other and sets a variety of minimum standards. Reflecting the regulatory underpinning of the system, wages and conditions for most national system employees must be at, or above, the safety net of those set in over 123 Modern Awards (Awards) and the 10 National Employment Standards.
Employsure is accustomed to hearing employers’ frustrations and complaints about the ‘clunkiness’ of the system, concerns about the complexity of forming Enterprise Agreements, inconsistencies and lack of clarity in Awards, barriers to forming individual arrangements, and the unpredictability of Fair Work Commission’s (FWC) decisions on a range of matters.
There is an understandable tendency to imagine that there may be a neater and more coherent system, and that it would be desirable to start with a clean slate. However it is unlikely that the system will get a ‘knockdown and rebuild’, rather we will continue with ‘renovations’ of the Fair Work Act.
Not so Modern Awards.
Modern Awards are the industrial instruments that prescribe various grounds for wages and conditions for a wide variety of skill levels across multiple industries. They are a longstanding part of Australia’s workplace relations framework, with the FWC and its various quasi‑judicial predecessors determining Awards for more than 100 years. While they are rigid and historically bound, Awards and the processes for determining them have adapted over time and undergo continuous reform.
Today, Awards undergo a four yearly review process as a requirement of the Fair Work Act. The primary objective of the review process is to reassess their relevance, resolve anomalies, and ensure that the Modern Awards objective of the Fair Work Act is met.
Penalty rate changes.
Penalty rates can be a huge impediment when it comes to trading on weekends, not to mention public holidays, for small business owners. On 23 February 2017, the Fair Work Commission (FWC) announced that Sunday and public holiday penalty rates in a number of Modern Awards in the hospitality and retail sectors will be reduced. The decision is to bring Sunday rates into line with Saturday rates, will undoubtedly change the game for business owners and be a landmark decision that most employers have warmly welcomed.
This is a monumental decision which has positive impact, particularly for the small-business owner. Now, there are far more opportunities for staffing on weekends and public holidays and, therefore, greater profitability opportunities. Nevertheless, while the reduced rates will be welcomed by employers, the decision does not simplify the Modern Award system for them – it remains a highly complex and disturbing undertaking for small-business owners to apply.
And while employers welcome the penalty rates decision, most employees are undoubtedly disappointed. The cut to their pay will prompt possible difficult conversations about changes to staffing and wages for Sundays and public holidays. The effects of these changes will be widely and deeply felt throughout the nation.
It is important to note the changes do not take immediate effect, so employers need not act in haste. Further details on how these changes will be implemented is yet to be confirmed by the FWC and as a result no employee’s rates of pay should be reduced at this point in time.
Excessive annual leave.
2016 saw several amendments made to annual leave (AL) entitlements in Modern Awards. The FWC amended a number of Modern Awards in relation to when annual leave can be taken, cashed out and paid. Some of these changes will come into effect this year. From 29 July 2017, some Modern Awards, including the Aged Care Award 2010, Clerks – Private Sector Award 2010 and Social, Community, Home Care and Disability Services Industry Award 2010, will give employees the power to give an employer a notice requesting to take excess annual leave, even if the employer does not agree.
Employees can now, by written agreement with their employer, choose to cash out a period of AL no greater than two weeks for each 12 month period. The cashing out of AL must not leave the employee’s remaining AL balance with less than four weeks. Finally, the rate at which the leave is paid must be the same as if it were taken. Therefore, the annual leave loading of 17.5% would still apply.
As a matter of best practice, your business should encourage employees to utilise their annual leave for their health and wellbeing. Additionally, you should consider whether the changes to annual leave provisions in some of the Modern Awards affect your business, and whether you need to update your contracts, policies and procedures. It may be that some employees in your business are covered by a Modern Award with the new excessive annual leave provision, and other employees are covered by a Modern Award without the new provision, and so your business should have policies sufficiently flexible enough to cover both scenarios.
Migrant workers are more vulnerable to exploitation than are other employees. Although covered under the Fair Work Act, permanent and temporary migrant workers face higher risks of exploitation due to potential lower proficiency in English skills, lack of awareness of their rights in the workplace and a reluctance to reveal exploitation.
The exploitation of vulnerable workers is a hot topic at the moment, with the Fair Work Ombudsman (FWO) making it abundantly clear that exploitative practices will not be tolerated. The FWO has also warned that it will target all parties involved in the exploitation of vulnerable workers by using the accessorial liability provisions in the Fair Work Act. This approach can be seen in the 7-Eleven and Yogurberry cases from 2016 and the creation of the Migrant Workers’ Taskforce. This focus on vulnerable workers is a trend that is expected to continue in 2017.
Workplaces are important to our economy and society. Higher living standards, better pay and more jobs all depend on having fair, productive, and effective workplaces. The prosperity of tomorrow is driven by what happens in our workplaces today and this is why it is in our interest to make sure that our clients are on top of all workplace relations changes.
If you are ever confused about new employment legislation and how this could affect your business, call Employsure on 1300 651 415. As Australia’s leading workplace relations specialist, Employsure helps small to medium businesses understand confusing and constantly evolving legislation and the implications for you.