FWC Annual Wage Review 2025-26
Earlier this morning, 3 June 2025, the Fair Work Commission (FWC) announced their decision regarding the Annual Wage Review for 2025-26. The FWC has increased both the minimum wage and modern award minimum wage rates by 3.5% . The increased rates are to be applied with effect 1 July 2025.
National Minimum Wage Increase
The National Minimum Wage applies to employees not covered by an award or registered agreement. From 1 July 2025, the NMW will be increased to $948.00 per week or $24.95 per hour. It is an increase of about $32.10 a week to the current minimum wage.
Award Minimum Wage Increase
Following consultation with a range of stakeholders, including peak councils, registered employer/employee organisations, individual employers and employees, and the Australian Commonwealth and State Governments, the FWC decided that employees covered by a modern award (approximately a 2.6 million workers – equivalent to 20.7% of the national workforce) will have their award based minimum rates increased by 3.5% with effect the first full pay period starting on or after 1 July 2025.
The FWC determined that based on the Reserve Bank of Australia’s assessment that inflation has returned to its target of 2-3%, the time had come
for awarding a real increase to modern award wages and the NMW so as to avoid permanently entrenching a reduction in living standards for the
lowest paid in the community. The FWC went on to state that they were satisfied that based on:
- the labour market remaining strong;
- continued employment growth;
- low unemployment rates; and
- profit margins at approximately prepandemic levels;
- the level of wage increase was sustainable.
that, the Australian Government, “believes that workers should get ahead with an economically sustainable real wage increase” and that “a real
wage increase provides further relief to [the] lowest paid workers who continue to face cost-of living pressures.”
Enterprise Agreement Wage Increase
Employees covered by enterprise agreements that provide for annual wage increases aligned to the FWC Annual Wage Review (approximately 300,000 workers – equivalent to 2.3% of the national workforce), will also be entitled to the 3.5% increase with effect 1 July 2025.
Superannuation
The legislated minimum superannuation amount will increase from 11.5% to 12% per annum on 1 July 2025.
Takeaways for employers
The increases to minimum wages will take effect for employers from the first full pay period on or after 1 July 2025. The increases will also have a flow-on effect to all loadings, penalties, allowances and overtime payments under the awards that are calculated with reference to the minimum wage. Employers will soon be able to review these increase on the FWC’s Pay and Conditions Tool website, with the associated FWC pay guides being published closer to 1 July 2025.
Employers should review their current pay arrangements to ensure that:
- award/agreement-free employees:any employee not covered by a modern award or enterprise agreement is paid the new minimum weekly wage.
- modern award covered employees: from the first full pay period on or after 1 July 2025, employees covered by a modern award are paid the newly prescribed minimum award rates of pay, including casual loading and other loadings, penalties, allowances or overtime, which are calculated by reference to the modern award minimum rates of pay.
- all-inclusive salary employees: review salary packages of employees who receive ‘all-inclusive salaries’. The increase may affect the lawfulness of that all-inclusive salary if it is no longer adequate to compensate them for their award entitlements ie to achieve a positive BOOT.
- enterprise agreement covered employees: from the first full pay period on or after 1 July 2025, for employees:
- not covered by a modern award – not less than the national minimum wage;
- covered by a modern award – not less than the minimum prescribed rate of pay for the employee’s award classification; and
- engaged under arrangements that guarantee pay above the high-income threshold – must exceed the high-income threshold (currently $175,000, however, will increase with effect 1 July 2025).
Disclaimer: The information contained in this update is intended as a guide only. Professional advice should be sought before applying any of the information to circumstances. While every reasonable care has been taken in the preparation of this update. Law Ensure (ACN 168 990 261) does not accept liability for any errors it may contain.
FWC Annual Wage Review 2024-25
On 3 June 2024, the Fair Work Commission (FWC) announced their decision regarding the Annual Wage Review for 2024-25. The FWC has increased both the minimum wage and modern award minimum wage rates by 3.75%. The increased rates are to be applied with effect 1 July 2024.
National Minimum Wage Increase
The National Minimum Wage applies to employees not covered by an award or registered agreement. From 1 July 2024, the National Minimum Wage will be increased to $915.90 per week or $24.10 per hour.
It is an increase of about $33.00 a week to the current minimum wage, and affects about 2.6 million workers — equivalent to 20.7% of the national workforce.
Award Minimum Wage Increase
Following consultation with a range of stakeholders, including peak councils, registered employer/employee organisations, individual employers and employees, and the Australian Commonwealth and State Governments, the FWC decided that employees covered by a modern award (approximately a ¼ of all Australian employees) will have their award based minimum rates increased by 3.75% with effect the first full pay period starting on or after 1 July 2024.
The FWC determined that this level of wage increase was the most that could reasonably be justified in the current economic climate, stating that it was ‘not appropriate’ to increase award wages ‘by any amount significantly above the inflation rate’.
In determining the percentage increase, the FWC took into consideration:
- the current rate of inflation;
- the performance and competitiveness of the national economy;
- the need to achieve gender equality;
- promoting social inclusion through increased workforce participation;
- cost of living pressures;
- relative living standards and the needs of the low paid; and
- that modern-award-reliant employees will shortly receive the benefit of the stage 3 tax cuts and the 2024 budget cost-of-living measures, which are projected to increase real household disposable incomes over the next 12 months.
Enterprise Agreement Wage Increase
Employees covered by enterprise agreements that provide for annual wage increases aligned to the FWC Annual Wage Review, will also be entitled to the 3.75% increase with effect 1 July 2024.
Superannuation
The legislated minimum superannuation amount (Super Guarantee) will increase from 11% to 11.5% per annum on 1 July 2024.
New Casual Employment Definition
With effect 26 August 2024 the new definition of ‘casual employee’ is introduced to the Fair Work Act 2009 (Cth) (FW Act), where a casual employee is only a casual if:
- there is not a firm advance commitment to continuing and indefinite work, taking into account a number of factors including the real substance, practical reality and true nature of the employment relationship; and
- the employee is entitled to receive a casual loading or specific casual pay rate.
The definition expands further to provide indicia of how the employment relationship may be characterised by an absence of a firm advance commitment to continuing and indefinite work, which includes whether:
- there is an inability for the employer to elect to offer work or an inability for the employee to elect to accept or reject work (and whether this occurs in practice);
- having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee;
- there are full time employees or part time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee; and
- there is a regular pattern of work for the employee (although this does not have to be ‘absolutely uniform’).
In short, this change means that parties will need to look beyond the written terms of a contract to determine whether an employee is truly a casual and must make an assessment having regard to the ‘real substance, practical reality and true nature of the employment relationship’.
Employees who start as a casual, will stay casual until their employment status changes either through:
- a conversion process or FWC order; or
- accepting an alternative employment offer and starting work on that basis.
Employees who were employed casually before 26 August 2024 will stay casuals under the new definition unless they transition to permanent employment.
Right to Disconnect
With effect 26 August 2024 (and 25 August 2025 for small businesses) eligible employees gain the ‘right to disconnect’ outside of work hours, which includes emails, calls and text messages from both employers and third parties such as clients and contractors.
Modern awards will contain a new model term by 26 August 2024, with employees set to gain the right to refuse contact outside their working hours unless that refusal is unreasonable.
Several factors must be considered when determining whether an employee’s refusal is unreasonable.
This includes:
- the reason for the contact;
- whether the employee is compensated for:
- being available in the period when contact is made or attempted; or
- working additional hours outside their ordinary hours of work;
- the nature of the employee’s role and level of responsibility; and
- the employee’s personal circumstances, including family or caring responsibilities.
Takeaways for employers
The increases to minimum wages will take effect for employers from the first full pay period on or after 1 July 2024. The increases will also have a flow-on effect to all loadings, penalties, allowances and overtime payments under the awards that are calculated with reference to the minimum wage. Employers will soon be able to review these increase on the FWC’s Pay and Conditions Tool website.
Employers should review their current pay arrangements to ensure that:
- award/agreement-free employees:any employee not covered by a modern award or enterprise agreement is paid the new minimum weekly wage.
- modern award covered employees: from the first full pay period on or after 1 July 2024, employees covered by a modern award are paid the newly prescribed minimum award rates of pay, including casual loading and other loadings, penalties, allowances or overtime, which are calculated by reference to the modern award minimum rates of pay.
- all-inclusive salary employees: review salary packages of employees who receive ‘all-inclusive salaries’. The increase may affect the lawfulness of that all-inclusive salary if it is no longer adequate to compensate them for their award entitlements ie to achieve a positive BOOT.
- enterprise agreement covered employees: from the first full pay period on or after 1 July 2024, for employees:
- not covered by a modern award – not less than the national minimum wage;
- covered by a modern award – not less than the minimum prescribed rate of pay for the employee’s award classification; and
- engaged under arrangements that guarantee pay above the high-income threshold – must exceed the high-income threshold (currently $162,000, however, will increase with effect 1 July 2024).
Disclaimer: The information contained in this update is intended as a guide only. Professional advice should be sought before applying any of the information to circumstances. While every reasonable care has been taken in the preparation of this update. Law Ensure (ACN 168 990 261) does not accept liability for any errors it may contain.
More Changes to the Fair Work Act - Closing Loopholes and More!
Key changes introduced as a result of the Loopholes Act 1 include:
- stronger discrimination protections for employees experiencing family and domestic violence;
- small business redundancy exemptions when a non-small business downsizes and becomes a small business;
- the ability for the Fair Work Commission (FWC) to make orders for labour hire workers (ie same job, same pay);
- underpayments, compliance and enforcement – a new criminal offence for wage and superannuation theft that considers underpayments, compliance and enforcement;
- expanded workplace delegates’ rights including the requirement for employers to allow workplace delegates to communicate with other employees who are current or prospective union members at the workplace, provide delegates with reasonable access to the workplace to undertake their duties, and entitlement for delegates to paid time during normal working hours to attend training in relation to their role.
The Loopholes Bill 2 passed both houses on 12 February 2024, with the agreed amendments to the Fair Work Act 2009 (Cth) (FW Act) to include:
- a new definition of casual employment and employee initiated casual conversion;
- the right to disconnect;
- amended ordinary definition of employee/employer;
- enabling multiple franchisees to access the single-enterprise stream;
- transitioning from multi-enterprise agreements;
- additional model terms;
- intractable bargaining workplace determinations;
- workplace delegates’ rights;
- additional details relating to sham arrangements;
- exemption certificates for suspected underpayment;
- amendments including significantly increased penalties for civil remedy provisions (up to five times more than current penalties!) and lowering of the bar for what constitutes a ‘serious contravention’;
- revised compliance notice measures;
- updated withdrawal from amalgamations;
- an updated definition of employment; and
- provisions relating to regulated workers.
In this article we will discuss:
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- Discrimination protections for employees experiencing family and domestic violence. With effect 15 December 2023, the Loopholes Act 1 brought into effect stronger protections against discrimination for employees subjected to family and domestic violence.
This means that it is unlawful for an employer to take adverse action (including dismissal) against an employee because the employee is (or has been) experiencing family and domestic violence.
For employees not covered by the general protections’ contained in Part 3.1 of the FW Act, the Loopholes Act 1 also expands the FW Act’s unlawful termination provisions to prohibit employers from terminating an employee’s employment on the basis of ‘subjection to family and domestic violence’. This change is unlikely to cause concern for employers, however, employers should:
- be aware of these new terms when managing underperforming employees or matters of misconduct;
- ensure actions are taken to update policies and procedures; and
- include such provisions in discrimination training.
2. Small business redundancy exemptions when a non-small business downsizes, came into effect 15 December 2023.
Traditionally, most small business employers (those employing less than 15 employees) are not required to pay redundancy pay to employees who are made redundant.
However, with this new change, employees who are made redundant by an employer who was not a small business, but as a result of the employer:
- being bankrupt or in liquidation; or
- employing less than 15 employees by way of terminating one or more employees
becomes a small business, in these circumstances, the employer may still be required to pay their employees redundancy pay.
Note:
- this addition is yet to be reflected in the FW Act, however, the specific rules will be reflected in a new section 121(4) of the FW Act.
- further information on bankruptcy and liquidation can be found here.
- employers who are on the ‘cusp’ of small business status should take into consideration these new provisions when contemplating re-structures and downsizing.
3. The FWC has ability to make orders for labour hire workers (ie same job, same pay). This came into effect on 15 December 2023, however, any orders made by the FWC will not come into effect until on or after 1 November 2024.
Employees, unions and host employers can now apply to the FWC for new types of orders requiring ‘labour hire’ employers to pay their employees no less than the full rate of pay that would be payable to those employees if the ‘host’ employer’s enterprise agreement (or other relevant workplace instrument) had applied to them. Other orders can include the terms and nature of the arrangement under which the work will be performed.
Where an order has been made, host employers must:
- notify the labour hire employers covered by the order when a new enterprise agreement has been approved that will if it comes into operation, become the instrument covered by the order; and
- apply to the FWC to vary the order if they engage another labour hire employer and their employees to perform the same work as those already covered by the order; and
- notify potential and successful tenderers of the possible effect of the order on them.
The FWC cannot make an order if:
- it is not fair and reasonable in the circumstances;
- the arrangements are for a service to be provided rather than the supply of labour to a host employer; or
- the host employer is a small business employer.
Note: FWC orders will not affect:
- employees engaged in training arrangements under state and territory laws; or
- certain short-term employment arrangements (usually three months or less).
4. Underpayments, compliance and enforcement – A new criminal offence for wage and superannuation theft comes into effect from 1 January 2025.
This new criminal offence known as ‘wage theft’ targets employers who deliberately (ie not accidently, inadvertently or mistakenly) fail to pay their employees what they are owed pursuant to industrial instruments and orders.
Employers will commit an offence if:
- the employer is required to pay an amount to an employee or on behalf of or for the benefit of an employee under the FW Act, or an industrial instrument (such as the minimum prescribed award rate of pay) or a FWC order (other than superannuation, long service leave under State or Territory legislation, paid leave for being a victim of crime, paid leave for jury service or emergency service leave for certain employees) (Owed Payment); and
- the employer does an act or omits to perform an act; and
- the act or omission results in a failure to pay the Owed Payment to the employee in full on or before the day when the required amount is due for payment.
The penalties for violating this law are severe, with parties who have been determined to have intentionally underpaid employees, who are:
- body corporates, being liable for a fine:
- where the underpayment amount CAN be determined (ie the difference between the Owed Payment and the amount the employer actually paid to the employee) of the greater of three times’ the Owed Payment and 25,000 penalty units (currently $7.825 mil); or
- where the underpayment amount CANNOT be determined, then a fine of $7.825 mil.
- individuals, a term of imprisonment of not more than 10 years or the issuing of a fine:
- where the underpayment amount CAN be determined, the greater of three times’ the Owed Payment 5000 penalty units (currently $1.565 mil); or
- where the underpayment amount CANNOT be determined, then a fine of $1.565 mil.
Note:
- the law also provides a potential protection mechanism for employers to avoid penalties by entering a ‘co-operation agreement’ with the Fair Work Ombudsman (FWO).
- it will be important for all employers to ensure systemic controls and audits ensuring compliance with pay owed, identifying where a mis-payment or incorrect award classification has resulted in unpaid wages may have occurred, and be able to show substantial steps towards minimising the effect / rectifying the error
- New casual employment definition six months after royal assent (and 12 months’ later for small businesses)
Just when we thought we had safely exited the merry go round and could rely on the FW Act’s definition of a casual employee, the Loopholes Bill 2 enlivens the debacle all over again, with the replacement of the current definition of a casual as set out in section 15A of the FW Act.
The new ‘fair and objective definition’ (which notably removes any reference to ‘agreed regular patterns of work) sends us back in time again to the original WorkPac decisions, taking into consideration the totality of the employment relationship and focusing more on the ‘real substance, practical reality and true nature of the employment relationship’ (rather than the current definition which gives primacy to the terms upon which employment was offered and accepted).
The proposed definition is that an employee will be a casual only if:
(a) the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
(b) the employee would be entitled to a casual loading or a specific rate of pay for casual employees under the terms of a fair work instrument if the employee were a casual employee, or the employee is entitled to such a loading or rate of pay under the contract of employment.
The definition expands further to provide indicia of how the employment relationship maybe characterised by an absence of a firm advance commitment to continuing and indefinite work, which includes whether:
- there is an inability for the employer to elect to offer work or an inability for the employee to elect to accept or reject work (and whether this occurs in practice);
- having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee;
- there are full time employees or part time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee; and
- there is a regular pattern of work for the employee (although this does not have to be ‘absolutely uniform’).
In short, this change means that parties will need to look beyond the written terms of a contract to determine whether an employee is truly a casual and must make an assessment having regard to the ‘real substance, practical reality and true nature of the employment relationship’. In short, irrespective of what the casual contract provides for, the employer’s conduct (ie by not issuing rosters on a cyclical basis, regularly offering and asking casual employee to work changed hours/rosters or never communicating changes in offered hours etc) could result in a firm advance commitment being inferred and the employee being deemed permanent.
Note:
- a saving grace to the passed Loopholes Bill 2, is that existing casual conversion provisions (found in subdivision A of Division 4A of the FW Act) will cease to operate (ie requirement for employers to offer casual conversion), with the onus now on the casual employee to make a request to convert to permanent employment (existing provisions will continue to apply for currently employed casuals for a period of six months after enactment or 12 months if a small business).
Casuals will soon be able after six months’ employment (or 12 months if a small business), to assert that their employment has ceased to be casual.
If the employer accepts this, within 21 days, the employer must provide a written response to the employee either:
- accepting the assertion and converting the employee to permanent employment; or
- dispute the assertion, or rejecting the proposed change as being inconsistent with statutory requirements for recruitment or selection, or on ‘fair and reasonable operational grounds’.
- where more onerous obligations are imposed by an enterprise agreement, employers may still need to comply with those contractual obligations.
- the FWC will have power to arbitrate disputes about casual conversion.
- Casual Information Statements must now be given to casuals:
- when casual employees commence work; and
- for employers who are not small businesses, after the casual employee completes the first six months’ of service; and
- each period of 12 months’ of service.
2. right to disconnect – effective six months after royal assent (and 12 months’ later for small businesses):
This significant change sees the mandatory introduction of a new model clause in modern awards and the inclusion in the FW Act for the right for employees to disconnect.
The inclusion grants employees rights to reasonably refuse to monitor, read or respond to contact (or attempted contact) from an employer (and third parties, such as customers or clients) outside of the employee’s ordinary working hours. This new right is aimed at preventing employees from being punished for refusing to take work calls or answer work emails outside of their usual working hours, unless the refusal is unreasonable (provisions of which already exist in numerous current enterprise agreements).
Grounds which may be considered (but are not an exhaustive list) in an unreasonable refusal, must include:
- the reason for the contact or attempted contact;
- how the contact or attempted contact is made and the level of disruption the contact or attempted contact causes the employee;
- the extent to which the employee is compensated (including non-monetary compensation) to remain available to perform work or be contacted, or for working additional hours, outside of ordinary working hours;
- the nature of the employee’s role and the employee’s level of responsibility; and
- the employee’s personal circumstances (including family or caring responsibilities).
Note:
- if disconnect disputes cannot be resolved at the workplace level, parties can apply to the FWC to make an order (ie similar to the current stop bullying protections) for:
- the employee to be prevented from continuing to unreasonably refuse to monitor, read or respond to contact or attempted contact;
- the employer to be prevented from:
- taking disciplinary action against the employee for a reasonable refusal; or
- making unreasonable contact with the employee.
- penalties can be imposed if an order is breached.
- the ‘right to disconnect’ now forms one of the protected attributes for the purposes of the general protections’ regime under the FW Act and should therefore be vigilant in responding to complaints (and managing performance-related matters) raised about this new employee right. This means that employees could make both dismissal and non-dismissal related general protections claims if they believe that adverse action was taken against them in connection with exercising their workplace ‘right to disconnect’.
- employers should consider how the introduction of this right impacts on existing operations or work patterns at their workplace, especially for employers who operate across multiple national and international time zones.
3. amended ordinary meaning of employee / employer (section 15AA of the FW Act) – a date to be fixed by Proclamation or the day after six months post Royal Assent (whichever comes first):
This new definition, like the new casual definition, seeks return to a position where the ‘real substance, practical reality and true nature’ of the employment relationship is considered rather than simply looking to the terms of a written contract. Yes, here we go again, re-tracing our steps over ground we thought we had clarified.
Similar to the new casual definition, this amendment is aimed at overcoming the recent High Court decisions in Personnel Contracting and Jamsek which we discussed in an earlier issue (titled Contractor Clarification’ issued in February 2022).
Critically, this means that to determine whether a person is an employee or a contractor, it will no longer be sufficient to simply look to the terms of the written contract, parties must once again ascertain ‘the real substance, practical reality and true Nature of the relationship between the individual and the employer.
Accordingly, an assessment of other factors including how the contract is actually performed will be required. This change revives the previously accepted ‘multifactorial’ test, where no single criteria was decisive, but rather required the assessment of the ‘totality of the relationship’ by considering the conduct of the parties during the contract, including the degree of control and authority over work.
The transitional provisions contained in the reforms indicate that back-pay for unpaid entitlements will not arise for those workers who were contractors under the old version of the FW Act and will change in status to employees as a result of the new amendment. However, for such workers, employment liabilities will commence accruing on commencement of the new provisions.
- identify if the work to be performed is to be paid by the hour to the contractor (ie mainly for the provision of personal labour and skills which attracts the requirement to pay superannuation), or on the basis of completion of a set outcome/task;
- identify that the contractor is running their own independent business, separate and distinct to the principals, and is not a subordinate of the principal’s business;
- confirm that any variations or waivers must be approved and agreed to in writing, and that the contract reflects the entire agreement between the parties;
- determine if the contractor provides their own tools and equipment etc; and
- permit the contractor to:
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- generate their own goodwill and have ownership over the intellectual property they create;
- have their own clients and not be subject to any exclusivity or restraint to the principal;
- market their services to potential clients as part of their own business;
- have an unfettered contractual right to subcontract, assign or delegate their services or obligations under the contract, ideally without prior approval of the principal’s business, and
- exercise control over how, where and when the work is done.
4. sham contracting arrangements – amendment to the defence that is available to employers who misrepresent employment as an independent contracting arrangement – the day after Royal Assent:
This change brings an amendment the FW Act with the aim being that the reform will bring a greater effectiveness to deterring sham contracting.
Currently section 357 of the FW Act prohibits an employer from misleading a person who is legally an employee into believing they are an independent contractor, and allows for a defence that if the employer did not know, and was not reckless as to the worker’s true status then the employer could escape liability.
The new reform requires a more objective analysis to be imported to the defence, where the employer will only be able to escape liability by showing they reasonably believed the worker to be a contractor. This change will make the defence harder to establish, especially where the employer has not received independent advice supporting their view that the worker was not an employee.
5. underpayments, compliance and enforcement – significantly increased penalties for civil remedy provisions (up to five times more than current penalties!) and lowering of the bar for what constitutes a ‘serious contravention’ – the day after Royal Assent:
Under the proposed amendments, the fines for a single breach of the National Employment Standards (NES), a modern award or an enterprise agreement will reach a new stratospheric high!
For large companies, the maximum fine for breaching rules such as fair pay or agreements could reach $469,500, whilst for individuals, it could be up to $93,900. That is five times more than before.
There is also the proposed introduction of a new criminal offence for intentional wage theft (with fines for large companies being up to $4.695 million) and an adjustment to the threshold for what constitutes a serious contravention.
Just in case these recently made and future proposed changes weren’t enough for employer’s to get their head around, here are some other key changes that already came into effect late last year and earlier this year per the enactment of the Protecting Entitlements Act:
- employee authorised deductions – with effect 30 December 2023, employers must:
(a) have a written record from the employee for all authorised deductions (eg payments to a health fund or union fees etc) whether once-off or recurring; and
(b) only make employee-authorised deductions where the deductions are:
(i) mainly for the employee’s benefit;
(ii) permitted/authorised by a law, court order;
(iii) Fair Work Commission FWC) order;
(iv) allowed under the employee’s award; or
(v) allowed under the employee’s registered agreement and the employee agrees to it.
- are for an amount that can change from time to time; or
- directly or indirectly benefit the employer (or someone related to them).
Note:
- any authorisation for multiple or recurring deductions made before 30 December 2023 that meet the rules outlined above are taken to have always been compliant (until it is withdrawn); and
- any other authorisation made before 30 December 2023 continues in effect until it is withdrawn.
For further information about deductions click here, and for examples of reasonable deductions click here.
2. superannuation is now a NES entitlement for most employees – with effect 1 January 2024, the NES includes a right to superannuation contributions.
Employers already have an obligation to pay superannuation contributions (the current superannuation rate is 11% and will increase to 11.5% on 1 July 2024 and 12% on 1 July 2025) for eligible employees under superannuation guarantee laws, however, with the inclusion of the entitlement under the Fair Work Act 2009 (Cth) (FW Act), any contravention by an employer to fail to pay superannuation contributions, means:
- employees covered by the NES can take court action under the FW Act to recover unpaid or underpaid superannuation; and
- a court with competent jurisdiction can impose civil penalties for breaching a provision of the NES (current maximum civil penalties applicable to breaches of a civil remedy provision of the FW Act are now are up to $18,780 per contravention for an individual or person of authority who was involved in the contravention, and $93,900 per contravention for the employer – however, as noted above these will soon be five times higher, the day after assent of the Loopholes Act 2).
3. unpaid parental leave – with effect 1 July 2023:
From 1 July 2023, the FW Act includes greater flexibility for employees taking unpaid parental leave. Key changes include:
- under the NES, right to request an extension of up to a further 12 months parental leave (up to 24 months in total);
- employees taking unpaid parental leave being able to take up to 100 days of their 12 month leave entitlement flexibly during the 24 month period after the birth or placement of their child (this is an increase from the previous 30 day entitlement);
- pregnant employees being able to access their flexible unpaid parental leave up to six weeks before the expected date of birth of their child;
- employees no longer being prevented from taking more than eight weeks of unpaid parental leave at the same time as their spouse or de facto partner (known as concurrent leave); and
- both parents being able to take up to 12 months unpaid parental leave at any time within 24 months of their child’s birth or placement (with both parents being able to also apply for an extension of up to 12 months beyond the initial 12 month leave amount).
What should employers do now?
- As a starting point, all businesses should take Tex Perkins from the Cruel Sea’s advice and ‘get a lawyer son, get a real good one!’
- These changes are incredibly complex, which impose a more thorough multifactorial test approach, which need to be assessed before compliance minimums can be appreciated and actioned. Is a worker a casual? Is a worker an employee or contractor? Is a worker an employee-like worker? Is a refusal to respond to contact outside of an employee’s working hours reasonable? Should the FWC make a same job, same pay order? Each of these have complex and different ‘multi-factor’ tests.
- If you require any further information or assistance in relation to any of the above exhaustive changes, contact us today and we will lead you through the employment law maze! Employers can also keep abreast of and review FWC/FWO information, tools and resources for implemented updates and changes.
| Part 1 | |
 15 December 2023Stronger Protections – Domestic Violence Stronger protections for employees experiencing family and domestic violence |  15 December 2023Small Business Redundancies Creating a carve out to this exemption for employers who are not initially a ‘small business employer’ but gradually become one during a bankruptcy or liquidation process |
 15 December 2023Labour Hire Workers FWC has ability to make orders for labour hire workers (ie same job, same pay (closing the labour hire loophole) |  1 January 2025Underpayments, Compliance & Enforcement (Part 1) New criminal offence for wage and superannuation theft |
| Part 2 | |
 6 Months After Royal AssentNew Definition of a Casual Employee Replacement of the current definition of a casual employee as set out in section 15A of the FW Act with a new ‘fair and objective definition’ |  12 Months After Royal AssentNew Right to Disconnect Mandatory introduction of a new model clause in modern awards and the inclusion in the FW Act for the right for employees to disconnect. |
 @ Royal AssentAmended ordinary meaning of employee/employer Replacement of the current definition of a casual employee as set out in section 15A of the FW Act with a new ‘fair and objective definition’ |  Day After Royal AssentSham Contracting Arrangements Amendment to the defence that is available to employers who misrepresent employment as an independent contracting arrangement = not liable if, at the time of the misrepresentation, the employer reasonably believed that the contract of employment was instead a contract for services |
 Day After Royal AssentUnderpayments, Compliance & Enforcement (Part 2) Significantly increased penalties for civil remedy provisions (up to five times more than current penalties!) and lowering of the bar for what constitutes a ‘serious contravention’ | |
Disclaimer: The information contained in this update is intended as a guide only. Professional advice should be sought before applying any of the information to circumstances. While every reasonable care has been taken in the preparation of this update. Law Ensure (ACN 168 990 261) does not accept liability for any errors it may contain.
FWO Annual Wage Review 2023-24
On 2 June 2023, the Fair Work Commission (FWC) announced their decision regarding the Annual Wage Review for 2023-24, with an:
- 8.6% increase in the minimum wage; and
- 5.75% increase to modern award minimum wage;
which comes into effect 1 July 2023.
National Minimum Wage Increase
The National Minimum Wage applies to employees not covered by an award or registered agreement.
From 1 July 2023, the National Minimum Wage will be increased to $882.80 per week or $23.23 per hour.
Award Minimum Wage Increase
Following consultation with a range of stakeholders, including peak councils, registered employer/employee organisations, individual employers and employees, and the Australian Commonwealth and State Governments, the FWC decided that employees covered by a modern award will have their award based minimum rates increased by 5.75% with effect 1 July 2023.
The FWC determined that this level of wage increase was the most that could reasonably justified in the current economic climate, and in determining the percentage increase, the FWC took into consideration:
- the current rate of inflation, and its effect on the ability of modern award-reliant employees to meet their basic financial needs and the resulting financial stress;
- the current robustness of the labour market; and
- that increases to modern award minimum wage rates would likely provide a disproportionate benefit to female workers which may contribute to narrowing thethe FWO Annual Wage Review, will also be entitled to the 5.75% increase with effect 1 July 2023.
Changes to the paid parental leave scheme
For employees whose baby will be born or placed in their care on or after 1 July 2023, the current entitlement to 18 weeks’ paid parental leave pay will be combined with the current Dad and Partner Pay entitlement to two weeks’ pay. This means that with effect 1 July 2023, partnered couples will be able to claim up to 20 weeks’ paid parental leave between them. Parents who are single at the time of their claim can access the full 20 weeks.
Other changes include:
- allowing partnered employees to claim a maximum of 20 weeks’ pay between them, with each partner taking at least two weeks (except in some circumstances);
- introducing a $350,000 family income limit (indexed annually from 1 July 2024) for claiming paid parental leave pay;
- expanding the eligibility rules for fathers or partners to claim paid parental leave pay;
- making the whole payment flexible so that eligible employees can claim it in multiple blocks until the child turns two years of age; and
- removing the requirement to return to work to be eligible for the entitlement.
Services Australia is the government organisation that manages the paid parental leave scheme. For more information on the changes, you can visit the Services Australia website.
Takeaways for employers
The increases to minimum wages will take effect for employers from the first full pay period on or after 1 July 2023. The increases will also have a flow-on effect to all loadings, penalties, allowances and overtime payments under the awards that are calculated with reference to the minimum wage. Employers will soon be able to review these increase on the FWC’s Pay and Conditions Tool website.
If you require any further information or assistance in relation to the Annual Wage Review and salaried arrangements/better off overall test calculations, contact us today to see how we can assist!
SCHADS, Aged Care and Nurses Awards
For some employees covered by the:
- Aged Care Award 2010 (Cth) [MA000018] (Aged Care Award);
- Nurses Award 2020 (Cth) [MA000034] (Nurses Award); and
- Social, Community, Home Care and Disability Services Industry Award 2010 (Cth) [MA000100] (SCHADS Award)
minimum wages will increase by 15% with effect from the start of the employee’s first full pay period on or after 30 June 2023.
This increase applies to direct care employees working in aged care. Direct care employees are those who work in caring roles in the following award classifications:
- Aged Care Award: personal care workers, recreation/lifestyle activities officers, and the most senior food services employee (levels 4-7) who work at a particular aged care facility or site;
- Nurses Award: nursing assistants, enrolled nurses, registered nurses, and nurse practitioners working in aged care; and
- SCHADS Award: home care workers working in aged care.
Together with the Award minimum wage increase of 5.75% increase, this means that the minimum wage for applicable employees under the Aged Care Award, the Nurses Award and the SCHADS Award will change from the first pay period commencing on or after 30 June, and again from the first pay period commencing on or after 1 July (ie effectively a 20.75% increase).
Enterprise Agreement Wage Increase
Employees covered by enterprise agreements that provide for annual wage increases aligned to
Employers should review their current pay arrangements to ensure that:
- award/agreement-free employees: any employee not covered by a modern award or enterprise agreement will, from the first full pay period on or after 1 July 2023, be entitled to a minimum weekly wage for 38 hours of work equal to $882.80, or $23.23 an hour (plus the 25 per cent casual loading in respect of casual employees).
- modern award covered employees: from the first full pay period on or after 1 July 2023, employees covered by a modern award must not be paid less than the new modern award wage in respect of the employee’s classification under the modern award. This also includes casual loading and other loadings, penalties, allowances or overtime, which are calculated by reference to the modern award minimum rates of pay.
- all-inclusive salary employees: review salary packages of employees who receive “all-inclusive salaries”. The increase may affect the lawfulness of that all-inclusive salary if it is no longer adequate to compensate them for their award entitlements ie to achieve a positive BOOT. Employers also need to be prepared for the increase in the Super Guarantee rate to 11% on and from 1 July 2023.
- enterprise agreement covered employees: from the first full pay period on or after 1 July 2023, for any employees to whom an enterprise agreement applies, that they are paid base rates of pay under the enterprise agreement that are:
- for employees not covered by a modern award – not less than the national minimum wage;
- in the case of an employee covered by a modern award – not less than the wage specified in respect of an employee’s classification under a modern award; and
- arrangements that guarantee pay above the high-income threshold post 1 July 2023 still exceed the high-income threshold (currently $162,000, however, has not yet been adjusted for 1 July 2023).
Disclaimer: The information contained in this update is intended as a guide only. Professional advice should be sought before applying any of the information to circumstances. While every reasonable care has been taken in the preparation of this update. Law Ensure (ACN 168 990 261) does not accept liability for any errors it may contain.
Award Changes - Shut Downs and Leave
As part of the Fair Work Commission’s (FWC) 4-yearly review of modern awards, 78 modern awards will have existing shut down / close down clauses replaced with a new model term (which can be found here in paragraph 82) that comes into effect 1 May 2023.
- employers must give affected employees a minimum of 28 days’ written notice (Notice) prior to any temporary shut down period (or a shorter period if agreed between the employer and the majority of employees);
- in circumstances where an employee has been engaged after the Notice has been issued, the employee must be informed in writing of the temporary shut down period, as soon as reasonably practicable after the employee is engaged;
- providing the direction is reasonable, employers may direct employees in writing to take a period of paid annual leave during a shut down, if the employee has sufficiently accrued annual leave entitlements;
- where an employee does not have sufficient annual leave to cover the whole shut down period, by written agreement with the employee, the employee may take leave
- employees can no longer be required to take leave without pay in circumstances where the employee has insufficient annual leave accrued, or be directed to take leave in advance to cover the period of shut down.
Effectively, despite the new model clause providing that where an employee has insufficient annual leave to cover the entire shut down period, employers and employers may agree to an employee taking unpaid leave, many employers will now lose the right to direct the employee to take unpaid leave.
It is worth noting that whilst employers and employees may agree to the employee taking annual leave in advance of the entitlement accruing, Acting FWC President Hatcher and Deputy President Asbury, made it clear that employees cannot force employers covered by affected awards to provide annual leave in advance.
What employers should start to consider
For employers with employees covered by the affected awards, we recommend:
- planning for shut downs now (especially Christmas leave periods), to try and ensure that all staff have sufficiently accrued annual leave so as to avoid unnecessarily having to pay employee’s their normal remuneration for the period of shut down.
- carefully reviewing the new model clause to assess what obligations will now apply and/or what has changed eg under the Timber Industry Award 2020 (Cth) [MA000071] the clause remains very similar with the exception of the allowance to direct employees to take unpaid leave.
- employers applying greater scrutiny with employee annual leave requests to ensure employees have sufficient annual leave balances to cover any planned shut down(s).
- employers considering amending existing, or introducing new, leave policies, that state that in circumstances where shut downs occur:
- employees will be reasonably directed to take a period of annual leave pursuant to the terms of the relevant modern award.
- following a written request by the employee, the employer may grant the employee annual leave in advance.
- and an annual leave request for a different period of time in the year has been denied as the employee has insufficient annual leave accrued to cover the period of a shut down, leave may be approved, however, only on the basis that the employee agrees to take unpaid leave during the planned shut down.
- employers introduce new clauses within employment agreements, that state that the parties agree that unpaid leave will be taken in circumstances where there is insufficient annual leave accrued to cover the period of any shut down.
If you require any further information or assistance in relation to the new model award clause or the introduction and adoption of relevant employment agreement clauses, contact us today.
Impacted modern awards:
- Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020 (Cth) [MA000115](clause 22.3)
- Aircraft Cabin Crew Award 2020 (Cth) [MA000047] (clause 19.4)
- Airline Operations–Ground Staff Award 2020 (Cth) [MA000048](clause 22.6)
- Alpine Resorts Award 2020 (Cth) [MA000092](clause 25.3)
- Aluminium Industry Award 2020 (Cth) [MA000060] (clause 22.4)
- Ambulance and Patient Transport Industry Award 2020 (Cth) [MA000098] (clause 22.7)
- Animal Care and Veterinary Services Award 2020 (Cth) [MA000118] (clause 22.5)
- Aquaculture Industry Award 2020 (Cth) [MA000114] (clause 22.9)
- Asphalt Industry Award 2020 (Cth) [MA000054] (clause 21.8)
- Banking, Finance and Insurance Award 2020 (Cth) [MA000019] (clause 22.5)
- Black Coal Mining Industry Award 2020 (Cth) [MA000001] (clause 24.9)
- Broadcasting and Recorded Entertainment Award 2020 (Cth) [MA000091] (clause 18.6)
- Building and Construction General On-site Award 2020 (Cth) [MA000020] (clause 31.3)
- Business Equipment Award 2020 (Cth) [MA000021] (clause 23.5)
- Car Parking Award 2020 (Cth) [MA000095] (clause 24.6)
- Cemetery Industry Award 2020 (Cth) [MA000070] (clause 19.3)
- Cement, Lime and Quarrying Award 2020 (Cth) [MA000055] (clause 22.8)
- Cleaning Services Award 2020 (Cth) [MA000022] (clause 21.4)
- Clerks—Private Sector Award 2020 (Cth) [MA000002] (clause 32.5)
- Coal Export Terminals Award 2020 (Cth) [MA000045] (clause 20.7)
- Commercial Sales Award 2020 (Cth) [MA000083] (clause 20.6)
- Concrete Products Award 2020 (Cth) [MA000056] (clause 22.6)
- Contract Call Centres Award 2020 (Cth) [MA000023] (clause 22.10)
- Educational Services (Post-Secondary Education) Award 2020 (Cth) [MA000075] (clause 22.5)
- Electrical, Electronic and Communications Contracting Award 2020 (Cth) [MA000025] (clause 21.5)
- Electrical Power Industry Award 2020 (Cth) [MA000088] (clause 21.8)
- Fitness Industry Award 2020 (Cth) [MA000094] (clause 21.3)
- Food, Beverage and Tobacco Manufacturing Award 2020 (Cth) [MA000073] (clause 25.11)
- Gardening and Landscaping Services Award 2020 (Cth) [MA000101] (clause 20.9)
- Gas Industry Award 2020 [MA000061] (Cth) (clause 20.7)
- General Retail Industry Award 2020 (Cth) [MA000004] (clause 28.4)
- Graphic Arts, Printing and Publishing Award 2020 (Cth) [MA000026] (clause 31.12)
- Hair and Beauty Industry Award 2020 (Cth) [MA000005] (clause 24.3)
- Health Professionals and Support Services Award 2020 (Cth) [MA000027] (clause 26.5)
- Higher Education Industry—General Staff— Award 2020 (Cth) [MA000007] (clause 24.4)
- Horse and Greyhound Training Award 2020 (Cth) [MA000008] (clause 18.6)
- Hospitality Industry (General) Award 2020 (Cth) [MA000009] (clause 30.4)
- Hydrocarbons Industry (Upstream) Award 2020 (Cth) [MA000062] (clause 25.7)
- Joinery and Building Trades Award 2020 (Cth) [MA000029] (clause 27.9)
- Journalists Published Media Award 2020 (Cth) [MA000067] (clause 20.8)
- Legal Services Award 2020 (Cth) [MA000116] (clause 22.7)
- Local Government Industry Award 2020 (Cth) [MA000112] (clause 23.5)
- Manufacturing and Associated Industries and Occupations Award 2020 (Cth) [MA000010] (clause 34.7)
- Meat Industry Award 2020 (Cth) [MA000059] (clause 25.8)
- Mining Industry Award 2020 (Cth) [MA000011] (clause 22.7)
- Miscellaneous Award 2020 (Cth) [MA000104] (clause 21.4)
- Mobile Crane Hiring Award 2020 (Cth) [MA000032] (clause 24.6)
- Nursery Award 2020 (Cth) [MA000033] (clause 22.12)
- Nurses Award 2020 (Cth) [MA000034](clause 22.7)
- Oil Refining and Manufacturing Award 2020(Cth) [MA000072] (clause 24.6)
- Pest Control Industry Award 2020 (Cth) [MA000097] (clause 23.9)
- Pharmaceutical Industry Award 2020 (Cth) [MA000069] (clause 21.5)
- Plumbing and Fire Sprinklers Award 2020 (Cth) [MA000036] (clause 24.4)
- Poultry Processing Award 2020 (Cth) [MA000074] (clause 21.5)
- Premixed Concrete Award 2020 (Cth) [MA000057] (clause 22.8)
- Professional Employees Award 2020 [MA000065](Cth) (clause 18.4)
- Racing Clubs Events Award 2020 (Cth) [MA000013] (clause 23.5)
- Racing Industry Ground Maintenance Award 2020 (Cth) [MA000014] (clause 21.5)
- Real Estate Industry Award 2020 (Cth) [MA000106] (clause 20.5(a))
- Registered and Licensed Clubs Award 2020 (Cth) [MA000058] (clause 25.4)
- Restaurant Industry Award 2020 (Cth) [MA000119] (clause 25.4)
- Road Transport and Distribution Award 2020 (Cth) [MA000038] (clause 24.9)
- Road Transport (Long Distance Operations) Award 2020 (Cth) [MA000039] (clause 20.4)
- Salt Industry Award 2020 (Cth) [MA000107] (clause 23.10)
- Seafood Processing Award 2020 (Cth) [MA000068] (clause 21.11)
- Security Services Industry Award 2020 (Cth) [MA000016] (clause 21.4)
- Silviculture Award 2020 (Cth) [MA000040] (clause 22.5)
- Storage Services and Wholesale Award 2020 (Cth) [MA000084] (clause 24.5)
- Sugar Industry Award 2020 (Cth) [MA000087] (clause 31.5)
- Supported Employment Services Award 2020 (Cth) [MA000103] (clause 32.3)
- Surveying Award 2020 (Cth) [MA000066] (clause 22.7)
- Telecommunications Services Award 2020 [MA000041] (Cth) (clause 22.9)
- Textile, Clothing, Footwear and Associated Industries Award 2020 (Cth) [MA000017] (clause 32.6)
- Timber Industry Award 2020 (Cth) [MA000071] (clause 28.10)
- Vehicle Repair, Services and Retail Award 2020 (Cth) [MA000089] (clause 29.6)
- Water Industry Award 2020 (Cth) [MA000113] (clause 22.4)
- Wine Industry Award 2020 (Cth) [MA000090] (clause 24.9)
- Wool Storage, Sampling and Testing Award 2020 (Cth) [MA000044] (clause 23.5)
Disclaimer: The information contained in this update is intended as a guide only. Professional advice should be sought before applying any of the information to circumstances. While every reasonable care has been taken in the preparation of this update. Law Ensure (ACN 168 990 261) does not accept liability for any errors it may contain.
Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022
On 2 December 2022, the Federal Government passed the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) (Bill). On 6 December 2022, the Bill received royal assent and became the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJ BP Act).
Key changes being introduced as a result of the new SJ BP Act include:
- multi-employer bargaining;
- broader powers of Fair Work Commission (FWC) to intervene in workplace determinations;
- sunsetting of ‘zombie agreements’.
- enterprise agreement approval process (BOOT and pre-approval requirements);
- pay equity: equal remuneration orders and prohibition on pay secrecy clauses;
- restrictions to fixed/maximum term contracts;
- expanded scope for flexible working arrangements;
- sexual harassment and discrimination; and
- Abolition of the Australian Building and Construction Commission, establishment of the National Construction Industry Forum and carving out the building and construction industry from the multi-employer bargaining provisions of the SJ BP Act.
In an earlier article we discussed Zombie Agreements and in this article we will discuss other key SJ BP Act changes, including, multi-employer bargaining, restrictions to fixed/maximum term contracts, expanded scope for flexible working arrangements, pay equity (equal remuneration orders and prohibition on pay secrecy clauses), and sexual harassment and discrimination.
Bargaining
Multi-enterprise bargaining
With the exception of the sunsetting of ‘Zombie Agreements’, one of the most significant SJ BP Act changes, which comes into effect on 6 June 2023, is the expansion of multi-enterprise workplace bargaining. The Minister for Employment and Workplace Relations, the Hon Tony Burke MP (Minister Burke), stated in the Bill’s Explanatory Memorandum, that the underlying philosophy driving the Bill (and now the SJ BP Act) was that no employer should have a competitive advantage over another because of their labour arrangements.
The SJ BP Act does not introduce new streams of multi-employer bargaining, but reduces barriers to access the existing multi-employer bargaining streams, which includes:
- single interest employer authorisations – now referred to as common interest employers:
While multi-enterprise bargaining (ie where employees at different companies within an industry can join together to collectively bargain for pay and working conditions) is currently permitted under the Fair Work Act 2009 (Cth) (FW Act), it has largely been restricted to a process where only the employer can initiate bargaining. Under the SJ BP Act, unions will now also now be able to initiate multi-employer bargaining. If the majority of an employer’s employees support bargaining, and the employer employs at least 20 employees, then unions can compel employers to bargain for agreements that cover multiple common interest employers, potentially including, competitors, external companies within the supply chain, or internal group companies.
Under the SJ BP Act employers have the ability to resist multi-enterprise bargaining agreements if:
(a) there is an existing enterprise agreement in place that has not nominally expired; or
(b) employees are employed in the on-site general building and construction industry (subject to a few express carveouts); or
(c) the employer has less than 20 employees; or
(d) the employer employs at least 20 employees, and:
(i) the desire of the majority of employees (ie the 50% plus 1) determines that bargaining is NOT supported; and
(ii) the employer is able to convince the Fair Work Commission (FWC) that its operations and business activities are NOT clearly and reasonably comparable with the other employers who will be covered by the agreement.
Note
- a public interest test will be applied by the FWC, where the FWC must be satisfied that it would not be contrary to public interest to grant a multi-employer authorisation.
- in determining whether employers have clearly identifiable common interests, matters considered relevant include, geographic location, nature of the enterprises (including existing terms and conditions), and the application of regulatory regimes.
- for employers with 50 or more employees, it is presumed that the operations and business activities of the employer are reasonably comparable with those of the other employers that are covered by the agreement, unless the contrary is proved by the employer.
- in circumstances where less than nine months has passed since the most recent nominal expiry date of an agreement, the FWC has the discretion to refuse an application to add a new employer to a single interest employer agreement.
- there is a new requirement that employers negotiating as part of a multi-enterprise agreement, must obtain written consent from each union acting as a bargaining representative for the agreement prior to putting the agreement to an employee vote to either approve or vary the agreement – this effectively gives the unions an extraordinary veto power over multi-enterprise agreement voting.
- employees are also able to take protected industrial action or seek bargaining orders in support of single interest employer agreements and there are limits on employers’/employees’ ability to remove themselves as parties to them. However, there is a new inclusion of an obligation to attend FWC mediation/conciliation before protected industrial action is taken (which applies to all forms of enterprise agreements except the ‘cooperative’ multi-enterprise stream – those where no supported bargaining authorisation or single interest employer authorisation are in operation in relation to the agreement immediately before the agreement was made).
- the FWC has been granted broader powers to intervene and make workplace determinations (effectively arbitrating an enterprise agreement) where bargaining is ‘intractable’
2. supported bargaining:
The SJ BP Act amends and renames the FW Act’s low paid bargaining stream (which was rarely used), to that of the supported bargaining stream, with an aim to assist employees to bargain for multiple employer agreement coverage in industries that are low-paid (such as aged care and childcare) and have low agreement coverage.
The SJ BP Act simplifies the factors that the FWC is required to consider when granting a supported bargaining authorisation, to more readily allow multi-enterprise bargaining to commence. The previously lengthy list of relevant factors will be narrowed to focus on whether:
(a) the employers to the application have an ‘identifiable common interest’ (as detailed previously above); and
(b) the FWC is satisfied that it is appropriate to do so taking into account the pay and conditions in the relevant industry, including whether low rates of pay prevail; and
(c) the likely number of bargaining representatives for the agreement would be consistent with a manageable collective bargaining process.
Replacement Agreements
In cases of existing nominally expired agreements, the SJ BP Act removes the need for, employers to issue a notice of employee representational rights to commence bargaining, or employee majority support determinations, with bargaining now being able to commence on written request from an employee bargaining representative.
This change results in a much simpler and less procedural approach to commencing bargaining, however, also removes opportunities for employers to resist bargaining.
Note, a replacement agreement is defined as one which will replace an existing agreement which had a nominal expiry date within the last 5 years and which covers a substantially similar scope of employees.
Negotiating a Single Employer Enterprise Agreement – PRIOR to 6 June 2023
If you have an enterprise agreement which has passed its nominal expiry date, or have been considering negotiating and adopting a single employer enterprise agreement, employers still have a small window of opportunity to negotiate such agreements, so long as the application is filed with the FWC prior to 6 June 2023.
All employers with nominally expired enterprise agreements should immediately start planning their future industrial arrangements, giving consideration to negotiating a new enterprise agreement or reverting to coverage and adherence to the relevant applicable modern award.
Restrictions to Fixed or Maximum Term Contracts
In the second reading speech of the Bill Minister Burke identified that:
- the number of workers on fixed-term contracts has increased by over 50% since 1998;
- more than half of all employees engaged on fixed-term contracts are women; and
- more than 40% of fixed-term employees have been with their employer for two or more years.
In a bid to encourage secure, permanent employment, and limit the use of rolling fixed term or maximum term contracts (Fixed Contracts), with effect 6 December 2023, the SJ BP Act introduces prohibitions against engaging employees on Fixed Contracts:
- spanning for a period of two or more years (inclusive of extensions); or
- that may be extended more than once (even if the period of the Fixed Contract is not more than two years in duration); or
- where the employee has previously been engaged on two consecutive contracts for the same or substantially similar work (this applies irrespective of when a gap between contracts occurs eg a contract that finishes at the end of one semester and another contract that starts at the beginning of the next semester); and
introduces civil penalties for employer’s breaching such provisions. Given the maximum civil penalties applicable to breaches of a civil remedy provision of the FW Act are currently (as at 1 January 2023) are up to $16,500 per contravention for an individual or person of authority who was involved in the contravention, and $82,500 per contravention for the employer, it is crucial for employers to make themselves aware of, and implement processes to ensure compliance with, these new requirements.
If an employer enters into a Fixed Contract with an employee in contravention of the FW Act, any term providing for the contract to terminate at the end of a specified period is taken to have no effect. In other words, the Fixed Contracts is converted to a permanent employment contract (with all other contract provisions remaining unaffected), whereby employees will likely be entitled to notice and redundancy pay, and protection from unfair dismissal under the FW Act.
Exceptions
The exceptions, where Fixed Contracts may continue to be used include where:
- the employee is engaged to perform only a distinct and identifiable task involving specialised skills;
- the employee is engaged under a training arrangement;
- the employee is engaged to undertake essential work during a peak demand period;
- the employee is engaged to undertake work during emergency circumstances or during a temporary absence of another employee;
- in the year the contract is entered into, the employee’s earnings under the contract exceed the high income threshold for that year (currently $162,000 but will be higher come 6 December 2023);
- the contract relates to a governance position that has a time limit under the governing rules of a corporation or association; or
- the contract is for a position which is funded in whole or in part by government funding, the funding is payable for a period of more than two years, and there are no reasonable prospects that the funding will be renewed.
Note
- the prohibition will apply to a Fixed Contract entered into before 6 December 2023 if an employer entered into a subsequent contract after that initial contract ended, in circumstances which meet the ‘consecutive contracts’ restriction.
- the Fair Work Ombudsman will publish a Fixed Term Contract Information Statement (ie similar to the Fair Work Information Statement and the Casual Employment Information Statement) which will be required to be given to employees where they are offered a Fixed Contract, with failure of an employer to provide the new statement potentially attracting the imposition of a civil penalty!
What does this mean for your business?
- The ability of employers to engage employees on Fixed Contracts will be significantly curtailed.
- The onus will be on employers to establish that their Fixed Contracts are not in breach or otherwise exempt from the above prohibitions.
What should employers do now?
Employers should:
- review their current employment arrangements and conduct an audit of their employees on Fixed Contracts to determine how long they have been employed under such arrangements, including previous contracts.
- review template Fixed Contracts to remove any clauses that provide the option to extend or renew the term and when available, make provisions for the inclusion of the Fixed Term Contract Information Statement.
- if seeking to rely on an exception against the prohibition on Fixed Contracts, consider including that exception within the terms of the contract and explain why the exception applies.
- consider if they have projects that rely on fixed or maximum-term workforces that may be impacted by these changes, and plan ahead to structure their workforces in light of these changes.
Law Ensure offers a range of lawfully compliant Fixed Contracts, so contact us today if you wish to implement such contracts or require amendments to be made to any existing template agreements.
Expanded Scope for Flexible Working Arrangements
The FW Act has existing provisions regarding an employee’s to request flexible working arrangements (Request) in certain circumstances, such as being over the age of 55, having a disability, or being a parent/having the responsibility for the care of a child who is of school age or younger. With effect 6 June 2023 the SJ BP Act introduces the ability for employees when pregnant to also make a Request, whilst the existing domestic violence provisions have been expanded to include any employee who is experiencing family and domestic violence.
The SJ BP Act also makes amendments to the process employers must follow after receiving a Request, directing that employers must provide a written response within 21 days of receiving the Request, which must include:
- having had a discussion between the employer and the employee; and
- stating if the employer grants of refuses the request; and
- if, an agreement is made to change the employee’s working arrangements, setting out the agreed change; or
- if the employer refuses the request, setting out the reasonable business grounds that the refusal was based on.
Examples of reasonable business grounds may include:
- that the new working arrangements requested by the employee would be too costly for the employer;
- that there is no capacity to change the working arrangements of other employees to accommodate the new working arrangements requested by the employee;
- that it would be impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the new working arrangements requested by the employee;
- that the new working arrangements requested by the employee would be likely to result in a significant loss in efficiency or productivity; or
- that the new working arrangements requested by the employee would be likely to have a significant negative impact on customer service.
These reasonable business grounds remain unchanged, however, the SJ BP Act introduces provisions that the nature and size of the enterprise carried on by the employer is relevant when considering whether the employer has reasonable business grounds for refusing a request.
Lastly, where initial attempts to resolve Request disputes have failed at the workplace level, or where an employer has failed to respond to an employee’s request within the mandated 21 day timeframe, the SJ BP Act introduces the power of the FWC to conciliate and arbitrate. It is most important to note that civil penalties now apply to an employer breaching a FWC order, so it is crucial for employers to ensure compliance with these new requirements.
Note: similar procedural changes have been made to extension of parental leave requests, with civil penalties also applying breaching an order of the FWC.
Pay Equity (equal remuneration orders and prohibition on pay secrecy clauses)
A key goal of the SJ BP Act is to address the gender and pay gap. In an attempt to meet this goal, reforms include:
- the prohibition on, and invalidation of, pay secrecy clauses in employment agreements with civil penalties applying for non-compliance, thereby allowing employees to openly share and discuss their remuneration and employment conditions with colleagues or competitors (protections under the general protection provisions of the FW Act are also afforded for employees who elect not to make a disclosure or who refuse to answer their co-workers if asked); and
- the establishment of two new expert panels within the FWC on pay equity and the care and community sector to tackle low pay in female dominated industries.
While it is not necessary to amend existing employment agreements, employers should be aware that existing pay secrecy clauses and employment conditions are now unenforceable, and the inclusion of pay secrecy provisions in employment agreements date on or after 7 June 2023 may result in imposition of civil penalties, or form the basis for general protections claims.
What should employers do now?
Employers should:
- review current template employment agreements and remove pay secrecy provisions, or amend clauses regarding the obligation to keep all contents of the agreement confidential.
- give thought to how pay transparency might impact organisational reputation, the morale of staff and relationships between staff, and if as a result consideration should be given to whether any changes are required to remuneration.
- consider how gender pay equality within the workplace is managed.
- review policies and procedures to ensure that employees’ rights to discuss or keep their remuneration confidential are not prejudiced. In particular, ensure that employees who exercise these rights do not receive prejudicial treatment.
Sexual Harassment and Discrimination.
The Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 (Cth) came into operation on 12 December 2022, and together with the SJ BP Act has resulted in changes to the FW Act, the Sex Discrimination Act 1984 (Cth) (SD Act), and the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act). Changes include:
- with effect 7 December 2022, under the:
- FW Act, extension of the protections against discrimination under the general protection provisions of the FW Act to include the attributes of breast feeding, gender identity and intersex status.
- with effect 13 December 2022, under the SD Act, a:
- prohibition of conduct that subjects another person to a hostile workplace environment on the ground of sex;
- positive duty on employers (or a person conducting a business or undertaking) to take reasonable and proportionate measures to eliminate, as far as possible, sexual harassment or harassment on the ground of sex, conduct creating a hostile work environment, or acts of victimisation against another person (Positive Duty).
This will require measures to be taken to prevent the conduct being engaged in by duty holders, employees, workers, agents and third parties. Measures may involve, where appropriate:
- implementing policies and procedures;
- conducting regular training and education;
- collecting and monitoring gender-based data;
- conducting surveys;
- providing appropriate support to workers and employees;
- developing a sexual harassment strategy;
- implementing a complaint’s process;
- monitoring employees’ use of email and computer systems; and
- providing appropriate support.
The meaning of ‘reasonable and proportionate measures’ will vary between duty holders in accordance with their particular circumstances. Factors that may be considered include the:
- size, nature and circumstances of the business;
- duty holder’s resources, financial or otherwise; and
- practicality and costs associated with the steps.
Note, this provison will not limit the positive duty that already exists in both Commonwealth and relevant State or Territory work health and safety law, to eliminate or manage hazards and risks to a worker’s health, which includes risks to psychological health and therefore sexual harassment risks.
- with effect 6 March 2023, under the:
- FW Act, employees can make an application to the FWC for a stop-sexual harassment order. The FWC must first attempt to conciliate the dispute. If the dispute is not settled at that point, the FWC may, with the consent of both parties, arbitrate the dispute. If consent is not given by either party, the applicant will then have 60 days to make an application to the Federal Court.
Note, the FWC will have the discretion to dismiss an application that is made more than 24 months after the alleged sexual harassment, although we expect that the FWC may be reluctant to dismiss sexual harassment claims based on the passing of time alone. This discretion will be in addition to the FWC’s general power to dismiss an application that is frivolous or vexatious or has no reasonable prospects of success.
- AHRC Act, the Australian Human Rights Commission (AHRC) has been empowered to promote and enforce the Positive Duty by:
- publishing guidelines, promoting public understanding, and undertaking research in relation to the Positive Duty;
- making inquiries into and issuing compliance notices in relation to a person’s compliance with the Positive Duty;
- applying to the Federal Circuit and Family Court of Australia for an order directing a person to comply with a compliance notice in relation to the Positive Duty;
- unrelated to the Positive Duty, empowering the AHRC to inquire into any matter that may relate to systemic unlawful discrimination.
- allowing representative bodies to make representative applications in the Federal Courts on behalf of persons who have experienced unlawful discrimination; and
- providing that the President of the AHRC has a discretion to terminate a complaint if the alleged unlawful conduct took place over 24 months ago (as opposed to the previous 6 months).
- AHRC Act, the Australian Human Rights Commission (AHRC) has been empowered to promote and enforce the Positive Duty by:
What does this mean for your business?
Employers should have already taken steps to protect workers from sexual harassment to comply with existing obligations to eliminate or minimise risks to health and safety under work health and safety legislation. The changes are a timely reminder to ensure this has been done and if not, to commence as soon as possible.
What should employers do now?
As a starting point, all businesses should:
- ensure they have robust policies, training and procedures in place to prevent or address sexual harassment in their workplace – it is critical that employees not only receive the policies, but that they understand them, and regularly receive refresher training.
- investigate (ideally using suitably skilled and qualified investigators, whether they are internal or external resources) complaints of sexual harassment in a timely, responsive fashion, and in compliance with published policies, and address the conduct if established, and then ensure the implementation of any required changes to policies and procedures during the reflection process.
- review and if necessary update policies and training in relation to anti-discrimination, to ensure that people managers are aware of the new protected attributes.
Law Ensure also recommends conducting safety audits of workplaces to proactively identify areas of risk of sexual harassment or sex discrimination.
If employers do not discharge the positive duty, employers will be exposed to risk:
- of sexual harassment or sex discrimination in their workplace (and where a complaint is made), and the potential imposition of civil penalties;
- of investigation by the statutory regulators for workplace health and safety; and
- of investigation by the AHRC of volitions and potential recommendations for prosecution for breaches of the new positive duty even where there is no employee complaint.
Zombie Agreements – The Demise of the Living Dead
On 2 December 2022, the Federal Government passed the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) (Bill). On 6 December 2022, the Bill received royal assent and became the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJ BP Act).
Key changes being introduced as a result of the new SJ BP Act include:
- multi-employer bargaining;
- broader powers of Fair Work Commission (FWC) to intervene in workplace determinations;
- enterprise agreement approval process (BOOT and pre-approval requirements)
- pay equity: equal remuneration orders and prohibition on pay secrecy clauses
- restrictions to fixed/maximum term contracts
- expanded scope for flexible working arrangements
- sexual harassment and discrimination; and
- sunsetting of ‘zombie agreements’.
In this article we will be focusing on the demise of the living dead, being the end to agreements which were made prior to the commencement of the Fair Work Act 2009 (Cth) (FW Act), have long since passed their nominal expiry dates, but continue to operate today – more commonly known as ‘zombie agreements’ (Zombie Agreements).
Zombie Agreements:
- were made prior to 2009 or during the bridging period under the FW Act (1 July to 31 December 2009);
- have nominally expired but remain operational;
- usually include references to ‘pre-modern awards’, now-outdated legislation and tribunals (eg the Australian Industrial Relations Commission);
- are usually titled as a ‘collective agreement’ or ‘workplace agreement’; and
- most significantly merely require that an employee be paid no less than the minimum base rate of pay to the corresponding modern award.
Most Zombie Agreements contain terms and conditions of employment that are considered much less favourable to employees when compared with the provisions of the current modern awards and enterprise agreements. Under Zombie Agreements employers are only legally required to pay a flat base rate of pay which must not fall below the base rate of pay in the modern award, however, this rate of pay excludes penalties, overtime or allowance provisions, and for casual employees, can include a lower rate of casual loading.
The Demise of Zombie Agreements
With the introduction of Part 13 of the SJ BP Act, Zombie Agreements will automatically expire on 7 December 2023.
Employer Notification Obligations
Employers currently operating under a Zombie Agreement must:
- provide written notice to covered employees on or before 6 June 2023, informing employees that:
- they are covered by a Zombie Agreement;
- on 7 December 2022, the sunset provisions regarding Zombie Agreements came into effect;
- unless an application is made to extend the Zombie Agreement’s termination date, the Zombie Agreement will automatically terminate on 7 December 2023; and
- with effect 7 December 2023 the terms of the applicable modern award will cover the employee’s employment (unless a new enterprise agreement is negotiated and approved by the FWC).
Employer Requests for Extension
Employers (and employees and industrial associations) can seek an extension from the FWC for the continued operation of the Zombie Agreement, for a further period of up to four years, however, extensions will only be granted if the:
- request for the extension is made with the FWC on or before 6 December 2023; and
- FWC is satisfied that:
- the relevant employees, viewed as a whole, would be better off overall (ie passing the ‘Better Off Overall Test’ – the BOOT) under the Zombie Agreement than under the relevant applicable modern award (or under a new enterprise agreement applied for), and it is otherwise appropriate to extend; or
- it is reasonable in the circumstances to extend the life of the Zombie Agreement.
In most cases it would appear unlikely that these conditions will be satisfied, given most Zombie Agreements would fail a modern BOOT assessment and that there is a 12 month period in which an employer can commence bargaining and lodge an application with the FWC for the approval of a new enterprise agreement. Accordingly, employers with Zombie Agreements should immediately start planning their future industrial arrangements, giving consideration to negotiating a new enterprise agreement or reverting to coverage and adherence to the relevant applicable modern award.
Do you need help?
If you are unsure if your organisation is currently covered by a Zombie Agreement, or would like support or advice concerning your strategy or assistance negotiating a new enterprise agreement, call us today and we can guide you through every step of the process, including:
- providing assistance to gain a clear understanding of the strengths and weaknesses of the existing Zombie Agreement and benchmarking proposed terms and conditions against similar businesses and current FW Act compliant enterprise agreements;
- training managers in negotiation and agreement making;
- managing the entire process, including drafting, lodging and implementing agreements;
- providing new enterprise agreement based employment agreements; and
- ensuring compliance with new obligations, including the duty to bargain in good faith, passing the BOOT, the Fair Work Information Statement and the Casual Employment Information Statement, and adhering to strict new procedures and rules.
In our next article we will discuss other key SJ BP Act changes, including, multi-employer bargaining, pay equity (equal remuneration orders and prohibition on pay secrecy clauses), restrictions to fixed/maximum term contracts, expanded scope for flexible working arrangements, and sexual harassment and discrimination.
Family and Domestic Violence Leave
With the introduction of the Fair Work Amendment (Paid Family and Domestic Violence Leave) Act 2022 (Cth) (FDV Act), from 1 February 2023 (or 1 August 2023 for employers who are small businesses), all employees, including those who are casual (for shifts offered and accepted prior to their request to take leave) and part-time, will be entitled to ten full days of paid family and domestic violence leave (FDV Leave) each year (ie the entitlement is not pro-rated for part-time or casual employees). FDV Leave renews every year on each employee’s work anniversary and does not accumulate from year to year if it isn’t used.
Family and domestic violence means violent, threatening or other abusive behaviour by an employee’s close relative that seeks to coerce or control the employee, or causes the employee harm or fear.
A close relative is:
an employee’s:
spouse or former spouse;
de facto partner or former de facto partner;
child;
parent;
grandparent;
grandchild; or
sibling;
an employee’s current or former spouse or de facto partner’s child, parent, grandparent, grandchild or sibling; or
a person related to the employee according to Aboriginal or Torres Strait Islander kinship rules.
When taking FDV Leave employees must give employers notice of the leave as soon as is practicable, and advise of the period or expected period of leave. Employers can require the employee to provide evidence to support the FDV Leave request, which could include documents issued by the police, court or family violence support services. Given the sensitivity of the information supplied, employers must take reasonable steps to ensure that any evidence received in support of an employee’s FDV Leave request remains confidential.
The introduction of FDV Leave forms part of the National Employment Standards (NES) and replaces the existing entitlement to five days of unpaid family and domestic violence leave. Please note, employees will continue to be entitled to five days of unpaid family and domestic violence leave until they can access the new paid entitlement in 2023.
The updated Fair Work Information Statement (FWIS) reflecting the amended NES has now been published by the Fair Work Ombudsman, and can be found here.
Employers will need to ensure that all new staff commencing in 2023 receive a copy of the updated FWIS and be fully aware of the changing obligations and duties that are introduced by the FDV Act.
If you require any further information or assistance in relation to FDV Leave, the NES or the FWIS, contact us today to see how we can assist.
If you require domestic violence support, the following contacts may be able to provide assistance:
National Sexual Assault, Domestic Family Violence Counselling Service on 1800 737 732.
NSW Domestic Violence Crisis Line on 1800 65 64 63.
NSW Link2Home Crisis Accommodation and Referrals on 1800 152 152.
Women’s Community Shelters, which is a not-got-profit organisation that works with local communities to establish crisis accommodation shelters for women and children who are homeless or leaving domestic and family violence.
IF YOU ARE IN AN EMERGENCY, CALL 000.
FWO Annual Wage Review 2021-22
On 15 June 2022, the Fair Work Commission (FWC) Expert Panel handed down its decision in the Annual Wage Review for 2021-22 (Wage Review). The key outcomes of the Wage Review are:
- 5.2% increase to the national minimum wage
- 4.6% increase to award minimum wages, subject to a min. increase of $40.00 per week: – 1 July 2022 for most modern awards; and – 1 October 2022 for employers in the aviation, tourism and hospitality industries.
- 25% casual loading to remain steady for modern award or enterprise agreement free employees.
National Minimum Wage Increase
The National Minimum Wage applies to employees not covered by an award or registered agreement.
From 1 July 2022, the National Minimum Wage will increase by $40 per week, which amounts to an increase of 5.2%.
The new National Minimum Wage will be $812.60 per week or $21.38 per hour.
Award Minimum Wage Increase
% Increases
Employees who are covered by an award will have their award based minimum rates increased by 4.6%, subject to a minimum increase for adult award classifications of $40 per week. In effect, this means:
• award wage rates above $869.60 per week will increase by 4.6 per cent per week; and
• award wage rates below $869.60 per week will increase by $40 per week.
eg. Amy is a full time employee working under the Social, Community, Home Care and Disability Services Industry Award 2010 (Cth) [MA000100]. Amy is classified as a social and community services employee, level 1, pay point 1.
Amy’s weekly minimum wage before 1 July 2022 is $840.10.
As this weekly wage is below $869.60, she will receive a $40 increase in her weekly wage from 1 July 2022.
Timing of the Increases
The wage increases will take effect for employers from the first full pay period on or after 1 July 2022, except for employers in the aviation, tourism and hospitality industries with applicable modern awards (see list below).
For employers and employees covered by modern awards relating to the aviation, tourism
and hospitality industries, the modern award wage increases will take effect from 1 October 2022.
The following modern awards will have a 1 October 2022 operation commencement date:
• Air Pilots Award 2020 (Cth) [MA000046];
• Aircraft Cabin Crew Award 2020 (Cth) [MA000047];
• Airline Operations – Ground Staff Award 2020 (Cth) [MA000048];
• Airport Employees Award 2020 (Cth) [MA000049];
• Alpine Resorts Award 2020 (Cth) [MA000092];
• Hospitality Industry (General) Award 2020 (Cth) [MA000009];
• Marine Tourism and Charter Vessels Award 2020 (Cth) [MA000093];
• Registered and Licensed Clubs Award 2020 (Cth) [MA000058]; and
• Restaurant Industry Award 2020 (Cth) [MA000119].
Changes to Superannuation
Increases
The legislated minimum superannuation amount (Super Guarantee) will increase from 10% to 10.5% per annum on 1 July 2022. The Super Guarantee rate will continue to increase by 0.5% each financial year until it reaches 12% on 1 July 2025.
Eligibility
From 1 July 2022, employees can be eligible for the Super Guarantee, regardless of how much they earn. This is because the $450 per month eligibility threshold for the application of the Super Guarantee has been removed.
Employers only need to pay super for workers aged under 18 when they work more than 30 hours in a week.
Note: Employers should be aware that in circumstances where employees do not choose a fund under the legislation, employers are obligated to pay the Super Guarantee contributions into the employee’s stapled super account.
Takeaways for employers
The increases to minimum wages will take effect for employers from the first full pay period on or after the operative dates set out above. The increases will also have a flow-on effect to all loadings, penalties, allowances and overtime payments under the awards that are calculated with reference to the minimum wage. Employers will soon be able to review these increase on the FWC’s Pay and Conditions Tool website.
Employers should review their current pay arrangements to ensure that:
• award/agreement-free employees: any employee not covered by a modern award or enterprise agreement will, from the first full pay period on or after 1 July 2022, be entitled to a minimum weekly wage for 38 hours of work equal to $812.60, or $21.38 an hour (plus the 25 per cent casual loading in respect of casual employees).
• modern award covered employees: from the first full pay period on or after the relevant operative date, employees covered by a modern award must not be paid less than the new modern award wage in respect of the employee’s classification under the modern award. This also includes casual loading and other loadings, penalties, allowances or overtime, which are calculated by reference to the modern award minimum rates of pay.
• all-inclusive salary employees: review salary packages of employees who receive “all-inclusive salaries”. The increase may affect the lawfulness of that all-inclusive salary if it is no longer adequate to compensate them for their award entitlements ie to achieve a positive BOOT. Employers also need to be prepared for the increase in the Super Guarantee rate to 10.5% on and from 1 July 2022.
• enterprise agreement covered employees: from the first full pay period on or after the relevant operative date, for any employees to whom an enterprise agreement applies, that they are paid base rates of pay under the enterprise agreement that are:
+ for employees not covered by a modern award – not less than the national minimum wage;
+ in the case of an employee covered by a modern award – not less than the wage specified in respect of an employee’s classification under a modern award; and
+ employers who intend to guarantee pay above the high-income threshold for certain employees should review whether the annual rate of earnings paid to the relevant employees exceeds the high-income threshold. Employers should note that the highincome
threshold will increase on 1 July 2022.
If you require any further information or assistance in relation to the Wage Review and salaried arrangements/BOOT calculations, contact us today to see how we can assist!
Contractor Clarification
Say what it is and follow what you say! Earlier this month the High Court of Australia (HCoA) delivered two judgments bringing clarification to determining whether workers are independent contractors or employees.
Previous Test
Current Test
The HcoA held that where parties have entered into a valid and comprehensive written agreement, the ultimate characterisation of the relationship is focused on rights and duties established by the written agreement, and not how the relationship operates in practice.
These two decisions highlight the importance of employers having effectively drafted agreements
for both independent contractors and employees.
Background
In both cases, Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting),
and ZG Operations Australia Pty Ltd vJamsek [2022] HCA 2 (Jamsek), the HCoA had to
determine whether the relevant workers were employees or independent contractors.
The HCoA upheld both appeals, however, with two different outcomes. In Personnel Contracting the HCoA held that the worker was an employee,
whilst in Jamsek, the workers were found to be independent contractors.
In both cases, it was not suggested that the:
• contracts were not observed in practice;
• reality of the work was inconsistent with the contracts;
• contracts were a sham or unlawful; or
• written contracts had been varied by conduct of the parties.
It was in this context that the majority held that the terms of the written contracts should have been the sole focus of the analysis of the relationship.
Applying the new approach, the majority of the HcoA found in Personnel Contracting that despite the agreement labelling the worker as a contractor, the terms of the agreement, such as the labour hire business being able to:
• offer the worker shifts and the workers was able to refuse such work;
• pay the worker by the hour;
• control how the worker performed their work;
• determine if the worker could delegate their work to other parties or was required to perform the work himself; and
• determine if the worker should provide his own tools and equipment;
established an employment relationship.
The majority emphasised that it was the actual rights and obligations established under the agreement which were relevant to the analysis of whether the worker was an employee of a contractor.
In Jamsek, the HcoA held the terms of the written agreement established an independent contracting relationship as it identified that:
• the workers had to provide their own trucks;
• the company had specifically stated they wished to move away from an employment
Background
In both cases, Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting),
and ZG Operations Australia Pty Ltd vJamsek [2022] HCA 2 (Jamsek), the HCoA had to
determine whether the relevant workers were employees or independent contractors.
The HCoA upheld both appeals, however, with two different outcomes. In Personnel Contracting the HCoA held that the worker was an employee,
whilst in Jamsek, the workers were found to be independent contractors.
In both cases, it was not suggested that the:
• contracts were not observed in practice;
• reality of the work was inconsistent with the contracts;
• contracts were a sham or unlawful; or
• written contracts had been varied by conduct of the parties.
It was in this context that the majority held that the terms of the written contracts should have been the sole focus of the analysis of the relationship.
Applying the new approach, the majority of the HcoA found in Personnel Contracting that despite the agreement labelling the worker as a contractor, the terms of the agreement, such as the labour hire business being able to:
• offer the worker shifts and the workers was able to refuse such work;
• pay the worker by the hour;
• control how the worker performed their work;
• determine if the worker could delegate their work to other parties or was required to perform the work himself; and
• determine if the worker should provide his own tools and equipment;
established an employment relationship.
The majority emphasised that it was the actual rights and obligations established under the agreement which were relevant to the analysis of whether the worker was an employee of a contractor.
In Jamsek, the HcoA held the terms of the written agreement established an independent contracting relationship as it identified that:
• the workers had to provide their own trucks;
• the company had specifically stated they wished to move away from an employment model and the offer for the two drivers to
continue a relationship with the company was only extended on the basis that they would be independent contractors;
• the workers were responsible for the maintenance and servicing of their trucks; and
• the company had no control over what was delivered and that the workers had discretion over which routes or areas they would follow
in making deliveries based on personal preference and overall conveniencel and the agreements were with partnerships rather than the individual drivers
Warning
The HCoA made clear that the previous ‘multi-factorial’ approach (ie to assess the ‘reality’ of the relationship between the parties) still had a role to play in circumstances where:
1. the agreement between the parties was not entirely in writing;
2. there is a dispute about the validity of the terms of the engagement; or
3. the agreement is ineffective under general law or statute, or is a sham; or
4. the agreement has been varied or otherwise displaced by the conduct of the parties.
In these circumstances, the ‘reality’ of the worker’s engagement and the totality of the relationship between the parties could be used to determine whether the worker was an employee or independent contractor.
What do employers need to be aware of going forward
In light of these two HcoA decisions, now is the time for businesses wishing to review existing ‘contractor’ engagements to ensure:
• clarity as to who the parties to the agreement are, noting that it is likely to be more difficult for contracts with legal entities (e.g. partnerships, companies) to later be found to be contracts of employment;
• the terms of the agreement properly reflect arrangements for the services/labour to be provided;
• the duties and obligations under the agreement are clearly stated;
• a sufficient level of control is granted to the business regardng the manner in which services are provided, being mindful that the
greater the right to control, the higher the risk of a finding of an employment relationship;
• there is clarity on which party is responsible for the provision of tools and equipment;
• there is clarity regarding the absence of an expectation for the contractor to wear any applicable uniform of the business;
• clarity regarding superannuation obligations;
• that the contractor is responsible for paying their own tax and GST for the services they provided to the business; and
• whether the contractor can delegate their work to other parties.
Businesses that fail to engage workers under comprehensive written contracts will be faced with the risk that the courts will apply the ‘multi-factorial’ approach and will assess the ‘reality’ of the relationship rather than the contract itself to
determine whether a work relationship is an employer/employee or principal/contractor relationship.
Where to from here ?
If you are concerned about your current contractors in the workplace, or require further information or assistance in the creation of casual or contractor agreements, please contact us today to see how we can assist !