The big issues facing Australian employers and their insurers in 2021

2020 was a year of significant upheaval and development in the employment sphere (not only from the COVID-19 perspective) and 2021 is proving no different with both substantive law reform and long-planned developments. As the pandemic unfolds and Australia races to counter lockdowns with vaccines, the latter part of 2021 promises further significant developments for employers, varying from COVID-19 relief measures, managing the return to the workplace and integrating new anti-discrimination protections. We outline these ‘big issues’ below.

Key figures to know

From 1 July 2021:

  1. the ‘high income threshold’ (which impacts unfair dismissal eligibility) increased to $158,500;
  2. the compensation cap for unfair dismissal claims increased to $79,250; and
  3. the superannuation guarantee rate increased to 10%, and will now increase by 0.5% per annum until it reaches 12% on 1 July 2025.

Increase to the minimum wage

From 1 July 2021, the minimum wage rate increased by 2.5% to $20.33 per hour ($772.60 per week). However, in response to the COVID-19 pandemic, the Fair Work Commission (FWC) delayed the operation of this increase for certain affected industries, as follows:

  1. for employees covered by the General Retail Industry Award 2020, the increase took effect in the first full pay period on or after 1 September 2021; and
  2. for award-covered employees in industries significantly impacted by COVID-19 (including the aviation, tourism, fitness and certain hospitality and retail industries), the increase will take effect in the first full pay period on or after 1 November 2021.

Casual employment reform

Casual employment has been controversial since the cases of Skene[1] and Rossato[2] caused uncertainty about how to define casual employment, and generated fear amidst employers that casual workers could ‘double dip’ by accepting casual loadings and then claim leave entitlements if misclassified as casuals. On 26 March 2021, the Fair Work Act 2009 (Cth) (FW Act) was amended[3] to clarify casual employment and on 4 August 2021, the much anticipated Rossato[4] appeal was decided by the High Court of Australia (Rossato High Court Decision) which aligned with the FW Act’s casual amendments.

Fair Work Act Amendments

The FW Act now defines a casual employee as a person who “accept[s] a job offer from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work”. The amended FW Act outlines factors that must be considered when determining whether an employee is a casual, namely: if the employer can elect to offer work, whether the employee can accept or reject shifts, if the employee works as required according to the needs of the employer, if the employee is described as casual and whether they are paid a casual loading.

In circumstances where an employee has been misclassified as a casual employee, the amended FW Act also enables employers to offset an identifiable casual loading paid in lieu of leave entitlements against certain entitlements.[5] This provision purports to apply on a retrospective basis, which was confirmed by the Rossato High Court Decision subject only to limited exceptions.[6]

Another key development is the creation of a pathway for conversion from casual to permanent employment. Under the new provisions, an employer (unless it has less than 15 employees) must offer to convert an employee to permanent employment if they have been employed for 12 months and during at least the last 6 months, the employee has worked a regular pattern of hours on an ongoing basis which they could continue to work as a full-time or part-time employee. However, an employer is not required to make the conversion offer if they have reasonable grounds, based on circumstances that are known or reasonably foreseeable. Notably, employees also now have the right to request casual conversion in certain circumstances and the FW Act specifies a strict process (including timeframes for the employer’s response). Employers are recommended to obtain advice if these provisions are relevant to their business.

Finally, to complement the Fair Work Information Statement, there is also now a Casual Employment Information Statement (CEIS). The FW Act requires that:

(a) small business employers (less than 15 employees) must provide all casual employees with the CEIS as soon as possible after 27 March 2021; and

(b) all other employers must provide all casual employees with the CEIS as soon as possible after 27 September 2021.

We anticipate that these changes will significantly reduce the number of claims made by casual employees for alleged underpayment, but may expose insurers to additional claims arising from casual conversion disputes during employment.

Rossato High Court Decision

The Rossato High Court Decision overturned the earlier Rossato[7] and Skene[8] decisions, finding that the test for casual employment is whether there is “a firm advance commitment to ongoing work”. However, rather than looking at the practical reality of the employment relationship, the High Court of Australia held that the issue of whether there is a firm advance commitment must be assessed solely by reference to the enforceable terms between the parties (primarily the employment contract). The Rossato High Court Decision affirms the primacy of the employment contract, reassuring employers that an employee will be correctly classified as a casual if the express terms of the employment contract do not provide “a firm advance commitment to ongoing work”.[9]

Respect at Work legislation passed

On 2 September 2021, Parliament passed the Sex Discrimination and Fair Work Act (Respect at Work) Amendment Bill 2021 (Respect at Work Bill), which originated from the 2020 Respect@Work Report produced by Kate Jenkins, Sex Discrimination Commissioner (Respect@Work Report).

This new legislation follows recent high profile ‘scandals’ involving senior public servants and reflects changing societal expectations to prevent such conduct from occurring.

As passed, the Respect at Work Bill enacts a number of amendments to the FW Act, the Sex Discrimination Act 1984 (Cth) (SD Act) and the Australian Human Rights Act 1986 (Cth) (AHRC Act) including:

(a) creating a new object clause to clarify that the SD Act aims to achieve equality of opportunity between men and women;

(b) creating a new prohibition against discrimination involving harassment of a person on the ground of sex in the SD Act. Such harassment involves conduct of a seriously demeaning nature against a person on the basis of their sex;

(c) protecting more workers from sexual harassment including members of parliament and ACT / NT legislative assemblies and judges (and their staff), by broadening the scope of the SD Act;

(d) clarifying that workplace sexual harassment is a valid reason for dismissal, for the purpose of an unfair dismissal claim, under the FW Act;

(e) enabling the FWC to make orders to ‘stop sexual harassment at work’, including after a single instance of sexual harassment (equivalent to the current anti-bullying jurisdiction) under the FW Act;

(f) providing two days’ paid compassionate leave to employees who suffer, or whose spouse or de facto partner has suffered, a miscarriage under the FW Act; and

(g) extending the time to bring a complaint to the Australian Human Rights Commission under the SD Act from 6 months to 24 months, and amending the definition of unlawful discrimination under the AHRC Act to clearly include victimisation.

Of significance, the Respect at Work Bill did not implement the recommendation to create a positive duty for employers to prevent sexual harassment in the workplace. A slightly modified positive duty (namely the duty to take all reasonably practicable steps to prevent sexual harassment in the workplace) arises under an employer’s work health and safety obligations in any event.

We expect these changes will expand the scope of existing claims, rather than leading to new types of claims. With increasing scrutiny of employers over sexual harassment and sex-based discrimination in the workplace in conjunction with this legislative reform, employers should ensure that all reasonable steps are taken to prevent discriminatory and harassing conduct, including ensuring their policies, procedures and employee training is updated and being implemented. Employers are encouraged to seek advice promptly if concerns of discrimination or harassment arise.

COVID-19 and the workplace

An area of significant flux and complexity is the management of COVID-19 in the workplace (including vaccinations). Given the lack of clarity and sensitivities associated with mandatory vaccinations, this is a fertile area for dispute against employers (and their insurers).

Given the serious work health and safety risks posed by COVID-19 and other government or customer requirements, many employers are expressing interest in mandatory COVID-19 vaccinations. However, this issue involves tension between intermingled work health and safety, contractual, privacy, anti-discrimination (disability/political opinion) and industrial consultation obligations, together with public health orders in some industries/sectors.

There are limited circumstances where an employer can lawfully mandate that an employee obtain a COVID-19 vaccination to attend a workplace, which may include:

(a) where there is a legislative or regulatory requirement for an employee to be vaccinated (including public health order);

(b) if a modern award, enterprise agreement or contractual agreement provides that an employer may require an employee to obtain a vaccination; or

(c) where it would be a lawful and reasonable direction from an employer.

Each State and Territory has implemented a mandatory COVID-19 vaccination policy for aged care workers (with some States extending this to health care workers), albeit with different scope, exemptions and requirements for each State and Territory. Interestingly, a number of large corporations including SPC, Qantas and Virgin Australia have also moved to mandate vaccination for their workers (with differing levels of push back in response).

The Fair Work Ombudsman has published guidance in which employees are split into four “tiers”, to assist employers with assessing when a direction to obtain a COVID-19 vaccination will be reasonable and lawful.[10] Challenging issues also arise when considering mandating vaccination for prospective new hires.

Due to the heightened emotions surrounding this already complex issue, we anticipate employers and their insurers may see a number of claims in this area, either from individual employees or collective disputes. Employers should seek advice prior to mandating that employees obtain a COVID-19 vaccination and what exceptions and allowances they may need to provide in their respective industries, to mitigate risk from a myriad of different claims.

Where to next?

The past 18 months have demonstrated the agility and speed that employer obligations can change, with far reaching consequences for many businesses.

The coming months will certainly see further ramifications from the passage of the Respect at Work Bill, the FW Act amendments, and the Rossato High Court Decision, which have each invoked significant changes for employers.

Employers now await upcoming High Court of Australia decisions[11] which will clarify the test for independent contractor vs employee (which will be particularly pertinent for the gig economy).

The Fair Work Ombudsman has further confirmed it is continuing to investigate underpayments by large scale employers, suggesting ‘wage theft’ discussions will continue to circulate (previously tipped to be the ‘big issue’ for 2020 before the COVID-19 pandemic occurred).

With the ongoing COVID-19 challenges, employers will need to remain flexible and vigilant to ensure proper processes and procedures are implemented to maintain legal compliance and best practice, for the benefit of their business and employees and to minimise risk.

 

Read other items in the Australian Insurance Brief - October 2021

 

[1] WorkPac Pty Ltd v Skene (2018) 264 FCR 536

[2] WorkPac Pty Ltd v Rossato [2020] FCAFC 84

[3] By the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021

[4] WorkPac Pty Ltd v Rossato [2021] HCA 23

[5] cl 46(1), (5)-(8) of Sch 1 to the FW Act and WorkPac Pty Ltd v Rossato [2021] HCA 23 at [10]

[6]WorkPac Pty Ltd v Rossato [2021] HCA 23 at paragraph 10

[7] WorkPac Pty Ltd v Rossato [2020] FCAFC 84

[8] WorkPac Pty Ltd v Skene (2018) 264 FCR 536

[9] WorkPac Pty Ltd v Rossato [2021] HCA 23 at paragraphs 88-92 and paragraphs 105-106

[10] https://coronavirus.fairwork.gov.au/coronavirus-and-australian-workplace-laws/covid-19-vaccinations-and-the-workplace/covid-19-vaccinations-workplace-rights-and-obligations#lawful-and-reasonable-directions-to-get-vaccinated

[11] ZG Operation Australia Pty Ltd & Anor v Jamsek & Ors S27/2021 and CFMMEU & Anor v Personnel Contracting Pty Ltd P5/2021

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