By Stewart Gough  |  Principal  |  9806 7483  |  stewartg@matthewsfolbigg.com.au

By Peter Doughman  |  Senior Associate  |  9806 7412  | pdoughman@matthewsfolbigg.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

DISCLAIMER: This article is provided to readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as a definitive or complete statement of the relevant law.

Casuals - High Court to hear ‘Workpac’ Appeal

In late 2020, WorkPac was granted special leave by the High Court to appeal the Federal Court’s decision in Workpac Pty Ltd v Rossato [2020], meaning that the High Court may finally provide authoritative guidance on what properly constitutes ‘casual’ employment.

By way of background, Mr Rossato was engaged by Workpac on a casual basis, his employment agreement specified that he was a casual employee, and he was paid a casual loading throughout his employment, however, after that employment ended he alleged he was in reality a permanent employee and therefore entitled to various NES benefits such as notice of termination and paid annual leave.

The Full Court of the Federal Court of Australia found that:

• Workpac had engaged Mr Rossato on a ‘regular, systematic and predictable basis’, and demonstrated a ‘firm advance commitment’ to provide Mr Rossato with ongoing work throughout his employment
• notwithstanding the fact that his employment agreement characterised him as a casual employee and he had received wages inclusive of casual loading, Mr Rossato was in fact a permanent employee and therefore eligible to recover unpaid NES entitlements from Workpac such as notice and annual leave
• Workpac could not set-off the casual loading against the entitlements claimed by Mr Rossato since the amount of casual loading paid had been subsumed into his wages and was not separately identifiable or recoverable

The Rossato decision followed on from the 2018 decision of Workpac Pty Ltd v Skene, in which the employee in question was held to be ‘other than a casual employee’ and thus eligible to leave and other entitlements under the NES.

Both decisions have caused particular anxiety to employers who rely upon a substantial casualised workforce as they illustrate that such employers may be vulnerable to underpayment claims made by casual employees even where they are paid a substantially-higher casual rate of pay throughout their employment.

It is anticipated that the High Court will resolve the ongoing dispute by formulating a clear and comprehensive definition of casual employment or at least provide meaningful guidance about the conditions which give rise to a ‘true’ casual employment relationship.

Action Items

Until the High Court hands down its decision employers should:

• ensure (as far as possible) casual employees are not engaged on regular, systematic and predicable shifts, and avoid giving such employees any guarantee of long-term employment
• ensure that all payslips issued to any casual employees show a separate and clearly-identifiable casual loading payment
• review and update their pro-forma casual employment agreements to ensure they contain strong and clearly-worded restitution and set-off provisions
• where appropriate, invite longer-term casual employees to convert to permanent employment in accordance with an applicable modern award or enterprise agreement

Proposed Amendments to the Fair Work Act

In December 2020 the Federal Government proposed the most significant set of changes to the national workplace system since the passage of the Fair Work Act in 2009.

The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 represents the outcome of deliberations by five working groups convened by the Minister for Industrial Relations and featuring representatives from employer groups and trade unions.

The Federal Government has stated that the purposes of the Bill include assisting businesses to recover from the effects of the Covid-19 pandemic, providing more clarity and certainty to both employers and employees about their rights and responsibilities, increasing employee/employer flexibility, and streamlining and simplifying the current industrial relations system.

The more significant changes proposed by the Bill include:

• providing a statutory definition of a ‘casual employee’ and introducing ‘casual conversion’ provisions for all national system casual employees (including Award-free employees)
• instituting ‘double-dipping’ protections that allow employers to set-off casual loading payments against other amounts that may be subsequently claimed by an employee (such as in the Rossato case mentioned in our other article)

• permitting certain Award-covered part-time employees to agree with their employers to work additional hours outside their ordinary hours of work at ordinary rates
• increasing the maximum penalties for contraventions of the Fair Work Act, introducing new penalties for systematic and dishonest wage underpayments (including jail for individuals), and granting ASIC the power to disqualify such individuals from managing a company
• simplifying the pre-approval and approval process for enterprise agreements and limiting the application of the Better Off Overall test (BOOT)
• conferring a power on the Fair Work Commission to approve certain enterprise agreements that fail the BOOT where it is in the public interest to do so, with such agreements to operate for a maximum of 2 years

Action Items

Until the proposed changes in their final form become law, employers should:

• continue to monitor all developments and changes to the draft legislation

• review and update their pro-forma employment agreements to ensure they remain compliant with all current laws and the requirements of all applicable modern awards and enterprise agreements

Miscellaneous Award 2020 – Extended Application

In mid 2020 the Fair Work Commission made a variation to the coverage provisions of the Miscellaneous Award 2020 (Award) which dramatically increased the potential application and scope of the Award to cover employees who would otherwise be ‘award-free’.

The Award has historically acted as a ‘catch-all’ to cover employees who were traditionally award-covered but who were not covered by any of the other modern awards.

Prior to 1 July 2020, the coverage provisions in the Award (including the previous 2010 version of the Award) included the following exclusions:

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

4.3 The award does not cover employees:

(a) in an industry covered by a modern award who are not within a classification in that modern award; or

(b) in a class exempted by a modern award from its operation,

or employers in relation to those employees.

In March 2020 the Commission conducted a review of the Award and noted the Fair Work Act also contained provisions that excluded from award coverage any classes of employees who, because of the nature or seniority of their role, have traditionally not been covered by awards, or who perform work that is not of a similar nature to work traditionally regulated by awards.

The Commission therefore determined clauses 4.2 and 4.3 of the Award were largely redundant and liable to give rise to confusion and conflict.

The Commission considered the coverage terms would, for example, exclude from coverage any employee who performed work of a kind that was traditionally award-covered (e.g. a cleaner), but was nevertheless not covered by an award on account of the industry of the employer.

Thus the Award was varied with effect from 1 July 2020 by:

• amending clause 4.2 to read “The award does not cover managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists”
• deleting clause 4.3

As a result workers may no longer be excluded from this Award simply because they work in an industry that does not have a modern award and/or because their position does not correspond to a classification within a relevant industry award.

Employees who were previously considered to be award-free may now in fact be covered by this Award and therefore entitled to the minimum rates of pay and other benefits prescribed by it from 1 July 2020.

Action Items

In light of the Award variation every employer who employs staff they consider to be award-free must:

• re-consider the issue of modern award coverage under the Award

• ensure employees who are covered by the Award are being paid at or above the Award minimum entitlements from 1 July 2020 (and correct any underpayments and any other Award non-compliance)
• notify all affected employees of their coverage by the Award from 1 July 2020 and disclose any resulting underpayments
• amend their pro-forma employment agreements to refer to the Award, comply with all administrative requirements prescribed by the Award, and ensure that any set-off clause captures (to the extent legally possible) all applicable Award entitlements

The JobKeeper 2.0 Scheme

As part of the Federal Government’s initial response to the Covid-19 pandemic the JobKeeper scheme assisted to keep businesses afloat (and employees employed) through the payment of employee wage subsidies.

As the original JobKeeper scheme ended on 28 September 2020 and the effects of the Covid-19 pandemic are continuing, the Federal Government introduced the replacement ‘JobKeeper 2.0’ scheme to apply from 28 September 2020 to 28 March 2021.

As with the original JobKeeper scheme, JobKeeper 2.0 operates by providing eligible employers with fixed fortnightly wage subsidies (JobKeeper payments) that the employer is required to pass on to all eligible employees.

However, JobKeeper 2.0 provides two different rates of JobKeeper payments which reduce part-way through the life of the scheme as follows:

28 September 2020 to 3 January 2021 (Quarter 1):

$1,200 per fortnight for:

• eligible employees who worked 20 hours or more a week on average in the four week pay periods before either 1 March 2020 or 1 July 2020
• eligible business participants who were actively engaged in the business for 20 hours or more per week on average

$750 per fortnight for all other eligible employees and business participants

4 January 2021 to 28 March 2021 (Quarter 2):

$1,000 per fortnight for:

• eligible employees who worked 20 hours or more a week on average in the four week pay periods before either 1 March 2020 or 1 July 2020
• eligible business participants who were actively engaged in the business for 20 hours or more per week on average

$650 per fortnight for other eligible employees and business participants

Amongst other things:

• to be eligible for the JobKeeper 2.0 scheme, employers must have a GST turnover of less than $1 billion and must be able to demonstrate a decline in actual GST turnover of 30% or more for Quarter 1 and/or Quarter 2 compared to the same quarter in 2019
• employers with a GST turnover of more than $1 billion will also be eligible provided they can demonstrate a decline in actual GST turnover of 50% or more for the relevant quarters
• employers who were eligible under the original JobKeeper scheme are not required to re-register for JobKeeper 2.0 provided they meet and can demonstrate the above GST turnover requirements

Critically, the JobKeeper 2.0 scheme continues to allow employers to issue JobKeeper stand-down directions to their eligible employees, to make unilateral changes to eligible employees’ duties and location of work, and to request eligible employees agree to changes to their ordinary working hours.

Employers must still ensure any such directions and arrangements strictly comply with the mandated legal administrative requirements (eg, notice and consultation obligations).

Action Items

All eligible employers (including those grandfathered from the original JobKeeper scheme) must:

• notify the ATO of all eligible employees, business participants, and their associated rates of pay in respect of the quarters covered by the JobKeeper 2.0 scheme

• work closely with their accountants to ensure their GST turnover has been correctly calculated for each quarter, and ensure these amounts continue to meet the relevant turnover test requirements
• continue to pay their eligible employees at least the value of the JobKeeper subsidy each fortnight, including if any eligible employees are ordinarily paid less than this amount or would not be entitled to this amount due to stand-down
• ensure all business participants declare to the ATO if their active involvement with the business exceeds 20 hours or more per week on average in a four week pay period in order to avoid potential costly repayment obligations

The JobMaker Scheme

Whilst handing down the Federal Budget in October 2020, the Federal Government introduced another wage subsidy scheme aimed at addressing the increase in unemployment due to the ongoing Covid-19 pandemic and called the JobMaker scheme.

The purpose of the JobMaker scheme is to support and incentivise employers to create new jobs within their business and employ additional people, with eligible employers to receive the following ‘hiring credits’:

• $200 a week for each eligible employee hired who is aged 16-29 (up to a maximum credit of $10,400)
• $100 a week for each eligible employee hired who is aged 30-35 (up to a maximum credit of $5,200)

The hiring credit is payable weekly for a period of 12 months following the date on which the employee was hired, provided they are employed by the employer between 7 October 2020 and 6 October 2021.

Amongst other things, the employer must be able to demonstrate:

• an increase in their total employee headcount from 30 September 2020 (the ‘reference date’)
• an increase to their payroll compared to the three month period up to the reference date

In addition, the employer must be registered for PAYG withholding, report to the ATO via Single Touch Payroll, and be up-to-date with their tax lodgement obligations.

Whilst the JobMaker scheme does not exclude a business or employer based on GST turnover, any employer that is registered for the JobKeeper 2.0 scheme will automatically be ineligible for the JobMaker scheme.

Where an employer meets the eligibility requirements, hiring credits will only be paid for a new employee where the following conditions are met:

• the employer has already employed one additional employee during the scheme period (ie, the hiring credits are only payable for new employees following the first new employee)
• the employee is aged between 16 and 35 as at the date of commencement of employment
• the employee had received some other Federal Government unemployment benefit (eg, JobSeeker payment, Youth Allowance (Other), or Parenting Payment) within the three month period prior to employment
• the employee is employed to work an average of at least 20 hours per week

If the eligible employee ceases employment with the employer, the employer will no longer be able to claim hiring credits for that employee following the date of cessation.

Action Items

An employer who wishes to take advantage of the JobMaker scheme must:

• ensure they are not registered with any other disqualifying subsidy scheme (eg, JobKeeper 2.0)
• register online with the ATO
• create and fill as many suitable positions as possible with new eligible employees during the period between 7 October 2020 and 6 October 2021
• commence submitting claims for wage subsidies from 1 February 2021 (for all new roles created in the first reporting period up to 6 January 2021)
• submit all claims for wage subsidies within three months of each new position being filled (supported by all relevant substantiating documentation)