SIGNIFICANT WORKPLACE RELATIONS ISSUES

Transcription

1 SIGNIFICANT WORKPLACE RELATIONS ISSUES 6 July 2015

2 EXECUTIVE SUMMARY Significant workplace relations issues include: In a major case contested over the past 15 months Ai Group has been successful in convincing a Full Bench of the Fair Work Commission (FWC) to give employers enhanced rights to direct employees to take excessive accrued annual leave, and to allow cashing-out of annual leave for award-covered employees by agreement with their employer. The 11 June decision in the Annual Leave Common Issue Case provides important new rights for employers and important flexibilities for employers and employees. The FWC s 4 Yearly Review of Awards is continuing. Ai Group is taking the lead role amongst employer groups and is working hard to protect and promote Ai Group Members interests. The Review commenced in early 2014 and will most likely continue until at least late The Review involves individually reviewing each of the 122 modern awards, as well as providing the vehicle for a large number of major cases (Common Issues Cases) dealing with entitlements across the award system. The Productivity Commission inquiry into the Workplace Relations Framework is continuing. More than 200 submissions have been lodged including a major submission of Ai Group which argues that Australia s workplace relations framework is holding Australia back. The Productivity Commission intends to issue a draft report in early August Parties will have an opportunity to make further submissions following the release of the draft report and the opportunity to participate in public hearings. A number of important workplace relations Bills are before Parliament but at this stage it is unclear when they will be voted upon in the Senate. Parliament next sits for two weeks from 10 August. Ai Group has made a detailed submission to a Senate Committee inquiry into the Fair Work (Registered Organisations) Amendment Bill 2014 [No. 2]. The Bill would impose additional duties on registered organisations and tougher penalties for those which break the law. An earlier version of this Bill was defeated in the Senate on 2 March On 25 June 2015 the Federal Government introduced the Fairer Paid Parental Leave Bill 2015 into Parliament. If passed the Bill would, from 1 July 2016, ensure that parents who are entitled to receive employerprovided payments in excess of the total amount of parental leave pay under the Government-funded Paid Parental Leave scheme (PPL scheme) do not receive any parental leave pay under the PPL scheme. On 2 June the Expert Panel of the FWC handed down its decision in the Annual Wage Review The Commission has increased the national minimum wage and award minimum wages by 2.5 per cent. The increase is operative from 1 July Significant Workplace Relations Issues Report, Ai Group 2

3 Ai Group is continuing to strongly oppose attempts by CoINVEST the administrator of the Victorian construction industry long service leave scheme to extend the coverage of the scheme through expansive interpretations of the coverage rules. On 3 June 2015, the Coinvest v Baytech Trades case was heard by the Full Bench of the Supreme Court of Victoria. Ai Group Workplace Lawyers, Mr Stuart Wood QC and Mr Ben Jellis of Counsel represented Baytech in this important case about the breadth of coverage of the scheme and the requirement to pay the 2.7% levy under the scheme. A Victorian Parliamentary Committee is conducting an inquiry into portable long service leave schemes. In its submissions to the inquiry Ai Group intends to highlight numerous problems with the operation of the existing Victorian construction industry portable long service leave scheme which need to be addressed. Ai Group will also strongly oppose such schemes being expanded to other industries. The Royal Commission into Trade Union Governance and Corruption is continuing its hearings. On 19 May 2015 the Royal Commission issued a discussion paper canvassing views on a wide range of law reform options. One important issue that Ai Group has been focussing on during the Royal Commission is the many millions of dollars each year that flow to unions from worker entitlement funds and insurance companies, and the role that industry-wide pattern agreements play in delivering these inappropriate revenue streams to unions. Ai Group has put forward a detailed plan to address the problems and pleasingly the discussion paper canvasses views on some key elements of Ai Group s plan. The Treasury has called for submissions on the final report of the Competition Policy Review that was released in March. Ai Group has lodged a submission expressing strong support for the recommendation that trading restrictions in enterprise agreements be outlawed, as proposed by Ai Group. As the final report states, competition should be favoured over restrictions and employers should be free to supply and acquire goods and services, including contract labour, should they choose to do so. A recent Ai Group submission to the Parliamentary Joint Committee s inquiry into crystal methamphetamine (Ice) has attracted significant media attention. An 11 May decision of a Full Bench of the FWC in a case involving the RACV is causing considerable concern and uncertainty for employers. An interpretation adopted by the Full Bench in the decision conflicts with the interpretation widely adopted by employers regarding personal / carer s leave accruals for employees who work extended shifts. Ai Group has raised its concerns about this issue with the Federal Government. Ai Group is also exploring various options to have the uncertainty caused by the decision addressed. Significant Workplace Relations Issues Report, Ai Group 3

4 The recent decision of the Full Federal Court in Anglican Care v NSW Nurses and Midwives' Association has interpreted s.130(2) of the Fair Work Act in a problematic manner for employers. The Court has interpreted the Act to mean that employees are entitled to accrue leave under the National Employment Standards (e.g. annual leave and personal / carer s leave) during periods of workers compensation absences unless the relevant State, Territory or Commonwealth workers compensation legislation expressly states that such leave does not accrue. Generally, workers compensation legislation does not deal with leave accruals. The Full Federal Court has handed down an important decision on the interpretation of s.120 of the Fair Work Act. This section enables an employer to apply to the FWC for an order reducing the amount of redundancy pay to which an employee is entitled because the employer obtains other acceptable employment for the employee. After a hearing on 21 May, the Full Federal Court reserved its judgment in respect of the Rail, Tram and Bus Union s application to overturn an FWC decision to terminate 12 enterprise agreements applicable to rail operator Aurizon. FWC S ANNUAL LEAVE DECISION In a major case contested over the past 15 months Ai Group has been successful in convincing a Full Bench of the FWC to give employers enhanced rights to direct employees to take excessive accrued annual leave, and to allow cashing-out of annual leave for award-covered employees by agreement with their employer. The 11 June decision in the Annual Leave Common Issue Case provides important new rights for employers and important flexibilities for employers and employees. The case is part of the FWC s 4 Yearly Review of Awards. During the Review, a series of major cases have been scheduled involving proposals to vary all or most awards. The FWC has called these proceedings common issue cases. In the Annual Leave Common Issue Case, Ai Group sought to have model clauses included in most modern awards covering: The right of an employer to direct an employee to take annual leave where the employee s accrued leave is excessive; The cashing out of annual leave by agreement between an employee and the employer, provided that at least four weeks of accrued leave is maintained; The granting of annual leave in advance by agreement between an employee and the employer, with the employer having the ability to deduct payment for any leave granted in advance from monies owed on termination; The right for an employer to pay annual leave as part of the employer s normal pay cycle, rather than in advance of the leave being taken; and The right of an employer to require employees to take annual leave during a close-down. Significant Workplace Relations Issues Report, Ai Group 4

5 At this stage no awards have been varied to reflect the Full Bench s decision. Excessive leave Employers will be given enhanced rights to direct employees to whom an award applies to take annual leave when an employee has an excessive leave accrual (defined as more than eight weeks accrued annual leave for employees who are entitled to four weeks of annual leave per year and 10 weeks accrued leave for those shift workers who are entitled to five weeks of annual leave per year). The specific clause to be inserted into awards has not yet been settled, but the FWC has proposed that the clause will include the following aspects: Before an employer can direct an employee to take leave, the employer and employee will be required to genuinely try to agree upon the steps that will be taken to reduce or eliminate the employee s excessive leave; and A direction from the employer must not result in the employee s remaining accrued leave being less than six weeks and must not require the employee to take any period of leave less than one week. Also, at least eight weeks notice must be given to the employee of the commencement of the leave. At this stage it is not clear whether every award will be varied to reflect the FWC s decision given that many awards already have provisions about excessive leave accruals. The FWC s decision relates only to employees to whom an award applied. Enterprise agreements under the Fair Work Act are able to contain provisions giving an employer the right to require an employee to take annual leave in particular circumstances if the requirement is reasonable. Also, an employer may direct an award-free or agreement-free employee to take annual leave in particular circumstances if the requirement is reasonable. Cashing out of annual leave Employees to whom an award applies will be able to cash out accrued annual leave in excess of four weeks accrued leave, by agreement with their employer and subject to various safeguards, including: Each cashing out of a particular amount of accrued annual leave must be by a separate agreement in writing between the employer and the employee; and An employee may not cash out more than two weeks accrued annual leave in any 12 month period. The FWC s decision relates only to employees to whom an award applies. Cashing out of annual leave for employees covered by an enterprise agreement under the Fair Work Act is available only if the agreement provides for such cashing-out and the safeguards in s.93 of the Act apply. Award-free and agreement-free employees are able to cash out annual leave in excess of four weeks accrued leave, by agreement with their employer and subject to the conditions in s.94 of the Fair Work Act. Significant Workplace Relations Issues Report, Ai Group 5

6 Granting annual leave in advance Employers of employees to whom an award applies will have the right to grant annual leave in advance of the leave accruing, by agreement with an employee. If leave in advance is taken by an employee, the employer will be able to deduct payment for the leave in advance from money owed to the employee on termination. At this stage it is not clear whether every award will be varied to reflect the FWC s decision or only the 48 awards which Ai Group and other employer groups applied to vary for this entitlement. The FWC has expressed a provisional view that all awards should be varied in similar terms. Payment of annual leave as part of the normal pay cycle Despite the fact that it is very common for employees to be paid for their annual leave in accordance with the normal pay cycle, a large number of awards still require that annual leave be paid in advance of the commencement of annual leave. The Full Bench has endorsed the clause proposed by Ai Group and decided that when employees are paid by electronic funds transfer (EFT), the employees may be paid in accordance with their usual pay cycle when on annual leave. Annual close-down The FWC has decided that it is not desirable to have a common annual close-down provision across all awards given that award provisions in this area vary considerably from one industry to another. A party may, however, seek the insertion of a new close-down provision or to vary an existing close-down provision when specific awards are considered during the 4 Yearly Review. Payment of annual leave entitlements on termination The FWC has decided to adjourn consideration of union claims for awards to be varied to require that an employer pay an employee on termination the amount that would have been payable had the employee taken the relevant period of annual leave (including annual leave loading). The unions claims in this area stem from uncertainty surrounding the interpretation of s.90(2) of the Fair Work Act. The Federal Government is seeking to amend s.90(2) to address the uncertainty through the Fair Work Amendment Bill 2014 which is before Parliament. The interpretation of s.90(2) is also the subject of an appeal which is currently before the Full Court of the Federal Court of Australia. 4 YEARLY REVIEW OF MODERN AWARDS The FWC s 4 Yearly Review of Awards is continuing. Ai Group is taking the lead role amongst employer groups and is working hard to protect and promote Ai Group Members interests. The Review commenced in early 2014 and will most likely continue until at least late The Review involves individually reviewing each of the 122 modern awards, as well as providing the vehicle for a large number of major cases (Common Issues Cases) dealing with entitlements across the award system. The Common Issues Cases and the status of each matter are outlined below: Significant Workplace Relations Issues Report, Ai Group 6

7 Annual Leave Common Issue Case a decision was handed down on 11 June 2015 (see article above). Award Flexibility Common Issue Case relates to the insertion of time-off-inlieu of overtime and make-up time provisions in awards that currently do not include this type of flexibility. The hearings have concluded and the FWC Full Bench has reserved its decision. Accident Pay, District Allowances and Redundancy Pay Transitional Provisions Common Issue Case involves a review of the accident pay, district allowances and certain redundancy provisions that were included in modern awards on a transitional basis until 31 December The case also includes union claims to insert national accident pay entitlements applicable to all employees covered by about 40 modern awards and the re-introduction of district allowances in a number of modern awards. Ai Group has been successful in achieving the deletion of the redundancy provisions. The hearings have concluded on accident pay and the FWC Full Bench has reserved its decision. The final hearings relating to district allowances have not yet been scheduled. Casual Employment Common Issue Case will be heard before a five- Member Full Bench of the FWC headed by Vice President Hatcher. The unions are pursuing numerous claims to restrict casual employment flexibility, and Ai Group is seeking to increase flexibility for employers and reduce red tape. The matter was listed for Mention on 5 June Submissions and evidence will be filed in October before hearings in early Part-time Common Issue Case will be heard in conjunction with the Casual Employment Common Issue Case. Employers, including Ai Group, are seeking to increase flexibility regarding part-time employment and the unions are pursuing claims to give part-time employees more entitlements. Family and Domestic Violence Clause Common Issue Case the ACTU is seeking the inclusion in all awards of a clause which would provide, amongst other aspects, an entitlement to up to 10 days of paid leave per year to an employee who experiences family violence. Ai Group has filed submissions opposing the ACTU s application on the basis that the FWC does not have the power to grant the claim. In response to Ai Group s submissions, the ACTU withdrew some of its claims but is continuing with the leave claim. A jurisdictional hearing is scheduled for 13 August. Family Friendly Work Arrangements Common Issue Case - the ACTU is seeking a right for new parents to return to work on a part-time basis following parental leave. This case also includes a claim for an additional 15.2 hours of paid leave per year for employees to attend antenatal, pre-adoption, fertility treatment, surrogacy or permanent care order appointments (not limited to medical appointments). In response to Ai Group s submissions on jurisdictional aspects, the ACTU withdrew some of its claims but is continuing with the above claims. A jurisdictional hearing is scheduled for 13 August. Significant Workplace Relations Issues Report, Ai Group 7

8 Apprentice Common Issue Case involves the insertion of certain apprentice terms and conditions decided by the Full Bench in the Apprentices, Trainees and Juniors Case in 2012 into a large number of other awards. The case has concluded. Public Holidays Common Issue Case involves a review of public holiday provisions in modern awards including various union claims for new entitlements. It is anticipated that these proceedings will commence in early Micro-business Schedule Common Issue Case relates to a proposal of a NSW employer group for a micro-business schedule to be inserted in all modern awards which would apply to businesses that employ fewer than 5 employees. The proceedings have not yet commenced. In addition to the above Common Issue Cases, there is a major Penalty Rates Case underway involving a review of penalty rates in a number of awards, most notably the fast food, retail and hospitality sectors. Ai Group Workplace Lawyers are representing fast food industry employers in this case. Another major case involving a review of certain award terms, which are allegedly inconsistent with the NES, is largely complete. Also, proceedings are underway concerning the separate review of each of the 122 awards. The awards have been divided into four broad groups and further split into subgroups. At this stage no awards have been finalised given the large number of interpretation issues that have arisen due to the Commission s decision to re-draft each award. PRODUCTIVITY COMMISSION INQUIRY INTO THE WORKPLACE RELATIONS FRAMEWORK The Productivity Commission inquiry into the Workplace Relations Framework is continuing. More than 200 submissions have been lodged including a major submission of Ai Group which argues that Australia s workplace relations framework is holding Australia back. The Productivity Commission intends to issue a draft report in early August Parties will have an opportunity to make further submissions following the release of the draft report and the opportunity to participate in public hearings. The Federal Government has stated that any recommendations made by the Productivity Commission which it supports will be taken to the 2016 Federal Election before implementation. The Commission is due to release its final report in November WORKPLACE RELATIONS BILLS A number of important workplace relations Bills are before Parliament but at this stage it is unclear when they will be voted upon in the Senate. Parliament next sits for two weeks from 10 August. Significant Workplace Relations Issues Report, Ai Group 8

9 The Bills are: The Fair Work (Registered Organisations) Amendment Bill 2014 [No. 2] see article below. The Building and Construction Industry (Improving Productivity) Bill 2013 which would restore largely similar arrangements to the very successful arrangements which were in place between 2005 and 2009 following the Royal Commission into the Building and Construction Industry; The Fair Work Amendment Bill 2014 which deals with greenfields agreements, union right of entry, and various recommendations of the 2012 Fair Work Act Review which were not implemented by the former Labor Government; and The Fair Work Amendment (Bargaining Processes) Bill 2014 which would make some modest but important amendments to the enterprise bargaining and industrial action provisions of the FW Act. Ai Group has made detailed submissions to Senate Committee inquiries into each of the above Bills. On 11 May the Construction Industry Amendment (Protecting Witnesses) Bill 2015 was passed by the Senate with the support of the eight key Crossbench Senators, and on 13 May it was passed by the House of Representatives. The Bill extends the compulsory examination powers of Fair Work Building and Construction for two years. The powers were due to expire on 31 May 2015 under provisions in the former Labor Government s Fair Work Building Industry Act Ai Group made a detailed submission to a Senate Committee inquiry into the Bill expressing strong support for the Bill. FAIR WORK (REGISTERED ORGANISATIONS) AMENDMENT BILL 2014 [NO. 2] Ai Group has made a detailed submission to a Senate Committee inquiry into the Fair Work (Registered Organisations) Amendment Bill 2014 [No. 2]. The Bill would impose additional duties on registered organisations and tougher penalties for those which break the law. An earlier version of this Bill was defeated in the Senate on 2 March This latest Bill includes a number of amendments to the earlier version of the Bill which address various concerns that Ai Group expressed about the regulatory burden which would have been imposed upon registered organisations including: Providing that material personal interest disclosures will only be required by officers whose duties relate to the organisation s financial management; Inserting a list of practical exclusions from the disclosure requirements, based on those in the Corporations Act 2001; Providing for a threshold for financial disclosure obligations; and Significant Workplace Relations Issues Report, Ai Group 9

10 Allowing the Registered Organisations Commissioner to grant exemptions from the statutory training requirements for officers if an individual can demonstrate significant knowledge in the relevant areas. The Committee is required to report to Parliament by 11 August. FAIRER PAID PARENTAL LEAVE BILL 2015 On 25 June 2015 the Federal Government introduced the Fairer Paid Parental Leave Bill 2015 into Parliament. If passed the Bill would, from 1 July 2016, ensure that parents who are entitled to receive employer-provided payments in excess of the total amount of parental leave pay under the Government-funded Paid Parental Leave scheme (PPL scheme) do not receive any parental leave pay under the PPL scheme. Parents who are entitled to receive employer-provided payments of less than the total amount of parental leave pay under the PPL scheme will receive a top-up. The Bill also reintroduces the measure provided by the Paid Parental Leave Amendment Bill 2014, which is currently before the Senate. To ease administrative burdens on business, the measure removes the requirement for employers to provide Government-funded parental leave pay to their eligible long-term employees. Employees will be paid directly by the Department of Human Services, unless an employer opts in to provide parental leave pay to its employees and the relevant employee agrees to the employer making the payment. The measure will now be implemented from 1 April The Bill has been referred to the Senate Community Affairs Legislation Committee. Submissions are required by 30 July. Ai Group intends to make a submission. ANNUAL WAGE REVIEW 2014/2015 On 2 June the Expert Panel of the FWC handed down its decision in the Annual Wage Review The Commission has increased the national minimum wage and award minimum wages by 2.5 per cent. The increase is operative from 1 July The increase equates to $16.00 per week on the national minimum wage, $18.70 on the base trade rate, and $31.00 for some professionals. The national minimum wage will become $ per week or $17.29 per hour. Ai Group, in its media statement, said that the increase will increase the strain on many businesses which are struggling in the current difficult business environment. The Australian economy is underperforming and unemployment has been stuck above 6 per cent for the past twelve months. While the increase will no doubt be welcomed by workers with secure jobs there is the clear risk that the increase will operate against the interests of those looking for work, or for more hours of work than currently on offer, and those whose jobs are less secure". Ai Group appeared before the Expert Panel on 20 May in the final consultations, and filed a number of detailed submissions during the Annual Wage Review. Significant Workplace Relations Issues Report, Ai Group 10

11 Ai Group strongly opposed the unions proposed $27 per week (or 3.6 per cent) increase and argued in support of a modest 1.6 per cent wage increase. COINVEST CLAIMS AND THE COINVEST V BAYTECH TRADES CASE Ai Group is continuing to strongly oppose attempts by CoINVEST the administrator of the Victorian construction industry long service leave scheme to extend the coverage of the scheme through expansive interpretations of the coverage rules. On 3 June 2015, the Coinvest v Baytech Trades case was heard by the Full Bench of the Supreme Court of Victoria. Ai Group Workplace Lawyers, Mr Stuart Wood QC and Mr Ben Jellis of Counsel represented Baytech in this important case about the breadth of coverage of the scheme and the requirement to pay the 2.7% levy under the scheme. The Supreme Court case arose from an appeal against a 17 September 2014 decision of Justice Kennedy of the County Court of Victoria. Judge Kennedy upheld CoINVEST s claim that electrical manufacturing workers on-hired by labour hire firm Baytech Trades to NHP Electrical Engineering Products were covered by the scheme. The decision created substantial cost risks for labour hire firms and manufacturers in Victoria. In the Supreme Court proceedings, it was argued on behalf of Baytech that the coverage rules of the scheme need to be interpreted in the context of the coverage of the industrial awards referred to in the rules, including the history and understandings reached over the years about the delineation in coverage between the Metal Industry Award and the Electrical Contracting Industry Award. A central argument was that electrical work in factories needs to be considered in the context of the Metal Trades Work section of the coverage rules and, under that section, work in factories is expressly excluded. It was argued that it could not have been the intention to exclude electrical work in factories under one section of the rules, only to bring such work back in through a broad interpretation of the Electrical Trades Work section of the rules. If the Supreme Court proceedings there were detailed arguments about the kinds of work carried out by manufacturers, labour hire suppliers and electrical contractors, and the implications for coverage under the scheme. The Supreme Court has reserved its decision. VICTORIAN PARLIAMENTARY INQUIRY INTO PORTABLE LONG SERVICE LEAVE ENTITLEMENTS A Victorian Parliamentary Committee is conducting an inquiry into portable long service leave schemes. In its submissions to the inquiry Ai Group intends to highlight numerous problems with the operation of the existing Victorian construction industry portable long service leave scheme which need to be addressed. Ai Group will also strongly oppose such schemes being expanded to other industries. The terms of reference for the inquiry require that the Committee investigate: the objectives of portable long service leave schemes; Significant Workplace Relations Issues Report, Ai Group 11

12 which sectors, industries or occupations may benefit from such schemes; the rationale for any difference in treatment between sectors or groups of employees; funding arrangements applying to existing portable long service leave schemes; governance, compliance and enforcement arrangements applying to existing portable long service leave schemes; the key components that should apply to any portable long service leave scheme for the community services sector including coverage, eligibility for and the calculation of long service leave benefits; whether alternative mechanisms or arrangements could better meet the objectives of a portable long service leave scheme for sectors of the workforce including the community services sector; the capacity to operate such schemes within or across jurisdictions, including recognition of service; the appropriate role for Government in facilitating portable long service leave schemes; and relevant implementation issues and options. The Committee is required to report to the Victorian Parliament by 1 May ROYAL COMMISSION INTO TRADE UNION GOVERNANCE AND CORRUPTION UPDATE The Royal Commission into Trade Union Governance and Corruption is continuing its hearings. On 19 May 2015 the Royal Commission issued a discussion paper canvassing views on a wide range of law reform options. One important issue that Ai Group has been focussing on during the Royal Commission is the many millions of dollars each year that flow to unions from worker entitlement funds and insurance companies, and the role that industry-wide pattern agreements play in delivering these inappropriate revenue streams to unions. Ai Group has put forward a detailed plan to address the problems and pleasingly the discussion paper canvasses views on some key elements of Ai Group s plan. The following extract from the Royal Commission s discussion paper is relevant: 293. A more broad-ranging option is that advocated by the Australian Industry Group (AIG). That organisation made a submission to the Commission outlining what it considered to be a number of inappropriate practices of worker entitlement funds and entities wholly or jointly controlled by unions which offer insurance products. These included: distributions from redundancy funds of surpluses to unions and employer association sponsors of funds rather than to employees; Significant Workplace Relations Issues Report, Ai Group 12

13 redundancy funds making payments to fund members in circumstances where members are not genuinely redundant; the use of funds contributed to redundancy funds to pay employees who are on strike; and redundancy funds discriminating against non-union members by only providing certain benefits to union members The AIG submitted that given these inappropriate practices, which were first identified in the Cole Royal Commission but were left unaddressed and have since that time worsened, specific legislation similar to the superannuation laws, to be called the Worker Entitlement Funds (Governance, Reporting and Supervision) Act, should be introduced regulating worker entitlement funds and entities wholly or jointly controlled by unions which offer insurance products The submission contained a detailed list of recommendations for inclusion in such special legislation. These included: Provisions imposing duties on directors, trustees or officers of worker entitlement funds and entities wholly or jointly controlled by unions which offer insurance products; A fit and proper person test for directors, trustees and officers and procedure for the removal of persons who fail the test; Regulatory oversight of worker entitlement funds by APRA; Reporting obligations to APRA; A prohibition on redundancy funds distributing any amount to a member other than for the purpose of genuine redundancy; A prohibition on redundancy funds making distributions to sponsoring unions and employers associations other than the payment of reasonable Board fees to directors; A prohibition on redundancy funds making payments to employees who are taking industrial action; A prohibition on funds discriminating between union members and non-union members when providing any fund benefits; Statutory privacy protections for information relating to contributing employers and fund members; A prohibition on commissions, management fees, spotter s fees or similar payments being made to sponsoring unions or employer associations by insurers or brokers in respect of insurance products; A prohibition on persons employed by funds carrying on union business; A prohibition on funds paying unions for recruiting new members; and Significant Workplace Relations Issues Report, Ai Group 13

14 Penalties for breach of the Act, modelled on the Corporations Act Given the amounts of money currently under management in worker entitlement funds and the value of insurance products held by employee insurance schemes, separate prudential regulation of employee benefit schemes is worthy of detailed consideration. Ai Group intends to prepare a detailed submission in response to the discussion paper by the 21 August deadline. COMPETITION POLICY REVIEW The Treasury has called for submissions on the final report of the Competition Policy Review that was released in March. Ai Group has lodged a submission expressing strong support for the recommendation that trading restrictions in enterprise agreements be outlawed, as proposed by Ai Group. As the final report states, competition should be favoured over restrictions and employers should be free to supply and acquire goods and services, including contract labour, should they choose to do so. This is an important area that was brought into focus by the decision of the Full Federal Court in Australian Industry Group v Fair Work Australia [2012] FCAFC 108 ( the ADJ Contracting Case ). The Court decided that sections 45E and 45EA, within the secondary boycott provisions of the Competition and Consumer Act 2010, did not apply to the terms of an enterprise agreement which imposed major restrictions on the engagement by the employer of contractors and labour hire providers. These types of clauses are frequently pursued by unions during enterprise agreement negotiations. They stifle competition and impose major inefficiencies on employers. It is in the community s interest that they be stamped out, as recommended by the Review. PARLIAMENTARY JOINT COMMITTEE S INQUIRY INTO CRYSTAL METHAMPHETAMINE A recent Ai Group submission to the Parliamentary Joint Committee s inquiry into crystal methamphetamine (Ice) has attracted significant media attention. The submission highlights the particular dangers of the Ice epidemic for the manufacturing, construction and transport industries, given research which shows a higher than average use of Ice by employees in these industries and given the prevalence of heavy machinery and vehicle operation in the industries. Ai Group s submission calls upon unions to drop their opposition to drug and alcohol testing in workplaces. The submission also includes a number of recommendations for tackling Ice usage including: Recognising that drug and alcohol testing at the workplace is a key action employers can take to protect the safety of employees and the community. Significant Workplace Relations Issues Report, Ai Group 14

15 Conducting work health and safety campaigns aimed at educating the community about the risks created by methamphetamine use in operating machinery and vehicles. Encouraging law enforcement agencies to provide liaison services and dedicated hotlines for employers and employees impacted by Ice, including for those in regional and remote locations. Developing education resources to assist employers to deal with the impacts of Ice in their workplaces, including providing details of external support services for affected employees to complement existing employee assistance programs provided by many employers. PERSONAL / CARER S LEAVE ACCRUALS FOR EMPLOYEES WORKING EXTENDED SHIFTS An 11 May decision of a Full Bench of the FWC in a case involving the RACV is causing considerable concern and uncertainty for employers. An interpretation adopted by the Full Bench in the decision conflicts with the interpretation widely adopted by employers regarding personal / carer s leave accruals for employees who work extended shifts. Ai Group has raised its concerns about this issue with the Federal Government. Ai Group is also exploring various options to have the uncertainty caused by the decision addressed. Ai Group does not agree with the interpretation of the Full Bench which conflicts with previous FWC decisions and our understanding of the intended interpretation when the FW Act was being developed. Ai Group s understanding of s.96 is that, for example, an employee working a 38 hour week on the basis of 12 hour shifts would be entitled to 76 hours of personal / carer s leave per year, not 120 hours of leave. The issue came up in the case of AWU v BP Refinery and, in that matter, Deputy President Asbury of the Commission decided that s.96 is to be interpreted in the manner contended by Ai Group. Deputy President Asbury s decision in AWU v BP Refinery was cited by Commissioner Wilson in ASU v Hobson Bay City Council. The decision of Commissioner Wilson was upheld on appeal by a Full Bench of the Commission. When the Fair Work Act was being developed there was considerable discussion about how the personal / carer s leave entitlements in the National Employment Standards (NES) should be expressed. In its submissions at the time, Ai Group urged the previous Labor Government to express personal / carer s leave entitlements in the NES in terms of hours rather than days. Ai Group understood that the intent of the reference to 10 days in s.96(1) of the Fair Work Act, when read with s.96(2), meant that, for example, an employee working a 38 hour week on the basis of 12 hour shifts would be entitled to 76 hours of personal / carer s leave, not 120 hours of leave. The Government chose to continue to express the entitlement in terms of days but responded to Ai Group s concerns by inserted wording into the Explanatory Memorandum to clarify that the entitlement was 76 hours per year regardless of the pattern of hours over which a 38 hour week is arranged. Significant Workplace Relations Issues Report, Ai Group 15

16 LEAVE ACCRUALS DURING PERIODS OF WORKERS COMPENSATION The recent decision of the Full Federal Court in Anglican Care v NSW Nurses and Midwives' Association has interpreted s.130(2) of the Fair Work Act in a problematic manner for employers. The Court has interpreted the Act to mean that employees are entitled to accrue leave under the National Employment Standards (e.g. annual leave and personal / carer s leave) during periods of workers compensation absences unless the relevant State, Territory or Commonwealth workers compensation legislation expressly states that such leave does not accrue. Generally, workers compensation legislation does not deal with leave accruals. The Court s interpretation revolves around the meaning of the word permitted in s.130(2) of the Act. Subsection 130(2) provides that an employee is not prevented from taking or accruing leave under the NES, if the taking or accruing of the leave is permitted by a compensation law. Prior to the Federal Court s decision, Ai Group, the Fair Work Ombudsman and most other parties interpreted s.130(2) to mean that where the relevant workers compensation legislation is silent on leave accruals, then leave does not accrue. The basis for this interpretation was a series of Court and Commission decisions interpreting the word permits in other workplace relations legislative provisions to mean expressly permitting or authorising. The Fair Work Amendment Bill 2014, which is currently before the Senate, would repeal s.130(2) of the Fair Work Act to ensure that leave under the NES does not accrue during periods of workers compensation. At this stage it is unclear when the Bill will be voted on in the Senate and whether the Bill will be passed. OBTAINING ACCEPTABLE EMPLOYMENT WHEN EMPLOYEES ARE REDUNDANT The Full Federal Court has handed down an important decision on the interpretation of s.120 of the Fair Work Act. This section enables an employer to apply to the FWC for an order reducing the amount of redundancy pay to which an employee is entitled because the employer obtains other acceptable employment for the employee. In FBIS International Protective Services (Aust) Pty Ltd v MUA, the Court considered circumstances involving a contracting firm which lost a contract with a client. The employees of the outgoing contracting firm were made redundant but were hired by the incoming contractor. The issue at hand was had the outgoing contractor done enough to meet the test that it had obtained other acceptable employment for the redundant employees with the incoming contractor? In earlier Court and Commission decisions, the test that had been applied was whether the outgoing contracting firm was a strong moving force behind its employees obtaining employment with the incoming contracting firm. However, in its FBIS decision, the Court held that the former strong moving force test was an unnecessary distraction. The Court cited the following definition of obtain in the Shorter Oxford Dictionary: To come into the possession or enjoyment of (something) by one s own effort, or by request; to procure or gain, as the result of purpose and effort; hence, generally, to acquire, get. Significant Workplace Relations Issues Report, Ai Group 16

17 The Court then stated that the possession must be the result of the conscious, intended, acts of the person concerned, as distinct from, for example, coming into possession of something by gift or inheritance. The Court decided that FBIS had not done enough to obtain employment for its redundant employees with the incoming contractor. However, importantly the Court has not ruled out applications by other outgoing contractors being successful if they do more than FBIS to obtain employment for their employees with the incoming contractor: 23. It was submitted on behalf of the applicant that, if it were not held that it had done enough to obtain the employment of the 49 employees with ACG, employers could, in effect, forget about having recourse to s 120 in any change of contractor situation. This submission should not be accepted. While the resolution of any future disputes in this area cannot be anticipated, it is clear from the facts of the present case as set out by the Full Bench that there was more that the applicant might have done to advance the prospects of any application which it proposed to make under the section. Likewise, any future outgoing contractor would, in our view, see ample scope for the operation of the section notwithstanding the unsuccessful outcome of the applicant s own case before the Full Bench. The applicant failed because of the limited nature of what it had been able to obtain for the 49 employees, not because the bar set by s 120 was too high for the section to be of practical utility in a change of contractor situation. FULL FEDERAL COURT RESERVES JUDGMENT IN AURIZON CASE After a hearing on 21 May, the Full Federal Court (Jessup, Tracey and Reeves JJ) reserved its judgment in respect of the Rail, Tram and Bus Union s application to overturn an FWC decision to terminate 12 enterprise agreements applicable to rail operator Aurizon. In its 22 April 2015 decision, the FWC Full Bench established some new principles which arguably lower the bar for employers wishing to terminate an expired enterprise agreement. In the past, the FWC has adopted an approach which has made it extremely difficult to terminate an agreement without the consent of the employees and the relevant union/s. The FWC decision followed lengthy Commission proceedings with extensive evidence. Significant Workplace Relations Issues Report, Ai Group 17