Quarterly Employment Law Insights | Winter 2020Download Full Document August 2020
The COVID-19 pandemic has caused great upheaval for employers. Advice and strategy around redundancies, restructuring, work health and safety, JobKeeper, disputed workers compensation claims and workplace flexibility, have been a critical part of our services in recent months.
In this Winter Quarterly, we provide our readers and valued clients with an update on all things employment law, COVID and non-COVID, which includes practical tips to assist employers during these uncertain times.
JobKeeper: Parts 2 and 31
The Federal Government has recently confirmed that JobKeeper will be extended in a modified form. The payment will vary depending on timing, and whether an employee is full-time or part-time:
More than 20 hours a week
|20 hours or less a week|
28 September 2020 to
4 January 2021
|$1,200 gross per fortnight||$750 gross per fortnight|
|4 Jan 2021 to 28 March 2021||$1,000 gross per fortnight||$650 gross per fortnight|
Whether an employee works more than 20 hours a week will be assessed by reference to the month of February 2020; before the COVID-19 pandemic in Australia.
The period in which turnover is assessed, by a potentially eligible employer, will change. From
28 September 2020, employers will be required to reassess eligibility with reference to their actual, not estimated, GST turnover in the June and September quarters. Similarly, from 4 January 2021, employers will need to again reassess their turnover to demonstrate they met the relevant decline in turnover in each of the June, September and December quarters in 2020.
The payment will continue to be available to new applicants and employers, provided that the revised eligibility requirements are met. However, it is very important that employers in receipt of JobKeeper consider whether they will meet (or are likely to meet) the new turnover test, which requires an analysis of actual GST turnover, rather than projected GST turnover.
If you have any questions in relation to JobKeeper in your workplace in the coming months, please contact the team.
JobKeeper Directions – Don’t Go Further Than You Have To
The Fair Work Commission has recently handed down two decisions relating to the reasonableness of a “JobKeeper Direction”.
Eligible employers are able to give a "JobKeeper enabling direction" to an employee in receipt of JobKeeper payments. A JobKeeper direction allows employers to vary an employee’s hours of work, even down to zero, without the employee’s consent. However, protections are afforded to employees; including that the stand down direction must not result in the employee’s hourly rate of pay falling below their previous base rate of pay.
Importantly, a JobKeeper direction to stand down, reduce hours, work in a different location, or take annual leave, must be reasonable. The Fair Work Commission has recently provided further guidance on what this means in practice.
In Allan Jones v Live Events Australia Pty Ltd  FWC 3469 the FWC said that an employer had “overplayed its hand” when issuing a direction to reduce an employee’s hours by approximately 50 percent.
- The FWC emphasized that where a decision is made to reduce an employee’s hours, that decision must be reasonable in all the circumstances.
- In this case, the “reasonableness” test came down to the fact that whilst the employer’s operations had reduced, the role performed by the employee had been impacted less than other areas of the business, and he had continued to work the same hours. However, rather than throw out the direction entirely, FWC reduced it to 20%.
More recently, in Transport Workers’ Union of Australia v Prosegur Australia Pty Ltd  FWCFB 3655 the FWC considered a direction issued to regular casual, part-time and full-time employees to fix their working hours to 50 hours per fortnight.
- The TWU disputed the reasonableness of the direction, largely on the basis that it disproportionately affected full-time employees. The direction also had the effect of increasing the hours that some casual employees usually worked.
- On appeal, the FWC quashed a decision that found the direction was reasonable, noting that a blanket decision that had the effect of reducing some employees’ hours, while increasing others, was unlikely to be reasonable. Following further submissions from both parties, the Full Bench accepted a new direction proposed by Prosegur that resulted in full-time employees working a minimum of 60 hours per fortnight.
- Put another way, a “one-size-fits-all” approach will rarely pass muster. If issuing a direction, ideally the direction will be tailored to (and justified with reference to) a particular work group with its own efficiency measures and categories of employee.
Presently, the legislation provides that any JobKeeper direction issued to an employee will cease to have effect as of 28 September 2020. However, we expect that this may change given the extension of JobKeeper. Watch this space.
The Alleged “Double-Dipping” Casuals are off to the High Court
Our readers will be aware of the controversial Rossato v Workpac decision, in which a Full Bench of the Federal Court found that certain casuals were entitled to both a 25% casual loading and paid leave.
This decision caused significant concern amongst employers, given the long held understanding that the purpose of a casual loading was to compensate casual employees for receiving no paid leave.
The Federal Court decision has been appealed to the High Court. If the High Court agrees to hear the appeal, which we think likely, a final decision will likely be delivered either later this year or early next. Until then, despite the difficulties this may cause, the Full Federal Court decision remains law, and must be complied with. If you have not done so already, we again urge our clients to obtain advice tailored to your casual arrangements.
We will ensure we keep you posted with any developments. In the interim, more information about the original decision can be accessed at the following link:
Workers Compensation: A Fresh Perspective
We have seen a significant increase in the number of clients, self-insured and registered, seeking our assistance with workers compensation disputes.
If a dispute arises, our clients that are not self-insured are ordinarily comfortable with their claims agent defending a dispute on their behalf. However, the interests of Return to Work can differ from those of the employer. Also, RTW disputes often give rise to broader industrial law considerations that technically fall outside the RTW dispute, but are still of critical importance to an employer.
If either of these things occur, an employer should consider obtaining their own “third-party” representation, independent of the insurer, so that they have a seat at the table during the dispute.
Whether it makes commercial sense to become involved in a dispute must be assessed on a case-by-case basis. As but one example, if a claim is accepted for medical expenses only, this will not affect the employer’s premium. In “dollar terms” at least, an employer will see little impact. Conversely, employers in certain industries face “dollar-for-dollar” premium impact for each dollar paid, by the insurer, as income support. In that case, if an employer has a genuine and arguable basis on which to maintain a rejection (or dispute an acceptance) it is very important it “get involved” or at least get advice.
If you have any concerns about a workers compensation claim, ensure you obtain advice early from our team. Wallmans is relatively unique in South Australia in that we specialise across all aspects of employment law; workers compensation included.
Labour Hire Licensing – An Update
South Australia’s amended Labour Hire Licensing Act 2017 (Act) commenced on 20 July 2020. The Act creates a Scheme whereby employers providing labour hire services to certain industries are required to obtain a license from Consumer and Business Services (CBS). However, the Act has now been narrowed, so that the licensing requirements only apply to those industries in which workers are “vulnerable to exploitation”. Those industries are:
- trolley collection
- horticulture, meat and seafood processing.
Those employers who are no longer required to be licensed may apply to CBA to obtain a refund for the remainder of their fees paid.
If you operate in these sectors, please contact our team for a discussion.
Set-Off Clauses – The Good, the Bad and the Ugly
If there were a prize for Most Poorly Drafted Employment Clause, we would hand the chocolates to the notorious “set-off” clause. At first glance, the concept of common-law set-off appears straight forward. In simple terms, a contract may state that any amount paid above the legal minimum may be set-off, or allocated towards, one or more entitlements. This seems logical, but the law of set-off is complex, and employers make mistakes.
Two rules are often misunderstood:
First rule: The “additional amount” paid must ordinarily exceed what the employee would have received under the modern award2 for each relevant period. Common law contracts can only do so much. Paying an employee an annual salary of $5,000 a year “above award” does not permit an employer to insist they work a 50 hour week. The weekly salary in an award ordinarily assumes a 38 hour Monday to Friday work week with sociable hours.
Second rule: The contract must contain a clear set-off clause that that states which industrial entitlements the “additional amount” may be allocated towards. This is explained further below.
How much do I have to pay above the award?
Contrary to what many believe, there is no magical figure to ensure that all employees' salaries will be “safely” above the award minima. It comes down to the work that each employee performs. A contract cannot change this.
How then do you work out the “additional amount”? Regular overtime, afternoon, night and weekend work are the big ticket items in terms of salary, but allowances, annual leave loading and superannuation must also be considered. Further, ensure you are realistic about the number and timing of hours of work.
Finally, once a salary has been fixed, continue to monitor workplace practices to ensure that it continues to meet the obligations under the relevant industrial instruments. As but one example, in prosperous economic times, annual award rate increases can quickly catch-up to a salary that had been agreed years prior.
Principles of Set Off
How do you ensure your set-off clause is worded appropriately? In simple terms: your contract must clearly state the purpose for which it has been made. For example, if an employee is paid a bonus (a contractual entitlement) but later claims excessive overtime (an award entitlement), absent a well-worded set-off clause, an employer can’t “allocate” the bonus paid to the overtime sought later by the employee.
On the other hand, if the payment was made for the purpose of satisfying all award obligations, and those obligations are clearly defined in the contract, then all payments made to the employee could be allocated towards obligations the employee alleges, in the future, have not been met.
In simple terms; if you do not have a set-off clause in your contracts, or you are unsure if your clause is clear as to its purpose and effect, we strongly suggest you obtain urgent advice.
We are very pleased to announce that not one but two of our specialist employment, WHS and workers compensation lawyers have been promoted, effective 1 July 2020.
Sarah Lithgow has been promoted to Special Counsel, while Ellen Gordon has been promoted to Senior Associate. Their contact details are available at the end of this Quarterly.
We are fortunate that the promotions reflect the depth of experience and specialist expertise in our employment, safety and workers compensation team.
Please join us in congratulating Sarah and Ellen.
1 Local, State and Federal Government employers are not entitled to JobKeeper. JobKeeper articles will not be relevant to employers in the government sector.
2 Set-off considerations are not limited to award covered employees. Further, many awards have their own requirements around annualised salaries. However, given our focus is on set-off, for the sake of simplicity we have focused on award covered employees.
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The content of this newsletter is for general information purposes only and should in no way be treated as formal legal advice.