Late last month, industry organisation Fashion Group International (Sydney) hosted a seminar which looked at how retailers were coping more than one year on from
the introduction of new workplace laws. The gathering came just a week out from regulators knocking on their doors, as Assia Benmedjdoub reports.
Industrial relations lawyer Alice DeBoos has been telling her clients to “sleep easy”. As a partner of Middletons’ Workplace Relations and Safety Group, DeBoos has the unenviable task of guiding businesses through the Fair Work Act, the federal workplace law which first took effect on July 2009 and has transitional provisions for wages and allowances until 2014.
DeBoos joins a chorus of retailers who believe the award modernisation element in particular, which involved crunching around 4000 state and federal awards into no more than 150 national awards, has been a complex and difficult process for all concerned. While the Fair Work Act commenced last year, the awards and new National Employment Standards kicked off in January 2010. DeBoos believes despite these early frustrations, there’s no reason to lose sleep.
“Everyone involved has found grappling with modern awards quite difficult,” she revealed at an industry seminar last month.
“But I can very comfortably say though that I think we have a period of stability ahead of us. Over the past 14 years, Australian employers have had many, many changes in this area. When there’s a change in government there’s a change in workplace relations laws.I think that a labor minority government, if it sticks around for the next three years, will see virtually no change to the current system.”
Within a week of DeBoos’ presentation, the level of confusion surrounding the new awards was quantified when regulators announced $2.5 million worth of grants to 15 industry bodies including the National Retail Association.
The aim was for selected bodies to produce targeted advice for small businesses operating in their sector, with this material set to be reproduced in coming months via www.fairwork.gov.au.
Three days after the Fair Work Ombudsman announced this program however, inspectors began doorknocking along popular shopping strips across Adelaide to conduct random audits. This included Norwood Parade, Unley Road, King William Road and Jetty Road at Glenelg.
Inspectors also visited employers in major shopping hubs at Mount Gambier, Port Lincoln, Whyalla and Port Pirie, with up to 250 business opening their books for scrutiny. A second team of inspectors undertook ‘educational visits’ to an additional 300 commercial premises across the city; with more visits expected to occur in selected locations nationwide before the end of the year.
While these educational visits were informal, with inspectors handing out fact sheets and educational material to employers, the audits saw around 170 metropolitan Adelaide and around 80 regional businesses force open their record-keeping and pay slip practices to ensure compliance.
Fair Work Ombudsman executive director Michael Campbell was firm in his stance.
“Where we find records are not adequate or identify other non-compliance issues, we will provide information and assistance to employers and request they voluntarily rectify any problems,” he said. “In cases where they don’t, or where we suspect deliberate underpayments or other serious breaches have occurred, we may launch a full audit which could lead to court proceedings.”
A number of fashion businesses have felt the brunt of these award breaches, the largest of which was the Cotton On Group earlier this year. On a broader level, employers can be fined up to $33,000 for each breach of the law for every employee involved; this means if a company has 100 employees and breached the award on multiple occasions for each, it can face millions of dollars in penalties. The Cotton On Group was not an aggressive case however, DeBoos said.
“Where there are large breaches of the law, regulators are offering what’s called ‘enforceable undertakings’ rather than dragging an employer through the court and putting them through that expense,” she said.
“An enforceable undertaking is a bit like a settlement, so it’s an agreement between the Fair Work Ombudsman and the employer in relation to an underpayment.”
In the case of the Geelong-based Cotton On Group, an investigation revealed it had failed to pay 3289 of its employees more than $278,000 for attending training sessions outside of working hours. Part of the undertaking was to back-pay these employees, post a visible apology to staff across all its stores, its website and Facebook page.
The company’s human resources managers were also required to undertake a quality workplace compliance program, reporting to the Ombudsman each year for the next three years on wage rates and entitlements paid to each employee. Despite this, DeBoos maintains the new watchdog has a softer bite than its predecessors.
“I think the approach of the Ombudsman has been a little bit different to its predecessors like the Employment Advocate,” she said. “They have taken the approach of what they call ‘practical compliance’ so if an employer rings up and says ‘my employer has not been paying me the correct hourly rate under my award’ they won’t march in there with a bunch of investigators and start fining you.
“What they’ll do is take an informal approach... and [employers] are given the opportunity to give an explanation. If your explanation is ‘oops, I’ve done the wrong thing’ and you undertake what is called voluntary rectification, the ombudsman will not prosecute you. So they take the approach that while they are a watchdog, they are also there as a body to assist employers.”
DeBoos said modern award compliance is understandably one of the most complicated areas of the Fair Work Act, with the next four years to involve some pretty complicated transitional agreements.
For instance, prior to the modern Textile, Clothing and Related Industries Award, there was a separate award in every state as well as federal-based requirements. Now there is one major award for the industry and this will be phased in until the year 2014.
“For any new worker employed as of 1 January 2010, it’s very straightforward – they are employed under the modern award that applies to their industry or occupation,” DeBoos said, before pointing out the headaches for existing employees.
“For current employees who were employed before that day, businesses will still need to refer to the state-based award they were bound to prior to that date because certain provisions of the old state awards will apply for the transitional period. Not all provisions though – the modern award will detail those items for which the old award still needs to be referenced.”
Wages and shift penalties will need to be phased in each year, DeBoos added.
“Over these four years, from the first of July each year, you need to transition in 25 per cent of the wages and penalties that apply to that particular employee, if in fact there is a change in the wage rate between what they’ve been paid now and what they were paid under the award.”
Businesses seeking more information on award compliance are encouraged to visit www.fairwork.gov.au.
Workplace laws explained
While the Fair Work Act took effect in July 2009, it contained National Employment Standards and Modern Awards which only took effect in January 2010.
National Employment Standards
The standards set out 10 minimum workplace entitlements for all Australian workers, including a maximum standard working week of 38 hours for full-time employees (with “reasonable” additional hours) and four weeks paid annual leave each year.
Key changes from the previous legislation include extended leave opportunities for families – parents were entitled to 12 months unpaid leave but can now request an additional 12 months. From January 1, all private sector employees were also entitled to give notice of termination and redundancy pay.
“Prior to this, there was no mandated legal right to redundancy for every employee – redundancy was determined by awards, so if you are an award-free employee, unless you had it in your contract of employment, there was no legal right to redundancy,” explains DeBoos. New employees must receive The Fair Work Information Statement, which can be downloaded from www.fairwork.gov.au.
Modern Awards
Also commencing on January 1 were the Modern Awards. These replaced the previous federal awards and are either determined by industry (for example, the textiles, clothing and footwear industry) or occupation (for example, clerks). These awards do not cover employees who have a base salary above $108,300, even if their occupation or industry is covered by the scheme.
The awards specify the minimum conditions of employment for each occupation or industry, including rates of pay, allowances, outworkers, redundancies and conditions for negotiating variations to the Modern Award conditions.
“The other thing businesses need to be aware of if they are paying employees as per award wages, is that there was a minimum award wage increase of $26 a week from July 1 this year,” DeBoos said.
“Any modern award that you look up online will have those increased wages in them.” Employers can find which Modern Award is applicable to their employees by visiting www.fairwork.gov.au. Where modern awards do not apply, DeBoos says it is possible to be covered by an enterprise agreement or an agreement made under the Workplace Relations Act.
Record Keeping
The Fair Work Act has introduced stricter requirements for employers when it comes to record-keeping. Key changes to pay slip requirements include the need to show an ABN; the name of the fund which superannuation contributions are made to; and the name and number of any other fund/account for which a deduction is made.
Employers are also required to keep records for seven years with details relating to overtime; loading, penalty rates and bonuses; superannuation contributions; termination of employees and the person who acted to terminate the employment; leave that is paid in cash; and records on employees transferring from a company acquired by their employer.
Dismissal Laws
Actions for unlawful dismissal on grounds of discrimination can be made by any employee regardless of the size of a business or their period of employment. Otherwise, there are regulations which apply to small and large businesses:
Small business fair dismissal code:
This applies to businesses which employ 15 workers or less. An employee can only make a claim for unfair dismissal if they have been employed for more than 12 months. An employee can be dismissed without warning if their conduct justifies immediate dismissal: this includes theft, fraud, violence or breaches of occupational health and safety procedures. Otherwise an employer must provide a valid reason why their worker could face dismissal and formally warn them of the termination risk if there is no change in conduct.
The employee must be given an opportunity to respond and rectify the problem. The new code also deals with redundancy. While unfair dismissal laws do not apply to genuine redundancies, if a position is refilled, the employee has grounds to launch a claim.
A checklist to ensure compliance with the code is available via www.fairwork.gov.au. “It is quite useful because it does step into the process of termination, but you need to be wary of it because there have been quite a few cases now that have been decided where a small business employer stood up and said ‘I’ve followed it and I still lost’,” DeBoos said.
Dismissal codes for big business: There are provisions in the Fair Work Act which deal with unfair dismissal claims for businesses with over 15 employees. Employees can have their cases heard by Fair Work Australia if they were employed at the company for over six months and earn less than $106,400. A claim can be brought forward if the employee has been harshly, unjustly or unreasonably dismissed.
A ruling will be made based on: if there is a valid reason relating to the employees’ conduct or capacity; if the employee was notified of the reason and given an opportunity to respond; and if the dismissal related to unsatisfactory performance, and whether the employee was warned prior to dismissal.
Businesses should err on the side of caution, with written warnings and documentation of reviews. Employers still have the right to dismiss employees for serious misconduct.