In this article, we set out the top ten developments in employment law that occurred in 2020 and the key changes to the law expected in 2021.
In response to the COVID-19 pandemic, 2020 saw an unprecedented number of changes introduced in employment legislation, as the Government endeavoured to deal with the affects of the virus on the economy and workplace. There were also a number of (unrelated) amendments to legislation dealing with matters such as parental leave and wage theft. We also witnessed several key decisions of the courts regarding casual employment, leave entitlements and the gig economy.
Perhaps the most significant event for employment law in 2020 was the introduction of the Federal Government’s Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (‘Fair Work Amendments Bill’), which proposes significant amendments to the Fair Work Act 2009, and (if passed) may come into effect as early as March 2021.
We detail some of the key provisions in the Bill throughout this article.
We look at these 10 changes to Employment Law throughout 2020 & what’s expected in 2021:
- The correct way to accrue personal/carer’s leave confirmed in Mondelez appeal;
- Whether employees can take personal/carer’s leave whilst stood down confirmed in CEPU v Qantas;
- “Wage theft” criminalised in Queensland & Victoria… and similar plans for the rest of Australia;
- The end of JobKeeper and the advent of JobMaker;
- Significant changes to parental leave entitlements introduced;
- “Gig economy” workers still considered to be contractors rather than employees;
- WorkPac v Rossato – are casuals employees now entitled to paid leave?;
- A proposed new statutory definition of “casual employment”;
- Proposed changes to overtime rules for part-time employees in several awards;
- Significant changes to the process for making enterprise agreements proposed.
#1 Correct way to accrue personal/carer’s leave confirmed in Mondelez appeal
On 13 August 2020, the High Court of Australia handed down a decision in Mondelez Australia Pty Ltd v AMWU & Ors [2020] HCA 29 reversing a 2019 decision of the court that had challenged the traditional understanding of how personal/carer’s leave accruals are calculated (see our earlier article).
Had the original decision withstood the appeal, all permanent employees (including part-time employees) would have been entitled to 10 full days’ personal/carer’s leave per year, regardless of the number of hours they worked.
In other words, a part-time employee contracted to work one 7.6 hour day per week, would have been entitled to 10 x 7.6 hour days as personal/carer’s leave per year, or 76 hours. For such an employee this would have been equivalent to 10 weeks paid leave (and would be the identical entitlement as a full-time employee working 5 x 7.6 hour days per week would receive).
This would have imposed a huge burden on employers, most of whom had not interpreted the personal/carer’s leave provisions in the Fair Work Act to operate in this way.
In the Mondelez appeal the court held that the reference to 10 days personal/carer’s leave in the Fair Work Act 2009 meant 10 x 7.6 hour days for full time employees (ie those that work 38 hours per week), but part-time employees were only entitled to a pro rata amount of leave based on their number of ordinary hours. So a part-time employee working one day per week (or one fifth of a full-time’s hours) should only be entitled to one fifth of the full-time entitlement ie 15.2 hours per year.
This confirmed the traditional understanding of personal/carer’s leave entitlements and meant employers could breathe a huge sigh of relief.
#2 Whether employees can take personal/carer’s leave whilst stood down confirmed in CEPU v Qantas
Due to the effects of COVID-19 pandemic, 2020 saw an unprecedented number of employees being “stood down” by their employers, either in reliance on the existing stand down provisions in the Fair Work Act 2009, or through new provisions inserted into the Fair Work Act 2009 for employees in receipt of the JobKeeper wage subsidy.
Given the traditional stand down provisions in the Fair Work Act 2009 had very seldomly been used, and the JobKeeper stand down provisions were entirely new, there was some uncertainty and debate about exactly how the provisions operated.
Perhaps the most controversial question was whether a stood down employee was able to access paid personal/carer’s leave if unwell during a period of stand down.
In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Qantas Airways Limited [2020] FCAFC 205 the court held (on appeal) that employees cannot access personal/carer’s leave (or compassionate leave) whilst stood down without pay (see our earlier article).
The court said the reason for its decision was that:
- the purpose of personal/carer’s leave and compassionate leave is to provide employees with “income protection” when they cannot perform work for reasons outside of their control (eg illness or injury, the need to care for a family member, etc).
- if the purpose of this leave is to provide income protection, this presupposes that the employee is earning income. Where an employee is not earning any income (because they have been stood down as there is no work to perform) there is no income to protect, and such leave should not therefore be available to them.
The court made clear that this is to be contrasted with the entitlement to annual leave and long service leave which are entitlements that employees have accrued over time and are not designed to compensate an employee where they are unfit or unable to work. Such paid leave can therefore be taken during a period of stand down. (Furthermore, due to the wording of the Fair Work Act 2009, employees are entitled to be paid for public holidays that arise during a period of stand down).
The decision was a victory for Qantas – and for employers generally – who otherwise would have had to make payment to ill or injured employees in circumstances where the employees had been stood down because there was no work for them to perform.
#3 “Wage theft” criminalised in Queensland and Victoria… and similar plans for the rest of Australia
On 14 September 2020 the Queensland Parliament passed the Criminal Code and Other Legislation (Wage Theft) Amendment Act 2020 (Qld), which amends the Queensland Criminal Code to enable wage theft to be treated the same as other forms of stealing, with employers who intentionally underpay their employees now exposed to a criminal penalty of up to ten years’ imprisonment (see our earlier article).
This followed the passing of similar legislation in Victoria, which means that wage theft will be a criminal offence in that State from 1 July 2021 (see our earlier article).
On a similar theme, the Federal Fair Work Amendments Bill proposes to introduce a criminal offence for an employer who dishonestly engages in the systematic underpayment of employees with a maximum penalty of four years in prison (with fines of up to $5.55m fine for a corporation and up to $1.11m for individuals).
#4 The end of JobKeeper and the advent of JobMaker…
One of the most important employment law developments in 2020 was the introduction of the JobKeeper wage subsidy to help businesses struggling with the effects of COVID-19. There were also a number of associated amendments made to the Fair Work Act 2009 which provided employers with several new wide-ranging powers. Most significant of these new powers was the ability to reduce an employee’s hours (potentially down to zero) if they could not be provided with useful work (through a “JobKeeper Enabling Stand Down Direction”).
The JobKeeper scheme was initially intended to cease on 28 September 2020 but was later extended to 28 March 2021.
If this timetable is not amended, many employers will need to carefully consider what the end of JobKeeper means for them. One important matter to be aware of is that any JobKeeper Enabling Stand Down Direction that has been given to an employee to reduce their hours will automatically cease after 28 March 2021, meaning employees will be entitled to be provided with (and paid for) their usual pre-COVID number of hours.
If such arrangements will not be viable for employers to implement they should consider in advance what other processes they could adopt to deal with this situation (eg negotiate with employees for a reduction in hours/pay by agreement, seek to rely on the “traditional” stand down provisions in the Fair Work Act 2009, redundancies, etc).
Although the JobKeeper subsidy is set to end, the Federal Government announced on 6 October 2020 a new incentive for businesses to employ additional young job seekers called the “JobMaker Hiring Credit” (see our earlier article).
Eligible employers will have access to the JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for a maximum claim period of 12 months from their employment start date. Employers must register with the ATO and make claims quarterly, with claims commencing in February 2021.
The JobMaker scheme is yet to be legislated, and so is subject to the approval of Parliament. Additional incentives have also been announced for businesses employing trainees and apprentices.
#5 – Significant changes to parental leave entitlements introduced
On 26 November 2020, the Fair Work Act 2009 was amended to introduce greater flexibility for employees taking unpaid parental leave. Employees can now take up to 30 days of “flexible parental leave” at any time up to two years after the birth or adoption of a child, including after the employee has returned to work from their first period of parental leave.
For example, an employee could take 11 months of their 12 month parental leave entitlement when their child is born and then return to work, whilst saving a further 30 days of parental leave to be taken flexibly at some point before the child’s second birthday. Those 30 days of parental leave could be either be taken in one block, or in separate periods of at least a day.
This follows similar amendments to the Government-funded paid parental leave scheme for employees on a low income.
2020 also saw new parental leave entitlements introduced for parents of stillborn babies, parents of children that die within the first 24 months of life and for parents of premature babies or those with birth-related complications.
The changes are likely to mean that employers’ parental leave policies will require updating to conform to the new rules. See our earlier article for full details.
#6 “Gig economy” workers still considered to be contractors rather than employees…for now…
Despite mounting pressure for many gig economy workers to receive the added protection of employment rights, the latest court and Fair Work Commission decisions in this area have continued to find such workers are genuine contractors rather than employees.
The most recent case – Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats [2020] FWCFB 1698 – found an Uber Eats driver was a contractor rather than an employee with factors of particular importance being:
- Uber Eats had no control over when or how long the driver performed her work;
- The driver was able to perform work for others (i.e. the driver could accept work through other competitor food delivery apps or perform other types of passenger or delivery work);
- The driver was not presented as part of Uber Eats (the driver was not required to wear a uniform or represent she was part of Uber Eats).
See our earlier article for full details of the case.
Although this decision was subject to an appeal – with many commentators suggesting that the Uber Eats employee would this time be found to be an employee – Uber was able to settle the case for an undisclosed sum at the last minute, perhaps suggesting that they saw the writing on the wall….
Penalties for wrongly classifying a worker as a contractor when they should be an employee are significant, and investigating and targeting so-called “sham contracting” arrangements looks set to continue to be a key focus of the Fair Work Ombudsman in 2021.
If businesses require assistance in determining whether workers are “true” contractors or should really be engaged as employees, Employment Innovations has a free downloadable checklist for this purpose.
#7 WorkPac v Rossato – are casuals employees now entitled to paid leave?
One of the major cases before the courts in 2020 was that of WorkPac v Rossato, the latest in a line of cases which confirms the position that if someone is treated as a permanent employee then – regardless of what was agreed at the time they were first employed, and regardless that they might be paid a casual loading – the law will regard them as permanently employed rather than as a casual (see our earlier article).
The (potentially catastrophic) result of this for employers is that someone who has been paid a casual loading, supposedly in compensation for the permanent-employment entitlements that they do not receive, can then be entitled to be back paid entitlements such as paid annual leave and personal/leave, payment for absences on public holidays, redundancy pay and payment for notice of termination.
Such was the case in Rossato where a “casual” mine worker was found to be a permanent employee for reasons including he was given a set roster, set months in advance, which (the court found) showed a firm advance commitment to ongoing work (and therefore was inconsistent with a “true” casual arrangement where employers and employees are free to offer and accept/decline shifts as they see fit).
Although the Government had hastily introduced amendments to the Fair Work Regulations 2009 in 2018 to seek to prevent such employees “double-dipping” on entitlements (see our earlier article), in Rossato the regulations were found to be ineffective for this purpose.
Leave to appeal the Rossato case was granted by the High Court on 26 November 2020 and is not expected to be heard until mid-2021.
However, in the meantime, the Fair Work Amendments Bill has proposed to significantly alter the law regarding casual employment (and so may make the outcome of the Rossato decision – and its appeal – far less important). We explain the Bill’s proposals in this area below…
#8 A proposed new statutory definition of “casual employment”
Despite the importance of correctly classifying employees as permanent or casual (as cases such as Rossato illustrate), some readers might be surprised to learn that the terms “casual employee” or “casual employment” are not defined anywhere in the legislation. Rather, employers have to look to previous case law (“common law”) to ascertain the meaning of the phrases.
This can lead to uncertainty and to a large number of employers “getting it wrong” (and exposing themselves to risk).
In response to this, the Federal Government is proposing through the Fair Work Amendments Bill to introduce a strict definition of “casual employment” to provide certainty regarding the issue of which employees are truly casuals.
The Bill proposes inserting a definition of a casual employee into the Fair Work Act 2009 in the following terms… A person will be a casual employee if:
- An employer makes an offer of employment to the person “on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work”; and
- The person accepts the offer on that basis; and
- The person is an employee as a result of that acceptance.
The Bill also provides an exhaustive list of factors that must be considered when determining whether the employer’s offer “makes no firm advance commitment to continuing and indefinite work according to an agreed pattern”. These are:
- Whether the employer can elect to offer work and whether the person can elect to accept or reject work;
- Whether the person will work only as required;
- Whether the employment is described as casual employment; and
- Whether the person will be entitled to a casual loading or casual-specific rate of pay.
Perhaps most importantly, the Bill provides that “the question of whether a person is a casual employee… is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party”.
In other words, so long as someone is properly engaged as a casual at the start of their employment, they will remain a casual unless their employment is formally altered to that of a part-time or full-time employee.
Courts will therefore be prevented from considering how the relationship developed over time (departing from the approach in Rossato), and rather, the sole focus will be on the terms the employee was initially engaged.
The Bill proposes a number of other supplementary provisions regarding casual employment:
- An obligation on employers to offer casual employees a permanent position after 12 months’ employment (unless there are reasonable business grounds not to make such an offer). Such provision is similar to the “casual conversion” clause that exists in most modern awards.
- An obligation to provide casual employees with a casual employment information statement – explaining the nature of their employment and their rights as casual employees.
- An ability to “set off” any casual loading paid to an employee wrongly classified as a casual employee, who is later found to be a permanent employee and therefore entitled to back-date permanent employee entitlements. In other words, employees who do not meet the new statutory definition of a casual employee, but who have been paid a casual loading in the mistaken belief they are a true casual. Although such a provision was previous introduced in 2018 (as explained above), the Bill expresses this in a slightly different way to avoid the – largely technical – reasons it was found to be of no use to the employer in.
If these proposals are adopted it is hoped that the current uncertainty regarding when an employee is a “true” casual will be significantly reduced.
#9 Proposed changes to overtime rules for part-time employees in several awards
Another key proposal in the Fair Work Amendments Bill is to allow certain part-time employees and their employers to agree that the employee may work additional hours without being entitled to overtime penalty rates.
Under most modern awards a part-time employee and their employer must agree on the set number of hours the employee is contracted work (and often the exact start and finish times, and the days on which they will work) in writing at the start of employment. Any additional hours worked outside of this is usually required to be paid at overtime rates (time-and-a-half or double-time).
Under the proposed changes in the Fair Work Amendments Bill, employers in industries judged to have been particularly adversely affected by COVID-19 will be able to offer part-time employees additional shifts without having to pay overtime rates. The relevant awards are as follows:
- Business Equipment Award 2020;
- Commercial Sales Award 2020;
- Fast Food Industry Award 2010;
- General Retail Industry Award 2020;
- Hospitality Industry (General) Award 2020;
- Meat Industry Award 2020;
- Nursery Award 2020;
- Pharmacy Industry Award 2020;
- Restaurant Industry Award 2020;
- Registered and Licensed Clubs Award 2010;
- Seafood Processing Award 2020; and
- Vehicle Repair, Services and Retail Award 2020.
The proposed provisions apply to part-time employees who work at least 16 hours per week.
#10 Significant changes to the process for making enterprise agreements proposed
Perhaps the most controversial proposal in the Fair Work Amendments Bill relates to the process for making enterprise agreements.
The current law operates so that the Fair Work Commission must not (subject to very limited exceptions) approve an enterprise agreement unless each employee that could be covered by the enterprise agreement will be “better off overall” under the enterprise agreement, rather than the modern award that would otherwise apply (the so-called “BOOT test”).
The BOOT test is usually applied in a very prescriptive way, with the Fair Work Commission considering every conceivable working pattern an employee could work (such as significant amounts of weekend, public holiday and overtime work) to assess whether employees will always be financially better off under the enterprise agreement rather than the applicable modern award. This makes including simplified or “all-in” rates of pay in an enterprise agreement very difficult.
Under the new proposals, compliance with the BOOT test will be eased, and in particular the Fair Work Commission:
- will only be required to have regard to patterns of work or types of employment, that current employees are engaged in or those that are reasonably foreseeable (in other words, they won’t consider working patterns that are hypothetical or not reasonably foreseeable);
- can have regard to the overall benefits (including non-monetary benefits) under the enterprise agreement when compared to the relevant modern award;
- can (for the next two years at least) approve enterprise agreements which do not pass the BOOT test after taking into account factors such as; the views and circumstances of the employer and employees, the impact of COVID-19 on the business and whether the approval is in the public interest.
Such proposals have been met with fierce opposition from unions which fear that they will be used to circumvent the minimum safety net of entitlements that modern awards are designed to provide.
In addition, under the new proposals, employers will only be required to take reasonable steps (as opposed to all reasonable steps) to:
- notify employees when voting for enterprise agreement will occur;
- explain the terms of proposed agreements to employees;
- give employees access to the materials they will be voting on (eg copies of the enterprise agreement, etc).
In a move to streamline the process, the default position will be that enterprise agreements will have to be approved (or rejected) by the Fair Work Commission within 21 days.
Another key proposal is that any enterprise agreements entered into prior to the commencement of the Fair Work Act (that is, anything entered into before 1 July 2009) that are still in operation will automatically terminate on 1 July 2022 and the applicable modern award will apply instead. These so called “zombie agreements” often comprise of terms far less favourable than current modern award conditions so will mean significant changes for employers and employees affected by such changes.
Need further help?
If you need further help on any of the matters raised in this article please contact EI Legal.