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Amendments to the Fair Work Act 2009 - The BOOT and casual changes

14 December 2020

Amendments to the Fair Work Act 2009 (Cth) have recently been introduced into parliament. These amendments foreshadow, amongst other things, changes to the "Better Off Overall Test" for the purposes of industrial instruments and clarification of how casuals are treated in a post Workpac world.

On 9 December 2020, the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 (Cth) (Bill) was introduced into parliament.

While the Bill is yet to be made law, it foreshadows a number of amendments that will be of interest to businesses. Particularly for those businesses with significant casual pools of employees. The Bill also implements some interesting amendments in relation to the making of enterprise agreements.

Casual employees

The Bill proposes to introduce a statutory definition of casual employees focusing upon offer and acceptance of employment. Given the decision in Workpac Pty Ltd v Rossato [2020] FCAFC 84, this may come as a breath of fresh air for employers who have faced significant uncertainty in relation to the status of their casual employees.

The Bill will also prevent "double dipping". That is, casual loading amounts can be offset against claims for leave and other entitlements, should an employee more appropriately be characterised as a permanent employee. This may significantly reduce employer's potential liability for an incorrectly classified employee.

The rationale for this amendment, as expressed in the Bill's explanatory memorandum, is to "give employers confidence to create jobs by using casual employment as a flexible employment option and encourage rehiring of many casuals who lost their jobs due to COVID-19".

The Bill also creates a statutory obligation upon employers to offer regular casual employees with conversion to permanent employment, unless there are reasonable business grounds to refuse (a residual right to convert will exist for those employees that have not received or accepted an offer to convert). A casual employment information statement will also need to be provided to casual employees.

Enterprise agreements

The Bill aims at reducing the prescriptive requirements, and to increase flexibility, in relation to providing employees with a fair and reasonable opportunity to consider whether to approve an enterprise agreement prior to a vote.

The Fair Work Commission no longer needs to be satisfied that an enterprise agreement does not exclude the National Employment Standards. However, a term must be included explaining the interaction between the National Employment Standards and the enterprise agreement. This is a proposal aimed at reducing the time between making an application for approval of an enterprise agreement, and the Fair Work Commission's final determination.

"As far as practicable" the Fair Work Commission will be required to approve enterprise agreements within 21 working days.

Clarification has been provided in relation to the process for assessing enterprise agreements against modern awards (that is, the "Better Off Overall Test" (BOOT)). This includes consideration of non-monetary benefits and the views of employees, employers, and their bargaining representatives. Further, consideration is not to be had in relation to roster patterns, types of employment, and kinds of work that are not reasonably foreseeable or hypothetical.

Limited circumstances also allow enterprise agreements to be approved which may not pass the BOOT. However, this amendment is to be repealed two years after commencement and exists to facilitate the difficulties created by COVID-19. Significant attention has been provided to this portion of the Bill. We expect that this will be amended prior to the Bill being passed.

Old agreements will also be 'sunsetted' by 1 July 2022 where approved prior to the commencement of the Fair Work Act 2009 (Cth), and during the bridging period prior to the commencement of the modern award framework.

Other matters

Some award flexibilities implemented in response to the COVID-19 pandemic will be preserved for a period of two years. This includes in relation to flexible work directions for choice awards. Further part time flexibilities in relation to hours of work are proposed.

Greenfields agreements may have longer nominal expiry dates of up to eight years in some circumstances.

In limited circumstances, the Bill criminalises wage underpayment. Further compliance measures include amendments to the mechanisms by which employees can recoup underpayments, including an increase to the small claim jurisdiction.

If you require further information or have any queries in relation to this legal update, please contact a member of our Employment team.

Further Reading