Yesterday’s decision by the Fair Work Commission in the casual and part-time employment test case proceedings was a significant one, and will lead to changes to most modern awards. This article provides the key information about what changes will be made, and how your business will be impacted by the decision.
The casual and part-time employment test case was one of the largest cases of 2016, running between March and November last year and involving more than 100 witnesses giving evidence before a five member Full Bench.
The case centred around a claim by the Australian Council of Trade Unions (ACTU) which sought to impose uniform four-hour minimum engagements in almost all modern awards, along with casual conversion clauses that would give most casual employees the automatic right to convert to permanent employment after six months’ service. The ACTU also sought to impose a restriction on employers recruiting new employees until they had first offered existing employees additional hours.
In addition to the ACTU claim, the case also involved numerous claims by other parties (both unions and employer parties) seeking other changes to a smaller number of awards.
ABLA played a leading role in the proceedings, representing the Australian Chamber of Commerce and Industry as well as a large number of other employer and industry bodies which opposed the ACTU claim.
For the most part the ACTU’s claims were rejected by the Full Bench. However, the Commission did decide to make a number of changes to modern awards.
Proposed new minimum engagements for casual employees
The Commission rejected the ACTU’s claim for uniform four-hour minimum engagements across the modern award system, finding that a ‘one size fits all’ approach was inappropriate. There will be no change to those modern awards which currently contain minimum engagement provisions.
However, the Commission reached the provisional view that the 34 modern awards which do not currently contain any minimum engagements should be varied to include a new two-hour minimum engagement period for casuals.
The Commission has also proposed to vary the facilitative provisions in four awards (the Manufacturing, Vehicle, Graphic Arts, and FBT Awards) to prevent employers from reaching agreement with individual employees to reduce the minimum engagement to less than three hours.
Proposed new casual conversion rights
The Full Bench has proposed to insert a casual conversion clause into the 85 modern awards that do not currently contain casual conversion provisions.
The proposed casual conversion provisions would operate so that, where a casual employee has worked a particular pattern of work for more than 12 months, that employee will be able to elect to convert to permanent employment provided that the pattern of work could be continued in accordance with the full-time or part-time employment provisions in the relevant modern award.
The employer would have the right to refuse the request where:
- the conversion would require a significant adjustment to the casual employee’s hours of work to accommodate them in full-time or part-time employment;
- it is reasonably foreseeable that the casual employee’s position will cease to exist, or the employee’s hours of work will significantly change or be reduced within the next 12 months; or
- other reasonable grounds exist (based on facts which are known or reasonably foreseeable).
Employers would also be required to provide a copy of the model conversion clause to all casual employees within their first 12 months of employment
Parties will be given a further opportunity to comment on the proposed clause before it is finalised.
No changes will be made to the other 37-odd modern awards that already contain a casual conversion clause.
No restrictions on hiring new employees
The Commission rejected the ACTU’s claim to introduce restrictions on hiring new employees, finding that it would be “unsustainable for a wide range of reasons”.
New overtime entitlements for casuals in some industries
Changes will be made to the following modern awards to provide casual employees with entitlements to overtime in certain circumstances.
The awards affected are the:
- Hospitality Industry (General) Award
- Registered and Licensed Clubs Award
- Restaurant Industry Award
- General Retail Industry Award
- Fast Food Industry Award
- Hair and Beauty Industry Award
- Horticulture Award
For the first three awards listed above, the Commission will vary those awards so that casual employees will receive overtime for all time worked in excess of 12 hours per day, or for all hours in excess of 38 hours per week. Employers will be able to average hours over a roster cycle (provided it is less than four weeks). The overtime penalty rate will be the same in each award as it is for full-time employees, except that it will not compound on the casual loading otherwise payable to the employee.
The Retail Award will be varied so that casual employees will receive overtime payments when working in excess of 38 hours per week, when working outside the span of hours for each day, and when working in excess of nine hours per day (save that casual employees will be able to work up to 11 hours on one day without attracting overtime rates).
The Fast Food Award will be varied so that casual employees will receive overtime payments when working in excess of 38 hours per week; and when working in excess of 11 hours in a day.
The Hair and Beauty Award will be varied so that casual employees will receive overtime payments when working in excess of 38 hours per week, and when working more than 10.5 hours in a day.
Lastly, the Horticulture Award will be varied so that casual employees will receive overtime payments when working in excess of 12 hours per day, and when working more than 304 hours over an eight-week period. This decision was particularly intriguing given that the Full Bench acknowledged that “the most likely response of horticultural employers” would be to “reduc[e] the working hours of their casuals to a level which did not attract any overtime payments”, thereby reducing the take home pay of employees working in the sector.
New flexible part-time employment provisions in some industries
In a positive development for employers, the Commission has proposed to make changes to the part-time employment provisions in three awards to provide more flexible rostering arrangements.
The three awards affected are the:
- Hospitality Industry (General) Award;
- Registered and Licensed Clubs Award; and
- Restaurant Industry Award.
The Commission found that the current part-time provisions in these awards were unworkable, and so the proposed changes will give employers greater flexibility to roster part-time employees.
The proposed new provisions would allow employers to roster part-time employers for between 8 and 38 ordinary hours per week (averaged over the roster cycle), and agree with employees on a guaranteed number of hours each week, and the ‘available window’ in which those hours could be worked (i.e. the employee’s availability). The employee would only be able to alter their availability on 14 days’ notice.
What this means for your business
The changes sought by the unions in this case had the potential to fundamentally hinder an employer’s right to manage their workforce. Pleasingly, however, the most damaging aspects of the unions’ claims were rejected.
For the most part, the changes will have a relatively modest impact on most businesses. We anticipate that most employers will be able to effectively manage the outcome without any significant adverse impact on their business operations.
The changes outlined above have not yet come into effect. The Commission has indicated that it will provide interested parties with an opportunity to comment on the proposed changes, with further hearings likely to be held in the coming months. We anticipate that the changes will not come into effect until later in the year.
As always, if there is any issue within your business that might give rise to a claim, early intervention is the best protection. Feel free to contact us on 1300 565 846 if this raises any questions.