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Luis Izzo: Welcome everyone. Great to have you here today as we begin a new era under a Labor government.
Luis Izzo: There's a lot we have to get through.
Joe Murphy: I might just stop you there. I think you're reading from the wrong script.
Luis Izzo: You're right. That script was written away.
Joe Murphy: It was and ladies and gentlemen, thank you for tuning in. You might think that we do not have a lot to talk about today, but we do. It's our special election analysis. The Labor Party did have a very elaborate scheme of changes that they were proposing from the workplace relations perspective. You might think that the coalition government did not have very much to do in that space, but in fact, we've got a bit to talk about today, don't we Luis?
Luis Izzo: That's right. There's a range of things that we've identified where we're likely to see changes and continuing developments in the industrial front. It's probably timely because most employees out there have really been focused on the Labor Party agenda, because I think most pundits expected a different outcome at the election. I'm not too sure how much businesses are across the coalition platform and the things we might say are from the union movement over the next three years.
Joe Murphy: Yeah, before we get into our material, I might just quickly let everyone know that these apologies are forthcoming from our CEO, Nigel Ward, who had hoped to be with us today, but he's Canberra incidentally on important business for a client that was urgent and sends his apologies to all of our listeners and viewers.
Joe Murphy: What's happened? Just from a numbers perspective, today, I note that there are, I think 76 seats in the House of Representatives for the coalition and a range of seats for Labor and the greens. I think Labor in the 60s, the high 60s and it looks like the coalition will have probably 77 seats by the looks of it.
Joe Murphy: Does that mean they've got a mandate to do what we're about to talk about? I don't know and I don't think so but you'll see from some of the topics we're going to talk about today. That whilst the Labor government had some elaborate plans, the coalition government had some really interesting, important measures that we're going to be putting place for workers that were vulnerable workers, migrant workers and also some other changes to protect transient workers and workers who have uncertain work like casuals.
Joe Murphy: They're going to need cross bench support if they're going to get legislation through because it looks like in the Senate, the coalition will not have majority. They'll have sort of around the mid 30s and that's not enough. I think they need the high 30s to get through.
Joe Murphy: Labor will have a range of seats in the mid to high 20s in the Senate and the greens will have nine as we currently told, and there's a range of other independents. One Nation has won. Australian conservatives have won and the like, but that brings us to the more interesting stuff.
Joe Murphy: The first thing I think, Luis, we want to talk about is, well, what's the reaction from the unions and ALP going to be?
Luis Izzo: I think we're likely to see a two stage response to the election over the weekend. I think the first thing we'll likely see is perhaps a subdued level of activity over the next three months. You have to remember that particularly on the ACTU youth front, they have been pursuing a change the rules campaign for two years now.
Luis Izzo: The Labor Party, in particular their shadow employment spokesman, Brendan O'Connor, has been out in force for at least 12 months prosecuting the case for change, speeches at various seminars, conferences. Anywhere they could get to effectively a microphone and a platform.
Luis Izzo: The Labor Party and the ACTU were running a very focused and comprehensive campaign on change. I think there's going to be a level of exhaustion. There's going to be a level of inward focus for a while. There's going to be the political level, the IOP going to be looking at their leadership. We already know that Bill Shorten stood down from the leadership post, which means there's going to be a level of internal leadership debate.
Luis Izzo: Equally the ACTU, they're going to have a level of introspection. I'm not suggesting there's going to be any leadership change or anything at the ACTU level, but that doesn't mean there won't be a period of introspection a lull in activity.
Luis Izzo: For those employers that are currently involved in price bargaining, they might find that the level of opposition they face or the level of industrial disruption they face might not be what could otherwise have been the case. I think there will be lull.
Joe Murphy: Initially?
Luis Izzo: Initially. Then you talk about what though is the longer term impact. What's the environment like and look like 2019 onwards or late 2019 onwards I should say. I think there's probably three or four different types of focuses we're going to see.
Luis Izzo: Absolutely, the first thing that union movement can do is ramp up focus on individual employer compliance issues. Continue the story about wage theft that they've prosecuted quite loudly for the last two years saying there's employers out there paying improperly not following the minimum award obligations they should and that this is unacceptable.
Luis Izzo: That had a level of success over the last three years. We saw the liberal party introduce more significant penalties through its vulnerable worker's bill. I think the story is about franchisees. I think the story is about any employer not complying with their obligations is likely to be one that continues.
Luis Izzo: If you are not paying the right rates, if you're not doing the right thing, absolutely, I think you can expect PR campaigns on social media. You can expect prosecutions by the union movement. Effectively, Sally McManus and the ACTU standing up saying, "The system is not working. Here's why we've got employers not doing the right thing."
Joe Murphy: I think that's right Luis. I think we have seen Sally McManus be a very fierce advocate for those positions that they've advanced over the last two years. Unless she decides she's going to have a political career, which is possible, but it may not be in the next 6 to 12 months and it may not even be in the next term. We will see.
Joe Murphy: While she's at the helm of the ACTU, they will not be easing off. If anything, as Luis has just said, they're going to be ramping up. They might be allow for three to six months as they realignment themselves both the ALP and the ACTU. Then they're going to focus again on individual employers and all of those things that Luis talked about.
Luis Izzo: Just a couple of other things in relation to what I think we'll see. There was a big part of the Labor Party platform related to equal remuneration for workers. We had a lot of talk about the childcare subsidy, which was intended to apply. Bill Shorten had announced increasing childcare wages by a few dollars an hour in relation to that sector.
Luis Izzo: That's no longer available at the parliamentary level. That doesn't mean it goes away. What it means is that what we'll likely to see is that kind of case being prosecuted in the Fair Work Commission. In the Fair Work Commission, what we'll likely to see is effectively the IEU, the Independent Education Union together with the United Voice pushing for a wide range of changes in the childcare industry which we'll see significant wage increases based on the fact that they're saying remuneration is not equal across the genders. Industries that are predominant female-based are not seeing the same type of wage outcomes.
Luis Izzo: The IEU case, as I understand it, is pushing for claims of up to 60% higher wages in that industry at the award level. That is going to unfold in the next few months, but that won't be the last ERO case. I think what you'll see is because these wage changes that the union movement had sought to achievement parliamentarily aren't available. I think we're going to see it in the commission.
Joe Murphy: I think that's right, Luis. I think we need to be mindful. I think the unions need to be mindful also that while there are no substantial changes in relation to the commission or the Fair Work Act around awards and around equal remuneration that employers can also pursue cases. They are currently pursuing cases around efficiencies and they have historically around penalty rates and the like.
Joe Murphy: Those types of applications are still available to employers under the current scheme. Whilst the unions will agitate those claims, employers will continue to educate their counter claims.
Luis Izzo: I think that's right. I think on the union front. We've mentioned the ERO. We've mentioned the fact that it's likely that we may see other types of compliance focus from them. I think the final two areas from the union is absolutely this living wage argument is not going away. The living wage, I suppose, campaign that was pursued by Bill Shorten in the Labor Party, that was being pursued by the ACTU well before it became an issue at the political level.
Luis Izzo: We're going to see the ACTU bringing a very substantive argument to the Fair Work Commission as part of the annual wage review. They are saying that the minimum wage should not be set in the way it currently is. The minimum wage should be set at 60% of the median Australian wage. Absolutely, that's not going away. We're likely to see determinations on that in the coming months. If it's not to their liking, it will come back next year. I think they'll continue to pursue that.
Luis Izzo: The last thing is ... I don't want to scare employees too much, but I suspect over the next three years, the notion of the award wage settings themselves. The way that the pay rates are structured and the value of the rate compared to the work or what we call in industry relations, the work value. That's another target area likely.
Luis Izzo: We may see work value cases start to emerge. One or two have already started to burgeon in the current award review. These are all mechanisms and levers that can be pulled entirely outside of the parliamentary level. Entirely outside a statutory change.
Luis Izzo: Whilst you might say, "Well, the Labor Party agenda won't be progressed in three years." That's a large number of types of issues that we're going to see ventilated in the commission just by the union movement. That's before we get to, I suppose, the Labor Party's response and the employee movement response.
Joe Murphy: I think one of the things that people expect is that the LNP won't do a lot. The government won't do a lot around industry relations unless there's a case pursued for change. I think the unions and other organizations have demonstrated that if they approach these correctly and agitate in a way that's appropriate and acceptable to the government, they can get results.
Joe Murphy: We're going to talk about some of those things like the migrant workforce task. One of the things around the Liberal Party platform, if I can say, the industrial platform, which wasn't much, but there were a number of choice things there. Is that they're going to retain the ABCC. The Australian Building and Construction Commission is going to be retained.
Joe Murphy: The Labor Party platform had been proposing to remove that altogether and that will stay. There are lots of employees out there who are very happy about that. The ABCC regulates not just union but also employers and how they behave in their building and construction space. It's been a much maligned organization by the unions over the years, but it's been there for a while, disappeared and now it's come back, but it's here to stay at least for the next three years.
Luis Izzo: The Registered Organisations Commission is the same thing. They were brought in by the Liberal Party in response to the Royal Commission on Trade Unions. There's a lot more oversight of both employer organizations and employee organizations. That's likely to stay.
Luis Izzo: Just on that case for change point, I think that's right. If you look at what happened over the last three years, there were occasions where the statute was changed. We had new roles in relation to bargaining. Changes made too if there were technical errors or any kind of minor areas in relation to enterprise agreement approval processes or voting processes. That can now be subject to a level of discretion from the Fair Work Commission, not previously the case. Same with notice of representational rights and bargaining.
Luis Izzo: Where employees have demonstrated, there is a real issue here that needs resolving. The Liberal Party will listen, but they're not going to just run off on a flight of fancy. They're going to want to see cogent evidence based reasoning to support a change. If that's there, then we might get some level of reform.
Joe Murphy: It's a bit of a shame because there's a lot that can be done with the Fair Work Act where there are inadvertent areas made by the previous Labor government in bringing out legislation into place. We know that because the explanatory memorandum itself actually doesn't line up with the act in many places.
Joe Murphy: There is a case for change in a range of spots, but because of the Howard government, changes back in 2007 prior to them losing government at that time to the Rudd government. The LNP government since has been reticent to do anything because they're worried about that. It's been very difficult with an opposition that hasn't been willing to play ball.
Luis Izzo: Yeah. Speaking of which, there were a number of bills previously tabled in the last parliament, which did not make it through into legislation. It's possible that a number of those bills will come back in one form or another.
Luis Izzo: The first is the casual conversion bill. The liberal government proposed to insert into the Fair Work Act itself a right for casual employees to convert to permanency after a 12 month period if they had regular and systematic hours. That right of conversion can only be negated if there were reasonable business grants to refuse it.
Luis Izzo: That legislation didn't get up, largely because it had some interesting wording around what a casual may or may not be or how it's defined. That didn't get supported of the cross bench or Labor Party. That's one thing that might come back.
Joe Murphy: Well, this is good policy and it's difficult to say why they shouldn't get up if it is re-agitated through the parliament because at the moment, we've only got award covered employees where those awards provide an entitlement for an employee to either apply or be offered casual conversion where they can convert from a casual to a full time or a part time position.
Joe Murphy: This is good policy. I think given that we're at the front end of a three year term, this has much greater chance of getting up at this point if they're re-agitated.
Luis Izzo: The other thing, as Joe mentioned earlier, there's an increase focus on protections for migrant workers. There was some level of gray, if you like, in relation to how the Fair Work Act applies to a transient migrant workforce that might only be in the country for a brief period of time.
Luis Izzo: To what extent of the Fair Work Act entitlements apply. To what extent do Fair Work as small claims procedures apply to a migrant workforce literally temporarily in the country. There's a desire to try and improve protections around that. That's something that hasn't quite been progressed to the point of being passed in parliament but might come back.
Joe Murphy: They're also looking at whether or not they bolster some criminal offenses around the behaviour of registered organizations and whether or not persons who are holding office in those registered organizations are a fit and proper person.
Joe Murphy: One might say that this is a bit of clamping down on unions, but the way this has operated is very much like the Royal Commission - focused on unions, but the laws that have come out of those inquiries have actually resulted in an oversight of both employer associations and unions. There's been an even-steven is their approach.
Luis Izzo: Then there's some interesting dialogue if you like, that the Liberal Party has talked about, which hasn't been previously been tabled as bills in parliament, but the kind of dialogue and rhetoric we've heard from over the last 12 months about where they might move. The first of those areas relates to labor hire licensing.
Joe Murphy: Which is interesting, because the Labor government had proposed a federal labor hire licensing scheme. We have one in Queensland. Victoria are following suit. South Australia had followed suit for a while but have pulled out.
Joe Murphy: New South Wales hasn't proposed to introduce one that the other states and territories had been looking at it. It's very interesting that the federal coalition were looking at this particular space in connection with migrant workers specifically, but with a focus on particular high risk industries. Those high risk industries were the meat industry, cleaning, security and horticultural industries as well, where they do find that there are a lot of vulnerable workers who are migrant workers in those industries might require protection from unscrupulous employers.
Luis Izzo: Just for the benefit of listeners out there who are engaging labor hire workers in Queensland and Vic, very important that you're aware that there are now licensing regimes in place, which means regardless of where you are based, if you're engaging a labor hire worker in Queensland or Victoria and the worker is not from a licensed provider, you yourself can be subject to penalties. There are fines that will apply to employees engaging unlicensed labor hire providers.
Luis Izzo: That's the regime already in place in two states. It was the Labor Party platform. It now is part of Liberal Party platform to have licensing in some industries. Importantly what they are not talking about, which is what the Labor opposition we're talking about is this notion that labor hire employee should be paid sight rates or host employee rates.
Luis Izzo: There isn't any discussion that if you engage a labor hire provider, you have to pay them the same, all those employees the same amount as you pay your own, but will they need to be licensed? Perhaps.
Joe Murphy: We'll find out. The next one is a really interesting one and it's one that is going to be very difficult for a coalition government that doesn't have both houses to resolve. That is this misalignment between the various obligations and the work, health and safety laws and the bullying laws and the discrimination laws and unfair dismissal generally, and sexual harassment, of course, and discrimination.
Joe Murphy: How they all interact, and Luis and I have talked about this in the past and we've talked about different cases and different areas of law. Generally speaking, there is not an alignment of all of those obligations. You've got your health and safety obligations which are very serious and very significant. Then you got your discrimination laws which sit in a misalignment to those laws and then you got your unfair dismissal laws, which again sit in misalignment to those.
Joe Murphy: There are some employers that over the years have been very disappointed to have dismissed someone who has engaged in either inappropriate conduct from a sexual harassment perspective or from a discrimination perspective or from a health and safety perspective in particular and have proceeded with dismissal only to find that they have a finding against them in the Fair Work Commission of unfair dismissal.
Luis Izzo: Yeah. Precisely. It is something that the Liberal Party talked about as recently as April this year about wanting to try and amend the unfair dismissal laws so as to try and ensure that an employer that complies with their obligations under one law is not then hit with liability under another.
Luis Izzo: There's a variety of ways that might happen. If you take sexual harassment, they could look to redefine the definition of serious misconduct under the regulations. Now, that's something that doesn't necessarily need parliament to approve. The Minister could do that with the Governor General's descent.
Luis Izzo: There's a few different ways they could attack that, but the reality is that I think there's noises being made by employers that's not going away about how to ensure I provide a discrimination that I know is free from harassment, discrimination or a safe workplace if I can't proceed to discipline with some level of firmness and surety around these issues. It might come back up. The other one, and this is the ...
Luis Izzo: It's certainly a can of worms. It's the enterprise agreement approval process.
Joe Murphy: Yes. I think a bit of history is worthwhile giving here at this point, Luis. I think when you
Luis Izzo: Please enlighten us.
Joe Murphy: When you look at the history of what's occurred here is the Fair Work Act provides for a very prescriptive process of making an enterprise agreement. From the commencement of bargaining right through until the approval process including the better off overall test (boot). The better off overall test, the detail of that is perhaps not quite specific in the act.
Joe Murphy: It talks about being better off overall, but what we have seen historically is where the commission wants was quite happy to take an agreement that was supported by both employers and the union and approve that on the basis that they could be confident that it passed to the boot because everyone else simply say that it did.
Joe Murphy: We're now in a world where we have the member assist team at the Fair Work Commission and various members going through with a fine tooth comb picking every single clause and comparing that to the award and any external document that is referred to in that agreement. What that has meant is it's a painstaking process.
Joe Murphy: Now, in defense of the member assist team and the members of the Fair Work Commission, part of the reason that they currently operate that way is because there have been a range of four court decisions and federal court decisions where they have been taken to task for failing to meet their obligations under the Fair Work Act and the approval process.
Joe Murphy: There is a very detailed, pedantic assessment process that they go through in the Fair Work Commission and with good reason, as I said that. What are they looking at now?
Luis Izzo: Well, yeah. I do want to come to that, but you've just now kind of ...
Joe Murphy: Opened up a canned of worms.
Luis Izzo: I think wanting to be diplomatic about this, but there is a real issue. I think your defense of the Fair Work Commission is somewhat warranted. We have a federal court that is applying at the moment a level of technical assessment and analysis over what is meant to be a very effectively fluid, kind of simple, fair approval process.
Luis Izzo: The whole point of the Fair Work Act and the way it's meant to operate, if you look at some objects, it talks about fair, just, efficient process. Particularly when employers go to the commission with an EA that's supported by the union, supported by the employers, voted up overwhelmingly by the workforce. Some of those matters could allow for a less prescriptive line by line forensic, microscope approach.
Joe Murphy: Well, the act also talks about not being caught up in technicalities either.
Luis Izzo: That's right, but you get to the federal court, and if you run a technical argument and gets a wide level of attraction from the federal court justices who don't necessarily practice day-to-day in this same area.
Luis Izzo: We're seeing then effectively handcuffs coming back down to the commission. Part of the message that the Liberal Party needs to take out of this is what's happening at the federal court level. Do we need employment specific judicial members that actually have been in the area, understand the area and now can apply a level of judicial decision making with the benefit of the background? That's just my two cents.
Joe Murphy: Well, it's not a new thing either. We did have a specialist industrial court in New South Wales for many years, many decades. It's probably no surprise we're having a discussion again.
Luis Izzo: I suppose that's still part of the problem. In terms of the solution, well, the Liberal Party did say in its policy, one of the few things that were in there was we're looking at removing unnecessary red tape from the approval process. I think that's a code word for fixing up the current issues employees are having around getting AIs approved. There's still quite long waiting periods. Experience varies from case to case, but you can still be waiting many months to have an EA approved.
Joe Murphy: You can. The national inquiry into sexual harassment, this is a really interesting point. I understand the drivers for what's currently coming out of that inquiry and what's being said out of the inquiry, but it does give cause for some concern about how the system might operate.
Luis Izzo: I think like you say, absolutely. The Sex Discrimination Commission is being applauded for conducting what has been a really wide ranging inquiry into the prevalence of sexual harassment in work places. Looking at causes. Looking at workplace culture.
Luis Izzo: Rather than just say what the law say, why is it the workplaces are having these incidences of sexual harassment. Very wide ranging review has been undertaken. What's interesting is some of the ... I suppose the little avenues in which the inquiry is taking course.
Luis Izzo: One of the most interesting is these notion of employers entering into nondisclosure agreements with employees in relation to claims of this nature. There's been a wide range of views expressed. Some submissions to the inquiry have said that nondisclosure agreements are inappropriate for this type of matter that employees should not be able to silence victims of sexual harassment.
Luis Izzo: You can see, Joe, on the one hand, there's a fair degree of merit behind that concern. I take it there's a competing view as well that might have some ...
Joe Murphy: Luis, my concern is that whilst I see ... You and I both seen cases where there has been sexual harassment and that you could see why an individual might want to retain the right to be able to go public about that or speak to someone else about it.
Joe Murphy: We see a lot of claims, a lot of claims over the years we've been doing this where the reason money is paid in an agreement is entered into is because it's a commercial outcome. It's not because anyone has been sexually harassed.
Joe Murphy: In those circumstances, and with that regime available where you can settle a matter and you can have someone who feels aggrieved to have may not have been sexually harassed. They may have been subject to some adverse treatment. You can see the work that those agreements have to do is good work because it means that individual get some money, they go away. The employee get some comfort that they're paying some money in exchange for the complaint going away.
Joe Murphy: Now, if you're being righteous about it, you might say, "Well, this person should be able to be heard. They should have their case and have their day in court." I think that's okay. I think if someone wants to have their day in court, you and I both know they can have their day in court.
Luis Izzo: This is the problem though. Not every complainant wants to have their day in court. They don't necessarily want to have their name published. You only have to look at the recent defamation case involving Jeffrey Rush where a lot of media surrounded the actual victim in that case in the sense that the matter got out of her hands because articles published in the Daily Telegraph, Jeffrey Rush said it's defamatory and he pursued his legal entitlement to challenge that and ultimately was successful.
Luis Izzo: She didn't want to be involved in a court proceeding. She didn't want to have her name published. Didn't want to have a video footage of her taken or photos, et cetera. The reality is she was unnecessarily and unwittingly brought into a very large scale litigation because of our litigation that was ongoing.
Luis Izzo: Some complainants whilst they might want redress, they might want disciplinary action taken against. The offender, they might want some form of compensation. They don't necessarily want their names being made public. That is more likely if we enter into a scenario where all of these claims could be litigated and employees are less likely to settle then they don't have the protection of the NDA.
Joe Murphy: We both know, not just when it comes to sexual harassment cases, when it comes to unfair dismissal cases, when it comes to discrimination cases, when it comes to bullying cases that sometimes people are just happy to take a little bit of money and go away.
Joe Murphy: A very large portion of claims are misconceived or they're confused individuals who feel aggrieved. If everyone, if you get to this circumstance where you take away the ability for an employer to have that go away commercially with the ability to have it confidential, it's not worth much to the employers who are paying that go away money.
Joe Murphy: Then they might say, "Well, why would I pay this money? Let's just have their day in court." What you're going to have is a range of people who think that they were sexually harassed or think they were bullied or feel aggrieved about something that in actual fact, legally speaking, does not make the threshold.
Joe Murphy: They've gone through court and spend all their money on that because the employer wasn't in a position to give them a commercial deal. I think it does take away an ability for parties to reach a sensible outcome and a commercial outcome in many cases. I'm a little bit concerned about that. It will be great business for lawyers because we have lots of people pumping their fist in their air.
Joe Murphy: Saying, "Let's run this case." There will be a boom in legal fees. A halfway process might be whereby a court has some role in perhaps approving a settlement with a confidentiality arrangement.
Luis Izzo: That's right. It's really interesting here. The Law Council has come out and it has echoed a number of the concerns Joe had about banning nondisclosure agreements entirely. Even the Law Council said that there might be some approach that could be adopted to ensure that settlement agreements are ethically drafted.
Luis Izzo: There might be some way of finding a middle ground whereby the settlements aren't too onerous or aren't clearly unfair in one way or another, but do provide the protections that employers usually seek, which is a release from further claims and confidentiality.
Luis Izzo: Anyway, that's all going to unfold as part of the national inquiry. That's not the only issue. That's just one of the many issues being debated. I think we'll see a lot of really helpful stuff come out of it in terms of particularly some of the findings about workforce culture that we'll report back on once the findings are clear.
Joe Murphy: Stay tuned.
Joe Murphy: Next three years, industrial relations from the Fair Work Commission's perspective, what do you think?
Luis Izzo: I think it's easy to think that because the Labor Party didn't succeed in its reform agenda and IR, there won't be reform. If you look at the last three years, we have had a significant range of movement in a large array of areas. Indeed in cases where our firms have been prominently involved.
Luis Izzo: In 2014, just before the current government. I think it was the end of the Turnbull government, took power, we had annual leave test case come in, in relation to an ability to cash out annual leave being institutional more than awards. An ability to direct the employees to take annual leave, introduce them more of an awards. An ability for employees to take annual leave in advance. Introduce to them to more annual awards.
Luis Izzo: That change came through the Fair Work Commission, not legislatively. Same with penalty rates. We've heard a lot about penalty rates. That was a creature of the Fair Work Commission. The employer movement pioneered by the Australian Chamber and also other industrial associations.
Luis Izzo: Broader case, our firm acted for the Australian Chamber in that matter and we bought an evidence based case to say the Sunday penalty rate and the public holiday penalty rate and services sector was too high. The Fair Work Commission after huge number of hearing days and hundreds of witnesses, came to the conclusion that they agree.
Luis Izzo: Again, that change is going through the Fair Work Commission. Beyond that, we then had near provisions in relation to part time and casual employment, new minimum engagement clauses, casual conversion introduced. Now, that was a union claim.
Luis Izzo: Unpaid domestic violence leave, that has come in as a result of a claim brought by the ACTU in the Fair Work Commission. Now, family-friendly employment provisions. They are also being introduced as a result of a successful claim by the ACTU.
Luis Izzo: Now, all of these claims, I might add, ABLA acted in, acting for the Australian Chamber. You can say there hasn't been a lot that's gone on in the commission over the last three years. Right now, our firm is continuing to act in a number of common claims. Annualized wage arrangements in awards are still under the microscope. There have been changes to abandonment of employment provisions that have now gone out of the awards.
Luis Izzo: There is a common claim pertaining to payment of wages and how the obligation to pay rises and when payments due, that is still live. More recently, the overtime entitlements for casuals are coming under the specific microscope of the Fair Work Commission.
Luis Izzo: In this case, not even at the behest of any party, at the behest of the commission itself. That's just what's happened and what's going on. The changes that we've seen are likely to be enshrined now because we're going to have a period of three further years without intervention from the Labor Party.
Luis Izzo: I think by the time there's a new government, the penalty rates case will be long finished, long moved on from that. The change is implemented. That pattern of industrial litigation is likely to continue. I suppose the question is in what form. We've got a few ideas.
Joe Murphy: What's interesting about that Luis is that even though we did see through the ACTU campaign, change the rules campaign, that they were pointing at the government saying, "You're responsible for the penalty rates being lost in an actual fact." It was employer associations that did that through the Fair Work Commission.
Joe Murphy: The Fair Work Commission agreed there was a case for that and agreed that penalty rates would be reduced over a period marginally. It was marginal reduction. In that year, that was last year, they then also headed down I think the largest increase in about 10 years for an annual wage increase, which is interesting.
Joe Murphy: Take a little bit away from penalty rates, but take away one hand and give with the other the annual increase to everyone. Then we're also talking now about the Fair Work Commission, which has been empowered to this since the act came into play in 2009 and in full force from 1 January 2010 to overturn motion, make various changes including overtime for casuals.
Joe Murphy: It is interesting that we've had a lot happened in the last term, the last two terms really under a liberal government. As Luis says, we're going to say this start to be more enshrined. We've also got a government ... Well, it hasn't been consistent in terms of leadership, but we've had a coalition government over the last six years that does have a habit of looking whether or not this stuff should not only be enshrined in a common sense, but whether or not that should make its way into the NES. We might also see a bit of that over the coming three years.
Luis Izzo: Yeah. I think where the case for change has been made in the Fair Work Act that there is a tendency to then apply it. Now, in terms of cases over the next three years, I think there are a few things on the horizon. We've already mentioned the equal remuneration or the proceedings currently live.
Luis Izzo: I think we'll continue to see equal remuneration claims by the union movement. A particularly interesting one is the New South Wales Business Chamber. It's brought in a claim for a new category of employment. Now, we're actually acting in that matter.
Joe Murphy: I think it was your idea.
Luis Izzo: Effectively, what we are looking to do is say where there are long-term casual employees that the federal court is now telling employers, "Well, if they're long term, they have regular set of engagements. They might actually not be casual. They might be permanent and you might have obligations in terms of back paid leave entitlements, unpaid overtime amounts potentially."
Luis Izzo: In order to address this exposure that's arisen, the New South Wales Business Chamber is proposing a new form of flexible ongoing employment whereby casuals can be rostered the way they have been traditionally. The same type of rostering arrangements there as it can change. There's no obligation to come in. The work is off just as if someone is ordinarily a casual.
Luis Izzo: Instead of receiving the 25% casual loading, the employee receives a 10% loading and in exchange will accrue annual leave, paid personal leave. They'll have ability to access redundancy and notice of termination entitlements, unfair dismissal entitlements.
Luis Izzo: What that would seize, effectively in enshrining of the regular forms of casual engagement that are already out there in modern society. We know that the federal courts is the way that casuals are currently being employed is a problem. The federal court saying, "I don't care that you've paid a casual loading." They might still be permanent.
Luis Izzo: This is a way of saying, "Okay, we're going to live with that decision. If we're not going to get legislative change, let's provide employers with an ability to engage employees in a flexible manner the way they currently are but accrue leave for them so that there isn't that exposure to back pay." Obviously, the consequences of that is that the loading goes from 25% to 10%.
Joe Murphy: Quite a bit has been done around casuals. We have the government introduce the casual set off regulation, which was opposed by the LP, I think Doug Cameron raised an objection in the Senate and that's been postponed I think until the parliament kicks off again.
Joe Murphy: At that point, that's an ability for employers to set off their casual loading or to help employers try and argue that they can set off the casual loading against the claim for unpaid leave if a person later says, "I should have been employed as a permanent employee, ongoing employee full time or part time instead of casual."
Joe Murphy: We'll yet see how that will play out in court if it actually makes it to a court, but as Luis says, we've had a range of things around casuals and watch this space for the perma-flexi application because I think that's really important.
Luis Izzo: Yes. I suppose in terms of the better ground and the commission for the next three years. The other thing that we are watching is and we mentioned this before the notion of work value, but how all the award rates are aligned.
Luis Izzo: There's some discussion going on by way of an initial statement issued, I think at the commission level about asking about how these wage rates are set and aligned. The reality is unfortunately, if you actually look at all the wages, they're all pegged to a certain point about a decade ago and they have come out of whack.
Luis Izzo: The wage rates have effectively been condensed over time due to some of the wage increase works. They no longer, at the same relatively, that they once were. Now, that presents fertile ground for someone to come in and say why I think they should all change the way they operate.
Luis Izzo: I suspect we're going to hear some noise about that. That's something we're very actively watching for because if that is a discussion that happens, we need to be very clear representing employers that their voice is about how it should look like, I heard, because it could have some significant impacts in terms of the actual dollar amounts paid to employees.
Joe Murphy: One of the issues here is gender pay gap. That's not going away. That's an issue that's going to be one that the coalition is going to have to deal with even in this next three year term. It's not often the distance. It's not something that will one day resolve. It's an issue that's currently being played out in the commission through the equal remuneration case.
Joe Murphy: We're involved in that, of course. It will not be an issue that will go away. I think we might see a little bit more from the government around the gender pay gap. Then we've also seen, as Luis has already talked a little bit about, the Fair Work Commission doing this review, as he says about the awards, and reassessment about how those rates are paid.
Joe Murphy: We've actually sent a bit of movement in terms of award scope as well. The scope of awards, who they cover, because there are many people out there that think in award land that think everyone is covered by an award. As we know, not everyone is covered by an award and that means someone like Paul or Luis and I are subject to the minimum wage.
Joe Murphy: There should be a solicitor awards that I don't know. Someone has tried to get one up over the years for lawyers. Maybe we're not deserving of one, but I think that's another thing we need to watch in terms of the scope of awards or new awards might be something that come on, onto the radar. Because if the ACTU don't have a new piece of legislation to work with, they might start looking about, "Well, how can we start making things a nicer place?'
Luis Izzo: Precisely. I think, Joe, the other ... I think we may have some questions I see popping up on your radar we might need to come to.
Joe Murphy: Yes, we do.
Luis Izzo: Whilst Joe kind of assesses the questions coming in and hopefully pops them out, we cannot forget the role of the Fair Work ombudsman in this current industrial regime. It was conceived by John Howard as a child of the Work Choices Legislation. It was actually called the Office of Workplace Services.
Luis Izzo: It has been grown by successive Liberal and Labor governments year after year, budget after budget, term after term and they are everywhere. Their inspectors are in every metro area, their own regional areas. They're conducting audit trails through the middle build of New South Wales. Well, they've got their harvest audit campaign.
Luis Izzo: The FWO has been ... I think it's one of the few areas that Labor and Liberal ground is unanimous support for the role of the FWO. Unanimous increases in funding for the FWO to enable them to continue to pursue underpayment claims and ensure employers are not effectively being remiss in their payment obligations, and that's not going to stop.
Joe Murphy: Look, for me, they do sometimes have a contraction of funding in particular areas. Generally, we've seen overall growth year on year. I think just coming back to, for example, the harvest campaign that they had, they recovered over $1 million in wages in that harvest campaign.
Joe Murphy: They also team up with other government agencies. The migration agency, in some cases, the federal police, you'll find in jurisdictions where they have labor hire licensing regimes like Queensland. Even those agencies, the Department of Industrial Relations, in this case in Queensland, get involved. You see a collaboration of agencies. They're very coordinated. They're very sleek and they do a pretty good job.
Luis Izzo: Yeah. I think the message on the ombudsman front to employers that are listening is the best way of addressing a matter is to ensure you are ... I think it's two things. One is proactive and the other is cooperative.
Luis Izzo: If you are proactive, that is when a matter comes in, don't sit on it. You've got to do some calculations about whether you've underpaid or not. Don't put in the too hard basket. Get on top of it early and be seen to be cooperative with the ombudsman. Respond to their request for information. Consider the issues they've raised.
Luis Izzo: Cooperative does not mean just put up the website and say, "Okay, whatever you say we'll do it." That's not necessarily the case. If you disagree with a calculation or with a particular entitlement, absolutely you can raise it, but you want to be seen to be doing is considering the matter seriously, taking an advice on the matter to ensure that your interpretation is correct and engaging with them regularly to let you know what you're doing, how you're reviewing any particular complaint.
Luis Izzo: Where we see employers fall down and end up the subject to prosecution is where they have been lax, were they've almost been recalcitrant in their dealings with the ombudsman. It's just about proactive engagement in my view.
Joe Murphy: Look, it is and it does bring me to some of the things that this government or certainly the coalition government has done the last six years including the vulnerable workers bill where they made certain offenses subject to 10 times the penalties that were under the act at the time. It was $63,000 per breach. That went up to $630,000 per breach or $112,600 for individuals or $126,000 for individuals involved in that.
Joe Murphy: That was focused at the time on the franchise regime around the country, but also some other penalties in relation to other offenses. The Fair Work ombudsman was also given a range of bolstered powers around compelling individuals to give evidence or attend interviews and answer questions. Say for legal professional privilege being one of the only saving grace is in that process for individuals worried about being exposed personally.
Joe Murphy: You will find individuals in these businesses that are exposed personally, but always get advice if you have any doubt about it. I think where the ombudsman is concerned, it's a good idea to get advice if you've received a notice. Don't sit on it as Luis says. Get some advice.
Joe Murphy: The other thing is that the coalition government also been talking again about expanding the Fair Work ombudsman's powers so that they mirror the ACCC for example and their ability to gather evidence. Let's watch that space as well in terms of further expansion of powers.
Joe Murphy: It's interesting today we've talked about a whole range of things that the coalition government are going to do even though everyone thought they didn't have a policy or a platform from an industrial perspective. They certainly do have a whole range of things they're already looking at. Some of them have some synergies with a lot of the Labor party platforms just not on the same scale.
Joe Murphy: Now, just going to some of our questions Luis, one of the questions is haven't ERO claims already been heard and rejected in relation to early childhood educated teacher wages on the grounds of old stats and other seasons. In one respect, yes.
Luis Izzo: Yeah. Thank you for the question. Just to paint the ERO picture, there were two claims. One was by the United Voice in relation to childcare workers. One was made by the IEU in relation to educators.
Luis Izzo: The United Voice claim was dismissed. The way the claim was formulated was effectively the commission founded was not capable of being heard because the way they had formulated the claim didn't fit really with the legislation or the legislative test.
Luis Izzo: The IEU claim is live. The IEU claim relates to educators. When I say educators, there is the teaching qualified educator in the childcare center, which my high level understanding is one ... A requirement for one at least in every centre. That is progressing. There's likely going to be a hearing in about four to six weeks time on that. The hearing is going to go for a month.
Luis Izzo: Attached to that claim, it's both an argument that the sector is underpaid traditionally by reference to or by comparison to other more male dominated industries. Also that the work value attached to the work is not being matched by the current wage rate. That's why we're talking about a wage increase in that sector. For the question, I know it hasn't gone away.
Joe Murphy: Luis, just quickly another question we've got here is when is your perma-flexi case being heard?
Luis Izzo: Good question again. The application has been filed in a pilot award. The social community healthcare disability services sector. Any employers who are in that sector and interested in what we do in this place, please reach out to us. We love to hear from you because we're putting together evidence in relation to that matter.
Luis Izzo: We've already had initial directions. We're looking to file evidence in approximately three to four months in support of that claim and then likely there will be an opportunity for the unions that have indicated their opposition to the claim to file their materials. We probably not going to see here until early next year.
Joe Murphy: Okay. Thanks Luis. Another question here. Steve, thank you for the question. Sorry if this has been covered and I missed it, but for matters that have potential social policy implications, could it be the case that the Fair Work Commission has delayed decisions pending the outcome of the federal election? If so, can we expect those delayed decisions may start to be released now?
Joe Murphy: No, I never suggest the commission would delay decision purely on the basis of an election. Yes, you might find ... Steven, I know you're interested in the outcome from the Supported Employment Services Award decision. We will probably see that come out in the coming six months. Maybe a little bit earlier. Let's see.
Joe Murphy: Another question is I have casual employees who do not ... Long term casual employees who do not wish to convert to permanent. The 25% loading is 5% high than the financially neutral compensation for leave compared to permanent rates. These employees want to be casual so that they can take as much leave as they like when they like. That is, for example, parents.
Joe Murphy: Can I force them to convert to permanent to avoid these issues with regards to long term casual employees? Short answer no, but let's talk about it a bit.
Luis Izzo: Yeah. I think your issue there is if you keep them on gauge these casuals long term, the likelihood of a claim right now, very low. The likelihood of the claim six months, low. Where are you going to see the claim? The claim is for some reason, the relationship sours.
Luis Izzo: You might dismiss someone for misconduct. You might make them redundant because you no longer need them. At the point of termination, one of those employees might turn around and say, "Actually, I'm not very happy that I'm now being let go. It doesn't look like I've got a great unfair dismissal claim. The go and see the lawyer and the lawyer says, "Don't worry about bringing unfair dismissal. Just suit for your back pay and leave entitlements. You've been permanent all along.
Luis Izzo: Where we'll like to see exposure is once the relationship changers or sours, there's a termination event. That's exactly what happened in the Skene and WorkPac case and that's where you're exposed.
Luis Izzo: There's probably only two things you can do to try and address that. One, try and do as much as you can to keep the arrangement reflective casual engagements. Does your contract have the right type of wording in it? Does it talk about the contract deploying to each engagement? Then the employment commences and finishes at the end of each engagement.
Luis Izzo: Does your contract have a casual loading clause that has put you in the best possible position to recover any overpaid casual loadings? What we're working with clients on at the moment is drafting clauses that make it clear that the amount being paid for the casual loading is not just in lieu of annual leave and personal leave. They're the types of matters we've already seen today, but it goes further.
Luis Izzo: It says that the loading is paid on the basis that the parties have understood that the employee is casual at law. It's only payable for that reason and on that basis. The reason we're putting that in is if you are subject to one of these clients for back pay and leave entitlements, you can then respond with quite an effective counter claim to say, "Well, hang on, maybe you are permanent. Maybe I owe you this leave entitlement on the one hand, but I paid you a casual loading in error. It was only payable on the basis that you're casual. Accordingly, I'm going to recover that through principles of unjust enrichment that are available through the court system."
Luis Izzo: They're the types of things we're working on contractually. The other thing is casual conversion. Why not offer it? If they reject it, that doesn't determine whether they're casual or not, but at least it reinforces that the parties have yet again turned their mind to the issue and almost reinforced the casual arrangement.
Luis Izzo: You've tried to convert them under an instrument and have failed. That didn't happen in the Skene and WorkPac case. I don't know Joe, is your view to the court could have taken a different approach?
Joe Murphy: Look, I think you've covered off on contracts. If there had been a well drafted contract in place, that would have helped. If there had been a discussion, a recorded discussion or some sort of documentation around in converting to full time or part time depending on what his hours were at the time. I think it was full time at the time.
Joe Murphy: Then absolutely, there's every chance there could have been a different outcome there. If they had that ability to set off the payments made against the payments that he was claiming, then you've got a whole range of reasons why an individual is discouraged against making a claim.
Joe Murphy: You've got a contract that's well drafted. It's got the right casual characterization. It's got the right set off arrangement in it so that if you do have that claim later on, you can use those clauses to the best of their ability. It's not 100% outcome, but it puts you in the best place.
Joe Murphy: I think the theme is make sure you got good contracts. Make sure you give serious consideration to this issue of casual conversion. Casual conversion for many employees is your friend. I do find the very vast majority of employees I speak to that have the casual conversion discussion with their employees and documented. Those employees are not particularly willing to have the pay cut.
Joe Murphy: The question we just had was ... Well, these people don't want to take the pay cut because they like getting 25% extra. Most employees don't want to take a 20% pay cut, so they say, "No. We do not want that. You want that documented. You want it very clearly stated in the document. We use standard forms that we prepared. They provide a provision for the individual to decline and sign it saying, "I've declined the offer."
Joe Murphy: Now, we get it, there are some industries where you just think, "Look, I just don't want to risk it. I can't put someone on full time. The uncertainty of the contract I have with my principal contractors just means that I don't want to get involved to that. I get it, but for the vast majority of employers, I actually think that this casual conversion process is an opportunity to provide yourself with an ability to defend it.
Joe Murphy: Luis, in summary, if they had the contract and they had the casual conversion discussion at least documented, that would have been much, much better place. Much better place. We do have a few more questions here with the CFMU. What implication will this have on ABAs for this year around the country? The CFMU have not entered into negotiations for ABA due to the election. How will result now help employees in this industries?
Joe Murphy: That's really interesting because we had a range of unions not just around ABAs, but around award matters and other discussions in other industries, not just the CFMU saying, "Look, we'll see you guys in about three month's time. We don't want to have discussion." We will see them reengage in that respect.
Luis Izzo: I heard a client just yesterday say to me, "The standard CFMU approach these as 12 month terms only." I think that was because they were expecting a change of government and new laws to come in next year. I don't necessarily think that will be the standard approach anymore.
Luis Izzo: You're right. It's not just the CFMU, but absolutely, there's been a deferral of bargaining in the hope of a different system. I think they're going ... As we said at the beginning, I think there will be subdued period of activity for a few months whilst the union movement takes stock. They've all worked very hard on the current election campaign. They deserve a break.
Luis Izzo: I think they're going to come out of that and then just business as usual, back to it and that's when I think the push for 12 month terms, I don't think that will be as bigger thing anymore. Equally the deferring of bargaining, full stop. I think they'll re-enliven bargaining, perhaps with renewed vigor.
Joe Murphy: I think so, but I think one of the last things I like to say as we come in to the last couple of minutes, Luis, is that I think employers need to be thinking about this being an opportunity for collaboration. Perhaps the next three years of industrial relations, workplace relations to be one where maybe to the two halves can come together in a more constructive way under the current regime, which of course was put in place by the current industrial regime. Put in place by the previous Labor government. Really try and work together in a more constructive way.
Joe Murphy: The unions are not the enemy. I know there are some work sites and some employees that it is an enemy situation. It is very adversarial. They're there to help their members and their members ... By helping their members, if they help the employer run a bit of workplace that's safer, more profitable and a happier place to work, then that's a good outcome for their members.
Joe Murphy: There's a real opportunity here, I think, for the coming three years both for the government and for employers at large to really try and engage in a more constructive way. Your views, Luis.
Luis Izzo: Absolutely. I think we always talk about the way in which you can improve your workforce culture. It's a big deal for our CEO. He does a lot of training in relation to frontline leadership and cultural engagement. Improving productivity at large is not done by just black and white rules, it's about having a cultural shift and part of that has to be a level of engagement and cooperation.
Luis Izzo: The union movement and their members feel like they are participating in decisions of the workplace. They are being heard even if the outcome isn't one that they like. At the end of the day, we don't always get outcomes we like. I couldn't commend that approach more.
Joe Murphy: Well, that brings us to the end and thank you all for tuning in. The recording will be made available as it normally is. There's a range of things that we can help you with if you ever are interested in Luis or I or one of our team, a very large team up and down the Australian East Coast helping you out. Our numbers are easily available on our website, easily accessible.
Joe Murphy: We do these webcasts about once a month. We run training courses. We do training courses in Melbourne, Sydney, Brisbane, Newcastle and a range of regional areas when we have clients who are interested in having seen those regional areas a couple of times a year down in the Murray River Area and up in the Northern Rivers - where we have planes will travel! We have been known to travel to other states. We regularly head over to South Australia as well.
Joe Murphy: We have all the usual box and dice that you need, so feel free to reach out to us if you ever need a hand in this space, but let's wait and see what happens in this coming three years. It's going to be an exciting time. Thank you.