Implications for employers following the 2019 Federal Election

Now that employers have been given some time to digest the, according to the polls, unexpected result in Australia's 2019 Federal Election, many are still left questioning — what does the Coalition victory mean for the industrial relations and employment law landscape?

The Coalition Government's industrial relations policies were limited in terms of changes, with the primary focus being on strengthening the existing system. In the future, it is likely that changes will be broader, with the newly appointed Industrial Relations Minister, the Hon. Christian Porter MP, launching a major review of the national industrial relations and employment law framework.

Here we outline the implications that employers need to be aware of following the recent election.

Casual Employees

The way in which employers manage and facilitate the employment of casuals is on the Coalition Government's agenda for change. The decision in Workpac v Skene [2018] FCAFC 131 raised concern throughout the business community, principally that casual employees may be able to 'double dip' into casual loading and then claim annual leave entitlements. The Coalition has previously acted to clarify this, implementing the Fair Work Amendment (Casual Loading Offset) Regulation 2018 to offset casual loading from other entitlement claims, such as annual leave. This issue is likely to be the dominant focus of the upcoming review.

It is expected that the Coalition government will move to further its casual employment agenda by reintroducing the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 (Cth) to legislate the right for all casual workers to request to become permanent workers after twelve months of regular and continuous employment (there is a model casual conversion provision in most modern awards, including a modified version). The Bill was introduced by the former Industrial Relations Minister, the Hon. Kelly O'Dwyer MP, but has since lapsed. This will likely be up for parliamentary action.

Paid Parental Leave

The Coalition Government has also made a clear stance on the paid parental leave scheme. It has maintained that it will implement legislative changes to allow parents to take government-paid parental leave in smaller six-week blocks, to be used over the course of a two-year period, rather than the single 18-week consecutive period.

Worker Exploitation

Additionally, in March 2019, the Migrant Workers Taskforce Report was released, which investigated ways to improve the systems of protection for migrant workers. The government accepted, in-principle, all 22 recommendations included in the Report, and announced several measures in the 2019-2020 Budget to respond to these recommendations. Accordingly, it is expected that the Coalition Government will attempt to introduce criminal sanctions for exploitative conduct against migrant workers that is clear, deliberate, and systematic. The government has also promised to improve resourcing for the Fair Work Ombudsman (FWO) to ensure that it has appropriate powers and tools to effectively address worker exploitation.

Sham Contracting

The Government has also signalled a commitment to introducing tougher penalties for sham contracting, including by providing further funding to the FWO to establish a dedicated sham contracting unit.

Labour Hire Licensing

Following the implementation of the Queensland and Victorian labour hire licensing schemes, the government is investigating the possibility of introducing a National Labour Hire Registration Scheme. This scheme would focus on 'high-risk sectors' including horticulture, meat processing, cleaning, and security. The proposed scheme would make it mandatory for labour hire operators in those industries to register with the scheme, which would impose regulatory obligations on the operators to regularly report. It is proposed that, to be granted and maintain a licence, labour hire operators will need to show that they are complying with the Fair Work Act, health and safety legislation, as well as their superannuation, taxation, and, if applicable, immigration law obligations.

Enterprise Agreements

The review announced by the new Industrial Relations Minister, the Hon. Christian Porter MP, will also closely examine the current framework for enterprise agreements, specifically the 'better off overall test.' The 'BOOT' is the present test that an enterprise agreement must satisfy before receiving approval from the Fair Work Commission (FWC). The review will seek to reinforce recent legislative amendments that allow the FWC to look more broadly at the substance of an agreement when making a determination.

Practically, this will likely mean that the FWC can overlook minor technical and procedural errors in enterprise agreements when granting approval. Further, the review will seek to identify ways that the FWC can streamline and speed-up the approval process.

Religious Freedoms

Looking towards the future, there are a raft of changes that may be introduced by the government. In 2018, the findings of an inquiry into religious freedoms was released, of which the government accepted 15 of the 20 recommendations. The government endorsed the development of a dedicated piece of legislation to enshrine protections for religions and to establish a Religious Freedoms Commissioner.

This particular issue has become extremely topical in light of the Israel Folau and Australian Rugby Union proceedings.

National Inquiry into Sexual Harassment

The current National Inquiry into Sexual Harassment in Australian Workplaces is being conducted by the Sex Discrimination Commissioner, Kate Jenkins. The Inquiry commenced in June 2018 and is the first of its kind in the world. It is proposed to operate for 12 months, with the intention of investigating, among other things, the drivers of sexual harassment in the workplace, and the effectiveness of current laws and policies to address it.

When the findings of the Inquiry are released later this year, it is expected that many of the recommendations will be adopted by the government and will likely receive support from all sides of the political divide.

Whistleblowing

From 1 July 2019, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 commenced. For employers, this means that whistleblowers no longer need to reveal their identity before they can receive the benefits of the legislative protections. The following points are also of importance to the business community:

(a) Whistleblowers covered by the protections cannot be liable for any civil, criminal, or administrative liability arising out of the making of the disclosure, which also includes disciplinary action. Also, no contractual or other remedy can be enforced against the whistleblower on the basis of the protected disclosure.

(b) Prohibited victimisation of whistleblowers, meaning conduct that causes detriment to an eligible whistleblower, is an offence. The offence of victimisation also covers persons other than the whistleblower themselves, such as the person who receives or investigates a disclosure. What constitutes detriment? Detriment has been defined to include, but not be limited to, matters such as the dismissal of an employee, damage to reputation, and alteration of an employee's position to their disadvantage.

If an employer meets the definition of a large proprietary company, then they are obliged to have a whistleblowing policy. If a company satisfies at least two of the following criteria, it is considered to be a large proprietary company:

1. Consolidated revenue for the company, and any entities it controls, of $50 million or more in the company's financial year; or
2. Consolidated gross assets value of $25 million or more for the company, and any entities it controls, at the end of the company's financial year; or
3. The company has 100 or more employees at the end of its financial year.

Modern Slavery

From 1 January 2019, the Federal Modern Slavery Act 2018 came into effect. The Act essentially provides that reporting entities must provide a statement that deals with how their organisation is ensuring that they are not contributing to modern slavery. The following are reporting entities under the Act:

a. An entity that has a consolidated revenue of at least $100 million for the reporting period, if the entity: i. is an Australian entity at any time in that reporting period; or ii. carries on business in Australia at any time in that reporting period.

b. The Commonwealth.

c. A corporate Commonwealth entity, or a Commonwealth company, within the meaning of the Public Governance, Performance and Accountability Act 2013, which has a consolidated revenue of at least $100 million for the reporting period.

d. An entity which has volunteered to comply with the requirements of the Act.

If your organisation is a reporting entity for the purposes of the Act, then you must prepare a modern slavery statement, and that statement must include, among other things, the following:

1. the identity of the reporting entity;
2. a description of the structure, operations and supply chains of the reporting entity;
3. a description of the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls;
4. a description of the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to assess and address those risks, including due diligence and remediation processes;
5. a description of how the reporting entity assesses the effectiveness of such actions;
6. a description of the process of consultation with: (a) any entities that the reporting entity owns or controls; and (b) in the case of a reporting entity covered by a joint statement, the entity giving the statement; and
7. any other information that the reporting entity, or the entity giving the statement, considers relevant.

The NSW Government has also passed the Modern Slavery Act 2018 (NSW); however, it is yet to commence and was recently referred to a parliamentary committee. It is unclear when this Act will commence and whether there will be substantial changes to its current content.

What do all of these proposed changes mean for employers?

The prevailing effect of the Coalition's election victory is the need for businesses to understand the current changes to the law, as well as those expected in the future, and how these changes could impact the management of their workplaces.

In summary, employers will need to:

1. be conscious of their long-term casual employees, and the implications to their business of the casual conversion proposal and Workpac v Skene;
2. regularly address workplace culture and be clear on their practices and policies — this will include how they handle the sensitive issue of religious freedoms, how they manage and prevent occasions of sexual harassment, and how they deal with whistleblowers; and
3. be mindful of their employment arrangements with migrant workers, contractors, and potential labour hire workers to not just be compliant, but to also be proactive in their actions as law abiding corporate citizens.

The Coalition's term in government is at a time when employers should be keenly aware of their shifting legal, regulatory, and ethical obligations, where they will need to increase their focus on the employment arrangements they enter into, and the protections in place for their employees.