Since the introduction of WorkChoices on 27 March this year, there have been some further amendments to the legislation on the eve of the High Court Decision being handed down.

High Court Challenge

On 14 November, the High Court dismissed the states’ and unions' challenge to the constitutional validity of the Work Choices amendments, upholding the legislation in its entirety and rejected the challenge to the legislation and also threw out the challenges by the states and unions to particular parts of WorkChoices. This decision allows employers to continue under WorkChoices as is but it could be a whole different world if the Labour Party are voted in at the next election.

Amendments to WorkChoices

On 13 November, the Federal Government announced several amendments to the Workplace Relations Act and the Workplace Relations Regulations. While there have been previous amendments to the Regulations, it is the first substantial amendment to the Act, since WorkChoices commenced in late March.The exact detail of the amendments has not been released but here is a summary of them.

Record Keeping of Hours Worked

The amended Regulations will require that records of hours worked only need to be kept in relation to time when an employee is entitled to overtime rates or penalty rates and in relation to casual employees and irregular part-time employees. I assume that the same will apply to keeping records of start and finish times. Penalties will apply for failure to keep appropriate records after 27 March 2007. We already have this in place due to our Kronos time and attendance system and therefore fully comply with the requirements.

Personal and compassionate leave payments: penalty rates etc will not apply

The government has announced that it will introduce legislation to amend the Act, to provide that an employee’s basic rate of pay will apply during periods of paid personal leave or compassionate leave. That is, overtime payments, penalty rates and other loadings will not apply – at least under the Fair Pay Standard (the position could be different under an award or agreement). This is consistent with the position relating to annual leave under the Fair Pay Standard.

Stand-down without pay to be provided for in legislation Another amendment to the Act foreshadowed by the government will provide that employers may stand down an employee without pay if it is not possible to provide the employee with work, due to circumstances beyond the employer’s control. This might occur because of industrial action upstream or downstream in the supply chain, the breakdown of machinery, or perhaps natural disasters such as the cyclones or floods.

Historically, many industrial awards and agreements provided for the stand-down of employees without pay. However, there was some doubt about how these provisions interacted with the Fair Pay Standard which provided that employees must be paid for all nominal hours, even if they are not worked, unless unpaid leave is taken. The new stand-down provision will remove this doubt, providing a legislative entitlement for employers to stand down employees without pay in certain circumstances.

Redundancy pay obligations outlive terminated workplace agreements As you may recall, once a WorkChoices workplace agreement is terminated the employer and employees will revert back to the Fair Pay Standard, plus any applicable protected award conditions. This led to a concern that some employers might unilaterally terminate their workplace agreements immediately before announcing large-scale redundancies, therefore minimising their obligation to make redundancy payments to employees.

The Government has announced that the Act will be amended to avoid this possibility, by providing that redundancy pay obligations in workplace agreements will continue to apply for 12 months after the workplace agreement is unilaterally terminated by the employer, unless a new workplace agreement is made with the employee(s). Again, the details are yet to be seen, but the Government states that this will apply to pre-reform agreements and WorkChoices workplace agreements, and only in relation to employees who were employed at the time the agreement was terminated.

Employers and employees can agree to cash out personal leave

Another amendment will allow employers and employees to agree to ‘cash out’ accrued personal/carer’s leave, as long as the employee retains at least 15 days’ leave for use in case of illness or injury, or to care for family/household members. This new rule will only apply to leave accrued since WorkChoices commenced. Pre-reform personal leave can be cashed out under a WorkChoices agreement at any time. It remains to be seen whether many employers and employees will avail themselves of the opportunity to cash out personal leave. Many employees see personal leave as a form of insurance, in case of long term illness or injury – but the opportunity to obtain payment without taking the leave may be attractive. For employers, the reality is that most employees do not use all of their personal leave, and accounting standards do not require a 100% accrual for this contingent liability. Depending on the circumstances, there may or may not be an economic case for employers to agree with employees to cash out accrued sick leave.

Extra leave will not accrue when additional hours are worked

Another criticism of WorkChoices made by some employer organisations was that it was arguable that when an employee worked additional hours the employee would accrue additional annual leave and personal leave. This meant that an employee with ordinary hours of 38 hours, who works regular overtime, would be entitled to more annual leave each year than employees who did not work regular overtime. The government has announced that the Act will be amended, to remove this possibility, to provide that annual leave and personal leave accruals will be based on an employees’ ordinary hours.

Submitted by: Tony Lines – employee relations manager, Warner Village Theme Parks and AALARA board member

Information Sources: Minter Ellison IR news updates and Workplace Info