By a 5 to 2 majority, the High Court this morning dismissed the States' and unions' challenge to the constitutional validity of the Work Choices amendments to the Workplace Relations Act 1996. (See New South Wales v Commonwealth of Australia; Western Australia v Commonwealth of Australia [2006] HCA 52 (14 November 2006).)
The majority (Chief Justice Murray Gleeson and Justices Bill Gummow, Kenneth Hayne, Dyson Heydon and Susan Crennan) rejected the challenges to both the central features and specific aspects of the legislation and upheld Work Choices in its entirety.
Justices Michael Kirby and Ian Callinan dissented, each finding Work Choices wholly invalid.
The federal government yesterday announced some significant changes to the Work Choices legislation and regulations.
Overview of changes
The proposed amendments will:
- permit the cashing out of personal/carer’s leave in certain circumstances;
- cap the accrual of annual leave and personal/carer’s leave;
- protect redundancy entitlements in workplace agreements for up to 12 months after the termination of the agreement;
- alter the payment rules for personal/carer’s/compassionate leave and for leave for pregnant mothers for whom no safe job is available;
- afford employers the right to stand down employees where work is unavailable due to circumstances outside the employer’s control; and
- further amend the record-keeping requirements.
The changes are to be implemented as soon as possible. The amendments to the regulations (which will affect record keeping requirements) may be effected by the end of this year. The majority of the amendments necessitate changes to the Act, which may not occur until early next year.
Impact on employers
Employers will need to familiarise themselves with the changes, in particular those relating to record-keeping requirements.
Cashing out personal/carer’s leave
The cashing out of personal/carer’s leave is currently prohibited. The proposed changes would allow employees to cash out accrued personal/carer’s leave, provided that the employer and employee have agreed in writing and also that (for a full-time employee) the employee has at least 15 days of personal leave remaining after cashing out. Hence, in effect, employers would have the right to refuse the cashing out of personal leave.
Currently, the cashing out of annual leave is only possible under a workplace agreement. It is unclear whether this would also apply in respect of cashing out personal leave. We will have to await further information from the Government in this regard.
Accruing annual and personal/carer’s leave
The proposed changes will alter the accrual of annual and personal/carer’s leave under the Australian Fair Pay and Conditions Standard (AFPCS) so that paid leave will not accrue for hours worked above 38 hours per week.
Protection of redundancy entitlements
One of the proposed changes will allow redundancy entitlements in agreements to continue to apply for up to 12 months if an agreement is terminated by an employer who:
- unilaterally terminates a workplace agreement after its nominal expiry date has passed on 90 days’ notice; or
- successfully applies to the Australian Industrial Relations Commission for an agreement to be terminated, where it is not contrary to the public interest.
The changes will affect both workplace agreements made under Work Choices and pre-reform agreements. The preserved redundancy entitlements will cease if a new workplace agreement is lodged within the 12 month period and will only apply to employees employed at the time the agreement was terminated.
Employers will be obliged to notify employees that their preserved redundancy entitlements continue where an agreement is terminated. Preserved redundancy entitlements will also bind a new employer on a transmission of business.
Payment for personal/carer’s leave etc
In respect of personal/carer’s leave, compassionate leave and leave for pregnant employees for whom a safe job cannot be found; the AFPCS currently entitles employees to be paid the amount they would reasonably have expected to have earned had they been at work (this might include, for example, rostered overtime, commissions, penalty rates, shift allowances etc).
The proposed amendment will entitle employees to be paid only their basic periodic rate of pay when on leave (ie, as payment of annual leave under the AFPCS is currently calculated).
Right to stand down employees
One problem with the legislation in its current state is that, unless an industrial instrument expressly provides otherwise, employers are usually unable to stand down employees where work is unavailable due to factors outside the employer’s control. In effect, this can mean that an employer has to either continue to pay employees when there is no work or dismiss them. One of the proposed amendments targets this issue.
Amendments to record-keeping requirements
The record-keeping requirements imposed on employers by the legislation have caused concern amongst business. In particular, concerns have been raised over the requirement to record an employee’s total hours worked and start and finish times. The government responded and amended the Regulations in September to limit the types of employees for whom these records must be kept (in particular, limiting its application to employees earning less than $55,000 per annum).
Further amendments are proposed to reduce the administrative burden placed on employers. Employers will only be required to record those hours for which an employee is entitled to overtime or penalty rates. However, employers will still be required to record hours for all casual and irregular part-time employees, where they are paid on an hourly basis.
The grace period afforded to employers to comply with their record-keeping obligations continues to apply and they cannot be prosecuted for breaches of the record-keeping and payslip requirements until after 27 March 2007.
For further information, please contact Louise Houlihan on +61 3 9608 2273 or l.houlihan@cornwalls.com.au
or Jane Lawler on +61 3 9608 2109 or j.lawler@cornwalls.com.au
