FAIRWORKACTREVIEW
SUBMISSION OF
THECONFEDERATIONOFACTINDUSTRY
FairWorkActReview
FairWorkActReview
Introduction
- ThissubmissionisputforwardbytheConfederationofACTIndustryforconsiderationaspartofthe Fair Work Act review process.
- TheConfederationofACTIndustry(ConfACT),tradingastheACTRegionChamberofCommerceIndustry,isanemployerorganisationrepresentingapproximately650organisationsintheAustralianCapitalTerritoryandNewSouthWales. As such, ConfACT is the largest and strongest voice for business in the Australian Capital Territory region. MembersoftheConfederationaretypicallysmalltomediumsizedbusinessesorcommunityorganisations,withasmallernumberofmembersclassedaslargeemployers.
- ConfACTisaffiliatedwiththeAustralianChamberofCommerceIndustry(ACCI)and notes that ACCI has put forward a major submission to the Fair Work Act Review, incorporating the views of a number of Chambers of Commerce and industry bodies.
- ConfACT endorses the submissionsmadebyACCI. Thefollowingadditionalcommentsareprovided in relation to some elements of the Fair Work Act 2009 that are problematic in their operation.
GeneralProtections
- TheGeneralProtections provisions contained inPart3-1oftheFairWorkAct2009areintendedtopreserveanumberofworkplacerightsforpartiesincludingemployees,employers, andcontractors. TheGeneralProtectionsalsosetouttoprotecttherightofpartiestoundertakelegitimateindustrialactivities,andprovideotherprotections.
- Clearly,theGeneralProtectionsintheFairWorkAct2009gofarbeyondtheprovisionscontainedintheformerWorkplaceRelationsAct1996,aspartiesareprotectedagainstawholerangeofadverseactions,notmerelyagainstdismissal. Therangeofprotectionsthusprovidedislaudableasaobjective,butinpracticetheprovisionisflawed.
- WhiletheGeneralProtectionstheoreticallyprotectanumberofpartiesintheworkplacefromadverseactions,inpracticetheonlypartiesabletousetheprovisionsareemployeeswhonotifyGeneralProtectionsdisputesasacomplaintagainstanaction,orperceivedaction,oftheiremployerorformeremployer.
- AsubstantialdifficultyforanypartyfacingaGeneralProtectionscomplaint,andtherebyforcedtodefendtheiractions,isthereverseonusofproofrequirementsetinplacebySection361oftheFairWorkAct. Thereverseonusofproofrequiresthatanallegationispresumedtobetrueifapersonallegesthatanotherpersontookadverseactionagainstthemforsomeparticularreason. Theburdenofdisprovingtheallegationisplacedonthesecondpersonagainstwhomtheallegationismade.
- ThisisaveryrealproblemfortherespondentinanyGeneralProtectionsdispute.Frequently,theallegedmotivationforaparticularactionhasnoconnectionwiththerealbasisforthedecision. However,therespondentmaybesubjecttosubstantialfinesifheorsheisunabletorefutea(possiblybaseless)allegation.
- Itisacknowledgedthatthereisasoundbasisfornotrequiringtheallegedvictimofadverseactiontofullyprovethereasonfortheiradversetreatment. Therewillbeinstancesofgenuine(unwarranted)discriminationwhereadverseactionhasbeentakenforaproscribedreasonandthevictimofthatadverseactionhasnoproofofthereason. However,thecurrentwordingofthereverseonusofproofprovisionallowscompletelyunsubstantiatedallegationstoberaisedbyapersonwhonotifiesaGeneralProtectionsdispute.
- ItwouldbelogicalforapersonlodgingaGeneralProtectionsdisputetoproviderelevantevidencetosupporttheirclaim. Ifevidenceisnotavailableforanyreason, it is bothreasonableandappropriatefortheclaimanttoatleastsetoutthebasisforareasonablebeliefthattheadverseactioncameaboutforaparticular(proscribed)reason. AtpresentitisnotnecessaryforaGeneralProtectionsclaimanttosetoutanyreasonfortheirbeliefthat actionhasbeentakenagainstthemforaparticularreason;itissufficientfortheclaimanttosimplymakeageneralallegationwithoutanybasis.
Recommendation
- ItisrecommendedthattheFairWorkAct2009beamendedtoincorporatearequirementforapersonnotifyingaGeneralProtectionsdisputetoshowthattheyhavehadadverseactiontakenagainstthem,andtoeither
(a)provideevidencethattheadverseactionwastakenforaproscribedreason,OR
(b)setouttheirreasonforhavingagenuinebeliefthattheadverseactionwastakenforaproscribedreason.
PaymentofAnnualLeaveonTerminationofEmployment
- TheNationalEmploymentStandardsprovideforAnnualLeaveentitlementsforfull-timeandpart-timeemployees. Sub-Section90(1)setsouttherateofpaymenttowhichanemployeeisentitledwhentheemployeetakesaperiodofAnnualLeave. Sub-Section90(2)setsouttherateofpaythatshouldapplytothecalculationof thevalueofaccumulatedleavepaidoutthetheemployeeuponterminationofemployment.
- UnfortunatelythereisconsiderabledebateanddisputeoverthecorrectinterpretationandapplicationofSub-Section90(2),particularlyinregardtowhetherAnnualLeaveLoadingshouldbeincludedinthepayrateforcalculationofthevalueoftheAnnualLeave.
- ManyemployeeshaveanentitlementundertherelevantModernAwardorEnterpriseAgreementtobepaidanAnnualLeaveLoadingasanadditionalpaymentwhentheyproceedonaperiodofapprovedAnnualLeave. NotethatthisentitlementisnotcanvassedinanywayintheNationalEmploymentStandards,anditisnotpartofthepaymentforAnnualLeave. AnnualLeaveLoadingisastand-alonepaymentthatisonlypaidincircumstancesprescribedbytheModernAwardorEnterpriseAgreementthatcreatestheentitlement.
- ModernAwardswereauthorisedbytheAustralianIndustrialRelationsCommissionin2008and2009. TheAIRCconsultedwidelywithemployergroups,unions,andotherpartiesduringtheperiodwhentheModernAwardswerebeingformulated,andpastpracticesand “traditions” prevalentinparticular industrieswere,tosomeextent,recognisedinvariousModernAwards.
- Most,butnotall,ModernAwardsprovideanentitlementtoAnnualLeaveLoadingforanemployeeproceedingonapprovedAnnualLeave. However,thereisnouniformapproachtakeninModernAwardstotheissueofwhetherAnnualLeaveLoadingshouldbeincludedasaterminationpaymentinrespectofAnnualLeavewhichremainsunusedatthetimethatanemployee'sengagementends.
(a)SomeModernAwardsspecifythatAnnualLeaveLoadingisnottobepaidoutonterminationofemployment;
(b)SomeModernAwardsspecifythatAnnualLeaveLoadingmustbepaidoutonunusedleaveuponterminationofemployment;
(c)themajorityofModernAwardsaresilentontheissue.
- ItisapparentthattheAIRC,inmakingModernAwards,consideredtheissueofAnnualLeaveLoadingpaymentsonterminationofemployment,andincludedappropriateprovisionsinparticularModernAwardstakingintoaccountpastcustomandpracticeinvariousindustries,andotherrelevantfactors.
- TheFairWorkOmbudsman'sofficelastyearchangeditspositionontheinterpretationandapplicationofSub-Section90(2),andcurrentlyadvisesthattheSub-SectionrequiresthatAnnualLeaveLoadingshouldbeincorporatedintothepaymentfortheAnnualLeavepaidtoanemployeeontermination. Thisinterpretationcanbedisputedonanumberofbases,andIamaware thattheAustralianChamberofCommerceIndustryhasforcefullyputtheviewtotheFairWorkOmbudsmanthathisoffice'sadvicetoemployersandemployeesonthisissueisincorrect.
- Withoutgoingintothewholerangeoflegalarguments,theFairWorkOmbudsman'spositioncaneasilybeseentoproduceanabsurdoutcomeinthecaseofanemployeewhoiscoveredbyaModernAwardthatrequirespaymentofunusedAnnualLeaveLoadingupontermination. TheemployeewouldthereforereceiveanamountofAnnualLeaveLoadingupontheendingofhisemploymenttosatisfytheawardobligation. IftheOmbudsman'srulingisfollowed,thesameemployeewouldreceiveapaymentforhisunusedAnnualLeavewhichwascalculatedbasedonawageratethateffectivelyincorporatedtheAnnualLeaveLoading. Theemployeewouldthereforebe “entitled” tobepaidtwiceforhisAnnualLeaveLoadingupontermination;onceasadiscretepaymentofAnnualLeaveLoading,andagainthroughthepaymentoftheAnnualLeaveentitlementata “loaded” rate.
- InthisscenariotheemployeewouldactuallyreceiveagreaterpaymentforhisaccruedAnnualLeave(andLoading)as a terminationpaymentthanhewouldifhehadtakentheleavewhilestillanemployee. ThiswouldbeanabsurdoutcomethatsurelycannotbeavalidinterpretationofSection90oftheFairWorkAct.
- Regrettably,uncertaintyovertheproperinterpretationofSub-Section90(2)hasexistedforanextendedperiod,withtheresultthatemployersandemployeesareuncertainoftheirproperentitlementsandobligations. Itisourunderstandingthatsomeemployershave(quiteunjustifiably)beencoercedintomakingoverpaymentsthroughthethreatoflegalactionbytheFairWorkOmbudsman'soffice.
Recommendation
- ItisrecommendedthattheintendedapplicationofSub-Section90(2)beclarified,toindicatethatAnnualLeaveLoadingisnottobeconsideredasapartoftheemployee'swageforthepurposeofcalculatingthepaymentduetotheemployeeinrespectoftheiraccumulatedAnnualLeave. ItisourunderstandingthatthiscouldbeachievedeitherbyRegulationorbyamendingtheprincipalAct.
- Onothermattersnotspecificallyaddressedinthissubmission,wesupportandendorsethesubmissionsoftheAustralianChamberofCommerceIndustry(ACCI).
- Wethankthe Review Panel forthisopportunitytocontributetothe Fair Work Act Review process. I would be pleased to be contacted on (02)62835236,,toprovideanyfurtherinformationnecessary.
GregSchmidt
Director,WorkplaceRelations
ConfederationofACTIndustry
17February2012
Submission bytheConfederationofACTIndustrytotheFairWorkActReview