Workplace Relations Update

Contents

• Reminder to employers: increases to rates of pay

• One step closer to paid parental leave: Productivity Commission Draft Inquiry Report

• Corporations can access the Independent Contractors Act

• Update on the preservation of State industrial laws

Reminder to employers: increases to rates of pay

Employers are reminded that the 2008 decision of the Australian Fair Pay Commission came into operation from the first full pay period to commence on or after 1 October 2008 (see our July 2008 workplace relations update below)

Update July 2008 click here

If you have any queries as to the application of these increases to your individual business or Workplace Agreement, please contact one of the Gadens Lawyers' workplace relations team.
By Michael Cooper

One step closer to paid parental leave: Productivity Commission Draft Inquiry Report

On 29 September 2008, the Productivity Commission released its draft Parental Support Inquiry Report (Report) in response to the Federal government's request to assist it consider how to improve support for parents with newborn children, ensure economic growth and respond to the ageing population.

The Report contemplates a significant overhaul of the Australian welfare system with respect to child and maternal welfare payments and makes a number of recommendations based around three objects. The objects are child and maternal welfare, labour force attachment and work/life balance and gender equity. Relevantly for employers, these include:

1. The introduction of a government funded statutory paid parental leave scheme that provides employees with:

• 18 weeks' paid parental leave capped at the adult minimum wage (being $543.78 per week from 1 October 2008) which can be used by either parent, so long as they are the primary care giver for the child, with restrictions around when it can be taken;
• an additional 2 weeks' paid parental leave for the eligible partner of the mother of the child on a 'use it or lose it' basis;
• statutory superannuation to be payable on the paid parental leave (which is to be funded by the employees' employer) subject to satisfying eligibility criteria; and
• fathers and same-sex partners can take two weeks of paid leave at the same time as their partner.

In order to qualify for paid parental leave the employee must be entitled to unpaid parental leave under the NES (see our August 2008 workplace relations update below)

Update August 2008 click here

This essentially means these employees must have had 12 months' continuous service and have been working at least 10 hours per week; and

2. An employee's employer is to pay the employee the paid parental leave, and receive a 'speedy reimbursement' from the government.

The Report is not finalised and is subject to change. There is some debate now as to whether the introduction of paid parental leave will be deferred given the current economic climate. If the Federal government elects to go ahead with the introduction of a paid parental leave scheme, significant legislative change will be required.

The Productivity Commission's final report is expected to be released by February 2009. We will keep you updated.
By Kathryn Dent and Michael Cooper

Corporations can access the Independent Contractors Act

Since the commencement of the Independent Contractors Act 2006 (IC Act) on 1 March 2007 (see our March 2007 update below), there have been very few decisions which have considered the application of the IC Act. However, a recent decision of the Federal Magistrates Court of Australia has found that certain corporations can seek relief under the IC Act where the directors of the contractor corporation are the individuals performing work on behalf of the contractor corporation.

Update March 2007 click here

The claim

In September 2005, ABB Warehousing (NSW) Pty Ltd (ABB) entered into a contract with Fabsert Pty Ltd (Fabsert).

ABB subsequently terminated a contract with Fabsert in August 2007 without any notice of termination, although Fabsert 'stayed on' for a period of one week to handover the warehouse management business (the services being provided) to the new warehouse manager.

Fabsert sought damages under the Trade Practices Act 1974 and the IC Act for an additional $20,000 payment, which Fabsert alleged was promised during discussions for the provision of services. Fabsert also sought an order of compensation for reasonable notice for the termination of the contract. Fabsert was only successful in the claim for reasonable notice in the amount of 12 weeks' notice.

The IC Act

Importantly, the court considered whether the IC Act applied to the contract between Fabsert and ABB. In order for the IC Act to have any application, the work performed under the contract must be wholly or mainly performed by a director of the company, or a member of the family of a director of the company.

The court held that although Fabsert engaged a casual pool of labour to perform duties, the contract between Fabsert and ABB was for warehouse management services (and not for the labouring component of the work performed in the warehouse). A complication in this case was that whilst one of the directors had performed work for the entire duration of the contract, the other director had only been a director for 1/5^th of the contract (and had been an employee of Fabsert for the remainder of the period of the contract). The court held that substantially more than half of the work performed under the contract had been performed by a director, so the court had the jurisdiction to deal with Fabsert's claim.

Implications for employers

The decision of the court is a timely reminder that parties to a contract should ensure that the contract has a termination clause which specifies a period of notice. The decision also highlights the need for parties to a contract for the provision of services to monitor who is performing work under the contract, and whether the people performing work under the contract are directors of the company performing the services, in which case the IC Act may have application.
By Kathryn Dent and Michael Cooper

Update on the preservation of State industrial laws

Further to our April 2008 workplace relations update (see below), a recent decision of a full court of the Federal Court of Australia has cast uncertainty on whether a State industrial law (such as the Annual Holidays Act 1944 (NSW) (AH Act)) is preserved as a notional agreement preserving a State award (NAPSA).

Update April 2008 click here

The decision was a result of an appeal by Citigroup against a decision of the District Court of New South Wales which ordered Citigroup to pay a former employee, Mr Mason, $57,245.63 plus interest and legal costs.

The main issue before the District Court was whether Mr Mason was entitled to receive his annual holiday pay in accordance with the Workplace Relations Act 1996 (WR Act), or the AH Act. Under the AH Act, Mr Mason's annual holiday pay would have included bonuses and commissions (in some circumstances), whilst under the WR Act, Mr Mason's annual holiday pay would not have included bonuses and commissions. The District Court ultimately found that Mr Mason's holiday pay should be paid in accordance with the AH Act.

Citigroup appealed the decision to the Federal Court, however by the time the appeal came to be heard, Mr Mason and Citigroup had come to an agreement that the appeal should be allowed and that Mr Mason's original application in the District Court should be dismissed.

This means that the Federal Court did not have an opportunity to consider whether the decision of the District Court of New South Wales was incorrect. The Federal Court did find however, that there was arguably an appellable error in the decision of the District Court.

Implications for employers

Unfortunately, the decision of the Federal Court does not provide any further clarity as to whether a State industrial law, including the AH Act, has been preserved as a NAPSA. We will keep you updated on any other decisions which consider this issue. In the meantime it would be prudent to ensure that if leave entitlements are being referred to "in accordance with applicable legislation" that it is made clear it is the legislation governing that entitlement at the time leave is taken or paid out on termination.
By Kathryn Dent and Michael Cooper

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.