2021 Employment Law Forecast

After a tumultuous year, expect a number of significant changes in the workplace and industrial relations space in 2021. We anticipate changes in: IR laws, flexible working and returning to the office, employee remuneration: annualised salaries and criminalisation of wage theft, casual employees, Jobkeeper, WHS and the introduction of Covid vaccines.

Changes to IR Laws

Legislative changes to Australia’s industrial relations framework are set to occur in 2021 following the introduction of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (IR Omnibus Bill) by the Federal Government in December 2020.

The IR Omnibus Bill is the by-product of the ‘IR working groups’ chaired by Attorney-General and Minister for Industrial Relations, Christian Porter, established in June 2020 to investigate possible IR reform as a consequence of the impact of the pandemic on Australian workplaces.

The IR Omnibus Bill primarily addresses the following:

• as a response to the Rossato decision (discussed below), a new proposed definition of ‘casual employment’ (which focusses on how casual employees are engaged), as well as a mechanism to prevent casual employees ‘double dipping’ (more detail in our previous article);

• the criminalisation of wage theft;

• extending workplace flexibilities for eligible Modern Awards;

• simplifying enterprise agreement processes (including a controversial proposal to permit pandemic

• affected employers to negotiate short-term enterprise agreements with staff which do not need to satisfy the threshold ‘Better Off Overall Test’).

Further details to come as the IR Omnibus Bill progresses in Parliament. For more background information regarding the IR reform, see our previous article.

Flexible Working Arrangements and Returning to Work

The NSW Government repealed its Public Health Order permitting employees to work from home where reasonably practicable last December, however as cases of COVID-19 continue to fluctuate in NSW, employers are understandably cautious about forcing employees to return to work. Whilst we do not envisage the demise of the traditional office environment, increased flexibility and working from home arrangements will continue. Working from home considerations are also covered in our previous article here.

The likelihood of ongoing working from home arrangements, coupled with the increase in the number of employers with working from home policies, has led to the Fair Work Commission considering the formalisation of working from home arrangements in Modern Awards. One such example is the Clerks – Private Sector Award 2020 (Clerks Award). The Clerks Award contains “Schedule I”, which originally operated until 30 November 2020, but has since been extended to 29 March 2021.

Schedule I in the Clerks Award permits employers and employees to agree to flexible working from home hours. Specifically, the spread of ordinary hours for employees who are working from home by agreement has been temporarily extended, to between 6.00 am and 10.00 pm, Monday to Friday, and between 7.00 am and 12.30 pm on Saturday.

The Fair Work Act 2009 (Cth) (FW Act), prior to COVID-19, already made provision for specified categories of employees (such as employees with a disability or over the age of 55) to make a request for “flexible working arrangements”, which could only be refused by an employer on reasonable business grounds. We anticipate an increasing uptake of employees who fall within these recognised categories seeking to utilise the “flexible working arrangements” provisions of the FW Act to resist attempts by employers to require them to return to the traditional workplace environment. Modern Awards also impose additional procedural requirements on employers where a flexible working arrangement request is made.

With employees becoming more accustomed to working from home during the pandemic; the Fair Work Commission beginning to formalise flexible working arrangements for some industries and occupations; and COVID-19 case numbers beginning to decline; the question arises as to whether employers can require their employees to return to the traditional workplace. Provided the direction to attend the workplace is a “lawful and reasonable” direction, the answer would usually be yes. Employees generally do not have any legal rights to insist on working from home. However, each case will turn on its own facts. Employees with an agreed flexible working arrangement recognised by the FW Act; employees who are deemed ‘vulnerable’ by Government health organisations; employees with health concerns or carer’s responsibilities; or employees raising queries or complaints about the ability of their employer to provide a safe working environment are all examples of circumstances which may compromise the ability of an employer to direct employees to attend a workplace.

Employee Remuneration: Annualised Salaries and Criminalisation of Wage Theft

Given the recent spotlight on employee underpayments, the use of “annualised salaries” and the criminalisation of wage theft are likely to continue to be major focuses as the Australian economy recovers from the impacts of the pandemic.

In early 2020 and before the impact of the pandemic was felt in Australia, changes to annualised salary provisions under a number of Modern Awards took effect. The Modern Award annualised salary provisions place strict obligations on employers including with respect to employee notification/agreement, calculation of salary arrangements, reconciliation and record-keeping. The new provisions seek to ensure that the annualised salaries paid to Award-covered employees sufficiently cover their minimum entitlements under relevant Modern Awards. The provisions are complex and compliance is difficult. While alternatives to the use of the Modern Award annualised salary provisions are potentially available, the attitude of the Fair Work Ombudsman to anything other than strict compliance with record keeping and reconciliation requirements is likely to be increasingly tested as the Australian economy recovers and the focus returns to underpaying organisations.

Criminalising deliberate forms of employee underpayment or “wage theft” also features, with the proposed industrial relations reform legislation including proposed significant civil penalties and up to 4 years’ imprisonment for wage theft. The proposed changes follow Victoria and Queensland legislating the criminalisation of wage theft last year.

Now is a crucial time for employers to ensure their compliance with obligations relating to employee remuneration, or risk facing significant consequences for underpayment claims.

Casual Employees

Last year saw the Full Court of the Federal Court hand down its highly anticipated decision in the matter of WorkPac Pty Ltd v Rossato [2020] FCAFC 84, (Rossato) in which it found that an employee who was classified and paid as a casual was determined to be a permanent employee for the purpose of the FW Act and consequently entitled to permanent entitlements such as paid annual leave. In making this assessment the Court looked beyond the employment documentation between the employer and employee and considered the true nature of the arrangement. Significantly, the employer was unable to claim back or “set off” the casual loading paid to the employee, arguably permitting “double dipping” by the employee.

2021 will see key updates on the status of casual employees, noting:

• the High Court of Australia has granted WorkPac special leave to appeal the Rossato decision and the appeal is expected to be heard this year; and

• in a direct response to the Rossato decision, a new proposed definition of casual employment forms part of the IR Omnibus Bill (referred to above). The draft legislation proposes a simpler method of classifying casuals – essentially based on the terms of their engagement on commencement of employment being absent a “firm advance commitment”.

Until we have further clarification from the Courts and Parliament, the Rossato decision remains valid and it is important for businesses to regularly review and consider the working arrangements of casual employees. “Casual conversion” provisions in Modern Awards must also be considered. For now it is not enough for organisations to simply rely on the terms of their casual employment agreements, if the true nature of the relationship is indicative of permanent employment. A more in-depth background to the Rossato decision is covered in our previous article.

End of JobKeeper

Wage subsidy payments under the Federal Government’s JobKeeper scheme are scheduled to cease from 28 March 2021. For businesses and organisations that have utilised the JobKeeper scheme, particularly in industries that are still under significant financial pressure due to the COVID-19 pandemic, the cessation of such payments may have implications for ongoing viability.

As part of the JobKeeper scheme, temporary provisions were also inserted in the FW Act enabling eligible employers to issue “JobKeeper enabling stand down directions”, including changes to an employee’s usual duties, hours and location of work (see our previous article on workplace flexibility provisions under JobKeeper 2.0 here). These provisions will cease to have effect from 28 March 2021, following which eligible employers will no longer be able to issue such directions, and any existing directions will cease to have effect.

Introduction of COVID-19 Vaccines and WHS

With COVID-19 vaccines set to be rolled out in Australia this year, with the first inoculations scheduled for mid-late February 2021, the extent to which employers will be able to require employees to be vaccinated is a hot topic. The Federal Government has confirmed it will not legislate to make the COVID-19 vaccine mandatory.

Presently, there is no Federal, State or Territory legislation which expressly governs employer rights with respect to COVID-19 vaccines. While employers have common law rights to issue “reasonable and lawful” directions to employees, the question is whether a direction to be vaccinated against COVID-19 is reasonable and lawful. Perhaps unsurprisingly, opinions differ.

Some suggest it may be lawful to mandate a COVID-19 vaccination on Work Health and Safety grounds. The rationale being that COVID-19 vaccination will be necessary to eliminate or minimise the risk of infection in the workplace to the extent reasonably practicable, consistent with the employer’s statutory WHS obligations.

Others suggest it may be unlawful to mandate the vaccine – on the basis that employers have been managing the risk of COVID-19 to date through a combination of working from home, social distancing and cleaning protocols.

Further, risks of discrimination and other claims exist if an employer sought to mandate the vaccine for employees, where employees may have medical, religious or other grounds (such as political grounds) for refusing to be vaccinated. Again, the issue is unclear at this stage of the proposed vaccine roll-out in Australia.

Discussions between governments, unions and businesses are taking place with a view to providing clearer guidance and direction to employers about the COVID-19 vaccine. Interestingly, the Federal Government has recently announced that the COVID-19 vaccine will not be mandatory for aged care workers and residents which is likely to trigger a mixed response. What this means in a broader sense for employers is yet to be seen, but as governments and health authorities move closer to the vaccine roll-out we expect further information and guidance to be released.

For now, employers should exercise caution about requiring employees to be vaccinated against COVID-19 or introducing vaccination policies with respect to COVID-19.

Henry William Lawyers

As always, we are here to help. Our job is to make your life as an employer easier, if you need any assistance please contact Nick Noonan or Lisa Berton.