What's there to look forward to in the workplace in 2021?

The Federal Government has this week introduced into Parliament an omnibus Bill, the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 to reform various areas of the IR landscape.

The Bill proposed amendments to provide:

1. A definition of "casual" (that the job is offered without a firm advance commitment to continuing and indefinite work according to an agreed pattern); and an obligation on employers to offer conversion to full or part-time work for casuals who have been engaged for 12 months and on regular work patterns for 6 months; and setting off arrangements for casual loading overturning the effect of the Rossato decision;
2. An adjustment to the better off overall test (BOOT) so that it is applied only to "reasonably foreseeable" patterns or kinds of work, or types of employment, to require the FWC to have regard to the overall benefits (including non-monetary benefits) and to also require the FWC to take into account the views of the employer and employees on the BOOT; replace the pre-approval requirements to require reasonable steps to ensure employees are given a fair and reasonable opportunity to decide whether or not to approve an agreement; and provisions enabling COVID-affected businesses to make enterprise agreements less generous than modern awards for a period of two year if necessary for the survival of the business, subject to worker approval and approval being in the public interest;
3. A 21 day timeframe for the FWC to approve an new agreement unless there are exceptional circumstances; and restrict the ability of unions to intervene in the approval process for agreements they were not involved in negotiating;
4. Greenfields agreements that may cover new major infrastructure projects valued at >$500m for eight years, with discretion for the Minister for Industrial Relations to permit such agreements for projects over $250M (but less than $500M) that are deemed nationally significant;
5. New criminal offences for "wage theft" for employers that dishonestly engage in a systematic pattern of underpaying one or more of their employees, providing for maximum penalties of up to four years imprisonment and penalties of up to $1.11 million (or both) for individuals, and penalties up to $5.5 million for body corporates, and jurisdiction being given to lower courts to deal with small underpayment claims of up to $50,000;
6. Mechanisms to permit the alteration of duties and location of work (similar to those provided under COVID-19 special provisions) for particular industries; and terms for simplified additional hours agreements for part-time employees who may perform additional hours before triggering additional payment.

See our Employment Alert on the Bill.

The Bill follows calls for industrial relations reform by employers and business groups during the Federal Election in 2019. The Prime Minister asked the Attorney-General, in his capacity as Minister for Industrial Relations, to take a "fresh look" at Australia's industrial relations system to identify how it is operating and where there are impediments to shared gains for employers and employees.

The Attorney-General's Department developed five working groups to consider various areas of reform for IR:

1. casuals and fixed term employees;
2. award simplification;
3. enterprise agreements;
4. compliance and enforcement; and
5. Greenfields Agreements.
   

The omnibus Bill addresses some but not all of those areas from the working groups.

The Bill, and reforms it seeks to introduce, faces a challenging senate for its passage. It is expected the Bill will be subject to substantial debate, and possible amendment, in the committee stage of its passage through Parliament. The passage of the Bill and reforms ultimately introduced will be a key development to watch in the beginning of 2021.

With JobKeeper payments set to end on 28 March 2021, many employers will need to be planning for how to best arrange their workforce so as to minimise the impacts of the subsidy ceasing.

Restructuring and "rightsizing" will likely become a focus for many businesses to deal with this. We also expect that the end of JobKeeper will impact businesses' approaches to bargaining.

Restructuring - applications for variation of redundancy pay

Restructuring will continue to be a prominent focus for businesses in 2021 as the economy and markets continue to change, and in certain industries may remain volatile, due to the impact of the pandemic.

In 2020 we have seen a steady increase of applications under section 120 of the Fair Work Act 2009 (Cth) for variation of redundancy pay. A section 120 application is one enabling an employer to seek a reduction redundancy payments on the basis of either:

• The employer obtaining other acceptable employment for the employee; or
• The employer not being able to pay the amount.

The FWC has taken a flexible approach in its interpretation of 'acceptable employment'. In ASG Maintenance Pty Ltd v Robert Lord [2020] FWC 5894, the FWC found that the offer of employment that required 100 minutes' additional daily travel (50 minutes each way) was 'acceptable alternative employment' due to the nature of the engineering business and its rural location, and reduced redundancy pay accordingly. Going into 2021, employers should consider a broader range of possibilities for redeployment when undertaking restructures as this may have significant cost- benefits to the employer depending on their circumstances.

The FWC has also rejected applications to reduce redundancy pay to zero, such as in Coal River Farm Investments Pty Ltd [2020] FWC 3558. In this case, while the company's food and beverage section of the business had lost all revenue, the rest of the business was still operating, although at a significantly reduced rate. The FWC found that the company had not provided sufficient evidence of its inability to make any redundancy pay to grant the application.

In 2021, when JobKeeper ceases, it will be interesting to see whether the Commission becomes more open to granting such applications.

APAC restructuring developments

Around our other Asia Pacific offices, restructuring will also continue to impact employers into 2021. The governments of Singapore, Hong Kong and Japan have introduced various schemes to assist businesses with the costs of continuing to employ their employees during the pandemic. Businesses which access these schemes are often required (formally or informally) not to make any redundancies while receiving such support, with penalties applying for those who do.

With support under these schemes due to cease at the end of 2020 or early 2021, there is likely to be an increase in business closures and redundancies as companies who have stayed afloat due to government subsidies cease to operate. It is likely that regulators will continue to closely scrutinise redundancies, even after the cessation of government support.

Due to the economic challenges brought about by COVID-19, some businesses are delaying bargaining for enterprise agreements. This is largely because these employers wish to avoid committing to pay increases, or other additional benefits that will come at a cost to the employer, in times where they are in economic distress with an uncertain timeline for recovery. 

The reforms proposed by the omnibus Bill (see above) propose a mechanism for employers to reach agreements on a new enterprise agreement that is less generous than a modern award, for COVID affected businesses for a period of two years. That modifies the operation of the BOOT. The passage of those provisions in the Bill may be of significant interest to employers engaged in or contemplating bargaining.

Some businesses are already starting to frame their approaches for enterprise bargaining to occur next year. The fundamental and pertinent question of "to bargain, or not to bargain?" raises a series of further questions, including:

• If you do decide to bargain, when is the best time to do so?
• What is it that you are trying to achieve in the bargaining process? Are you hoping to achieve an increase in productivity? Perhaps a restructure?
• What are your pressure points – what are you not willing to give up in the bargaining process? What are some points you are willing to sacrifice?
• How do your remote working arrangements impact aspects of the process, such as the requirements to notify, issue communications and hold briefings? Will working from home rights and costs, become a bargaining issue?
• Does everyone in your workforce have access to the requisite technology to participate?

Stay in touch with us for updates and our recent Employment Alert on the omnibus Bill and any amendments to the enterprise bargaining regime might affect you.

2020 has seen exponential growth in claims against employers relating to underpayments. it is a matter that the Federal Government seeks to address through reforms in its omnibus Bill.

An underpayment may be the result of inadvertent payroll errors, misapplication of an industrial instrument (commonly through the use of annualised salaries) or inexpert attempts to supplant payment obligations. Regardless of whether an alleged breach is deliberate or inadvertent, any contractual or legislative breach will carry significant legal, financial and reputational consequences.

Class actions for underpayment

2020 has already seen several class actions commenced in relation to underpayments and we expect that this will continue in 2021. Class actions have also been commenced asserting that an industrial instrument has been wrongfully approved. Employers operating under older industrial agreements should be aware of the risk that questions could be raised about the validity of the approval of such agreements.

Three 2020 developments will likely affect the forum and availability of funding for such class actions:

• On 22 May 2020, the Federal Government announced the introduction of new regulations to the Corporations Regulations 2001. These regulations remove the previous exemption for litigation funders which provided that litigation funds were not are not managed investment schemes. The removal of the exemption means class action funds will be subject to managed investment scheme registration and funders will be required to hold an Australian Financial Services License. This will put many class actions on hold as funders have to comply with regulations in order to keep funding cases.
• In June 2020, the Victorian Government passed the Justice Legislation Miscellaneous Amendments Bill 2019 (Vic) which permits contingency fees to be ordered to be paid to plaintiff law firms, enabling them to receive a percentage of the damages awarded in class action proceedings. The introduction of this legislation may lead to more class actions being commenced in Victoria, as opposed to the Federal Court and courts in other States, in light of a recent decision by the High Court that the Federal Court and NSW Supreme Court lacked power to make "common fund" orders.
• On 10 November 2020 in Augusta Ventures Limited v Mt Arthur Coal Pty Limited [2020] FCAFC 194 a majority of the Federal Court confirmed that while funders of employment underpayment class actions are not protected by section 570 of the FW Act (which essentially established a "no costs" jurisdiction for matters under the FW Act funders should not be ordered to provide security for costs because as such an order might impact the interests of the plaintiff individual employee, in having their claim effectively extinguished due to non-compliance with a security for costs order by the funder, when the individual employee was not susceptible to a costs order. The decision means that litigation funders are far less likely to face security for costs orders and also a limited risk profile for adverse costs liability compared to other types of civil litigation.

Wage theft legislation

Both Victoria and Queensland criminalised "wage theft" in 2020, and the Federal government proposes to do so in its omnibus Bill.

The Queensland Parliament passed the Criminal Code and Other Legislation (Wage Theft) Amendment Act 2020 (Qld), which amends the Criminal Code to amend the definition of "stealing" to include "a failure to pay an employee, or another person on behalf of the employee, an amount payable to the employee or other person in relation to the performance of work". Employers who intentionally fail to pay or underpay their employees are now exposed to a criminal penalty of up to 10 years' imprisonment if prosecuted and convicted of "stealing"..

These amendments come as a result of a Parliamentary Committee Inquiry which determined that there was endemic wage theft across Queensland. For more details on the Act and what it means for you, please see our Alert, Wage theft now a criminal offence in Queensland: What employers need to know.

In Victoria, following the passage of the Wage Theft Act 2020 (Vic), there is now an offence for dishonestly withholding employee entitlements arising under contracts, agreements and relevant law, which carries a penalty of up to 6000 penalty units (amounting to $991,320) for body corporates or 10 years' imprisonment for individuals.

Western Australia has recently proposed the Industrial Relations Legislation Amendment Bill 2020 (WA) as a part of its overhaul of its Industrial Relations legislation arising out of the 2019 Inquiry into Wage Theft in Western Australia.

The Federal Government's omnibus Bill includes a new offence for "wage theft". The new provisions would apply to employers that dishonestly engage in a systematic pattern of underpaying one or more of their employees. This would not capture one-off underpayments, and inadvertent mistakes or miscalculations. For individuals, maximum penalties of up to four years imprisonment and pecuniary penalties of up to $1.1 million (or both) would apply, and for body corporates penalties up to $5.5 million. See our recent Employment Alert on the omnibus Bill for more details.

It is possible that 2021 will see more States enacting such legislation subject to whether that is considered necessary if the federal omnibus Bill becomes law, and the legislation may be tested in the near future. Employers should be carefully considering whether their payroll systems, award/agreement interpretation and payment history are compliant with their legal obligations.

Correctly characterising an employment relationship as one of casual or permanent employment was a focus of litigation and regulatory change in 2019 and 2020, and is set to continue into 2021.

The Federal Government's omnibus Bill will include into the FW Act, for the first time, a definition of "casual": An employee will be a casual employee if they accept an offer of employment that makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work. The Bill also provides a mechanism for conversion of casuals engaged for 12 months and on regular work patterns for 6 months to convert to full time or part-time employment. See our Employment Alert on the Bill. The reforms in the Bill come in the context of litigation on the meaning of "casual" and concerns around double-dipping on entitlements and casual loading.

On 26 November 2020, the High Court of Australia granted special leave for the employer to appeal the decision of the Full Court of the Federal Court in Workpac Pty Ltd v Rossato [2020] FCAFC 84. In this case, the Court found that the employee was a permanent employee entitled to be paid annual, personal/carers and compassionate leave, plus payment for public holidays during Christmas shutdowns.

The Workpac Pty Ltd v Rossato decision applied reasoning from an earlier decision of the Full Court of the Federal Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131. In the Skene decision, it was held that because of the regular nature and stability of the employment, and the expectation that the employment would continue for a considerable length of time, the employee was entitled to paid annual leave, as a permanent employee.

The outcome of the High Court's special leave decision means that this issue will be subject to further judicial scrutiny in 2021. This will be a key area to watch in 2021.

In June 2020 Queensland saw their first conviction for industrial manslaughter in R v Brisbane Auto Recycling Pty Ltd & Ors [2020] QDC 113.

Brisbane Auto Recycling Pty Ltd received a $3 million fine under industrial manslaughter provisions, and its two 23 and 25-year old directors received suspended 10-month jail sentences under the less serious offence of "reckless conduct"(category one), for their roles in the death of a 58-year old casual contractor who was crushed by a reversing forklift. The Court found in the case an absence of safety systems including a failure to control the interaction of mobile plant and workers at the workplace, failure to effectively separate pedestrian workers and mobile plant, and a failure to effectively supervise operators of moving plant and workers. The Court noted this fine was less than one third of the available maximum penalty, but that any lesser penalty would not adequately punish the employer or serve to adequately deter others.

The decision, being the first under new industrial manslaughter provisions, demonstrates significant penalties that can be imposed under the provisions, with the Court noting there were no comparable cases (at that time) for the Court to consider. We await the development of principles on sentencing and the potential for individuals being convicted with industrial manslaughter under the provisions given they have been reflected (with some changes) in other jurisdictions.

On that front, industrial manslaughter offences that were legislated by Victoria and the Northern Territory in late 2019 commenced operation. This increases the total number of States and Territories with industrial manslaughter laws to four (see our Safety Matters Alert for further detail).

Western Australia's proposed industrial manslaughter laws, as part the adoption of the (modified) WHS Act, have been approved by the Legislative Assembly and are set to be included as a part of the upcoming WHS reforms to commence next year when accompanying regulations are ready.

The Work Health and Safety Bill 2019 (WA) (WA Bill) passed the upper house of the WA Parliament on 21 October 2020 and is expected to commence in the first part of 2021 once accompanying regulations have been prepared. The long awaited WA Bill will modernise and consolidate existing Western Australian safety law into a single Act, covering all workplaces, to substantially mirror the national model WHS legislation with some State specific modifications. 

Some of the additional reforms including new industrial manslaughter offences, a prohibition on insurance or other indemnities for WHS penalties and the inclusion of a new, specific duty of care, for "WHS service providers".

Another issue is the further reopening of the physical workplace as infection levels across all regions come under control. It will be interesting to see if attendance at the physical workplace will return to pre-COVID-19 levels, or if telecommuting and other flexible work arrangements will become a permanent feature of the employment landscape. A new guideline issued in Singapore regarding mental health suggests an expectation on the part of government that flexible working will continue after the COVID-19 pandemic subsides. For insights into issues faced by employers in regards to working from home, please see our Singapore update, Top five home working issues for employers.

In addition to understanding the home as a more permanent workplace for many, businesses will also need to continue working on the transition back into the office. For a list of key issues to consider in the region in managing this transition, please see our Singapore Employment Update and webinar, both titled 'Managing the return to workplace transition – What is your plan?'

 In March 2020, unfortunately shadowed by the emergence of the pandemic, the Australian Human Rights Commission released their landmark report, Respect@Work: Report of national inquiry into sexual harassment in Australian workplaces. The 900+ page report made a host of significant recommendations, including establishing a positive duty on employers to end harassment, introducing a "stop sexual harassment order" akin to a "stop bullying order", and establishing a federally-funded Workplace Sexual Harassment Council to coordinate efforts to address the issue.

For more details on the recommendations that will affect employers please see our Employment Alert, WHS risk not individual misconduct: Issues for employers from the National Inquiry into Sexual Harassment in Australian Workplaces. In light of the delays to government policy due to COVID-19, we expect that any major reforms or government response will occur in 2021.

The Modern Slavery Act 2018 (Cth) commenced on 1 January 2019. Some Australian entities were due to issue their first Modern Slavery Statement under this Act by 31 December 2020.

Due to COVID-19, entities with a reporting period ending before 30 June 2020 have been granted an extension on the legislated 6-month time period within which to submit their first Modern Slavery Statement. These entities now have 9 months to submit their first statement. This does not impact the reporting period or the submission of future reports.

The Act requires entities with an annual consolidated revenue of more than $100 million to report annually on the risks of modern slavery in their operations and supply chains, and actions to address those risks.

Entities that fall within the scope of the laws should review existing policies to monitor and combat modern slavery and conduct audits on suppliers and supply contractors to identify and mitigate any modern slavery risks prior to the first reporting deadline.

In a development that may foreshadow similar changes in Australia, the UK Government has confirmed that it will be bringing forward reforms to the transparency reports employers have to publish under the UK Modern Slavery Act 2015. Under the UK Act, certain organisations must publish an annual statement setting out steps they have taken during the previous financial year to ensure that slavery and human trafficking is not taking place in their own business and supply chains. As the UK Act currently stands, this is the only mandatory disclosure required. However, the UK Government now proposes changes to the UK Act so as to make mandatory those other aspects of a modern slavery statement that are currently voluntary. There will also be a single new reporting deadline of 30 September each year, with all organisations being required to report on the same 12-month period between 1 April and 31 March.

We do not know for certain that these reforms will be introduced next year, as the UK Government has said only that it will bring forward the necessary legislation "when parliamentary time allows". For more information on these impending UK reforms, please see our update, Far-reaching changes to the Modern Slavery Act are on the horizon.

The substantive provisions of Human Rights Act 2019 (Qld) commenced operating on 1 January 2020. The Act forms part of a suite of administrative laws in force in Queensland, and holds the State government to account for actions which are incompatible with human rights, and gives public sector a mechanism to complain to the Queensland Human Rights Commission (QHRC) for alleged breaches of the Act by their employer. The Act also permits claims to be "piggybacked" onto other claims, and establishes an "adverse action" regime.

The Act protects 23 human rights, including privacy and reputation, freedom of association and freedom of expression, amongst others. The Act requires "public entities" in Queensland to consider human rights during all decision-making processes, and only constrain human rights in certain circumstances and after careful consideration by the decision-maker. "Public entities", for the purposes of Act, include Queensland Government departments and agencies, public service employees, police officers and Ministers, and other organisations that perform functions of a public nature on behalf of the State. Courts and tribunals are public entities only when they are acting in an administrative capacity, and not when exercising judicial functions.

In August 2020, the Land Court dismissed an application to strike out objections made under the Act. Environmental groups objected to Waratah Coal Pty Ltd's mining lease and environmental authority applications in respect of its proposed Galilee Basin coal mine development on the basis that decisions to grant them would be incompatible with human rights. Waratah Coal sought to strike out the human rights objections by contending that the Land Court was not obliged, and had no jurisdiction, to consider objections made under the Act. Ultimately, the Land Court found that it has jurisdiction and is obliged to consider objections made under the Act. For more information about this decision, see our Energy & Resources Alert.

It remains to be seen how any such objections will be considered in substantive hearings and decisions of the other Queensland Courts or the QHRC, particularly those relating to employment.

Following Safe Work Australia's publication of the final report of Marie Boland's review of the model WHS laws in early 2019, we saw various State responses during the course of 2020. These responses included Victoria and Northern Territory each enacting industrial manslaughter offences, with Western Australian provisions due to commence on 2021. Further, while New South Wales did not introduce an industrial manslaughter offence, it did make various changes to the Work Health and Safety Act 2011 (NSW) to implement some of the review's recommendations, and confirming the general criminal law would be utilised for manslaughter offences. 

In June 2020, Queensland saw their first conviction for industrial manslaughter. Now that the offence has been the subject of judicial consideration for the first time, there is more certainty about how the offence will be prosecuted. We expect to see more cases of industrial manslaughter in 2021. 

With borders tightened or closed around the world, it is becoming increasingly difficult and expensive to rely on a stream of migrant workers in Australia. This will see a shift in the make-up of many workforces, particularly in casual-heavy industries such as construction and hospitality. The changing demographics of the workforce will be an important feature for employers to keep a watch on and ensure they are following the correct procedures. It may also impact how sustained casual employment becomes, and could have a flow on effect to casual conversion rates. 

In our Asia Pacific offices, this year has seen a tightening on the use of foreign labour that is expected to continue into 2021. We expect more employers to require advice regarding cross-border remote working arrangements, border closures and visa processing moratoriums continue. For a more detailed analysis of this, please see our Employment Update, Tightening of rules for foreign employment in Singapore. 

In Hong Kong, 2021 is expected to see the commencement of a statutory protection against discrimination of breastfeeding mothers. Employers will need to consider how to best accommodate breastfeeding mothers in light of these statutory protections. Additional protections under the new law include things such as protections against race discrimination and workplace harassment.

For a more detailed look into this, please see our Employment Update, Expanded anti-discrimination protections in Hong Kong.                          

The Omnibus Law will have the effect of amending 76 different laws in Indonesia to encourage foreign investment and create jobs. Significantly for employers, it streamlines processes for the hiring of foreign workers and decreases the compensation payable to an employee in a redundancy situation. However, while the Omnibus Law was passed into law in November 2020, much of the detail of the changes will be set out in implementing regulations which are unlikely to be drafted until 2021.

See our Alert from November, Indonesia's Omnibus Law: A breakthrough, for more details on this.

The Brexit transition period will formally end at 11.00 pm on 31 December 2020. It seems unlikely that the UK Government will substantively change employment laws based on EU law (certainly in the short-term), so the most immediate consequence of this for employers will likely be the changes to the rules on freedom of movement and the flow-on effects that this will have for recruitment and resourcing.

Once the transition period ends, freedom of movement between the UK and the EU will cease, and the new points-based immigration system will operate in the UK from 1 January 2021. This new immigration system will apply to anyone coming to work in the UK from overseas, other than Irish nationals. Although there are similarities between this new system and the current immigration system for non-EU nationals, there are significant differences to be aware of. Among other things, there are changes to the immigration route for skilled workers, to the cooling off rules and to the way in which individuals can switch between immigration routes. EU nationals already living in the UK by the end of 2020 can apply for settled or pre-settled status but new arrivals will need to follow one of the new immigration routes.

At the time of writing, negotiations with the EU about the terms of a possible trade deal remain ongoing. Employers should therefore keep abreast of Brexit developments more generally, and consider how changed immigration requirements and/or sector-specific changes due to a trade deal with the EU may affect their business operations and staffing going forward. In particular, employers who do not already have a sponsor licence should assess whether they need to apply for one.

For more information, please refer to our UK Employment Update, The UK's future immigration system is unveiled.

As part of its package of measures to help businesses and individuals weather the economic impact of the coronavirus pandemic, the UK Government postponed tax reforms which had been due to come into effect in April 2020 which relate to the tax status of contractors. Those rules will now come into effect in April 2021. The aim of the rules is to ensure that those who provide their services through a personal services company (PSC), but in fact work like an employee, are taxed in broadly the same way as direct employees.

Under the rules currently applicable in the private sector, it is the PSC that is responsible for determining whether the individual should be taxed as an employee. Under the new rules, medium and large employers in the private sector will become responsible for determining the tax status of contractors and ensuring that the right employment taxes are paid.

In preparation for these new reforms, employers should consider whether any of their contractors could in fact be regarded as employees for tax purposes. If that is possible, employers should weigh up the risks involved and consider whether they need to change their contractual arrangements. If employers do not take appropriate action, they could be exposed to significant liabilities for tax and national insurance, so this should be a priority for the new year.

For more information, please refer to our Tax & Employment Update, New IR35 determination rules delayed to 2021.