It is fair to say that the new year is certainly underway and with it, a raft of key changes to legislation have been ushered into the employment law arena. In this client alert we discuss the consequences of the Fair Work Commission Full Bench decision in Huntsman Chemical Company Australia Pty Ltd TA RMAX Rigid Cellular Plastics & Others  FWCFB 318 (“Huntsman”) delivered on 18 January 2019 which considers the effect of the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2019 (“Amending Act”) which provides a mechanism for the Commission to dispense with minor procedural errors relating to the making of enterprise agreements where it is concluded the enterprise agreement has otherwise been “genuinely agreed”.
In addition, this article considers the significant impact of a recent decision by the Federal Circuit Court which highlights the potency of the new provisions under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth) (“Vulnerable Workers Act”) regarding the obligation on employers to keep proper employment records and why, as a result of the Vulnerable Workers Act, employers who fail to keep proper employment records will inevitably fail to satisfy the reverse onus of proof when defending underpayment claims.
Dispensation of Minor Procedural Errors When It Comes to Approving Enterprise Agreements
The Full Bench of the Fair Work Commission led by the President, the Honourable Justice Ross, recently published its decision in Huntsman which considers the implications of the Amending Act which came into effect on 12 December 2018. The Amending Act which amends section 188 of the Fair Work Act 2009 (Cth) now allows the Commission to approve enterprise agreements containing minor procedural or technical defects, where it is concluded the enterprise agreement was nevertheless “genuinely agreed.” Relevantly, such defects may involve both technical or procedural errors such as the failure to comply strictly with the form and/or content of a particular instrument, for example, the Commission’s notification of employee rights template which is required to be given to employees during enterprise bargaining negotiations. The power of the Commission under the Amending Act means the once previous stringent legislative requirements which jettisoned the approval of enterprise agreements in the past, can now be dispensed with at the Commission’s discretion if an enterprise agreement has otherwise been genuinely agreed and the dispensation of the requirement does not have the effect of disadvantaging workers. In Huntsman, the Commission also observed that whether the incidence of non-compliance may be characterised as a “minor error” depends on the nature of the requirement which has not been complied with “in the circumstances”.
The Commission’s ability to now dispense with the strict procedural and technical requirements of the Fair Work legislation’s agreement making process is likely to have the effect of clearing a backlog of unapproved enterprise agreements and assisting employers going forward in ensuring that enterprise agreements, whether new or being renewed, can be more readily and efficiently approved.
Reverse Onus of Proof to Explain Record Keeping Failures
The Fair Work Ombudsman has launched its first legal action using the reverse onus of proof provisions under section 557C of the Vulnerable Workers Act. This provision places the onus of proof on the employer to show that it has kept proper records, and if it is unable to do so, will be found to be in breach of the provision that require employers to keep adequate employee records. Noting that in the past employers avoided facing litigation for underpayment claims because the Ombudsman was unable to rely on documents and other records as evidence of non-compliance with modern award payment requirements. The new laws close a significant loophole in the system which means that employers who can no longer provide a reasonable excuse for failing to keep proper records, will now be unsuccessful in disproving underpayment allegations.
The effect of the new legislative changes will first be tested before Justice Vasta in the case of Fair Work Ombudsman v A&K Property Services Pty Ltd & Ors, BRG68/2019 in which the Fair Work Ombudsman is claiming severe penalties against A&K Property Services Pty Ltd (“A&K Property Services”) of up to $63,000 per contravention of the Vulnerable Workers Act and the three directors themselves of up to $12,600 for their alleged involvement in each contravention. A&K Property Services was investigated by the Ombudsman in 2017, which resulted in the institution of legal proceedings in which the Ombudsman is claiming the company and its directors had no employment records in place when the initial investigation was conduct yet produced allegedly reconstructed records in response to a notice to produce issued by the Ombudsman. A&K Property Services is also facing underpayment liabilities in the amount of $19,467 for allegedly failing to pay nine employees the correct minimum wages, penalty and overtime rates in accordance with the Food Industry Award 2010 together with $7,416 in unpaid superannuation entitlements. It is worth noting that the A&K Property Services has backpaid its employees for the outstanding amounts and the issue before the Court relates solely to the outstanding superannuation entitlements and breach of the record keeping provisions.
If the first month of the new year is anything to go by, it is fair to say that 2019 is promising to be a year filled with significant change for employers. We note that at both State and Federal level, there will be elections which are likely to see a potential change of government. To this end, we will keep our readers informed of any significant policy proposals or legislative changes affecting employers and their employees.
If any of our readers require further information in relation to any aspect of this alert or need specialist employment law advice this year, please do not hesitate to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.