Flexibility under Fair Work Act: AHRI Survey

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1 Flexibility under Fair Work Act: AHRI Survey The work flexibility provisions under the Fair Work Act 2009 appear to have made it easier for many organisations to provide flexible work arrangements, but may also have increased the administrative workload, according to a recent survey by the Australian Human Resources Institute (AHRI). As the latest survey in its regular Executive Pulse series, AHRI surveyed 57 executive-level HR practitioners online in April Almost 40% (38.6%) of respondents said that the Act has made flexibility arrangements easier to implement, while just over 10% said it had become harder. This means that almost one-half (47.4%) reported no change. However, 41% said that more time to manage flexible work arrangements was now required. Similar percentages said that they needed to seek more legal advice than before and also spent more time keeping records related to flexible work arrangements. Around 18% said that they spent more time negotiating with unions over flexibility arrangements, but note that 30% said they had no union coverage at the workplace and a further 18% said that unions covered less than 10% of their employees. Seventy per cent said that the time spent with unions had not changed. Types of flexibility requested Part-time hours, working off-site/from home, variable hours, extension of parental leave and extension of personal/carer s leave were the five main types of flexible work arrangement requested by employees. Around 80% of respondents believed that employees were well aware of their entitlement to personal/ carer s leave, over 50% reported high awareness of variable hours and extension of parental leave, and 40% reported high awareness of entitlement to working from home. Over 70% of employers actively promote their flexible work practices when attracting and recruiting employees. Of those practices, personal/carer s leave had the highest take-up rate, followed by variable hours and working off-site/from home, with extension of parental leave having a low take-up rate (about 10%) so far, but likely to increase in future as employees become more aware of it. Other survey results Almost 90% of organisations offer benefits related to employees physical and mental health. The most common are Employee Assistance Programs and social functions (both over 80%), career development programs (65%), executive and personal coaching programs (60%) and team development programs (50%). Around 20% provided healthy foods, massages and yoga. Continue next page. Victorian TAFE Association Level 3/478 Albert Street, East Melbourne VIC 3002 Ph: (03) , Fax: (03) Reg. No. A37584B

2 While more than 80% of respondents claimed that the workplace culture did not insist on employees working to the clock, 37% said that there was still pressure on employees to work unpaid overtime. While 70% said that senior management actively called on employees to work sensible hours, more than 60% said that management failed to model that behaviour. Source: Executive Pulse Workplace Flexibility Research Report execpulse_workplace_flexibility_0610.pdf Separate contracts of employment: same employee same employer This is a subject that should be of interest to all Victorian TAFEs. Employers are sometimes approached by employees seeking other work within the organisation, where the work is outside the employee s ordinary contracted hours and the duties to be performed are different. What are the employment issues? The main concern for employers is whether an employee can be employed under two separate contracts of employment simultaneously with the same employer. That is, can full time and part-time employees be separately engaged as casual employees. This scenario has been tested infrequently before industrial courts and tribunals, although the principles determined in these decisions provide some guidance for employers. An industrial tribunal would apply the specific circumstances of each case to determine whether the two separate contracts of employment are valid. Overview Generally, industrial tribunals have determined that employers do not have carte blanche to put in place multiple contracts of employment with an employee. Where multiple contracts cover work that is regulated by a single award/agreement, such arrangements are arguably not permissible, unless the award/agreement contains a multi-hiring clause, because the arrangement would likely be seen as a device to circumvent overtime and other award/agreement provisions in relation to hours of work. Note: Neither the Teachers MBA or the PACCT Agreements (including their respective underpinning Awards) contain a multi-hiring clause. Nor is there a multi-hiring clause contained within the Educational Services (Post Secondary Education) Award Continue next page

3 Examples of Multi hiring clauses Fox Studies Australia Agreement Full-time, part-time and casual employees may be separately engaged as casual employees for duties in a separate section of the Fox Studios Australia facility from that in which the employee is usually engaged. For the purpose of this clause a separate section means: (a) a discrete location other than the employee s usual work location; or (b) a discrete set of duties other than the employee s usual duties, provided such duties are not wholly or substantially performed in the employee s usual work location and where overtime would ordinarily be performed. Alpine Resorts Award 2010 Dual-role employment Due to the unique nature of most positions under this award, that being limited to when the alpine lift is being provided, employees may be offered dual-role employment, in which the employee may have two distinct roles. Multi-hiring arrangement As an alternative to dual-role employment, an employee may be engaged on a multi-hiring arrangement. The employer may then offer the employee, and the employee may undertake a non-primary role (or roles) provided that: (i) any non-primary role is to be undertaken, and paid for, on a casual basis; and (ii) any hours worked in a non primary role do not count towards ordinary hours or overtime in the employee s primary role. However, the courts and tribunals did envisage circumstances where an employee could be employed under two separate contracts of employment, operating concurrently with the same employer. Two separate contracts of employment Generally, the decisions by the industrial courts and tribunals have established that an employer and an employee are not precluded from entering into two separate contracts of employment that operate concurrently, provided the work performed under those contracts of employment is not regulated by the same award or agreement. As all TAFE s currently have at least two Agreements operating concurrently, it is possible for employee s to have two separate contracts of employment. However, this is not to be confused in the case of work performed under different awards/agreements during ordinary working hours, where the so-called major and substantial function test is applied. Major and substantial function test This test is applied by industrial tribunals where the work under consideration involves a range of different activities covered by different awards. Tribunals have generally determined that the major emphasis should be placed on the major and substantial function, purpose or object of the engagement rather than on the major and substantial time spent on the performance of each of the duties

4 Working outside ordinary hours Where an employee is employed outside their ordinary working hours on work covered by different award/agreements, from that which covers normal employment, other considerations apply. The employer should ascertain whether the employee was instructed to perform the after-hours work as overtime, or whether such work was undertaken voluntarily by the employee as a new and separate engagement. In the former case, the employee would be entitled to overtime rates in accordance with the provisions of the award/agreement covering his or her ordinary work. On the other hand, if the after-hours work was undertaken voluntarily, such arrangement is regarded as a new engagement and the employee would be entitled to payment at the ordinary rate under the award/agreement covering such work, unless that award/agreement required payment to be made at overtime rates because of when the work was performed, irrespective of whether the total hours worked by the employee exceed the total ordinary hours for the week or not. Calculation of overtime As the duties performed under the second engagement are governed by a different award/ agreement, provisions such as overtime apply only to the hours worked separately under each of the applicable awards/agreements for the work performed. This means that the hours worked under each contract of employment are not added together for the purposes of establishing the appropriate penalty payments. However, work performed on a weekend under a separate contract of employment may attract overtime rates in any case, because the work may fall outside the span of ordinary hours prescribed by the award/agreement that covers the duties under the second engagement. Source: Workplace Info CAUTIONARY NOTE: Schedule 6 of the Teacher MBA (i.e. old TAFE Teachers Award which forms part of the MBA by virtue of inclusion as a Schedule) at Clause 13 states: Teachers under this award will be employed in ONE of the following types of employment:.. (VTA emphasis). Therefore, if a TAFE teacher was to be considered for a separate employment contract, it could not be a role under the coverage of the MBA. A PACCT role however would be permissible. In relation to PACCT it is possible, however extreme care should be taken in the case of a part-time role and then a separate contract for another part-time or casual role. In this case it could be strongly arguable for a temporary or permanent increase in time fraction with the classification and pay determined accordingly to the highest level of duties and accountabilities undertaken. In the above circumstances we recommend you seek advice from VTA before any proposed arrangements are finalised

5 Fair Work Australia Cases of Interest Fixed-term contract employee s application for unfair dismissal remedy dismissed An unfair dismissal application by a part-time teacher with Canberra Institute of Technology (CIT) has been dismissed by FWA. This decision once again confirms that employees engaged on fixed-term contracts cannot pursue unfair dismissal when their contract comes to an end. The teacher was employed on a series of continuous fixed-term contracts since 2003, and when his final contract was not replaced, he lodged an application for unfair dismissal. CIT opposed the application, submitting there was no dismissal at its initiative the fixed-term contract simply came to an end and, therefore, no dismissal exists under s386 of the Fair Work Act CIT further argued that the changes to the treatment of contracts for a specified period under the Fair Work Act do not alter the position of a contract for a fixed period that terminates at the end of that period. However, the teacher responded to the jurisdictional objection, stating that if the legislation intended there to be a jurisdictional hurdle in relation to all contracts that have terminated with the passage of time, the position would have been clearly stated in the same way it is in s386(2)(a) in relation to contracts for a specified term. Commissioner Deegan confirmed that, despite a slight alteration to the wording, the legislation is unchanged in respect of the requirement that for there to have been a dismissal there must be a termination at the initiative of the employer. Relying upon on the Full Bench decision Department of Justice v Lunn Commissioner Deegan said when a contract for a specified period or an outer limit contract reaches the nominated end date, the contract terminates through the effluxion of time and there is no termination of employment at the initiative of the employer. Commissioner Deegan did note that what has changed under the new IR laws is the manner in which the legislation deals with contracts for a specified period of time. Under the previous legislation, where there was a termination of the employment of an employee employed for a specified period, that termination could not be the subject of an unfair dismissal application irrespective of whether the contract terminated with the effluxion of time or otherwise, where as under the current legislation the jurisdictional bar operates only where a contract for a specified period terminates with the effluxion of time. The only change to the operation of the relevant provisions that is intended is to provide that an employee employed under a contract for a specified period of time, whose employment is terminated other than at the expiration of that contract, may make an application under the unfair dismissal provisions of the legislation. The teacher s application was dismissed. Drummond v Canberra Institute of Technology [2010] FWA 3534 (4 May 2010) - 5 -

6 Take-home pay order application dismissed This is a decision that will be of interest to Institutes that have employees whose employment conditions are governed by a Modern Award and are not covered by one of the Agreements currently in operation. The basic philosophy of take-home pay orders is that no employee should be worse off overall under the Fair Work Act, so it is possible to seek an order from Fair Work Australia. To date, only one order has been issued - Wright v Kilmore Racing Club [2010] FWA Wright saw his pay drop from $ to between $90 and $115.39, after he came under the Racing Clubs Events Award Wright was employed as a casual mobile barrier driver at harness racing events run by the Kilmore Racing Club (KRC). KRC claimed that Wright had been award-free prior to the introduction of the Modern Award and had been entitled to the national minimum wage of $14.31 an hour plus the default casual loading of 20%, with no minimum engagement period or entitlement to penalty rates. Even though Wright was award free, KRC provided Wright with many of the conditions under the Entertainment and Broadcasting Industry (Recreational Grounds etc Victoria) Award 2000, including payment based on a six-hour minimum engagement, and payment for any time worked beyond the six hours. Therefore Wright was actually being paid $ for each session he worked as a mobile barrier driver. At a minimum of six hours payment this equates to a rate of $19.36 per hour. This figure included the casual loading. Commissioner Bissett noted that under the modern Racing Clubs Events Award 2010, Wright receives $20.98 per hour ($16.78 plus 25% casual loading). Commissioner Bissett ruled that the Wright had been affected by a reduction in the minimum hours under the Modern Award compared to his previous situation, and that his hourly rate of pay had actually gone up. Under the Entertainment and Broadcasting Industry (Recreational Grounds etc Victoria) Award 2000, Wright was entitled to a minimum six hour engagement and was paid as such, regardless of actual hours worked. However under the Racing Clubs Events Award 2010, the minimum payment is four hours. Therefore any reduction in the actual pay received by Wright is as a consequence of this change in the minimum engagement period. In her decision, Commissioner Bissett said the Revised Explanatory Memorandum to the Transitional Act states that it is not intended that the take-home pay orders should prevent an employer from taking action (e.g. reorganising roster arrangements) that would otherwise be lawful. The capacity to engage Wright for a minimum of four hours is provided for under the Modern Award and such rostering is lawful. Take-home pay orders are not intended to stop the employer implementing rosters as permitted under the Award. The amount of take-home pay for working particular hours has not decreased for Wright - his hourly rate of pay has increased - rather the minimum payment period has changed and it is this that has affected Wright s take-home pay. Continue next page

7 There is no question that, on the basis of his pay slips, Wright is taking home less pay now than he was prior to the operation of the Racing Clubs Events Industry Award For Wright to be entitled to a take-home pay order he must have suffered a modernisation-related reduction in take-home pay. To have suffered such a reduction requires that each of the parts of subitem 3 of Item 8 [of the Transitional Act] be satisfied. This is not so in this matter. The high income threshold is indexed each year with effect from 1 July As of 1 July 2010 the threshold has increase from $108,300 to $113,800. The high income threshold is: the amount which must at least be met with a guarantee of annual earnings (a written guarantee given to an employee who is covered by a Modern Award where the employer wants to employ the person without the Award applying) the amount below which an employee who is award/agreement-free; and has completed the minimum employment period; and is dismissed by the employer can make an unfair dismissal application. High income threshold increase re Unfair Dismissal The high income threshold also sets the maximum amount that can be awarded in an unfair dismissal matter i.e. six months pay so, from 1 July 2010, $56,900. What is included in determining the income for the high income threshold? Income includes: wages; amounts which are paid for the employee s benefit (such as under a salary sacrifice arrangement); non-monetary benefits where there is an agreed value placed on the (and it is reasonable). Income does not include: amounts which cannot be determined in advance (such as performance related bonus or commission); superannuation contributions required under the superannuation guarantee; reimbursements. Next HR Network meeting Thursday 26, 10am 3pm at VTA offices For further information concerning this Update contact: Leanne Sumpter, Workforce Services Consultant Victorian TAFE Association Level 3, 478 Albert Street, East Melbourne 3002 Ph: (03) , Fax: (03) lsumpter@vta.vic.edu.au Note that this HR Update is prepared by the VTA for the general information of member organisations. While it provides general background on the selected topic, advice should be sought in the first instance from the VTA office before acting on the material contained herein.