As 2016 draws to a close, here is a summary of 3 key changes and events that hit the headlines:
1. Annual leave
Most modern awards were varied this year so that:
- Employees can elect to cash out up to 2 weeks’ annual leave provided they retain at least 4 weeks’ annual leave after the cashing out;
- Employees and employers can agree the employee will take annual leave in advance;
- Employers can direct employees with excessive annual leave balances (i.e., more than 8 weeks’ accrued leave) to take some leave; and
- An employee with an excessive annual leave balance can request a period of annual leave and, subject to compliance with certain conditions, the employer must grant the leave. This change will take effect from 29 July 2017 and does not apply to all awards.
The above changes come with a number of conditions, so it is important to review the award that covers your employees before making any agreements or giving any directions to employees about annual leave.
2. Accessorial liability
The Courts have shown an increased willingness to penalise senior managers and directors who are involved in contraventions of the Fair Work Act. In June this year, we saw a director of a 7-Eleven franchise penalised just over $68,000 and his company, a further $340,290 for underpaying employees, and just last month, we saw penalties of $100,000 imposed against an employer and a further $24,000 against its sole director for sham contracting and underpaying employees.
The Fair Work Ombudsman has flagged its intention to continue this approach in 2017, saying in the Fair Work Ombudsman Annual Report 2015 – 16:
“By pursuing accessories, we can seek penalties from individuals involved in the conduct, irrespective of whether the corporate employer is still operating, or has money in the bank. And after the recent precedent-making case of FWO v Step Ahead Security Service Pty Ltd & Anor, we can now also recoup back-payments from accessories, making them directly accountable for underpayments in which they were involved”.
Employers, directors and senior managers should heed the Ombudsman’s warning and take steps now to ensure employees receive their lawful entitlements.
3. Compliance with workplace laws – supply chains and franchise arrangements
The Fair Work Ombudsman recently entered into a Proactive Compliance Deed with 7-Eleven which it describes as setting “a new standard for franchising in Australia”. The measures imposed on 7-Eleven and its franchisee operators are extensive and include requirements that 7-Eleven appoint an independent auditor to conduct a number of annual franchisee workplace audits and install biometric shift scanning and CCTV systems at all outlets, so that employee hours and payment arrangements can be monitored.
The Fair Work Ombudsman has called on “all franchises to consider what steps they might take to ensure their network is compliant”. While the focus is currently on franchisee arrangements, we recommend that employers treat this as a reminder to consider the extent to which their own supply chains and networks comply with workplace laws and what steps, if any, can be taken to ensure compliance. This could become an important issues for companies who rely on third party labour supply companies to supply staff.
We wish all of our readers a safe festive season and a wonderful New Year!