Employment law: What to expect in 2017

07 March 2017

Happy New Year to all of our valued clients. With so much change in employment regulation, we take this opportunity to look at the key employment issues that are likely to arise over the next 12 months and explain how they will affect your business now and in the future.

Wages growth

As many employers will be aware, Australia has recently experienced a considerable period of low earnings growth, the likes of which was last seen in the early 1990’s. This trend is likely to continue in 2017. Despite the subdued economic environment, employees and employee representatives are continuing to pursue substantial wage increases during enterprise bargaining negotiations. It is also not uncommon for them to demand evidence to support employer claims that proposed wage rises are unaffordable. Major employers and employer bodies experience protracted bargaining and have called for a complete overhaul of the enterprise bargaining process under the Fair Work Act 2009 (Cth).

What to do: For the time being, increases in enterprise agreements are likely to fall in the 2-4% range. Employers should, therefore, seek demonstrated productivity outcomes from employees if higher increases are being sought. Employers should also be aware they are not required to disclose confidential or commercially sensitive information during the negotiation process (including the impact of projected wage increases). However, we recommend seeking prompt advice where necessary in order to manage the risk of hostile wage negotiations and the real risk of protected or unprotected industrial action.

Wages equality

The issue of wage equality continues to gain momentum in Australia, particularly given the now established requirement under the Workplace Gender Equality Act 2012 (Cth) for private sector employers with over 100 employees to formally report against a number of gender equity indicators. The National Workplace Gender Equality Agency (Agency) takes a pro-active approach in analysing such data and reporting on trends and challenges concerning wage equality and gender equity in the workplace.

The Agency recently reported that the current national gender pay gap is 16.2%, having remained around 15% – 19% for the last 20 years1. It is also noted that the pay gap favours males in all Australian industries (including in female dominated industries such as health and social and community care) and that it also favours full time working men over full time working women2.

Our expectation is that dialogue about wage equality will continue as part of the industrial landscape in 2017. Consequently, employers may find employees and employee representatives actively seeking the inclusion of wage equality outcomes in enterprise bargaining negotiations. The need to demonstrate wage equality will also likely be a key issue for employers who are engaged in tendering processes for State and Government contracts.

What to do: Employers should consider salary audits analysing gender differences in their wage rates and employee conditions and pay transparency. Employers should also closely monitor promotions and pay rises. This will either highlight existing equity issues and provide an opportunity for corrective measures to be taken or enable employers to position their workplace wages and conditions positively. In either case, such analysis will aid employers in enterprise bargaining and tendering processes.

Terminating enterprise agreement

Another area where we anticipate action from employers in 2017, concerns proposed terminations of enterprise agreements. Many enterprise agreements which have passed their nominal expiry date continue to remain in force and employers simply update wages payments and other key terms in order to keep pace with market or award conditions. However, many enterprise agreements are negotiated during profitable times and employers often agree on terms which later become unattractive and a financial burden for them.

Employers are not stuck with an enterprise agreement and an enterprise agreement can be terminated by agreement or more likely by application to the Fair Work Commission after the nominal expiry date. It remains incumbent on employers to show why terminating an agreement is not against the public interest and is appropriate having regard to the views and likely effect on employees and employers covered by the agreement.

There has been an increasing trend for employers to apply to the Fair Work Commission to terminate enterprise agreements. The reason why? If successful, the strategy can avoid an employer from being tied to outdated and expensive employee expectations or conditions during prospective or current enterprise bargaining negotiations, and increases the employer’s bargaining power.

Until recently, many termination applications slipped through without active opposition from employee representatives. However, the Australian Council of Trade Unions’ current policy position suggests that it intends to adopt a strategy of strongly opposing applications for the termination of enterprise agreements, especially when enterprise bargaining is already underway3.

What to do: Employers with substantially outdated or expensive enterprise agreements should carefully assess the benefits and disadvantages of terminating the agreement, including how a proposed termination is likely to affect employees and any adverse consequences for the employer. They should also turn their mind to how and why a proposed termination is not contrary to the public interest, as this will ultimately be a key factor which the Fair Work Commission will consider in deciding an application and promptly seek advice about a suitable enterprise bargaining strategy. In unionised industries, any application to terminate an enterprise agreement will be strongly contested.

Personal liability

A key concern for many Managers and HR professionals in 2016 was the increasing trend to bring claims against individuals including seeking penalties for personal liability under the Fair Work Act 2009 (Cth). Under section 550 of the Fair Work Act 2009 (Cth), proceedings may be brought directly against any individual who is “involved” in a contravention and not just an employer. These claims are known as accessorial liability claims. The current maximum penalties for an individual is $10,800 per contravention.

Accessorial liability claims are a strategy by claimants to increase the likelihood of obtaining a settlement and compensation if there are potential recovery issues against an employer, for example because the business is insolvent. Claims are also a means of bolstering a claimant’s negotiating power by bringing action against former Managers or work colleagues, in the hope of securing a settlement or higher financial settlement.

Aside from the financial implications for individual Managers and HR professionals, accessorial liability claims can require a substantial amount of time and resources to resolve and are, therefore, often very stressful for individuals.

What to do: Managers and HR professionals should ensure they have a good working knowledge of the laws concerning the engagement, management and termination of employees and should maintain good records in cases of employee grievances, misconduct or performance management. In particular, they should comply with applicable company policies in effecting any employment related decisions, and where any type of adverse action is proposed against an employee (including a dismissal, final warning or demotion) Managers and HR professionals should carefully consider the reasons why this course of action is warranted to ensure that the reason does not include a prohibited reason and seek prompt legal advice.

We would be pleased to discuss developing tailored solutions to help you manage any of the workplace issues considered above on a day to day basis. Please contact any member of our Workplace Relations and Safety Group.

This article was written by Melissa Harvey, Associate and Clare Raimondo, Partner.


1Workplace Gender Equality Agency, What is the gender pay gap? (2017) https://www.wgea.gov.au/addressing-pay-equity/what-gender-pay-gap

2Ibid

3Australian Council of Trade Unions, Policies and Resolutions ACTU Congress 2015 (2015) https://www.actu.org.au/media/801491/actu-congress-2015-consolidated-final-policies-and-resolutions.pdf

 

New appointments

We are very pleased to announce that HWL Ebsworth has appointed two new Partners in the Workplace Relations and Safety Group effective from 9 February 2017. The new Partners are Chris Egan (Melbourne) and Brad Swebeck (Sydney). Both appointments are internal promotions which reflects our strong commitment to developing and growing our business and providing our clients with increased depth and breadth of expertise.

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