Todays presenters Andrew Burnett Bruno Di Girolami Lew Clark - - PDF document

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36 Offices in 17 Countries

Webinar Series Employment Laws Around the Globe

Australia March 14, 2012

Andrew Burnett Bruno Di Girolami

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Today’s presenters

Andrew Burnett Partner T +61 8 9429 7414 E andrew.burnett@squiresanders.com Bruno Di Girolami Partner T +61 8 9429 7644 E bruno.digirolami@squiresanders.com Lew Clark Partner and today’s Moderator T +1 602 528 4065 E lew.clark@squiresanders.com

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Today’s presentation

Employment Law Around the World: AUSTRALIA

• Introduction
• The Fair Work Act Summarised for New Business
• Industrial Relations and Enterprise Bargaining – A Framework
• Can You Bring Your Own Workers into Australia?
• The Safe Workplace
• Foreign Entities and the Australian Workplace

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Sources of law

• The Australian Constitution
• Fair Work Act 2009 and other federal legislation
• State legislation
• Modern Awards
• Enterprise Agreements
• Employment Contracts
• Case Law

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Historical Background

• Since 1901 Federal Constitution.
• Constitution sets out by subject area powers of Federal Parliament to make laws.
• State and Territories also make laws but where inconsistent with Federal laws, the

Federal laws apply.

• Federal Parliament has only a limited “labour power”.
• States developed own employment regimes.
• Power shifted to centre but Federal Parliament limited by the “labour power.”
• Dramatic shift in 2006 when “corporations power” in Constitution used as basis to

enact Federal employment laws binding all Australian corporate entities.

• National regime under the Fair Work Act 2009 (FW Act) regulates most employment

in Australia.

• States referred powers to Federal government.

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The Fair Work Act Summarised for New Business

Types of Employment are:

• Full-time (fixed term or permanent ongoing)

Employees generally work 38 hours a week and receive a range of entitlements;

• Part-time (fixed term or permanent ongoing)

Employees work regular hours but fewer than full-time employees Same entitlements as full-timers - in proportion to hours worked;

• Casual

Requires a certain informality, uncertainty and irregularity of engagement. Employer can elect to offer work on particular day and employee can elect to work. Paid by the hour plus a 25% loading on applicable hourly rate to compensate for not receiving entitlements of full-time or part-time workers. Replaces personal/carers leave, annual leave, notice and redundancy pay.

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The Fair Work Act Summarised for New Business

Employees and Independent Contractors

• FW Act applies to employees only - not to independent contractors.
• “Employee” defined by common law tests. Criteria to determine

employment set out by case law.

• Recent judgements reflect control, ability to create goodwill and power to

delegate as key criteria.

• Independent contractors must: supply tax invoice with ABN; provide for

insurance; meet their tax obligations and pay their own superannuation.

• FW Act seeks to address significant blurring of the two in recent years by

prohibiting “sham” contracting.

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The Fair Work Act Summarised for New Business

Safety Net

• FW Act provides two part safety net protecting minimum wages and

conditions for employees.

• Safety net consists of:
• 1. National Employment Standards; and
• 2. Modern Awards.

(Provide additional ten minimum standards tailored to particular industries and occupations. Include pay scales and apply nationally.)

• Effective from 1 January 2010.
• Safety net standards cannot be modified to employee’s detriment by

contract or agreement.

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The Fair Work Act Summarised for New Business

National Employment Standards (NES):

• 1. Maximum weekly hours of work;
• 2. Requests for flexible working arrangements;
• 3. Parental leave and related entitlements;
• 4. Annual leave - 4 weeks paid leave per year;
• 5. Personal / carer’s leave and compassionate leave;
• 6. Community service leave;
• 7. Long service leave;
• 8. Public holidays;
• 9. Notice of termination and redundancy pay; and
• 10. Provision of a Fair Work Information Statement

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The Fair Work Act Summarised for New Business

Modern Awards

• Provide 10 basic entitlements in addition to NES relevant to the

particular industry or occupation of the employee.

• Modernisation process under FW Act reduced Awards from several

thousand to 122 key industry awards.

• Each Award has a coverage clause and lists employee classifications.
• High income threshold for application of Modern Award. Currently

AUD$118,100 – indexed annually.

• Modern Awards include individual flexibility clause allowing employer

and employee to alter conditions as long as overall employee is not worse off.

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The Fair Work Act Summarised for New Business

Modern Award entitlements:

• 1. Minimum wages;
• 2. Type of work performed (full time/ casual);
• 3. Arrangements for when work performed (span of hours, rostering,

breaks);

• 4. Overtime rates;
• 5. Penalty rates;
• 6. Minimum annualised wage arrangements (as an alternative to

penalty rates);

• 7. Allowances;
• 8. Leave, leave loading & leave arrangements;
• 9. Superannuation; and

10.Consultation, representation and dispute settling procedures.

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The Fair Work Act Summarised for New Business

Regulatory bodies established by the FW Act

• Fair Work Australia (FWA)

Independent tribunal established to oversee regime. Powers to vary awards, approve agreements, determine unfair dismissal claims and make orders in relation good faith bargaining, industrial action and workplace disputes.

• Fair Work Ombudsman

Inspectorate to monitor compliance and provide information and advice.

• Specialist Fair Work divisions of the Federal Court and Federal

Magistrates Court.

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The Fair Work Act Summarised for New Business

Minimum Wages

• Minimum wages and loadings set by the Minimum Wage Panel.
• Annual review is non-adversarial.
• Updated rates take effect from 1 July each year.
• The national minimum wage acts as safety net for employees not

covered by awards or agreements. Currently AUD$15.51 per hour or AUD$589.30 per week.

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The Fair Work Act Summarised for New Business

Unfair Dismissal

• Employee may challenge a dismissal on grounds it was unfair or harsh, unjust or

unreasonable.

• Exclusions apply:
• 1. Employed for under 12 months if small business employee;
• 2. Employed under 6 months;
• 3. Earn over high income threshold;
• 4. Dismissed due to genuine redundancy;
• 5. Casual who don’t meet requisite employment periods.
• Claims must be lodged with FWA within 14 days.
• FWA conciliates in informal manner to resolve matter.
• Unresolved claim determined at conference or hearing.
• Determination made on spot - reinstatement or an order for compensation.
• Small Business Fair Dismissal Code

Sets out a warning process and compliance with code disallows claim.

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The Fair Work Act Summarised for New Business

Workplace Rights – the General Protections

• Certain workplace rights identified in FW Act as protected by law.
• Workplace rights are an entitlement under Award or Agreement, or a workplace law.
• Unlawful for person to take adverse action because another person has, or

exercises, a workplace right.

• Adverse action includes dismissal, discrimination, refusing employment or altering

position of person.

• Certain industrial activities expressly protected as workplace rights.
• Remedies include compensation and pecuniary penalty orders..
• If dismissed, employee has 60 days to commence proceedings. (In effect offer an

alternative means of redress to unfair dismissal).

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Industrial Relations and Enterprise Agreements

Enterprise Agreements

• Enterprise Agreements (or collective bargaining) central to FW Act regime and

highly regulated.

• Can cover matters pertaining to employment relationship and relationship between

the employer and relevant employee organisation. Will prevail over applicable Modern Award.

• Parties required to bargain in good faith.
• Agreements cannot be made or approved without agreement of employer. May be

robust industrial bargaining with unions permitted to take protected industrial action.

• FWA has powers to assist bargaining process and to arbitrate settlement of
• disputes. Powers generally used to break bargaining deadlock in damaging

industrial dispute.

• Advantage to employer is no protected industrial action during life of Agreement.
• Agreements are for limited periods and operate 7 days after approved by FWA.

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Industrial Relations and Enterprise Agreements

Enterprise Agreements Types

• Single Enterprise Agreements – between employees and single employer or

multiple employers with a ‘single interest’.

• Multi-Enterprise Agreements – between employees and multiple employers that do

not have a ‘single interest’.

• Greenfields Agreements – between employer and relevant employee organisation

before employer has engaged employees. Mandatory Content

• Agreement must contain certain terms:

1. Flexibility term that allows individual flexibility arrangements; 2. Dispute settlement process; and 3. Consultation term allowing employee representation when major workplace changes.

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Industrial Relations and Enterprise Agreements

Enterprise Agreements Good Faith bargaining requirements are to:

• Recognise and bargain with other bargaining representatives involved;
• Attend and participate in meetings at reasonable times;
• Disclose relevant information in timely manner;
• Respond to proposals made in timely manner;
• Genuinely consider proposals of other bargaining representatives and

provide reasons for responses; and

• Not undermine freedom of association or collective bargaining.
• Do not require bargaining representatives to make concessions during

bargaining or reach agreement on terms to be included in the Agreement.

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Industrial Relations and Enterprise Agreements

Union Right of Entry

• Set out in FW Act and State safety laws.
• Union Officials with Right of Entry Permit may enter workplaces to:

1. Investigate suspected breaches FW Act, or Fair Work instrument that relates to or affects union members on premises; 2. Hold discussions with employees who are, or who are eligible to be members of union, and who wish to participate in discussions; 3. Investigate breaches of State occupational health and safety laws.

• “Fit and proper person” test required before Official issued with a Right
• f Entry Permit.
• Entry Notice required prior - an Official must give employer 24 hours

notice of proposed entry during working hours.

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Industrial Relations and Enterprise Agreements

Industrial Action

• Industrial action is either “protected” or “unprotected” under FW Act.
• Distinct consequences arise from both types of action.
• Protected Action is taken in context of legitimate collective bargaining and meet

stringent requirements. Those engaging in action must be “genuinely trying to reach an agreement” and employees must have voted in favour of action in a secret ballot.

• Protected Action status gives those taking part immunity from legal proceedings.
• FWA charged with preventing or stopping industrial action it believes will not be

protected.

• FWA can also make orders to stop Protected Action.

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Other relevant legislation

Parental Leave

• New entitlement to Paid Parental Leave provided by federal government.

Allows for minimum wage to be paid for 18 weeks to primary carer if qualify according to work and level of income test. Anti-discrimination legislation

• Range of anti-discrimination legislation - Federal and State.
• Federal legislation includes:

Age Discrimination Act 2004; Disability Discrimination Act 1992; Human Rights and Equal Opportunity Commission Act 1986; Racial Discrimination Act 1975; and Sex Discrimination Act 1984 (Australian Human Rights Commission, 2007).

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Other issues relevant to New Business

Taxation

• Income Tax paid by employer to ATO under Pay As You Go (PAYG) tax regime.
• Payroll Tax - State based assessed on the wages paid by an employer. Self-

assessed by employer and payable once threshold reached.

• In NSW threshold is $678,000 and rate 5.45%. In WA threshold is $750,000 and rate

5.5%. Superannuation

• Superannuation is a retirement (including pensions) program.
• Employers required to pay an additional amount based on a proportion of an

employee's salaries and wages (currently 9%) into complying superannuation fund.

• The rate will be 12% by 2020.

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Can You Bring Your Own Workers into Australia?

Visas

• Different classes of Visas exist for migrant workers.
• Some Visas place restrictions type of work done.
• Regardless visa, same minimum employment entitlements apply as if

migrant worker was an Australian citizen.

• May be permanent (granted for 5 years from date of grant) or temporary

(maximum of 4 years.)

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Can You Bring Your Own Workers into Australia?

Permanent Visa Employer Nominated Migration

• Visas designed to allow Australian employers to nominate skilled

workers from overseas for permanent residence in Australia.

• Three categories exist:
• 1. Employer Nomination Scheme (ENS);
• 2. Regional Sponsored Migration Scheme (RSMS); and
• 3. Labour Agreements (LAs).
• The Invest Australia Supported Skills (IASS) program, allows

international corporations to transfer key managerial and specialist personnel to Australia on permanent visas. If nominated by an employer for an IASS program, the applicant can apply for a Labour Agreement visa

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Can You Bring Your Own Workers into Australia?

Temporary Visas

• Business visitor visas generally allow stay up to 3 months to conduct

business activities but limited work rights. This includes:

• 1. Electronic Travel Authorities- Business Entrants – subclass 977 and 956;
• 2. Business Short Stay Visa subclass 456;
• 3. Sponsored Business Visitor (Short Stay) Visa subclass 959.
• Business Long Stay Visa – subclass 457 allows stay between 3 months

and 4 years, generally where applicant sponsored by a business to fill specific position. Process:

• 1. Approval of employer as a Standard Business Sponsor
• 2. Nomination of visa application
• 3. Application by individual
• Other specialist work visas available (Eg: Entertainment, sport, media)
• All business visas are subject to condition 8112. Prohibits holder from

engaging in work which could otherwise be done by an Australian.

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The Safe Workplace

New Safety Laws

• Harmonisation of Australian Workplace Health and Safety laws well

underway.

• Safe Work Australia established a Model Work Health and Safety Act in

2009 to replace many different State Occupational Health & Safety laws.

• From 1 January 2012 new Act was effective in federal jurisdiction, States

New South Wales and Queensland.

• Other jurisdictions (South Australia, Victoria, Western Australia and

Tasmania) expected to pass Act this year, to be effective from 1 January

• 2013. Some States are claiming will make minor amendments to Model

Act.

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The Safe Workplace

Harmonised Laws – Areas of Change

• A “Person Conducting a Business or Undertaking” (PCBU) replaces

previous terms of “employer” and those with “control of workplace”. A PCBU captures many more types of businesses and individuals.

• Broad definition of “worker” - person who carries out work in any capacity

for a PCBU. Not limited to employees. Workers also duty holders.

• Officers of a PCBU subject to a positive duty to exercise due diligence in

relation to health and safety. Broad definition of “officer” from Corporations Act.

• Significantly increased penalty regime

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The Safe Workplace

Penalty Regime

• Separate personal liability of officers irrespective of company liability
• Category 1 (recklessness)
• Maximum penalty is:
• $3million for company
• $600,000 or 5 years jail for an officer
• Duty subject to what is ‘reasonably practicable’

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Foreign Entities and the Australian Workplace

Entity carrying on business in Australia

• Register with Australian Securities and Investment Commission (ASIC),

before permitted to “carry on business” in Australia.

• Meaning of “Carry on Business” depends on circumstances. May be a

single transaction if substantial. Likely to be if engaging in continuous, systematic or regular business.

• There are two options for a company wishing to “carry on business” in

Australia:

• incorporate a subsidiary as an Australian Company; or
• register as the local branch of a foreign company.
• Although both processes require range of documents lodged with ASIC

and fee paid, incorporating a subsidiary is generally faster and cheaper.

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Foreign Entities and the Australian Workplace

Registration requirements

• Foreign registered bodies require at all times an Agent (either an

individual or a company) resident in Australia authorised to accept notices etc and who may be liable for acts of the foreign company in Australia.

• Registered bodies notify ASIC at least once every calendar year and at

intervals of no more than 15 months of balance sheet, profit and loss and cash flow statements, and other changes as they occur.

• Australian subsidiaries require an Australian resident director who will

have certain duties towards the company.

• General reporting requirements in accordance with the Corporations

Act.

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Questions?