CHANGES TO WORKCHOICES

Including some good news for employers on record-keeping

On 13 November 2006 the Federal Government announced amendments to the Workplace Relations legislation. Employers should be aware of changes relating to:

• standing down employees without pay;
• record-keeping requirements;
• accrual and payment of leave;
• “cashing out” of personal leave and annual leave; and
• redundancy entitlements in workplace agreements.

The Government is expected to introduce the amendments to the Workplace Relations Act 1996 (‘the Act’) and the Workplace Relations Regulations 1996 (‘the Regulations’) into Parliament in mid December.

These changes will add to the amendments already made in September regarding:

• employers imposing penalties on employees in relation to personal leave;
• written elections for cashing out leave; and
• cashing out of ‘pre-WorkChoices’ personal and compassionate leave under workplace agreements.

Which changes are already in force?

No penalties for employees taking personal leave

Employers are now prohibited from imposing penalties on employees for:

• being absent from work due to illness, injury or emergency (affecting the employee or a member of his or her family or household); or
• failing to provide the notice or evidence required to substantiate such an absence.

“Penalty” is defined to mean a deduction from wages, a reduction of entitlements or a requirement to make a payment to the employer. However, if the employee fails to comply with the notice and evidence requirements contained in the Act, he or she is not entitled to payment for the period of personal leave in question. The changes mean that employers cannot impose further notice and evidence requirements (beyond those contained in the Act) as a precondition to payment of leave entitlements.

Workplace agreements must not include a term imposing a penalty on an employee in relation to these matters. Otherwise, the employer may be liable for fines for including prohibited content in the agreement.

Written election for cashing out annual leave

Under the Act, annual leave entitlements may be exchanged for cash, if the employer and employee agree in a formal workplace agreement. The Regulations now require that the workplace agreement must also state that the leave can only be cashed out by written agreement. Otherwise, the provision may be regarded as ‘prohibited content’, exposing the employer to substantial fines.

New provisions enabling cashing out of personal leave

An employer and employee may include a provision in a workplace agreement enabling cashing out of personal/carer’s leave and compassionate leave which accrued before 27 March 2006. The cashing out must be by written agreement.

Which changes will be introduced to Parliament shortly?

Standing down employees without pay

Employers will have the right to stand down employees without pay, where the employees cannot be usefully employed due to factors outside the employer’s control (such as natural disaster or industrial action).

Stand down clauses are contained in some employment contracts, workplace agreements and awards. However, in the absence of such a clause, employers have in the past been faced with the choice of either paying employees (even where no work is available) or terminating their employment. The introduction of a legislative right to stand down employees in certain circumstances will provide a middle ground.

Record-keeping requirements

After concerted campaigning by employer organisations, the Government plans to significantly reduce employer record-keeping obligations.

Employers will only be obliged to keep records which are sufficient to show compliance with obligations in relation to wages and leave. For example, employers will be required to keep:

• records of hours worked by casuals and irregular part-time employees, when they are paid on an hourly basis;
• records of hours for which an employee is entitled to overtime or penalty rates;
• any written agreement in relation to matters such as cashing out of leave or averaging of hours of work.

Accrual and payment of leave

Annual leave and personal/carer’s leave will accrue based on the hours worked, subject to a cap of 38 hours per week. This means that working overtime will not result in increased leave entitlements accruing.

The payment rules for personal/carer’s leave, compassionate leave and leave for pregnant employees who cannot be transferred to a safe job, will also be changed. Employees will be entitled to payment at their base rate of pay (not including overtime, allowances or penalty rates). This is in line with the current rules regarding payment for periods of annual leave.

Cashing out leave entitlements

The Act will be amended to enable employers and employees to agree to cash out personal/carer’s leave accrued since 27 March 2006. This will be subject to the safeguard that full-time employees must have at least 15 days’ leave remaining after the cashing out (pro rata for part-time employees).

Preservation of redundancy entitlements in workplace agreements

The Act will be amended so that, where an employer terminates a workplace agreement, the redundancy provisions in that workplace agreement will continue to operate for 12 months. However, if the employee/s agree to enter a new workplace agreement within that 12 month period, then the redundancy provisions of the old workplace agreement will no longer apply.

Conclusion

It is likely that these will not be the last changes to this complex legislation, with Prime Minister John Howard quoted as saying, “We’ll continue to finetune the legislation”. Future Employment Alerts will keep you up to date with relevant details of these amendments.