This is an AI Group podcast. In this podcast, we'll be discussing the most significant workplace relations issues of the month, February 2022. The full Members Only report is available on our website at aigroup.com.au in the news section under reports and policies. On that page, select workplace relations.
With me today to discuss the key aspects of this latest report is Stephen Smith, AI Group's head of National Workplace Relations Policy. Hi, Stephen. Hi, Tony. And I'm Tony Melville, our Group's Head of Corporate Affairs.
Out of all the many issues in this month's significant issues brief, we're going to focus on three of the big ones. The first is the High Court Independent Contractors' Decisions. The next is working from home arrangements. And the third is Domestic Violence Leave.
And we'll also mention AI Group's new policy in that case, as well as the workplace relations case that was in the Fair Work Commission. So we'll start off with the first issue. The High Court's handed down important judgments in two cases that provide guidance on the meaning of an independent contractor. The judgments in these cases give a lot more emphasis to the terms of the written contract between the business and the worker than the approach adopted in many earlier court judgments, which consider the difference between an employment relationship, as a contract of service, and an independent contractor relationship, which is a contract of four services.
So for the first one, if you can just take us through one after the other, Stephen, the first one is the CFMEU versus personal contracting provider, limited about a young backpacker. What's the background there and what was the outcome? Yes, in this matter, it related to a young backpacker who was engaged by a labour hire business to work as a labourer on a construction site. And the argument of the CFMEU in the matter was that the young labourer was not a genuine independent contractor, but rather should have been classified as an employee in that matter that went through the federal court, all the way up to the High Court.
Ultimately, the High Court did agree with the CFMEU that in this particular case, the person was an employee and not an independent contractor. And what's the significance then of that case on its own outcome? Well, it's actually a really, I guess, good decision for most businesses because it clarifies the test that applies in deciding whether someone is an independent contractor or an employee, and it puts a lot more emphasis on the terms of the contract than what some of the earlier cases did. So in this case, yes, there was a written contract with the person, but the contract included terms that were inconsistent with the nature of an independent contracting relationship.
Effectively, the court found that the person had no discretion really at all about what time they work, how they do the work, and the terms of the contracts were seen as inconsistent with the nature of an independent contracting relationship. So not a good outcome for the company involved, but it is a good decision for employers and businesses more generally because of the clarity that it provides. OK, so for employers then, the message would be you have to have a contract that if you have independent contractors, you have to have an agreement that is very clear and doesn't breach any of the rules around independent contracting. So you're much safer there and you don't have to dig through all your rosters and things like that to prove that an independent contractor is that correct.
Well, generally, it gives a lot more emphasis to the terms of the contract. It doesn't mean you don't need to look at the broader nature of the relationship because we do have sham contracting laws and it can be argued that a contract is a sham because it's inconsistent with the nature of the relationship. But what the High Court has said is that you've really got to start with the contract and give a lot of weight to the written contract. And then, yes, there are other factors that a court would look at, but there's been a lot less emphasis given to the factors that go to an employment versus an independent contracting relationship in that decision.
And then the one that we'll talk about very briefly, it was handed down on the same day. That's a ZG operations Australia proprietary limited versus JAMsec. Two truck drivers engaged by a company were held by the High Court to be independent contractors and not employees. What's the story there?
Well, these two truck drivers had worked for ZG operations for nearly 40 years. But the court looked at the terms of the contract and decided that, despite the consistency of the engagement over a very long period of time and the fact that they essentially only had the one client, that they were genuine independent contractors. So the rationale in the earlier decision we were just talking about with the CFMEU versus personal contracting and ZG operations versus JAMsec. The reasoning was the same, but the outcome was different in the two cases.
In the first case, the young backpacker was held to be an employee. In the second one, the two truck drivers were held to be genuine independent contractors. But in both cases, great emphasis was given to the terms of the written contract, which I think is the key thing about these cases. The contract becomes critical.
It's important for businesses to review their contracts with independent contractors to make sure that they include the right provisions and don't include provisions that really are inconsistent with the nature of the relationship. So, Steve, you also mentioned earlier that JAM contracting provisions in the Fair Work Act. So what should employers be able to look out for there? Because there are penalties up to $66,600 for each contravention.
Yes, these laws are very significant laws. And what employers need to do is make sure that they're not misrepresenting an employment contract as an independent contracting arrangement. So it goes to those sorts of issues we've been talking about, but it's very important to make sure that an independent contracting relationship is a genuine one, because otherwise there's a risk that it will be seen to be unlawful under their shame contracting laws. OK, so we'll move on to the second big issue, although we covered quite a lot there in the first one.
And that's about working from home. So many employers, these employees have worked from home for an extended period during the pandemic. That's as well over two years now. Currently giving consideration to what arrangements should be implemented for the future.
So let's go through a few of the issues that employers might need to consider. So the first one is the lawful, is what they're doing with their workers' lawful and reasonable. What's the issue there? Well, employers have the right to issue lawful and reasonable directions to their employees.
It's a common law right, and employees have a duty to comply with those directions. Now, this is a concept that is equally relevant to a working from home or a work-location issue. So, you know, of course, employers should try to reach agreement with their employees if that's possible on what sort of working arrangements will apply. But when push comes to shove, employers do have significant rights in relation to the way that work is carried out.
And also the location of work, but it comes back to what is reasonable and lawful in the circumstances. So now we're in the post-Omicron period. Is it going to be harder to prove reasonable when an employee can say, look, I can go to the pub or I can go to the movies without having to show them vaccinated? So how can you direct me to be vaccinated?
Your vaccination is another concept that relates to this issue of lawful and reasonable directions. But in terms of requiring people to come into the office, again, it'll be a matter of looking at what is reasonable and what is lawful in the circumstances. But, you know, of course, a lot of employers are looking at hybrid work arrangements. There are all sorts of new ways of working that are very common in the current environment.
So three days at the office and two days at home, that type of thing? Yeah, that type of thing. But of course, a lot of jobs cannot be performed at home. And of course, in those circumstances, people need to work in the factory or the office or wherever the workplace is the shop.
But there is an ability to work from home and people have been working from home. The rights of employers and employees may well come into the issue if there's any disagreement. And what about the other requirements in a public health order? So that's relevant as well, if there's a public health order that says, you know, you cannot work in a workplace or you have to work from home because you can't come into certain circumstances.
Yes, public health orders have, during the pandemic, required that employers allow employees to work from home where that's been possible in the circumstances. But a lot of those public health orders have now been lifted as we come out of the Amacron variant of the virus and at the time being, you know, most of those public health orders don't deal with this issue anymore. OK, we're going working from home. So will employers be needing to go back and have a look at contracts?
Perhaps that specify you will need to be in the workplace five days a week or even renew contracts that specifies you have to be there at least three days or make those sort of variations in a contract? Will workers doing that? Employers doing that at the moment? There's a lot of employers that are reviewing their working from home policies to bring them up to date and to make sure that they reflect contemporary arrangements.
But if there is a disagreement between an employer and an employee about work location issues, a good starting point to consider the rights of the employer and the employee is to look at the terms of the written employment contract, if it is set out in writing, because most of those contracts do specify a particular work location. So that's part of the employment agreement and that obviously carries a significant weight. You should also be looking at whether your directions could indirectly or directly discriminate against an employee as well due to some protected attribute. Yes, there are state and federal anti-discrimination laws that may be potentially relevant.
So for example, if an employee in New South Wales had caring responsibilities and they were able to establish that they needed to work from home because of those caring responsibilities, then it would be a matter of looking at the rights of the employer under state legislation that exists in that state. But there are also issues around the inherent requirements of the job. So discrimination is not always unlawful and typically not unlawful if the employer needs certain arrangements for the inherent requirements of the job. And there are also federal laws.
There are provisions in the Fair Work Act which give employees the right to request flexible work arrangements based on their caring responsibilities. If a formal request is made under those provisions, then an employer can not unreasonably refuse that request. OK, and this could be a whole article for a podcast, Working from Home and Work Health and Safety and Workers' Compensation Laws. Is there anything you need to keep in mind in particular for people working from home?
Just one simple but extremely important point, that work health and safety laws and workers' comp laws apply equally when people are working from homes. So employers need to be very careful with this issue and to make sure that they've got systems in place to protect employees while they're at work, including while they're at home. And there are some obvious ways that that can be done like making sure that people are working safely. A lot of employers have checklists that employees are required to complete to make sure that their workstation and so on is safe.
A very important issue. It is. OK, so now just the last issue to discuss here is the Fair Work Commission's Family and Domestic Violence Leave Review. It's looking at whether award-covered employees should have paid family and domestic violence leave entitlements.
So our group's been playing a leading role in that. What are the issues you've been dealing with there, Steve? Well, the final hearings for this case are on in the week commencing the 28th of February, the date that we recorded this podcast. And it is a very big case.
The final hearings will go on for several days. There's been a lot of material filed. The unions are seeking 10 days of paid domestic violence leave. Currently in the National Employment Standards, it's five days of unpaid leave.
Of course, this issue of domestic violence is an extremely important community issue. Employers do and should be very mindful of the importance of this issue and the assistance that employees might need. This is a case about whether the safety net should be varied. And in AI groups view, it's not appropriate to require all employers, even small businesses, to be providing 10 days paid domestic violence leave.
There's a lot of government assistance available in this area, which is entirely appropriate. And it will be interesting what the Commission decides after the final hearings. OK, and when can we expect that? Well, there was a decision in March.
Then it's however long they take to hand down their final decision. But you would imagine that's likely to be by the middle of the year. OK, and so just one final issue relating to that and for this podcast, what's our group's proposal? We've got a counter-proposal on the domestic violence leave.
Yes, in our policies that we put out ahead of the federal election, we're calling on political parties to support a government-funded paid domestic violence leave scheme. So the way that this scheme would operate that we proposed, it's a bit like the paid parental leave scheme. The Fair Work Act provides an unpaid leave entitlement, and this would provide government-funded leave to the level of the National Minimum Wage for anyone that takes leave for domestic violence purposes. So we think it's got a lot of merit and we're hoping that whichever party wins government will implement this policy.
And the key there is government-funded leave. Yes. OK, so we'll wrap it up there. If you want to see that full policy paper, the series of election papers we're putting out, election statements, you can find it on under news on ARgroup.com.au and it's the gender equality diversity and inclusion policy paper.
There's also a link in the significant issues brief itself. So the full members only report, just as a reminder, is available on our website, ARgroup.com.au in the news section under reports and policies. So with me today has been Stephen Smith, our group's head of National Workplace Relations Policy. Thanks a lot, Stephen.
And that's all for now. See you next time.