This is an AI Group podcast. In this podcast, we'll be discussing the most significant workplace relations issues that members will need to grapple with and get across as we start 2023. The full members only report for January is available on our website at AIgroup.com.au in the news section and reports and policy papers. We've made today to discuss the key aspects of this latest report is Brent Ferguson, AI Group's head of National Workplace Relations Policy and I'm Tony Marvel, our group set of corporate affairs.
So we look at three issues from this quite lengthy report today in this podcast. The first is the next trench of IR reforms. Second is the proceedings relating to the setting of principles for agreement approvals that I know a lot of you will be looking at during the next 12 months. And the fair work commissions imposed new annual leave shutdown provisions in modern awards, which are a much just a Christmas but for some just be over but it's only something need to be crossed this year.
So, okay, let's go to the first one. Now, this is the big one for the year. Last year was the biggest IR changes in living memory, at least a decade anyway. So, but next year this coming year, 2023 is going to see a whole new raft of changes.
So let's go through them. These are matters that are outstanding from from what the government talked to the last election. So the first one is rearing. So again, casual employees.
What's the government hoping to do that? Well, this is the first of a trench of reforms that the government's proposing to move on, you know, from our understanding engagement with them this year. It's one of the elements of the policies that the government took to the last election. Now, in essence, they've said that they're going to look at the definition of who will be a casual employee for the purposes of a fair work act.
Now, there's a technicality associated with that and some detail, but I think what members should be prepared for is proposed legislation in some work by detailing the use of casual employees and certainly the use of regular casual employees. Now, we'll have to see the full detail and consultation about what that looks like, but it does raise again a specter of, you know, a real restriction on the use of casual employment has something that we've already been engaged with the government. So it's not about completely undoing the high court decision on defining a casual because when that happened, that was a huge side release. So, a lot of companies were getting millions of dollars in back.
Yeah, this is the complexity. The election commitment was to look at the definition of careful employment and reinstate the common law test. Now, members will recall this was a huge source of controversies and a number of problematic federal court decisions that, you know, it really exposed employers to millions, tens of millions, of course, industry of liability for back pay in terms of entitlements. Now, ultimately, two things happen to two really employees at that.
First, the coalition moved to pass legislation which inserted a workable definition of careful employee in the act, which effectively removed that liability. But secondly, ultimately, the high court came down with quite a favorable definition, which formed the base of the common law definition of careful employee, which reinforced that outcome. Now, as the election commitment was to change the definition under the act to reflect the common law test, but that test has changed. Well, hopefully any changes wouldn't be retrospective.
I think that's what we'll be looking for. The real problem that employers faced was this potential retrospective element to the decision in the federal court in the sense that people who they had thought were engaged as a casual for many years could have been found to not be the true casual for the purposes of their work act, but there was not being the liability to certain legal departments. Now, that's what we'll be arguing for is that whatever change is made, makes it workable for industry and certainly needs to avoid raising this prospective industry employers being settled with costs that they hadn't anticipated based on a reclassification of a very permanent employee, or what casual ones are permanent employee value. Okay.
So the next one is expected, which changes this year, label her firms and same job, same pay. So the government has indicated that it will move on its commitment to regulate in relation to the same job, same pay principle. There's some complexity here, and I think that complexity is why the government hasn't already moved on this area. But the core of the issue is that the government, as said, they will look to ensure that employees are engaged to a labor hire arrangement, receive the same pay as employees who are directly employed to do comparable roles by an individual employer.
So it will have big implications at the very least for labor hire companies and for employers that utilize labor hire. And the example that we often use is an airline employing people like if their own staff special treats on the airlines and special deals, labor hire for working with that same airline can't. Well, and that's part of the issue. It's a government understanding.
Well, we've already been in lockups with the government where we've been talking with the department for employment with populations through the complexity of this issue. It sounds good, but the headline is that simple, same job, same pay, but there are all sorts of complexities of how to actually work out the pay and how an employer can actually utilize the arrangement. So how you define the same pay is one of the key issues that we're going to have to look very hard for to ensure that it's workable. Okay.
Now employee like forms of work. This is key workers. I think you mentioned about the people. This is a whole area that the government could look at filling with with lending.
This could end up being a very profound change. We've got a lot of numbers in this area. We do. And it's quite a bit in terms of this scope of this reform potentially now.
What the government has said in essence is that they're intending to legislate to enable the commission to set terms and conditions for employment like workers. Now the obvious examples are the gig workers that includes delivery drivers and so forth. But it's potentially there's potential for this to have much broader ramifications and result in the regulation of contracting arrangements generally. But certainly the key focus of this is potentially empowering the commission to set terms and conditions for the gig economy.
And we've already again on this discussion with the department about what that might look like with a gig award. Well, it could be. But if you look at other jurisdictions, for example, in the NSW jurisdiction, the commission in that state is already empowered to set industrial instruments that set minimum terms and conditions for certain truck drivers who are engaged as contract drivers or independent contractors. For many people, this will raise alarm bells about the prospect of the return of the RSRT.
That was the road safety remuneration tribunal. You may remember, it was a tribunal that operated briefly and set terms and conditions for contractors in the trucking industry quite controversial because when it actually did set terms and conditions, how could you demonstrate an impact on the liability of those contractors? It was hugely hit and it was quickly abolished. So the concern is that how the government ensures that those mistakes are the part not repeated in regulation.
Okay. Another one that's bearing its head again is criminal offences for wage theft. Well, this has been on the agenda for some time. So employers won't be shocked about this.
Certainly the government has said what it's intended to do is about move to introduce wage theft laws. They are in effect criminal offences for very serious instances of underpayment of wages. One of the key issues there will be what is the test for how this applies? We need to ensure that he's only for those very serious, deliberate, systematic attempts, if you will, to underpay people that is caught in subject and poised to be sought to penalties.
This will be a huge issue and it will be a matter that raises the importance of ensuring compliance in order in relation to the application of all of your rewards and industrial instruments. But certainly the should be no surprise as I might expect that will be promptly on the government agenda. So another one is putting within the national employment standards the ability for employees to pursue their unpaid super. Is this a big change?
Well, whether it's a big change or not, partly depends on what the government does. But at the moment, superannuation arrangements are largely regulated or applied through the ATL. Of course, the proposition is that we should be intending to introduce obligations in relation to superannuation in the national employment standards. We would intend to make it easier for parties to seek enforcement of those entitlements.
So again, we have to look at the detail of how that's done. But that potentially is a big change to the system because awards and industrial legislation haven't dealt with. You know, comprehensively the superannuation for a very long time. Okay, you mentioned we've talked a lot of these things.
It's not going to be repeat is there of all the problems we had during 2022 with a multi employer bargaining and the seeming lack of consultation. What are we doing to try and keep this on track as far as the political is concerned? Well, we'll look at on a number of these issues. I was already getting consultation with the department around what the regulatory response might look like.
But certainly, I'm going to be with the minister has so far involved a commitment to further consulting with us to avoid some of what we've received to be deficiencies in the process last time. We've been very public about our concerns. It was rushed. It was enough consultation.
Certainly we're calling out for those mistakes, not to be avoided. And we're very hopeful that that will happen. But I think industry needs to be aware that the government obviously did have a number of significant election commitments and certainly governments be very upfront about their desire to implement those election commitments and to do so expect this year. Okay, well, on these issues, any of those ones that have raised some questions for you can read software, his email, you want to email print at print.foguson at a group.com.au.
So that's the next stretch of our reforms. The last stretch of our reforms included the provision under the Secure Jobs Better Pay Act to make some significant changes to enterprise agreement approvals. So just in short, what is that all about? Well, one of the issues that we cover often in this significant issues report and members can read about is proposed changes to the approval of enterprise grid making the process for approving and in simple terms.
One of the issues that will change is that there's going to be a simplification of what's required in terms of pre-approval steps. Now, at the moment, members will be painfully aware that the acts include the very prescriptive set of requirements around what must be done and what must be done to provide employer in order to have an agreement made and approved. They tell rules around how to explain in terms of the agreements, how you organize the vote, et cetera. Now, very broad terms.
What this legislation will do is remove a lot of that prescription and replace it with an overarching test that the Commission has to apply, which is in essence to be satisfied with the agreement was genuinely approved by the workforce. So in essence, the act requires the Commission to set a new requirement on the Commission to set a set of principles that will govern or explain what needs to be done or an agreement to be genuinely approved or genuinely agreed to by the workforce. So in essence, the act requires the Commission by June to set a range of principles that explains what an employer needs to do in order to have an agreement approved by its workforce. Those principles will provide guidance to employers.
They can follow those principles and provide guidance to the Commission as to when it should approve an agreement. So, in some departure from those principles, that doesn't mean that the agreement won't be able to be approved by the Commission. It is satisfied that the employees did generally agree to it. Because there were cases under the current system where if you're a bit late or you know there was something wrong with the paperwork, it was basically rejected and had to start again so a little beyond.
Most of the work will be gone so that the system will be far less prescribed as it does to be this overarching obligation and I'm supervising some work but this general overarching obligation is satisfied that the agreement was generally agreed to by the workforce and there'll be certain principles that employers will be able to follow which would guide them so that they follow the principles to be satisfied with specs, the Commission will approve your agreement but having a little deficiency in the process and so forth will be far less likely to be careless for rejection. So that's the intent to be improved but how beneficial this is will depend in part upon what those principles look like. And that really represents what we're dealing with now. The Commission has announced that it's about to commence proceedings that will result in the setting of those principles.
That's going to start as soon as it's as early as this week potentially with the Commission engaging in some consultation with paid councils like an AI group about what those principles should look like. So we'll be asking obviously for the view so you can see there's 27 March as a deadline for consultations, submissions to be filed. Yeah so what at the moment we welcome any feedback from members around what those principles should look like and issues and actually when approval process that is caused particularly concerned. The full mention said that they're going to consult with AI group as early this month or early February with a view to then releasing a discussion paper and then there will be some proceedings that involve AI group making submissions about what those principles should potentially look like.
And ultimately a draft set of principles will be released and they'll be Skype for parties to make submissions about that. And we also want to do that but consultations beginning now is a short point. So if you haven't used about please do reach out. Okay, and the last time we talked about today is the changes to shutdown provisions in modern awards are now sitting around Christmas but they shut down at all times of the year after various enterprises.
Yeah, there are various. But the issue here is that it's very common for water and industrial instruments that matter to contain provisions that enable employers to infect shutdown the operations for a period of the purposes of putting people on annual leave. You're like an oil refinery that might need to do a shutdown because we're maintenance. Yeah, so lots of manufacturing facilities shut down in order to do two things one facilitate maintenance of the operations but also let their start take leave and coordinate away so they take you all the same time.
It often happens at various points in the year but most commonly the shut down arrangements happen at Christmas and so forth. Now a lot of employers have in the past water and water terms but enable them to direct employees to take in relief. And if you're going to have enough annual leave, they're going to be able to directly to direct and take unpaid leave for the duration of that shutdown. But there's been a really profound change through this decision.
So this was a combination of the matter that really run for a number of views. In essence, the full mention of the Fair Work Commission's review the shutdown provisions in modern awards and decided that it will replace them with a standard of water clause dealing with these issues. The beginning issue for a lot of employers or the biggest issue is that they've also formed a view that they don't have power to include within that clause a term enabling employee to direct an employee to take unpaid leave. If they haven't got enough annual leave to cover the period of the shutdown.
Now what that means is that the new model term that's going to be inserted into all modern awards and current code shutdown provisions won't include any capacity for an employee to directly take unpaid leave and that could have some significant implications for employers if they don't manage it carefully. So we've prepared a member of ICE that explains what the new model terms is, explains the ramifications for employers but also goes through some options that employees have for managing this outcome and for managing leave a clause ahead of future shutdown arrangements because you know you've got shutdown coming up in July, and you'll be looking at to ensure you start up, still believe. That's right, there's a few options but I think turns your point at one of the key responses is to make sure you manage leave a clause and request for accessing leave now ahead of any future shutdown to ensure as far as possible that your workforce has sufficient annual leave to cover the duration of the shutdown. And the decision before bench suggested that you know many circumstances it's going to be reasonable to sign up to employee request for annual leave if you need to refuse that so that they maintain a bank of leave to cover a future shutdown.
So that's one of the issues we raised is that there are going to be some negative consequences for both employers and employees from this decision it's going to be lots of employers take a much more restrictive approach to the management of annual leave, try and ensure people to have enough leave to cover their shutdowns. Otherwise, if someone doesn't have the leave then you'll have to pay them anyway. We'll take it off against future leave. Yeah well you can there will be a capacity to agree to and leave in advance or to employee taking unpaid leave and that was one of the outcomes that we pressed for.
But one of the risks depending on how you set up your contracts and depending on what your industrial insurance says is that you may not have a capacity to make them take unpaid leave anymore certainly might have one pursuant to the award, which could lead you in a situation of potentially net to cover that's going to be a good deal. So that's a good question of potentially net to cover the pay for that period now. There are some options and our voice canvases those in details of course the time of our group that's always can talk individual employers through that but managing the leave is a key issue. There might be some capacity also use the standard provisions in the act in some circumstances to make people take to be stood out with that pay but that'll get quite complicated and quite a character.
There's advice about this specific circumstances. Okay, and again this is for members so call the workplace the past time for members or call that might be way if you want to be coming up on 300 double five double six dollars seven or four workplace lawyers will say email. And then before those are our group by calling the device and the advice that we've set out to members who can be an option for managing the outcome. So check the advice out and if you want some more support or maybe even to get some review your own situation, give us a call.
It'll have the details for you now. That's fantastic. I'll wrap it up there. Thanks a lot.
Brin, a group of National Workplace Relations Policy and that full members only reports on the group website at group.com.au. Thanks a lot. Okay, that's all for now. See you next time.