This is an AI Group podcast. Hello. In this podcast today, we will be discussing significant workplace relations issues for the period May to June, obviously, year 2025. This podcast is referring to our member-only report, the Significant Workplace Relations Issues Report, which is available on our website at aigroup.com.au in the news section under Reports.
Once you get to that page, you need to select workplace relations. With me today is Brent Ferguson, AI Group's head of national workplace relations. Hi, Brent. Hi, you're this.
I'm Janesh Blackmore, a Principal Advisor in Brent's team. The Significant Workplace Relations Issues Report, which we are talking about today, covers a raft of material for our members. In this podcast, we focus on three key issues of note. First, we will talk about the post-election agenda and what might be ahead for 2025.
Secondly, we will cover related implications in two key proceedings before the Fair Work Commission. These are the working-from-home proceedings and proceedings concerning exemption rates, each focus primarily on the class award. Last, but not least, we will talk about the annual wage review decision for 2024 and 25. And without further ado, Brent, could you share with us what you think the key priorities are for the government in your head?
Yeah, happy to, Enes. Look, I think the first thing for members to appreciate is that they are going to be looking at a raft of further changes being implemented by this government during this term. Now, I think it's fair to say the scale of changes are going to be much less than it was under the last term, but it is important to appreciate that the Labor Party did take a reform agenda to the election. Now, it was narrow, and I think it really focused on what I'd advise for key issues, and I'll just take everyone through those.
Firstly, it did propose that everybody implement some changes in relation to parental leave. I think this is a low-people's radar, but what is essentially for shadowing doing is introducing changes to ensure that, you know, in the very tragic circumstances of a still birth of a child or early infant death, that it will legislate to require employers to grant paid parental leave to those employees, where they already have made a commitment to grant parental leave. Essentially, it would be ensuring that that event didn't dis-entitle an employee to something that they were otherwise entitled to. We have to say the detail of precisely what that will look like, but I do expect that that will be very high on the government's priorities.
Secondly, one of the changes that got a fair bit of media attention was a proposal to protect penalty rates. Again, we don't know precisely what the government's intending to do here, but what they essentially said is in response to cases being advanced by various employers, particularly AI group, that would have seen potentially changes made that would impact when you had to pay penalty rates, but they would introduce a legislative amendment that effectively prevented those sorts of changes being made, essentially ensuring that employees pay didn't go backwards because of any change to modern awards relating to penalty rates. Again, we don't know what that's going to look like, and we're already engaging with the government to ensure they take a sensible approach to that and not a heavy-handed approach. But again, I expect that will be very high on their priorities, because some of those cases that we're advancing ourselves already on before the Commission will talk about that in a minute.
A third area that people should be aware of is in relation to payday super-super. Again, this is not on everyone's radar, but the government prior to the last election made it clear that they were going to make a change in relation to super-annuation obligations. Currently, employers need to make super-annuation obligations every quarter, every three months. What they've said is they're going to shift that to every pay period.
Essentially, what the model I think they're looking at is requiring that you pay the super-annuation contributions to employee within seven days of the payday. That would be a big change for a lot of employers. We've been engaging with the Treasury in the lead-up to the development of that position, and then we'll recently be working directly with the Assistant Treasurer and his office to work through some of the practical issues associated with that change. But that is something that the government is looking to implement, and implement as a priority.
Again, they foreshadowed that that change would be in effect from the 1st July, 2026. On that one, we're very keen to hear from members of FABE concerns about that, and there's information about that in the report. The final change that I'll just call out is the proposed limitations on the Australian trade or non-cubed clauses in contracts. Now, in essence, what the government is looking at doing is prohibiting contractual terms that prevent employees who are earning less than the high-income and threshold.
That's 175,000 per year currently from being subjected to a clause that's not moving to a competitor post-your employment. Again, we need to see the detail around precisely what they're going to do. They have said they will consult around things such as exceptions or exemptions from this change and transitional arrangements. So what we're going to do is make sure we're in a position to engage with them constructively, to call out what exceptions they need to be.
So again, I'd encourage members to reach out to the team if they rely on those sorts of provisions so that we can understand why they're important and why they need to be some sensible exceptions. On that one, I'd flag that they've indicated that those changes would come in effectively in 2027, and they'd be prospective, so they'd be about new arrangements. Well, thanks, Brent. That's really interesting.
And I suppose with the makeup of the Senate, do you think that the Greens might have any influence on the agenda? Look, I think it's fairly clear that the outcome of the election, in particular, the Greens holding the balance of power in the Senate will have a potential impact on the high-out developments over this term. I think it's important for people to appreciate that the Greens themselves do have a significant IR policy agenda. The report goes through and identifies a number of their policy initiatives that they're pressing for, but it includes things like reproductive life.
That's paid leave to deal with issues about menopause and potential infertility. It also includes a proposal for four-day week or four leave entitlements for casuals, and that list goes on. So the scene is set for this, what I described, narrow agenda of Labor to potentially expand because of the makeup of the Senate. But I think it's also important to realise that the scene is really set for that agenda to grow for various other reasons.
Of course, the Greens have an agenda, but the ACTU and the Union movement also has an agenda. And again, the significant issues report identifies some of the key issues that the movement will push for. Aside from that, it's also important to appreciate that there are three reviews into the three tranches of legislative amendments that were pushed through last term that are scheduled to be finished this year or early next. And again, I expect that those reviews will flag potential areas for further amendments.
I think it's pretty clear Labor is going to concentrate on firstly delivering their election commitments, but also on betting down those changes. Now, it may well be that there are things that the Union movement press for through those reviews that they act on, but we ourselves will be pushing for sensible changes as well. Of course, the other point I'd just call out is that, of course, we've now seen the government also announce a productivity summit between the 19th and 21st of August. Now IR per se is not specifically going to be looked at as part of that productivity summit, but I think you can expect that various players will raise it.
I think it's pretty clear that the Union movement will prosecute an agenda which does impact on IR through that summit. So again, I think it'll be a busy period for workplace relations. The man me probably talking about things like AI and so forth within that context as well. Well, I think what we're seeing through various forums, you know, is that the Union movement and others are arguing for greater regulation around artificial intelligence.
And there is certainly a workplace relations flavour to that. It's pretty clear that the ACTU and the Union movement more broadly is starting to push for a range of safeguards around the use of AI. And again, we're involved in a lot of those discussions. I expect that will be a big part of the productivity summit.
Interesting times, July 2025 when it all kicks off again. I think it's going to be busy. I don't think it'll be a repeat of the jobs and skills summit that everyone recalls. But again, there is a burning need to do something about productivity.
So it's certainly something that we'll be looking at participating in constructably. I think members will be very pleased to hear that, Brent. So then, they're segueing nicely into our second topic. And this is really focusing on the Clark's Award and the exemption rate and the working from home proceedings.
I'm wondering, could you share with us your insights and how that might affect members? There are a couple of major cases that you alluded to about the Clark's Award on Ford. The first does relate to an exemption rate. And this is a proceeding sort of flat out of an application that we have advanced seeking changes to that award to include what is called an exemption rate.
We're arguing that where their employees who are relatively well paid employees, they're paid significantly above the award minimum rates of pay. The employer should be relieved of some of the highly prescriptive rules in the award. Some of the very detailed provisions, for example, around how you implement working arrangements. There's not a novel concept.
Many awards of ad exemption rates for high paid employees for a long time. We've already advanced our material in support of that change. But as I already said at the start of the podcast, the government has announced that it will pose changes to legislation specifically designed to counter the claim that we've run in that award case. So we'll have to work with the government now to see what impact that legislation will have on that case.
I think that's going to, I suppose, colour where we go without proceeding. And so, Brendan, I presume when we're talking about an exemption rate, we're talking about how if you pay a higher level, which could be, say, 25% or so, that would mean that you would not then need to pay penalty rates over time in addition. Yeah, so really it's about a clause that lets people pay people differently. Instead of having that hourly rate, where you pay a minimum hourly rate and a penalty rate and shift loadings and so forth on top, you could pay a higher annual salary, for example.
And be relieved of some of the really cumbersome requirements that go along with having to pay by the hour, particularly the record keeping requirements and so forth that end up attaching to that. And really the catalyst for this was because we've heard really consistently from members since that annualized salary decision was implemented, those who remember prior to the pandemic, that the record keeping requirements of the clerks award and some of the really prescriptive provisions around how hours of work is structured. Just really don't align with the realities of the way, meaning of the senior high pay clerical employees actually work. So that's the idea.
The basic proposition is that if you paid above a certain rate and were open to working through with the commission, what that rate would be, you wouldn't have to be paid in some of that. Prescriptive hourly penalty rate type model. And this would help employers, for example, with reducing risks of underpayment and stuff like that as well. All of that.
It's trying to reflect the reality that these are employees who are really paid to do a job quite often rather than just being paid by the hour. And they're often afforded a really flexible approach to the way they work and paid an annual salary and pay above the award. And it's intended to make it easier for employers to implement those sorts of flexible arrangements that are beneficial to employees. It's not designed as a way of underpaying penalty rates or anything like that as being sort of coloured by the union or characterised by the union movement.
But we'll see where we go. We need to wait for that legislation to land. We're actively working with the government now to try and make sure a sensible approach is taken so that we can, you know, some relief from employers around the record keeping requirements of that award. Sounds like a wing wind.
And then we've got the flexibility working from home stuff. Well, yeah, the working from home case. So this is a really interesting case. I think, you know, just to give you some perspective on that, really in early 2023 or late 2023, sorry, the Fair Work Commission was required to commence a review of all modern awards.
And part of what they were required to or requested to commission review was how they could make awards simpler and easier to use. And this was a request that the then Minister Tony Burke made it to Fair Work Commission. The Commission Commission, this review, it looked at how awards could be simplified. One of the important outcomes of that review was they decided that they would initiate a separate set of proceedings looking at the Clucks Award and specifically implementing a potential, developing a potential working from home clause.
And that clause is designed to facilitate arrangements being agreed to between employers and employees around working from home. And specifically, it's intended to remove any award derived barriers to implementing working from home arrangements. So not like a right to request to work from home? Well, I think the union movement is very clearly going to press for a, you know, a right to request to work from home and not just a right to request.
They will press for a right to work from home. Now, you could expect that that right to work from home will be very strongly opposed by the employers. What we are seeking though is that there be some sensible changes made to make it easier to allow employees to work from home. And the reason for that is it's pretty clear that the award, the Clucks Award, particularly was written to reflect an assumption that people are working in the office or their employers premises.
It's got provisions, you know, such as a requirement that when you start your work, you have to work all of your hours through continuously until the end of the day. And you have to work within a certain span of hours. Now, we know that's not the reality of what happens in the modern context. You know, when people are working from home, often they're taking breaks, attending to personal issues.
Often they're taking time off to do things like pick up the kids and then they make those hours up in the evening. What we have in mind is a provision that would let employers and employees agree to implement those kinds of arrangements without the award staff and their ability to do that. We're certainly not trying to sort of take anything away from anyone. It's a voluntary arrangement that we're proposing to be implemented.
And this has got a lot of media attention because the way this case is unfolding is, you know, up until now, there's been some confidential without prejudice proceedings unfolding, where there's been negotiations between ourselves, the ACTU, the Australian Services Union, the ASU, and a small number of employer groups. So we try to see whether we can reach a middle ground. Now, I think it's fair to say we haven't reached any agreement, so it's pizza's broken out. But of course, we've seen in recent days the ASU, we think, disclose some of those discussions to the media.
But there's a long way to run on this. We've got our material, including our proposals that have to be filed sort of in mid-July. And then they'll be pursuing over the back half of this year, and we'll work through that. A long way to go.
That's interesting. I think one thing to point out though is that the Commission has said that it's looking at the Clark's Award, with a view developing a potential template clause that might then be inserted into other awards to facilitate working from home arrangements. Yeah, so big implications generally across the award system. Yeah, it's only one to watch.
Yeah. Now, we've got a final topic last but not least, obviously. And that's the annual wage review just conducted by the Fair Work Commission on it, the Expert Panel. So, Brent, can you tell us all about it?
Well, the Expert Panel, the Fair Work Commission in early June handed down its decision in the annual wage review. I think the central point is that it's decided to lift the national minimum wage and minimum rates within awards by 3.5%. That's above where inflation was tracking at around 2.5%. And I think to summarise the principal reason behind the Commission's decision to grant that increase is that since really 2001 award wages haven't kept up with inflation.
There hasn't been a real wage increase, a bulk of inflation that's been delivered. And that's obviously because of the peak in inflation that has all the we've experienced over that period of time. So, the Commission has wanted to go some way towards restoring those real wage increases by granting an above award increase. Now, the ACTU of course pushed for a much higher increase than that, but the full-bench or the Expert Panel wasn't minded to grant the ACTU's claim.
And really, the key moderating factor was the persistently poor productivity outcomes that were experiencing, which did restrain their ability to grant an even higher real wage increase. Now, there were other moderating factors, including for example the superannuation obligations that are going to commence from the 1st of July. But, as I say, the Commission was minded to start to go some way to restoring the real wage increases for workers. And I think it was interesting in that decision that there was some commentary around gender undervaluation and potential awards that might be reconsidered.
Yeah, that's right, Yness. Again, full context. When the secure jobs better pay legislation or amendments were pushed through and during the last term of government, they made some changes to the ACT, which have created a greater imperative for the Fair Work Commission when it's conducting these annual wage reviews to ensure that award rates of pay are free from what's called gender undervaluation. And they effectively are delivering equal pay for work of equal comparative value.
And what they've said is that they're going to go through a process of looking at award rates and making sure that they don't contain any sort of gender-based undervaluation. Now, it started that process a couple of years ago, but really gathered pace in the last annual wage review where they identified five priority awards, whether they're going to look like. And for our members, that includes employers in the early education sector. They also included some classifications for certain social community service sector workers and certain health professionals.
Now, those proceedings are still going, looking at those priorities, they're not finished. But the question arose this year. One other awards were going to look at next. And the ACTU had a fairly ambitious list of awards that it wanted to be examined, and by extension potentially resulting in significant pay rises.
The Commission so far has declined to proceed with identifying a big list of awards. What it said instead is that it's going to look at the professional classifications in a range of awards. So they're the classifications where you have to have a university degree at a minimum to be covered by that classification. And over the next 12 months, they're going to look at whether those rates have been barely set and poorly whether they're free from gender-based undervaluation.
And part of the reason was that, looking at those awards, is that in the awards, professional employees are predominantly female classifications. There's a majority of women working in those classifications. So that's going to be a big focus for the year ahead. Yeah, and we talk about that more in the report.
And there is a member advice, I think, that lists out the awards that the Fair Work Commission may consider. Yeah, look, importantly, that advice does contain a list of all of the classifications and awards that the Commission's going to be considering as part of these proceedings. Right, well, it certainly seems like the Fair Work Commission never sleeps, and it will continue to be that way. Well, I think that's the case.
I think, you know, if you look at the significant issues report, it goes through and it advice a whole range of significant cases that are on foot now that will have implications for industry. And I think we are moving into that phase now where there are going to be a range of significant cases in the Fair Work Commission that are implementing or testing the changes that were made over the last three years. So a busy time ahead, you know, busy time for members to ensure that they're ahead of or cross all these changes. Great.
So, well, we've covered off on those three key issues now. And I think there's a bit more to read in the report as you alluded to event. As I said, yes, yes, the report goes through a whole range of major proceedings that members should be aware of. It also covers off on various other legislative developments and government inquiries.
There's always, I think, just the important point to flag for members is that there is always an executive summary at the start of that report, which gives you just a snapshot of, you know, all the key issues that are going on at the moment. And then, of course, you can get into the detail in the body of the report with interest. Yeah, and hyperlinks out to that for people that just want to go directly to sections. It does, yes.
So thanks, Brent. I think let's wrap it up there. As I said, thank you again, Brent Ferguson, our head of National Workplace Relations Policy. And members, just to remind you, you can find the members only significant workplace relations issues report for the past two months at a group.com.au.
And that's all for now. I'll see you next time. Thanks for that, Giddis. See you soon.