Important IR Updates for SME’s

  • July 17th, 2017 at 1:20 pm

Start the new financial year right by making sure you are up to date with the latest industrial relations changes.  There has been an increase in the national wage, changes to penalty rates and 457 Visa holders.  Further, recent changes also affect the obligations to casual employees.  To find out more read our mid-year industrial relations update below.


Mid-Year Industrial Relations Update July 2017

National Wage Increase

Australia’s lowest-paid workers will get a $22-a-week pay rise after the Fair Work Commission lifted the national minimum wage to $694.90 in the decision made on June 6, 2017.

The Fair Work Commission has lifted the wage by 3.3 per cent – an increase of 59¢ an hour to $18.29 an hour.

This decision was influenced by the fact that inflation hit 2.1 per cent in the year to the end of March, according to the most recent official consumer price index.

The wage increases will be effective from the first pay period on or after July 1, 2017. 

Penalty Rates

In the previous IR Update, I set out the details of the recent penalty rates decision handed down by the FWC in February which affected employees in the fast food, hospitality, retail and pharmacy industries who will now see their Sunday penalty rates drop five percentage points on July 1.

The full cuts of 25 to 50 percentage points will then be delivered by 2019 for some workers and 2020 for others.

The Fair Work Commission on Monday, June 5, 2017 released its decision into the transitional arrangements for the Sunday penalty rate cut, which was announced in February.

The Commission found the existing Sunday penalty rates in the four industries “overcompensate” employees for Sunday work.

“Given this conclusion, we are not satisfied that it is appropriate to impose any further delay in the implementation of our decision,” the Commission’s full bench said.

But the Commission acknowledged that cutting Sunday rates on July 1 meant employees would only have had four months’ notice.

“In these circumstances, it is appropriate that the first step in the transition be smaller than subsequent steps,” it said.

Fast food and hospitality workers will receive their full cut by 2019, and retail and pharmacy workers will have their cuts phased in until 2020.

Public holiday penalty rates will drop also 25 percentage points from July 1 for fast food, hospitality, restaurant, retail and pharmacy workers.

If you are engaged in a business in one or more of these industries, it is important that you check the relevant award to determine the correct wage rate and penalty rate provisions.

General Employment Conditions


Workplace Agreements and Employment Contracts

There have been the two recent decisions by the FWC which increase the basic wage and cut penalty rates in some specific awards.

It is important that if you have employment contracts, Individual Flexibility Agreements, or workplace enterprise agreements that you review these instruments to take account of these decisions to ensure that these instruments pass the Better Off Overall Test.

There are increasing numbers of high profile employers facing significant back-payment and non- compliance fines for failing to meet these standards, particularly where all-purpose hourly rates have been applied incorrectly.

457 Visa Changes

The Government has tightened the rules concerning 457 visa holders and these changes will affect the time that they can remain in Australia after their employment ceases.

The maximum stay after termination of employment has been reduced from 90 to 60 days for visas granted on or after November 19, 2016.

Employers/sponsors can be held liable for removal of 457 visa holders who do not comply with this timeframe.

Australian Building and Construction Commission

The ABCC has been reinstated by the Federal Government after the passing of the Building and Construction Industry (Improving Productivity) Bill on November 30, 2016.

This means that the previous Office of the Fair Work Building Industry Inspectorate became the ABCC on December 1, 2016.

Main components of the new legislation:

  • The ABCC’s power to conduct compulsory witness examinations and undertake investigations and other enforcement action having regard to industry conditions for each category of building industry participant;
  • The establishment of a working group to look into Security of Payment for contractors;
  • An expanded definition of ‘building work’ which covers transportation and the supply of goods to building sites and offshore resources platforms;
  • Increases to penalties for unlawful industrial actions by individuals and corporate entities, including unions;
  • The creation of a prohibition on unlawful industrial action, including picketing;
  • An expansion of the existing offence of coercion;
  • Greater powers for the Courts to order injunctions to stop unlawful action, including picketing; and
  • The creation of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (“Building Code”), which will apply to all enterprise agreements past November 29, 2018.

From March 2017 Government projects over $4,000,000 will have to comply with new procurement rules that take into account:

  • Locally produced material content for the project;
  • The contribution to local employment;
  • The whole-of-life cost of the project;
  • That materials will comply with Australian product standards; and
  • How the company is growing local skills.

It is also a requirement on most Commonwealth building sites to have mandatory drug testing procedures in place.

There is also a new compliance process for Code compliance in relation to workplace agreements.

Uber Investigation

The ride sharing company Uber is currently under investigation by the Fair Work Ombudsman to determine the status of its drivers and whether or not the company is engaged in sham contracting.

If the drivers are classified as casual employees after the investigation and their relationship found to be in breach of workplace laws, the ramifications for the company and its future will be extreme with over 60,000 drivers currently driving for Uber in Australia.

The recent prosecution of Pizza Hut over their contractual relationship with delivery drivers and this latest investigation will have a significant impact on similar businesses.

New Domestic Violence and Menstrual Leave Provisions

In a decision handed down by the Full Bench of the Fair Work Commission on July 3, 2017 they formed the “preliminary view” that all employees should have access to unpaid family and domestic violence leave.

They also formed the view that all employees should be able to access personal leave for the purpose of taking of family and domestic violence leave.

The ACTU claim that there should be 10 days of paid domestic violence leave inserted into Modern Awards has been rejected at this stage but has certainly not gone away and further evidence will be submitted by respondents and interested parties in the coming months.

The FWC is also considering the application for paid menstrual leave to be inserted into Modern Awards.

FWC Decision on Casual Conversion to Permanent Employees

In a decision handed down on July 5, 2017 as part of the four-year modern award review process, the FWC has determined to amend 85 Modern Awards to include provisions for casual workers to have the right to request conversion to part time or full time employment after a period of 12 months where they have performed regular work.

Employers can refuse the request on reasonable grounds, including that it would require a significant adjustment to a casual employee’s hours of work or they could foresee their position would no longer exist in the next 12 months.

Written by Leigh Bernhardt