Workplace relations shakeup on the cards this year

With the federal election looming at the end of 2016, workplace reform is again up for debate. HC chats to a legal expert about the findings of an inquiry report assessing Australia’s Workplace Relations Framework.

Penalty rates, sham contracting and adverse action claims are key areas that could be up for debate at the next federal election, says employment lawyer Daniel Proietto.

Mr Proietto, a partner in Lander & Rogers Workplace Relations & Safety practice, sat down with HC Online to discuss the key findings of a recent review of Australia’s Workplace Relations Framework and what this means for HR professionals.

“It will be an interesting year because these changes will now be debated. Leaders should seek to influence change because the government will be listening,” Mr Proietto told HC Online.

He said the key areas highlighted in the Productivity Commission’s report included penalty rates, sham contracting, migrant workers and unfair dismissal/adverse action claims.

“These are the areas where the change will potentially be effected by the new government. Then it will be a matter of waiting to see first who wins the next election and secondly which of these changes they bring about in 2017,” he says.

Penalty rates

The Productivity Commission has recommended Sunday penalty rates in the hospitality, entertainment, retail and restaurant sectors be aligned with Saturday rates, in a move to embrace the seven-day economy and help increase entrepreneurship among smaller businesses who want to open on weekends.

Mr Proietto says this is one of the more contentious topics currently under debate however employers will react positively to this recommendation.

“Weekend work is not what it used to be as Australia has moved to a seven-day economy and penalty rates need to reflect a new modern economy,” Mr Proietto says.

“Recent polls suggest that the public is mindful that many of Australia’s lower paid workers rely on penalty rates to derive an income, so the community is not pushing hard for changes to penalty rates but employment groups are,” he says.

He says the challenge will be to implement a policy that finds the healthy balance between increasing employment while being mindful that lower paid Australians rely on penalty rates.

Unfair dismissal/adverse action claims

Under the current framework, employees who are fairly dismissed can easily bring an unfair dismissal claim against their former employer, which results in a drain on company time and resources.

Mr Proietto says an unhealthy culture has arisen where employers realise it may be cheaper to pay disgruntled workers to make the claims go away, rather than to spend money on legal fees to fight an unfair dismissal claim.

“The Productivity Commission has made some suggestions including a vetting process for new applications where those which are clearly unmeritorious will be rejected,” he says.

Another suggestion is to introduce a two-tier fee system, which may deter some applicants; however Mr Proietto says it is unlikely the fee schedule will be significantly increased.

The report has also recommended changes to help protect employers against adverse action claims, where an employee can say they were dismissed or demoted because they exercised a workplace right.

“While these laws were designed for employees being dismissed or treated unfairly at work because they made a complaint against their employer, there is a body of law developing where a dismissed or demoted employee can reference some trivial complaint, which is not what the law was intended to deal with,” Mr Proietto says.

“The Productivity Commission has said that unless that workplace right has a direct and tangible connection to the employment then it shouldn’t be considered, which may reduce the prospects of these types of claims being successful.”

Sham contracting

The vexed issue of whether a worker is an independent contractor or an employee has troubled workers for many years as legally, there is no clear definition differentiating an independent contractor from an employee. 

“In my view there are a great number of people working in Australia who are characterized as independent contractors but should be employees,” Mr Proietto says. 

“Right now, it is unlawful for an employer to knowingly or recklessly engage someone as an independent contractor when they are in fact an employee, which is quite a high bar to reach. The Commission says they should change the recklessness test to one of reasonableness – thus lowering the bar for sham contracting prosecutions.”

Given that there may be many incorrectly classified workers in the Australian workplace, he says the risk for HR executives and companies would be significantly increased if this change is made, and individuals including HR executives could be held personally liable.

While the Productivity Commission has made more than 30 recommendations to change key aspects of the Workplace Relations Framework, Mr Proietto describes the proposed changes as “tinkering at the edges” rather than recommending wholesale change.

“Politically this is an area fraught with difficulty for the coalition government and many of these ideas won’t see the light of day in becoming legislative change,” he says.

“It will be an interesting year – the government will be listening and there will be much discussion on these issues leading up to the 2017 election.”


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