Members Update

Dear member,

Welcome to the February 2020 member’s update.

This month we look at changes to Modern Awards (and no, this is not the annualised salary clauses – we will look at these when the clauses are released by Fair Work), an interesting case addressing service for a casual employee under the NSW Long Service leave Act, and the time limits associated with backpay/underpayment claims.

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Changes to Modern Awards

The Fair Work Commission have been reviewing all modern awards since 2014, as part of the 4-yearly review of modern awards – including the use of “plain language” in an effort to make the Awards easier to understand. The structure of many Awards has also changed (e.g. Consultation/Dispute Resolution clauses now appear further down in the Awards whereas “Hours of Work” appear further up in the Awards).

The changes to the Modern Awards are being rolled out in 3 tranches with Tranche 1 Awards effective 4 February 2020. (You will notice that the Awards have also had 2010 removed from their title and replaced with 2020).

Here is a link to the Fair Work website detailing what Awards fall into Tranches1, 2, and 3. - www.fairwork.gov.au/awards-and-agreements/awards/changes-to-awards-in-2020

Here is another Fair Work Commission website with a link to the Tranche 1 Awards which are effective 4 February 2020 - www.fwc.gov.au/awards-and-agreements/awards/modern-awards/modern-awards-list

Just as a simple example – looking at the Banking, Finance and Insurance Award 2010 (MA000019), the overtime clause in the 2010 Award looks like this:

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In the new look Banking, Finance and Insurance Award 2020 (effective 4/2/2020), the overtime clause looks like this:

I strongly suggest you ensure you are using the most recent Award with any/all changes – I have audited a number of workplaces who print out the Award and continue to use that hard copy throughout the FY without realising there have been changes to the Award. (e.g. you can see that in MA000019 below, the most recent changes were effective 19 Dec 2019 so any organisation that is using the version that was released at the beginning of the current FY will not be using the most up-to-date version of the Award)

The most accurate version can be located on the Fair Work Commission website and it’s simply a matter of saving that link.

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Casual Service and Long Service Leave (NSW)

In last month’s webinar, we looked at the differences between “absences that break continuity of service” and “absences that don’t break continuity of service but may not count towards service”.

A recent case came before the Industrial Relations Commission in NSW – here is a summary and the outcome of that case:

“The worker had been employed by a large retailer for 7 years. Initially part-time but this later changed to casual employment. His employment was terminated when the employer decided they no longer wanted to engage casuals.

The Long Service Leave Act 1955 provides full-time, part-time and casual workers in NSW to 2 months (8.67 weeks) paid long service leave when they have completed a continuous period of ten years’ service with the same employer. Under some circumstances a worker who has completed five years (but less than ten years) of service may be entitled to a long service pro-rata payment if he or she:

• resigns as a result of illness, incapacity, domestic or other pressing necessity; or • is dismissed for any reason except serious and wilful misconduct; or• dies.

In this case it appeared the employee it had an entitlement to long service leave. However, the employer formed the view that the employee was not entitled to pro rata long service leave because as a casual employee he was unavailable for work on numerous occasions and sometimes for extended periods of time of more than 8 weeks. The employer considered the service was not continuous.

In accordance with the Act a break in a worker’s service will not affect the continuity of service or the calculation of service in the following circumstances:

• The absence of the worker is under the terms of the employee’s employment• The absence of the worker is on account of illness or injury.

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A break in the workers service will not affect the continuity of service but does not count when calculating length of service in the following circumstances:

• Made by the employer with the intention of avoiding any obligation imposed on the employer by the Act or by any obligation in relation to sick leave imposed on the employer by a State Instrument• Arising from an industrial dispute• Made by the employer by reason of slackness of trade• Arising from the absence of the worker for any cause by leave of the employer• Where the worker returns to the service of, or is re-employed by, the employer within 2 months of the date on which the service was interrupted, other than resignation by the worker.

Having assessed the evidence available, the Inspector determined the absences were due to the nature of casual employment and did not break the continuity of service. Since the employee’s employment was terminated by the employer for a reason other than serious and wilful misconduct the long service leave was payable.

The employer was advised of the decision and based on the workers length of service they were entitled to 6.2241 weeks long service leave. As result the worker received a payment of $2,711.18.

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Time limits associated with backpays/underpayments

One of the common questions we receive is “how far back do I have to go to fix an underpayment”?

The simple answer is - “there is a six-year time limit from the date the underpayment occurred to be able to recover the money.”

So, for example, an employee identifies an underpayment and brings it to the attention of the employer in February 2020. The underpayment occurred between 1 July 2012 and 30 June 2013. Unfortunately, the employee would not be able to bring an action to recover this underpayment under the Fair Work Act.

The reason for the confusion stems from a statement on the Fair Work website which states:

“Underpayments for a single employee can happen in 1 pay period, a few weeks or months or up to many years, depending on how long the employee has worked for the business and when the mistake happened.

You may need to audit the pay records for a short period or for the entire period of employment, depending on the reason for the underpayment.”

www.fairwork.gov.au/how-we-will-help/how-we-help-you/help-resolving-workplace-issues/how-to-fix-an-underpayment

This is slightly misleading as it indicates that the employer is potentially liable for a backpay for a period greater than 6 years. However, some employers choose to correct underpayments made more than 6 years ago for moral reasons or because of public relations, goodwill and staff morale.

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Please join me for our monthly webinar to be held on 19th February at 1pm where we will look at “Payroll obligations when onboarding a new employee – it may not be quite as simple as it looks”.

REGISTER HERE

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