Employment Law changes - 1 April 2016

“Zero Hours” contracts effectively prohibited

This issue arose out of concerns about agreements requiring an employee to remain available for work when requested by the employer, without any reciprocal obligation on the employer to make any payment to the employee unless work is actually performed.  As a result:

• There must be genuine reasons based on reasonable grounds for including an availability provision in an employment agreement. 
• An “availability provision” means a provision under which the employee’s performance of work is conditional on the employer making work available, and the employee being required to perform any work the employer makes available.
• Genuine reasons include:
  • Whether it is practicable to meet business demands without including an availability provision.
  • The number of hours the employee is required to be available.
  • The proportion of the hours the employee is required to be available to the guaranteed hours of work.
• The hours the employee is required to be available and the guaranteed hours of work must be specified in the agreement; and there must be reasonable compensation specified for the employee making him/herself available to perform work if required.
• Factors to be considered when assessing compensation include:
  • The number of hours the employee is required to be available.
  • The proportion of the hours the employee is required to be available to the guaranteed hours of work.
  • The nature of any restrictions resulting from the availability provisions.
  • The rate of payment for the work the employee is available.
  • The amount of the salary (where applicable). In the case of an employee who is paid a salary, the salary may include compensation for the employee being available for work under an availability provision.
• The employee has the right to refuse to perform work over and above any guaranteed hours and the employee must not be treated adversely as a result of such refusal.

Note 1: There is a period of grace for existing employment agreements containing availability provisions.  They must be amended before 1 April 2017.

Note 2: The above provisions do not apply to casuals who have the ability to decline work for any reason.

Cancellation of shifts

In this context “shift” means “a period of work performed in a system of work in which periods of work are continuous and may occur at different times on different days of the week”. 

An employer may not cancel an employee’s shift unless the employment agreement specifies:

• A reasonable period of notice that must be given before a shift is cancelled.
• Reasonable compensation that must be paid if the requisite notice is not given.

The period of notice must be determined after considering all relevant factors including:

• The nature of the employer’s business and the employer's ability to foresee the circumstances that gave rise to the cancellation.
• The nature of the employee's work and the impact of the cancellation on the employee.
• The nature of the employee's employment arrangements, including whether there are agreed hours of work and if so the number of guaranteed hours.

Compensation must be determined after considering all relevant factors including:

• The period of notice specified.
• The pay the employee would have received for working the shift.
• Whether the nature of the work requires the employee to incur any costs in preparing for the shift.
• However, the employee is entitled to be paid for what he or she would have earned for working the shift if the agreement does not specify a notice period, or the employee is not notified until the start of the shift or the remainder of the shift is cancelled after the start of the shift.

Secondary Employment

Any provision in an employment agreement restricting an employee from working for another employer is unenforceable unless there is a genuine reason, based on reasonable grounds and the reason is stated in the employment agreement.  Reasonable grounds include protection of commercially sensitive information, intellectual property and reputation or preventing a real conflict of interest.  

Wages and Time Record

There are subsequent changes to record keeping: 

• If the number of hours an employee works each day and pay for those hours is agreed, it is sufficient to have those hours (the usual hours) and pay stated in the wage and time record, or the employment agreement, or a roster.  Previously the obligation was to record the start and finish times each day and the days of employment in each pay period.
• For a salaried employee the usual hours include any additional hours worked by the employee in accordance with the employment agreement.

Note: A Labour Inspector may issue infringement notices and fines for non-compliance.

Pay Deductions

• The Wages Protection Act now clarifies that deductions may be made from an employee’s pay in accordance with a general deductions clause in the applicable employment agreement.
• The employee must be consulted before any deduction is made.
• An employer may only make reasonable deductions.
• However, the employee is still able to withdraw consent.

Enforcement

Labour Inspectors now have greater powers to issue infringement notices.  Infringement fees range from $1,000 to a maximum of $20,000 over a three month period depending on the nature of the infringement. They also have greater powers to share information with other agencies.

The Court may impose:

• A Banning Order if the Court is satisfied the person has persistently breached or persistently been involved in the breach of one or more employment standards. The order may be imposed for a period of up to 10 years, during which time the person may not enter into an employment agreement as an employer, be an officer of an employer, or be involved in the recruitment or employment of employees.
• Fines of up to $50,000 for individuals, or in the case of a body corporate the greater of $100,000 or 3 times the amount of financial gain made from the breach. Note that insurance against such penalties is unlawful.
• Compensation orders to the employee.

Employers are required to maintain records sufficient to demonstrate compliance with the legislated minimum entitlements.