The most frequently asked employment law questions of 2009

The most frequently asked employment law questions of 2009

The Holding Redlich Employment and Industrial Relations team oversees a help desk for the Australian Human Resources Institute (AHRI), which deals specifically with questions about the new Fair Work Act (FW Act).  Over recent months, we have noticed particular themes in the types of queries we are handling.  We set out below some of the most frequently asked questions and our responses.

Termination of employment –is there still a qualifying/probation period in the Fair Work Act?

The qualifying period has been replaced by the concept of a minimum employment period (MEP), which is 12 months for employees of small business employers (i.e. employers with less than 15 employees) or 6 months for other employees.  During the MEP, an employee cannot bring an unfair dismissal claim, although he or she could bring some other type of proceeding, for instance a discrimination complaint, unlawful termination claim or a claim for a breach of the contract of employment.

The probationary period is a separate concept.  Notwithstanding the fact that the MEP precludes an employee from bringing an unfair dismissal for a particular period of time, many employers still elect to include probationary periods in their contracts of employment.  A probationary period, including one of less than 6 months, will not fetter the right of an employer to terminate employment before the MEP concludes.

Termination of employment – what is a genuine redundancy?

A genuine redundancy occurs when you no longer require the job the employee is doing to be done by anyone. However, in order to make a position genuinely redundant (and avoid unfair dismissal) you must follow the procedures set out in the FW Act. This includes consultation as required by any relevant modern award or enterprise agreement and/or being able to prove that you considered opportunities for reasonable redeployment of the employee within your enterprise or the enterprise of any associated entities of your enterprise. For example, if you close a night shift with the effect that workers working that shift are redundant, you must consider whether it would it be reasonable to offer the redundant workers employment in the warehouse. If you fail to do so, the termination will not be considered to be a genuine redundancy and may be an unfair dismissal.

Termination of employment – can casual employees claim unfair dismissal?

Casuals are entitled to claim unfair dismissal after 6 months of regular and systematic employment (for businesses with more than 15 employees) or 12 months’ regular and systematic employment (for businesses with fewer than 15 employees).

Can an employee and employer agree to ‘cash out’ some of an employee’s accrued annual leave?

From 1 January 2010, employees may reach agreement with their employers to cash out accrued paid annual, subject to conditions stipulated in the National Employment Standards. Different rules apply for employees covered by a modern award or enterprise agreement and award/agreement free employees.

An employer and an award/agreement free employee may agree to the employee cashing out a particular amount of the employee’s accrued paid annual leave as long as the employee’s remaining accrued entitlement to paid annual leave is at least 4 weeks. Each agreement to cash out a particular amount of paid annual leave must be a separate agreement in writing and the employer must pay the employee at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.

If a modern award or enterprise agreement includes terms providing for the cashing out of paid annual leave by an employee, the annual leave can be cashed out pursuant to the requirements of the relevant instrument.

Can I avoid/alter the effect of a modern award for particular employees/high income employees?

Although there is no way to avoid the coverage of a modern award it is possible to avoid or alter its application to particular employees. This can be done by:

1. entering into an award flexibility arrangement with a particular employee. This is a written agreement to vary the application to the employee of one or more provisions of a modern award, such as overtime or penalty rates, as long as the agreement results in the employee being better off overall than the employee would have been if no individual flexibility agreement had been agreed to - such as by paying a higher wage;
2. providing a guarantee of annual earnings to a particular employee. This involves providing a written guarantee to an employee that for a certain period (a minimum of 12 months) you will pay them more than the high earnings threshold (currently $108,300), during which period the modern award will not apply to them; or
3. entering into a collective agreement.

Do the National Employment Standards apply to all employees, including high income employees? What if we have an enterprise agreement which has different entitlements?

The 10 National Employment Standards provide a minimum safety net which applies to all employees including those employees earning over $108,300 per annum.

The National Employment Standards have applied from 1 January 2010 where they are more favourable than the entitlements in a pre-1 January 2010 enterprise agreement. Post-1 January 2010 enterprise agreements may not have entitlements less favourable than the National Employment Standards.

When bargaining for an enterprise (collective) agreement, do we have to tell any relevant unions that we are bargaining, or recognise them in the enterprise agreement, or bargain with all nominated bargaining agents?

As long as you have taken all reasonable steps to give the notice of employee representational rights to the employees concerned, you only need to recognise the union in the process if an employee appoints the union as his or her bargaining representative, or a union member does nothing after receiving the notice of representational rights, in which case the union will become the bargaining representative by default.

While you cannot refuse to bargain with a bargaining representative, if it is not practical to sit down with all bargaining agents you would not be breaching your obligations to negotiate with them in good faith. One option is to seek the endorsement of Fair Work Australia (FWA) to an approach for dealing with bargaining agents (e.g. ask groups of bargaining agents in distinct parts of your business to nominate one representative to a steering committee).

What is the high income threshold?

The high income threshold is $108,300.  It will be adjusted according to CPI in July 2010. The high income threshold is relevant for determining whether an employee earns too much to make an unfair dismissal claim, or whether an employer and an employee may enter into a guarantee of annual earnings.

Can a union exercise a right of entry a) without notice and/or b) if they don’t have any existing members in my business?

A union official seeking to exercise statutory rights of entry must give an entry notice to the occupier of premises and any affected employer at least 24 hours, but not more than 14 days, prior to entry.

Once on the site, the officials are not able to inspect records or documents relating to non union members unless those records substantially relate to the employment of union members or the affected non union members have given their express consent in writing.

Absent these conditions the official may apply to FWA for an order allowing inspection and copying of records or documents relating to non union members.  FWA may make the order if satisfied that it is necessary to investigate a suspected contravention.

A union can enter your workplace for the purposes of holding discussions with your workers even if there are no union members. This is subject to the union official holding a valid permit and showing this permit to the employer if requested to do so.  After giving the required notice regarding the entry, a union official can enter the workplace to hold discussions with your employees if it is entitled to represent the industrial interests of that employee and the employee wishes to take part in those discussions.  There are certain requirements which must be observed by union officials and employers, set out in the FW Act.

My employee has asked me for flexible working arrangements so that they can look after their young child – what should I do?

You are obliged to provide the employee with flexible working arrangements unless you have reasonable business grounds for refusing the request (which you must provide in writing). You need to consider such things as:

• the nature of the role and the impact of the flexible work arrangement on the capacity of the employee to perform the role’s requirements
• the impact of the arrangement on other workers, clients and suppliers
• the cost and feasibility of measures required to implement the arrangement, together with other issues (e.g. OHS)
• size of your organisation; and
• the impact on the employee if the arrangement is not implemented.

Parental leave – do employees on parental leave accrue annual and sick leave?

Annual leave and personal/carer’s leave do not accrue during unpaid parental leave.

Parental leave – can I make an employee’s position redundant while they are on parental leave?

You can make an employee’s position redundant while they are on parental leave as long as the fact that the employee is on parental leave has nothing to do with the reason that you have selected him or her redundancy.

However, it is important to make sure that the position is genuinely redundant, that is, go through the process of consultation and explore reasonable opportunities for redeployment, as discussed above.

Further, under the National Employment Standards employers are required to inform employees who are on unpaid parental leave about changes that will have a significant effect on the employee’s status, pay or location of the employee’s pre-parental leave position and provide them with an opportunity to discuss such changes.  A proposed redundancy will be considered to be a significant change for this purpose.

Do I have to grant community service leave an employee for leave for training for emergency services (ie Country Fire Authority)?

The entitlement to community service leave for voluntary emergency management is unpaid and unlimited and applies to full time and part time employees. If an employee is otherwise eligible, you may only refuse an employee leave for this purpose where taking the leave would not be reasonable in all the circumstances.

Can I require my employees to work more than 38 hours per week?

You can still require an employee to work a 40 hour week.  Under the National Employment Standards an employee can be required to work reasonable hours in addition to 38 each week.  However, you should be careful to check whether any modern award applies that would have the effect of entitling the employee to overtime payments if he or she works more than 38 hours each week.