The last 12 months has been a big one in the employment law and relations space with more changes set to come into effect on the 1st March 2020. It wouldn’t be hard to have missed one or two changes. Unfortunately, missing just one change could mean that you are breaching your obligations as an employer and the Fair Work Act (Cth) which could result in a underpayments claim and/or severe penalties being applied to you and your business.

At HR Maximised, we understand that its hard to keep up so we’ve developed a free HR Audit tool to assist you in assessing your compliance with the Fair Work Act (Cth) and highlighting areas that require attention. Once you’ve completed the Audit we’ll send you a report that explains your obligations and what’s the risk of not meeting those obligations.

So what’s changed?

Part time employees get the full 10 days personal leave

A Full Federal Court decision handed down on 21 August 2019 turned the long held belief and practice of part time employees receiving a pro-rata of the full time personal leave entitlement on its head. The Court determined that part time employees are entitled to receive the full ten days personal leave regardless of how many days or hours they work. Whilst the decision is currently being appealed, its important that employers are aware that currently as it stands their part time employees are entitled to 10 full days of personal leave a year.

From 1 March 2020, employers will need to notify employees in writing of their annualised salary and perform a Better Off Overall Test (BOOT) to prove they’re better off under the salary. 

The Fair Work Commission has made changes to 22 modern awards (read more here) regarding annualised wages / salaries. Under the new rules, employers must advise the employee in writing:

  • how the salary has been calculated including any overtime and penalty assumptions used
  • which provisions of the award the salary satisfies (penalties, loadings, allowances etc)
  • what is the outer limit of hours an employee can work before penalty rates apply
  • demonstrate how the salary is better off than payment under the award.

The changes have been made to a number of prominent awards including

Clerks – Private Sector, Manufacturing and Associated Industries, Banking, Finance and Insurance and Health Professionals’ awards amongst others. We expect more awards to be changed in the future so all employers should be aware and prepared for the changes.

Employers must keep records of the start, break and finish times for ALL their employees including salaried. 

Employers must have maintain records of all employees’ start, break and finish times and make sure this is signed off by the employee each pay period. This is recommended for all employees, including salaried workers not currently covered by the amended awards. 

Employers must pay salaried workers overtime for excess hours. 

Under the new changes, an employer must have a written agreement with the employee which outlines how many overtime hours are included in their base salary and must pay them overtime for hours in excess of these included hours.

If there is no written agreement then all hours in excess of 38 hours could be classed as overtime.

Employers must perform a  yearly Better Off Overall Test (BOOT) for salaried workers. 

Under the new changes, every 12 months or upon termination of employment, the employer must calculate how much the employee would’ve been paid under the award and if it was more than what has been paid to them under the salary arrangement, then the employer must pay this shortfall within 14 days.

Employers must pay superannuation on employee’s gross pay. 

From 1 January 2020, employers are now required to pay super on an employee’s gross rate of pay, including on any salary they have sacrificed. It is now no longer possible for the employer to pay an employee on a salary sacrifice agreement on the reduced amount of super.

Salary sacrifice cannot contribute to mandatory superannuation contributions

From 1 January 2020, employers cannot include salary sacrifice components to contribute in full or in part to their compulsory superannuation guarantee contributions.

Employers will need to self-correct any unpaid superannuation, under the proposed SG amnesty.

The Superannuation Guarantee (SG) Amnesty bill passed the House of Representatives in November and has now moved to the Senate. The bill, which is likely to be passed, will provide a one-off amnesty for employers to self-correct any unpaid super contributions, and will grant employers six months from the date of royal assent to come clean to the Australian Taxation Office. After the amnesty period, higher penalties will be applied – up to 200 per cent. Now is the time to act and review your superannuation contributions. 

2020 employee award changes

And just in case that wasn’t enough, the Fair Work Commission is also due to finalise its 4 year review of modern awards with changes occurring to 116 of the awards. The first round of changes (36 awards) is due to be released in February with the rest to follow in the coming year.

And in case you missed them, these changes occurred in 2018.

‘Double Dipping’ of ‘casual’ employees

Following the Full Federal Court decision in WorkPac Pty Ltd v Skene [2018] FCAFC 131, changes to the Fair Work Regulations were made to counteract casual employees ‘double dipping’ and receiving both the casual loading as well as full leave entitlements.

Under the new regulations, employers are able to have the casual loading offset one or more NES entitlements not available to casual employees. For this to occur, employers must have documented either in the employment contract or on the payslip (preferably both) what the casual loading is and what it offsets.

Casual conversion clause

As of 1 October 2018, a new clause was inserted into modern awards giving casual employees the right to request conversion to full-time or part-time employment. The casual conversion clause allows a casual employee who works ‘a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as a full-time employee or part-time employee’, and has done so for a period of 12 months, the new clause entitles that employee to request, in writing, to be converted to full time or part time employment.

A response must be made, in writing, within 21 days of receiving the request, and if the request is denied, must set out reasonable grounds for such denial.

Employers must have provided a copy of the new modern award conversion clause to casual employees employed as at 1 October 2018. New employees must be provided a copy of the clause within 12 months of their employment commencing.

Family and domestic violence leave

From 12 December 2018, the Fair Work Amendment (Family and Domestic Violence Leave) Act 2018 (Cth) took effect. As a result, the National Employment Standards now entitles an employee to 5 days unpaid leave to deal with family and domestic violence. All employees, including part-time and casual employees, are entitled to five days of unpaid family and domestic violence leave each year.

Check your compliance

Take our 10 min HR Audit tool today and we’ll send you a report which assesses your compliance, explains your obligations and what the risks are if you’re not compliant.