Award flexibilities to support Australia’s jobs recovery

by | Dec 10, 2020 | Employment Law and Workplace Relations Blog

The Australian Government has introduced a Bill that will allow some employers and part-time employees to agree arrangements for working additional hours without incurring award overtime penalties. The Bill also has the effect of inserting provisions into some modern awards that allow work directions to be given about an employee’s duties or where they perform work, for a period of two years.

The Minister for Industrial Relations – Christian Porter says the aim of the government is to extend existing JobKeeper flexibilities for employers, especially small employers, in distressed sectors of the Australian economy.

The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) was introduced into Federal Parliament on 9 December 2020.

Amongst other things, the Bill seeks to ensure flexibility and reduce award complexity for businesses, especially small businesses and in some sectors, seeks to encourage greater use of part-time employment arrangements instead of casual employment as businesses recover following COVID-19.  The two key award flexibility concepts within the Bill are “simplified additional hours agreements” and “flexible work directions”.

Simplified additional hours agreements

The Bill identifies 12 industry awards under which an employer and a part-time employee may agree to additional part-time hours without attracting overtime penalty rates that the award would otherwise prescribe.

The 12 industry awards (called “identified modern awards”) operate in sectors the Australian government has identified are distressed sectors of the Australian economy. They are:

  • the Business Equipment Award 2020;
  • the Commercial Sales Award 2020;
  • the Fast Food Industry Award 2010;
  • the General Retail Industry Award 2020;
  • the Hospitality Industry (General) Award 2020;
  • the Meat Industry Award 2020;
  • the Nursery Award 2020;
  • the Pharmacy Industry Award 2020;
  • the Restaurant Industry Award 2020;
  • the Registered and Licensed Clubs Award 2010;
  • the Seafood Processing Award 2020; and
  • the Vehicle Repair, Services and Retail Award 2020.

The government has left itself the option of adding to the list of identified modern awards by prescribing additional awards in later regulations.

To be valid, additional hours agreements must meet a number of requirements and there are circumstances when penalty rates may still be payable despite the employee’s agreement:

  • An agreement must be made in writing before the additional hours commence, or at least be promptly recorded in writing before the employee completes their first period of additional agreed hours.
  • The written agreement, or record must be retained by the employer and a copy provided to the employee if they request it.
  • The agreement must be with an employee who has reached 18 years of age or have the written consent of the employee’s parent or guardian.
  • The additional agreed hours and the days they are to be worked, must be identified.
  • There must be an agreement (i.e. a meeting of the minds about the additional hours to be worked and the pay arrangements) before the additional hours commence. To this end, the employer must inform the employee that their agreement is a ‘simplified additional hours agreement’ before the employee agrees to it.
  • Each period of additional hours must be for a continuous period of at least three hours or be part of a period of continuous work of at least three hours. In other words, even if the employer and part-time employee agree the agreement will be ineffective if it involves the employee attending for a shift of less than three hours.
  • The agreement cannot be inconsistent with certain modern award provisions – for example the parties cannot agree the employee will work additional hours on a day the employee is prevented from working.
  • Before making the agreement, the part-time employee must be engaged for at least 16 hours per week or for an average 16 hours per week, if the relevant modern award provides for averaging of ordinary hours.
  • Employees must not be forced or required to make an additional hours agreement and both parties can terminate an agreement with 7 days written notice.
  • A parent or guardian of an employee less than 18 years old can withdraw their consent however at any time, without notice and without having to notify the withdrawal in writing.
  • Agreed additional ordinary hours are treated as ordinary hours for events like personal leave, public holidays, annual leave and superannuation guarantee payments on ordinary time earnings.
  • Award specified overtime penalties must be paid if the agreed additional hours:
    • fall outside of the award span of ordinary hours;
    • cause the employee to work more than 38 hours or the maximum award ordinary hours (e.g. more than the award average of 38 hours or more than an award limit on the number of hours a part-time employee may work in any week); or
    • are worked at times attracting additional penalties (for example ordinary hours worked on a weekend).

If the Bill is passed into law without amendment, some employers operating in these identified distressed economic sectors would be forgiven for thinking there is nothing simple about “simplified additional hours agreements”.

However if the above negotiation, agreement, record keeping, scheduling and payroll arrangements are complied with, a part-time employee can work additional hours at ordinary time rates.

Flexible work directions

The Bill would allow employers covered by the above list of identified modern awards to give a “flexible work duties direction” or a “flexible work location direction” to their award covered employees.

A flexible work duties direction is one where the employee is directed to perform any duties that are within the employee’s skill and competency – provided that:

  • the duties are safe;
  • the duties are safe having regard to the nature and spread of COVID-19;
  • the employee has the required licence or qualification to perform the duties; and
  • the duties are reasonably within the scope of the employer’s business operations.

A flexible work location direction is one where the employee is directed to perform duties at a place different to their usual place of work (including working from home) if:

  • the alternative place is suitable for the employee’s duties;
  • the place does not require the employee to travel a distance that is unreasonable in all the circumstances;
  • the duties are safe;
  • the duties are safe having regard to the nature and spread of COVID-19; and
  • the duties are reasonably within the scope of the employer’s business operations.

No legislative guidance is given for when duties will be “safe”.  In the absence of any specific provision, an employee’s ability to refuse duties on safety grounds are likely to be assessed with regard to existing principles – such as whether the duty creates an imminent risk to the safety of the employee or any other person, that is not unreasonable or far-fetched.

Once given, a flexible work direction continues until (i) it is withdrawn or revoked by the employer; (ii) the employer replaces it with a new flexible work direction; (iii) the Fair Work Commission makes an order affecting the flexible work direction; or (iv) two years has elapses after the Bill becomes law.

Key take-aways

  • The Australian Government has identified particular sectors of the Australia economy it considers especially affected by the COVID-19 pandemic.
  • It has proposed a Bill to create employment flexibilities that it believes will help employment recover in those sectors.
  • Simplified additional hours agreements is one of those flexibilities however the Bill establishes multiple levels of protection for part-time employees that may defeat the Government’s stated simplicity objective. Employers need to carefully understand these requirements in the context of their own business and award to avoid incurring unexpected overtime liabilities.
  • Alternatively, some employers may find Enterprise Agreements are better suited to creating flexibility of hours.
  • Flexible work directions will operate for two years after the Bill passes into law. They allow employers to direct employees to perform alternative duties and work at home or some other reasonable location.
  • At all times though, flexible work directions must not compromise an employer’s obligation to provide a safe workplace and some additional controls may be required to address workplace safety risks.

If you would like to know more about the Australian Government’s proposed award flexibilities and how they might impact your business specifically, please contact our Employment and Workplace Relations team on (08) 9321 0522.

Jesse Rutigliano

Jesse Rutigliano