27 Jun HR Law Newsletter – June 2014
ARE YOU PREPARED FOR SUPER AND PAY CHANGES FROM 1 JULY 2014?
Some significant changes that Employers should be prepared for on 1 July 2014, include the following:
1. Superannuation
You must ensure that if you contribute the minimum Superannuation Guarantee Contribution (currently 9.25%) on behalf of your employees that you increase this contribution to 9.5% from 1 July 2014. This is the last proposed increase until July 2018.
You will need to ensure you look at the instrument that governs your employees’ employment (Modern Award, Enterprise Agreement and/or Employment Contract) to determine whether this 0.25% increase is included in the employees’ salary or in addition to the employees’ salary.
2. Minimum Wage set to Increase
As highlighted in our News Alert – Increase to the Minimum Wage, employer’s should make any necessary adjustments to the payments they make to their employees from 1 July 2014, to ensure that they are paying at least the national minimum wage (i.e. $640.90 per week) to award-free employees and where an employee is covered by an award, at least in accordance with the minimum rates of pay set out in the applicable Modern Award.
3. High Income Threshold Increases
From 1 July 2014, the income cap that determines both access to the Unfair Dismissal Jurisdiction and eligibility for guarantees of annual earnings (for the High Income Threshold) will increase from $129,300.00 to $133,000.00.
What does this actually mean in terms of access to the Unfair Dismissal Jurisdiction?
An employee covered by a Modern Award or Enterprise Agreement who has served the minimum qualifying period (i.e. 6 month or 12 months for a small business) will be able to access the Unfair Dismissal Jurisdiction regardless of their salary. Employee’s not covered by a Modern Award or Enterprise Agreement will only be able to access the Unfair Dismissal Jurisdiction if their annual salary is less than the High Income Threshold (i.e. less than $133,000.00 from 1 July 2014).
The High Income Threshold and Modern Awards
Employees who earn over the High Income Threshold are considered “high income employees” under the Fair Work Act 2009. High income employees covered by a Modern Award may be offered a guarantee of annual earnings by their employer. This means that an employer guarantees the employee earnings over a period. This guarantee of annual earnings (if recorded in writing e.g. included in the employee’s employment contract) means that the Modern Award will no longer apply to that employee.
Employers who have already entered into a guarantee of annual earnings with one or more of their employees, should undertake a review of their employee/s salary to ensure that the salary exceeds the new High Income Threshold (i.e. $133,000.00).
4. Cap on Unfair Dismissal
The maximum amount that an employee may recover if their unfair dismissal application is successful, will increase on 1 July 2014 to $66,500.00. This is the upper limit for compensation in this Jurisdiction, meaning that an employee will only be entitled to up to six months of their pay capped at $66,500.00.
By way of example, an employee who earns $60,000.00 per annum would only be entitled to compensation of up to $30,000.00 (i.e. six months’ pay) if their unfair dismissal application was successful.
5. General Retail Industry Award 2010 (“Retail Award”)
Are you in the retail industry and covered by the Retail Award?
On 21 March 2014, the Full Bench of the Fair Work Commission made a ruling (which was upheld by the Federal Court on 24 June 2014) to scrap the 90% rate of pay for 20-year-old retail workers who have six months of retail experience. Currently pursuant to the Award, a retail employee who is 20-years-old is only entitled to 90% of the full rate of pay for their classification (i.e. the adult rate).
This decision means that a 20-year-old employee who has worked for the employer for at least six months will be entitled to the full adult rate on and from their 20th birthday or otherwise from the date that they have six months service with the employer (as the case may be).
This change will be phased in across two years, the first change of an addition 5% of the adult rate (i.e. a total of 95% of the adult rate) being implemented on 1 July 2014. The remaining 5% will take effect on and from 1 July 2015, meaning that from that date, a 20-year-old employee with six months service with their employer, will receive 100% of the adult rate.
6. It’s the end of phasing in of Modern Award Pay Rates
On 1 July 2014, the phasing provisions for Modern Award pay rates end. Employers will be required to pay (at a minimum) the full rates of pay provided in the Modern Award applicable to their employees.
7. Restaurant Industry Award 2010 (“Restaurant Award”)
Are you in the restaurant industry and covered by the Restaurant Award?
In May 2014, the Fair Work Commission Full Bench made a ruling to reduce the penalty rate paid to “transient and lower skilled” restaurant workers from 75% to 50% for work performed on a Sunday. In making its decision the Full Bench found that a 25% casual loading on top of a 50% penalty tends to “overcompensate” lower-skilled workers “for working on Sundays and is more than is required to attract them to work on that day”.
This change will only affect payments to employees classified as Casual Introductory Level and casual Levels 1 and 2 under the Restaurant Award. This change means that you will only be required to pay those casual employees classified as a Level 2 or below, 150% of their base casual hourly rate for work performed on a Sunday. You must continue to pay employee’s classified as a Level 3 or above, 175% of their base casual hourly rate for work performed on Sundays.
This change is already in operation and is contained in clause 34.1 of the Restaurant Award.
HR Law is able to assist with any questions you may have about what your employees’ entitlements will be from 1 July 2014.
END OF FINANCIAL YEAR PARTIES – WHAT SHOULD YOU BE CONSIDERING?
With the end of the 2013/2014 financial year almost upon us, you may be considering holding a company function to congratulate and thank you staff for what was hopefully another successful year. A celebration is more often than not, accompanied by alcohol and which is accompanied with a set of risks.
Prior to the end of financial year function, we recommend that you consider:
1. Your policies and procedures.
Do you have policies and procedures in place about harassment, alcohol and drugs, bullying and the company’s expectations of employee’s behaviour at work functions? If so, now is the perfect time to recirculate these to your employees and remind them that the policies apply to work functions and any breach will be taken serious and may result in disciplinary action.
If you don’t have any policies in place, now is the time to look into implementing a specific policy or a suite of policies. As you will be aware, you have a statutory obligation to ensure the health and safety or your employees. Policies and procedures will assist you in meeting this obligation.
2. How you expect employees to behave.
We recommend that you provide notice to your employees on how you expect them to behave at the end of financial year function.
3. How your employees are getting to and from the function?
If you are providing alcohol to your employees, we suggest that you consider how they will be able to safely get home from the function. Is there public transport nearby? Are you providing taxi fares to your employees?
HR Law would be happy to assist you in preparing policies and procedures or to review your current policies and procedures to ensure they are up to date.
CASE UPDATE: REINSTATED AFTER GROPING FIVE COLLEAGUES AT THE OFFICE CHRISTMAS PARTY
Public Services Association and Professional Officers’ Association amalgamated Union of New South Wales (on behalf of Andrew McCaskill) and Department of Attorney General and Justice [2014] NSWIRComm 1009
An employee, Mr McCaskill, who admitted touching the breasts of five female colleagues at the NSW Attorney General and Justice Department (Department), 2012 Christmas party, has had his job reinstated after the NSW Industrial Relations Commission found he was treated more harshly than a senior manager who was only demoted for engaging in similar conduct.
The Facts
Mr McCaskill admitted to touching the breasts of five female colleagues at the office Christmas party on 7 December 2012, immediately expressing remorse and embarrassment for his drunken behaviour. Mr McCaskill’s inappropriate behaviour came to a head on 13 December 2012, when one of the female colleagues, Ms G, made a complaint that Mr McCaskill and her manager, Mr Cooke, touched her breasts. Ms G indicated that she did not want any formal action to be taken against Mr McCaskill but was “distraught because she had been felt up by her manager”.
Following the conclusion of a lengthy investigation, and notwithstanding that none of the other four women who were also inappropriately touched by Mr McCaskill had taken offence to his actions, Mr McCaskill’s employment was terminated on 20 December 2013. Mr McCaskill commenced proceedings against the Department for the reinstatement of his position.
Even though the “allegations against Mr Cooke were considered to be more serious in nature in view of both his position and in the context of the evidence gathered”, Mr Cooke who consistently denied the allegations and accordingly offered no contrition for his actions was only demoted by the Department and not dismissed.
Commissioner Tabbaa, in ordering the reinstatement of Mr McCaskill’s job, took into consideration that the Department had not applied its policies and procedures consistently to both Mr McCaskill and Mr Cooke. Her Honour stated that “quantity [of the number of women touched] is not the issue, it is one women too many [but] if a true comparison is to be made then it may be that the fairest way is to compare both men against the number of complaints, [which in both instances was the one complaint made by Ms G]”.
Lessons for Employers
This case highlights the importance of employers applying their policies and procedures consistently to all employees. The consequence of failing to do so may be that an employee dismissed for genuine misconduct is reinstated in circumstances where on all other accounts their conduct warranted the dismissal.
Further, senior employees should not be treated more favourably than other employee. In fact, senior employees who hold positions of control and authority over other employees in many instances should be held to a higher level than other employees because not only do their actions set an example for what is and is not appropriate behaviour for other staff, the actions of senior employees may have greater consequences for the victim of the inappropriate conduct, as was the case with Ms G and her manager, Mr Cooke.
Please contact HR Law if you have any questions about applying your policies and procedures consistently or if you have any general questions in respect of this case.
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