29 Jun HR LAW NEWSLETTER JUNE 2021

Welcome to the June 2021 edition of the HR Law Newsletter. 

The end of the financial year is always a busy time for businesses. There are many changes which start to come into effect on 1 July 2021.  We have set out a summary of the changes businesses need to be aware of below:

1. HIGH INCOME THRESHOLD INCREASES

Do you employ employees paid over the high income threshold?  Do your contracts contain a guarantee of annual earnings?  If so, you need to be aware of the increase to the high income threshold announced today and take action now.

From 1 July 2021, 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 $153,600.00 to $158,500.00.

Employees who earn over the high income threshold are considered “high income employees” under the Fair Work Act 2009 (Cth) (“FW Act”) and if they enter into a guarantee of annual earnings with their employer (which must be very clearly and carefully drafted in an employment contract):

• No Modern Award will apply to that employee; and

• The employee cannot bring unfair dismissal proceedings against their employer following the termination of their employment.

Employers who have already entered into a guarantee of annual earnings with one or more of their employees should use this time before 1 July to undertake a review of their employee/s salary to ensure that their salary exceeds the new high income threshold (i.e. $158,500.00), or will be increased to be in line with, if not more than, the high income threshold.

2. CAP ON UNFAIR DISMISSAL

The maximum amount that an employee may recover if their unfair dismissal application is successful, will increase on 1 July 2021 to $79,250.00. 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 $79,250.00.

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.   An employee however, who earns $180,000.00 per annum (if still eligible to make an unfair dismissal claim) would only be entitled to compensation up to $79,250.00 rather than six months of their actual pay.

3. RATE INCREASES EFFECTIVE 1 JULY 2021

As you may be aware, the Fair Work Commission delivered its annual wage review 2020/2021 decision, announcing the National Minimum Wage is increasing from $753.80 per week or $19.84 per hour to $772.60 per week or $20.33 per hour from 1 July 2021. This is an increase of $18.80 per week.

4. MODERN AWARDS

Modern Award minimum wages will also increase by 2.5%. Similar to last year’s annual wage review decision, wage increases will be staged over three dates, being 1 July 2021, 1 September 2021 and 1 November 2021.   Employers should ensure they are aware of which modern award relates to which staged increase date. 

A summary of the annual wage review 2020/2021 decision which outlines which Modern Awards fall within each group can be accessed here:

https://www.fwc.gov.au/documents/wage-reviews/2020-21/decisions/2021fwcfb3501.pdf

5. SUPERANNUATION

Are you ready for the superannuation guarantee (“SG”) increase on 1 July 2021? The minimum percentage of superannuation guarantee employers are required to pay is set to increase over time, with the next increase to 10% due on 1 July 2021. 

The rate of superannuation guarantee has been 9.5% per annum since 1 July 2014. From July 2021, the superannuation guarantee legislation states that superannuation payments will increase incrementally each year until they reach 12% in 2025.

Now is the time to start planning how this superannuation guarantee increase will be implemented and communicated. Employers need to consider the effect this will have on employees whose remuneration is inclusive and exclusive of superannuation and any amendments which may be required to the terms regarding their employment.

Employers should also clarify with their payroll provider prior to 1 July 2021 how the change will be implemented in the payroll system.

HR LAW ARTICLE

RESIGNATION VERSUS DISMISSAL: WHEN AN EMPLOYEE SAYS THEY ARE RESIGNING, DOES THIS REALLY MEAN THEY HAVE RESIGNED?

Who ends the employment relationship when an employee indicates to their employer that they are resigning? 

The Fair Work Commission has recently considered this question and examined the principles of resignation versus dismissal in Rodney Harvey v Valentine Hydrotherapy Pools Inc (2021) FWC 3373. 

This case concerned the dismissal of Mr Rodney Harvey (“Mr Harvey”), a casual pool cleaner employed for six years by Valentine Hydrotherapy Pools Inc (“VHP”).  Despite Mr Harvey being a casual employee, Deputy President Saunders found that Mr Harvey was protected from unfair dismissal because he was employed on a regular and systematic basis and had a reasonable expectation of continuing employment. 

Mr Harvey’s employment ended on 19 February 2021 and he subsequently filed an unfair dismissal claim in the Fair Work Commission against VHP. 

VHP argued that Mr Harvey was not dismissed within the meaning of section 386 of the FW Act as Mr Harvey’s employment was not terminated on the employer’s initiative.  Mr Harvey denied VHP’s claim and asserted he did not resign but was dismissed.

In determining this issue of resignation versus dismissal, Deputy President Saunders noted at paragraph [31]:

“there is a material difference between saying, on the one hand, “I am resigning” or “I resign” and, on the other hand, “I will hand in my notice”. The former either has immediate effect or is notification of a decision which has been made, and the latter is a statement of intention as to the future.” 

Deputy President Saunders also considered the series of events that occurred over the five days prior to Mr Harvey’s employment ceasing on 19 February 2021. Namely:

• A heated discussion took place between the parties on 15 February 2021 when Mr Harvey questioned the underpayment of two hours he claimed he worked.

• VHP contented that at the 15 February 2021 meeting, Mr Harvey said words to the effect that he “would hand in his notice”. However, Mr Harvey contended he mentioned payments regarding JobKeeper. Deputy President Saunders preferred the former recollection of events.

• Mr Harvey called in sick on 16 February 2021.

• Mr Harvey worked normal shifts on 17 and 18 February 2021.

• After his shift on 18 February 2021, Mr Harvey sent a text to VHP indicating he would hand in his resignation the next day, but 20 minutes later withdrew that and indicated he would be at work as normal the next day.

• Prior to Mr Harvey arriving at work on 19 February 2021, VHP emailed a letter to Mr Harvey accepting Mr Harvey’s resignation.

• Mr Harvey attended work ready to commence his shift on 19 February 2021, but was advised of the letter and was asked to return all company property and leave the premises.

After considering all the facts, Deputy President Saunders found that Mr Harvey had been dismissed at the initiative of the employer and the dismissal was harsh and unreasonable. Deputy President Saunders, following Koutalis v Pollett [2015] FCA 1165, noted at paragraph [37]:

“The question of whether an employment relationship has ceased to exist does not

depend upon the parties’ subjective intentions or understandings. Rather, it depends upon what a reasonable person in the position of the parties would have understood was the objective position. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe.”

Notably, VHP did not suggest to Mr Harvey that he had resigned and/or should not come to work and, as observed by Deputy President Saunders at paragraph [39], “Mr Harvey’s communications and conduct would not have led a reasonable person to believe or understand that Mr Harvey had resigned”.

In summing up his decision, Deputy President Saunders at paragraph [41] found:

“the actions of VHP were the principal contributing factor which resulted in the termination of Mr Harvey’s employment. Those actions were the “notice of resignation” letter sent to Mr Harvey on 19 February 2021, coupled with Ms Turton’s conduct in asking Mr Harvey to return his keys to the premises and leave. Such action on the part of VHP either intended to bring the employment relationship to an end or had that probable result”.

Deputy President Saunders awarded Mr Harvey four weeks’ pay as compensation because it was considered the employment relationship was not going to continue for long anyway.

Practical Implications and tips

The actions and conduct of the parties over the five day period immediately prior to Mr Harvey’s dismissal was the key focus of whether or not Mr Harvey had resigned. This decision highlights that the Courts will carefully consider the circumstances of each case and examine the conduct of the parties to determine if the employee resigned or the employee was dismissed at the employer’s initiative. 

If the Court considers that the resignation was “forced” by the employer, i.e. that the employee had no real choice but to resign, the employer may face penalties under the FW Act. An employee’s resignation needs to be voluntary and at their own initiative.

If you require any assistance with ensuring you avoid the risk of an unfair dismissal claim, please get in touch with the team at HR Law for advice. 

The content of this article is intended to provide a general guide to the subject matter.  Specialist advice should be sought about your specific circumstances.

WHAT YOU MAY HAVE MISSED

We recently saw the stand down of about 10,000 Australian workers by JBS after a cyber-attack, many of which were on daily hire arrangements and not paid for the stand down.

This brings into question the application of s.524 of the FW Act which allows an employer to stand down an employee during a period in which the employee cannot usefully be employed because of a number of circumstances including:

(a) industrial action (other than industrial action organised or engaged in by the employer);

(b) a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown; or

(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

If an employer stands down an employee during a period in accordance with s.524 of the FW Act then the employer is not required to make payments to the employee for that period.

It has not been previously considered whether the stand down provisions in the FW Act would apply to a cyber-attack, so it will be interesting to see if case law develops on this.