30 May HR LAW NEWSLETTER – MAY 2024

Welcome to the May 2024 HR Law Newsletter. 

This month, we provide updates from the 2024 Federal Budget, we consider the upcoming change to modern awards following the publication of the new “draft delegates’ rights” clause and discuss the newly published Fair Work Commission Implementation Report regarding regulated workers.  Finally, we examine a recent case in which penalties were imposed not only on the company for its contraventions of the Fair Work Act 2009 (Cth), but also individuals found to have been involved in the contraventions.

2024 FEDERAL BUDGET

On Tuesday, 14 May 2024, the 2024-25 Australian Federal Budget (“Budget”) was handed down by Treasurer Jim Chalmers.

According to the Treasury’s latest forecasts, workers are expected to receive real wage growth of 0.5% a year for the next three years as a result of falling inflation and large pay increases (as per upcoming collective agreements and wage rulings). Specifically, wage forecasts record pay growth of 4 per cent for 2023-24 as inflation drops to 3.5 per cent in the same period.

In addition, the Budget changes have introduced tax cuts for all taxpayers.

From 1 July 2024, the following changes include: 

• Reduction of 19 per cent tax rate to 16 per cent;

• Reduction of 32.5 per cent tax rate to 30 per cent;

• Increase in the amount which the 37 per cent tax rate applies to from $120,000.00 to $135,000.00;

• Increase in the amount which the 45 per cent tax rate applies to from $180,000.00 to $190,000.00. 

To read more about the 2024-25 Australian Federal Budget, click here.

We recommend that employers review their payroll systems now to ensure compliance with the upcoming PAYG tax reduction being implemented on 1 July 2024.

DRAFT DELEGATES RIGHT CLAUSE

Following the changes to the Fair Work Act 2009 (“Fair Work Act”) made by the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (“Closing Loopholes Act”),there is now a requirement for a “delegates’ right” clause to be inserted all into modern awards. In accordance with the timelines set out in the Closing Loopholes Act, these insertions must be made by 30 June 2024.

On 10 May 2024, Justice Hatcher, President of the Fair Work Commission, released a Statement and a draft of the “delegates’ rights” modern award clause. The Statement confirms that final determinations containing the modern awards are to be published on 28 June 2024 and in force from 1 July 2024.

To see Justice Hatcher’s Statement and the draft “delegates’ rights” clause, click here. 

REGULATED WORKERS – IMPLEMENTATION REPORT PUBLISHED

The Fair Work Commission has released an implementation report regarding the minimum standards for regulated workers. These changes will affect the digital platform gig economy and the road transport industry and are included in the new legislative changes under the Closing Loopholes Act.

Regulated workers are ‘employee-like’ workers performing digital platform work and regulated road transport contractors. These provisions expand the powers of the Fair Work Commission to:

• make minimum standards orders and minimum standards guidelines for regulated workers;

• make road transport contractual chain orders and road transport contractual chain guidelines for regulated road transport contractors, road transport employee-like workers and other persons in a road transport contractual chain;

• register collective agreements made between regulated businesses (digital labour platform operators or road transport businesses) and registered employee organisations which set terms and conditions for the regulated workers to whom they apply;

• deal with applications for a remedy in relation to unfair deactivation from a digital labour platform or unfair termination of a contract by a road transport business (not dealt with in this report).

To read the Implementation Report regarding minimum standards for regulated workers, click here.

THIS MONTH’S CASE BRIEF

A Canberra massage business, Foot & Thai Massage Pty Ltd (“FTM”) has been ordered to pay more than $2 million in compensation and fines for breaching the Fair Work Act 2009 (Cth) (“FW Act”).

In the recent decision of Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) (No 8) [2024] FCA 483 (10 May 2024), it was found that FTM had breached the FW Act by underpaying temporary visa workers, implementing a cashback scheme, threatening to kill workers’ families, threatening to return workers back to the Philippines and failing to comply with administrative record keeping requirements.

It was found that over the course of approximately four years, seven Filipinas Massage Therapists were subjected to unfair working conditions by FTM. FTM had sourced the workers from the Philippines, offering them full time roles with additional entitlements. However, their working conditions were full of “false promises,” with the Director of FTM himself describing the Massage Therapists’ employment contracts as “shams”.

FTM engaged in multiple breaches of the FW Act including:

• Section 44 – requiring workers to work unreasonable hours

• Section 45 – failing to pay the employees their minimum entitlements including hourly, penalty and overtime rates under the Health Professionals and Support Services Award 2010 (as applicable at the time). 

• Section 324 – unlawfully deducting amounts it referred to as “staff loans”;

• Section 340, 251 – engaging in adverse action;

•  Section 343 – engaging in coercion;

• Section 325 – requiring some workers to return money when the business was “suffering”

Justice Katzmann stated at [139] that:

“…the Massage Therapists suffered “significant emotional harm and distress as a result of living in fear of [Mr Elvin] becoming angry and sending them back to the Philippines or of killing their families back in the Philippines [which they endured] for a sustained period of approximately 3 to 4 years”. I had the strong impression from watching and hearing them in the witness box that their suffering was ongoing.”
 
Her Honour further found that the Director and Supervisor of FTM were also liable to pay financial penalties.

Personal penalties against the Director and Supervisor of FTM, were imposed in accordance with section 550 of the FW Act, which deals with “accessorial liability” and holds those personally accountable as accessories to breaches of the FW Act. Specifically, section 550(1) of the FW Act provides that a person who is involved in a contravention of a civil remedy provision of the FW Act is taken to have contravened that provision.  Section 550(2) of the FW Act provides that a person is involved in a contravention of a civil remedy provision if, and only if, the person:

• has aided, abetted, counselled or procured the contravention;

• has induced the contravention, whether by threats or promises or otherwise; 

• has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

• has conspired with others to effect the contravention.

In this case, Her Honour maintained that the Director and Supervisor’s breaches were “extremely serious” and “deliberate and intentional, rather than inadvertent and careless.”  Notably, Her Honour found that the Director never had any intention of complying with many of the terms of the Massage Therapists’ contracts and that he made an “economic decision not to comply with the Health Award.”  As a result, both the Director and Supervisor were ordered to personally pay pecuniary penalties.

This case serves as a timely reminder that employees who are engaged in management decisions can be held personally liable for workplace breaches. For both employers and employees who are currently involved in management decisions, it is important steps are taken to minimise liability which include:

• being aware of obligations arising under the Fair Work Act, including under relevant modern awards and/or enterprise agreements;

• regularly undergoing comprehensive audits on employment practice to maintain compliance with the Fair Work Act;

• actively implementing updates to processes, policies and procedures;

• seeking regular and systematic feedback from all relevant stakeholders including employees and clients; 

• where there are potential issues, making inquiries to confirm compliance with the Fair Work Act; and

• not turning a blind eye to possible breaches of the Fair Work Act, as a Court may be able to infer actual knowledge from “wilful blindness”.

To read the case, click on the link here.

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