27 Oct HR LAW OCTOBER 2021 NEWSLETTER
Are you ready for changes coming on 1 November 2021?
1 November 2021 will see the introduction of “super stapling” as well as wage increases for stage 3 Modern Awards. We detail these changes and how they may affect your business below.
1 November 2021 Modern Award increase
As previously advised in our June 2021 newsletter, the Fair Work Commission (“FWC”) handed down its 2020-2021 annual wage review decision on 16 June 2021. The FWC ordered a 2.5% wage increase to the national minimum wage and Modern Award minimum wages. This increase was to occur in three stages. You can read our previous article on this topic here: https://www.hrlaw.com.au/hr-law-newsletter-june-2021/
The stage 1 Modern Award increase for most Modern Awards took effect from the first full pay period on or after 1 July 2021. The stage 2 Modern Award increase for the General Retail Industry Award 2020 took effect from the first full pay period on or after 1 September 2021. The stage 3 Modern Award increase will occur from the first full pay period on or after 1 November 2021. In total 21 Modern Awards will increase as part of this stage, including the Hair and Beauty Industry Award 2010, the Hospitality Industry (General) Award 2020 and the Fitness Industry Award 2020. Keep in mind that with the 2.5% increase to minimum rates of pay under the stage 3 Modern Awards, other entitlements such as applicable allowances under the award may also be subject to increases.
Employers who make over Modern Award payments may be able to absorb any stage 3 wage increases if their employees pay adequately compensates them for this based on the hours they work. We strongly recommend that employers undertake a wage analysis and comparison for each employee in a standard pay cycle compared to what they would otherwise receive under the applicable Modern Award to determine if the current over-award payments are set at an amount that covers the wage increase or whether there would in fact be any shortfall that may require addressing.
Please also keep in mind that the rate of pay for an employee under an enterprise agreement cannot be less than the relevant rate of pay under the Modern Award that would apply to the employee. Accordingly, you should conduct a review of the base rates under your enterprise agreement and compare this to the rate each employee would receive under the applicable Modern Award when the increase takes effect. You should also check if the enterprise agreement contains an increase mechanism for rates that apply in the new financial year and the effect of the phased increases.
If you would like assistance with the above, please contact us at HR Law. Our lawyers are here to assist you and your business in meeting your obligations to avoid any back pay claims or penalties.
1 November 2021 will also see changes to how an employer manages the superannuation fund of new employees in order to meet their superannuation guarantee obligations. Recent changes to the Superannuation Guarantee (Administration) Act (1992) (“Superannuation Act”) introduce what is referred to as superannuation stapling. Superannuation stapling was introduced following reforms aimed to eliminate the creation of multiple superannuation accounts for employees that move between employers and choose the employer’s default fund even though the employee already has one or more superannuation funds.
From 1 November, an employee’s superannuation fund will be “stapled” to them. Section 32Q of the Superannuation Act provides that a fund is a stapled fund for an employee at a particular time if the requirements prescribed by the Regulations for the purposes of this section are met in relation to the fund at that time.
When a new employee commences employment with an employer and the new employee has not nominated a super fund or does not return the super choice form, the employer is required to check with the Australian Taxation Office (“ATO”) via the ATO’s online services to see if the new employee has an existing superannuation fund. Should the employee already have a superannuation fund, then the employer is required to make contributions to that fund. There may be instances where an employee has multiple superannuation funds. The ATO will decide on which fund the employer is required to contribute the superannuation.
An employer can check on the ATO’s online services only once a single touch payroll process has occurred or a tax file number declaration has been lodged, as these events will demonstrate that the employer has engaged the employee.
Employers will still need to maintain a default superannuation fund as some employees may not already have an existing superannuation fund. An employer can sign the new employee up to the employer’s default superannuation fund, but only once the employer has received confirmation from the ATO that there is not a “stapled” super fund.
If the stapled fund does not accept the super contributions, the employer is required to make a second contribution. Should the second attempt fail, the employer must notify the ATO who will then advise the employer of an alternate stapled fund and if none is available, then it is highly likely the ATO will advise the employer to contribute into the employer’s default fund or another fund that meets their superannuation obligations.
There may be instances where a stapled super fund may not accept the super contributions, in turn preventing the employer from meeting its superannuation guarantee obligations. Whilst the ATO can reduce the employer’s individual superannuation guarantee shortfall it is not automatically applied and may not be applied at all if the employer does not pay the rejected contribution to another fund. Therefore, employers need to have processes to identify rejected contributions and rectify them in a timely manner.
These new stapling provisions apply equally to a person who works under a contract that is wholly or principally for the supply of their labor where the person is considered and treated like an employee under the superannuation guarantee regime.
Superannuation clauses in employment contracts will need to be updated for new employees to refer to the prospect of contributions being made into an employee’s stapled fund.
Navigating superannuation guarantee obligations can be difficult and there are financial penalties if employers do not meet their obligations under the Superannuation Act and Regulations. If you require assistance to ensure you are meeting your superannuation guarantee obligations or to review your contracts, contact the team at HR Law for advice.
An employee is injured outside of work and cannot work for two years. Can you terminate their employment?
Employees injuring themselves outside of work and requiring time off work is a common situation that many employers face. Some employees may be absent from work for a day, a week or a month. Employers usually manage these situations by temporarily amending rosters or reorganising workloads without major disruption.
But what about a situation where an employee injures themselves outside of work and cannot work for nearly two years?
This was the case considered in William Eskander v Visy Board Pty Ltd  FWC 3122 and it’s subsequent appeal in William Eskander v Visy Board Pty Ltd T/A Visy Board  FWCFB 6036.
Mr William Eskander (“Mr Eskander”) worked as a qualified printer at Visy Board Pty Ltd (“Visy”) until he was terminated from his employment on 28 July 2021. As part of his duties, Mr Eskander was required to operate a crane or forklift for loading and moving products, climb stairs, walk up and down large printing machines, squat, crawl around machines, push trolleys, move 44 gallon drums of ink, lift buckets weighing up to 15kgs and generally be on his feet for six hours during a shift.
Mr Eskander suffered an ankle injury in October 2018 whilst on an overseas holiday. After injuring his ankle Mr Eskander continued with his overseas holiday and, following his return to Australia, was required to wear a moon boot for four months. Since the time of sustaining his injury, Mr Eskander never returned to work. Visy subsequently terminated Mr Eskander’s employment to which Mr Eskander then filed an unfair dismissal application.
In response to the unfair dismissal application, Visy submitted that due to Mr Eskander’s injury, he had been absent from work since October 2018 and at the time of his dismissal he was unfit to perform the inherent requirements of his position. Visy submitted Mr Eskander was dismissed for a valid reason as he was unable to perform the inherent requirements of his role.
Mr Eskander’s arguments included that his role was not physically demanding, he did not self-limit during a functional capacity evaluation (‘FCE”), the validity of the findings of the FCE were questionable and a further medical assessment should have been conducted as the medical report and initial assessment had been carried out several months prior to his dismissal.
A conciliation conference was held on 27 August 2021 but the matter was not resolved so the matter proceeded to hearing.
Was there a valid reason for dismissal?
In addressing the question of whether there was a valid reason for the dismissal of Mr Eskander, Commissioner Harper-Greenwell considered the following questions:
- was Mr Eskander capable of performing the inherent requirements of his role at the time of dismissal;
- were there any reasonable adjustments that could be made to Mr Eskander’s role; and
- was Mr Eskander able to perform the inherent requirements of his role at some future date?
In answering these questions, Commissioner Harper-Greenwell examined the medical reports, heard evidence from various parties including an Orthopedic Surgeon, Exercise Scientist, Visy’s Operations Manager and Mr Eskander and based upon the evidence, dismissed the unfair dismissal application.
Commission Harper-Greenwell noted at  that:
“… after an extensive period of absence from the workplace Visy had a valid reason to dismiss Mr Eskander for reasons relating to his capacity to perform the inherent requirements of his role”.
Mr Eskander appealed the decision of Commissioner Harper-Greenwell before the Full Bench of the Fair Work Commission (“Full Bench”). Mr Eskander lodged an appeal on eight grounds that focused on the medical reports and incorrect assumptions made from those reports, the denying of procedural fairness, failing to consider any other factors such as further medical examinations, return to work (whether without restriction or subject to adjustments or redeployment).
The Full Bench at  found that “the basis on which the Commissioner reached her decision discloses an orthodox approach” and that “the Commissioner applied the correct legal principles, considered, and dealt with the evidence that was before her and made findings of fact based on the evidence before her”.
The Full Bench dismissed all eight grounds of appeal.
Practical implications and tips
This type of situation is complex for employers to manage given the various protections employees have at law (including general protections and protections against unfair dismissal and discrimination). If you intend to dismiss an employee on the basis of an injury, we recommend seeking advice from our team at HR Law.
The content of this newsletter is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.