Changes to the High income Threshold and Unfair Dismissal

Effective of 1 July 2015, the high income threshold for unfair dismissal claims has increased from $133,000 to $136,700, stopping employees who earn more than this amount from being able to access the unfair dismissal jurisdiction.

This increase also meant the compensation cap for unfair dismissals has increased to $68,350. 

Although employees who earn over the threshold can be excluded from modern award coverage, the National Employment Standards still apply to them.

It is especially important for employers who are currently managing the performance of a high earning employee and thinking of dismissing them, as any employee who earns above $133,000 and under $136,700 will now be covered by unfair dismissal laws.

The high income threshold for unfair dismissals refers to the highest possible income an employee could have, unless they are covered by an award or enterprise agreement, before they are excluded from making an unfair dismissal claim against their employer.

This threshold applies under the Fair Work Act 2009 and changes every year on July 1st. The following indicates how much the threshold has increased every year:

• 2009 - $108,300
• 2010 - $113,800
• 2011 - $118,100
• 2012 - $123,300
• 2013 - $129,300
• 2014 - $133,000 
• 2015 - $136,700 (current)

If an employee claiming unfair dismissal is not covered by an award or enterprise agreement, and was earning greater than the high income threshold at the time of dismissal, then the employer may have a defence as to jurisdiction to the claim, although any defence still needs to be heard and contended in front of a representative of the Fair Work Commission.

The threshold relates to an employee’s annual earnings. It incorporates the employees’ wages, salary sacrifices, and non-monetary benefits like company cars and fringe benefits tax. It does not include allowances for living away. It is generally pretty straightforward working out an employee’s annual rate of earnings, however if an employee receives bonuses, overtime and salary sacrifices it can become more complicated.

In any unfair dismissal claim, it is important to figure out whether the employees claim is beyond the unfair dismissal jurisdiction and therefore disqualified.

The high income threshold level rises every year, enabling more and more employees to access the unfair dismissal provisions.

It is important for employers to be aware that employees that earn over the threshold may be unable to lodge an unfair dismissal claim may still have other ways to challenge their dismissal.

Before dismissing a high income employee it is always beneficial to seek professional  guidance to ensure you are safe guarded against any challenge.

Proposed changes to the Fair Work Act

The proposed changes to the fair work act the federal government has introduced to parliament could have a significant impact on the existing fair work act if implemented.

To outline how these changes could affect your business, here are some of the main points within the bill and how they could affect your business.

• Extending a period of unpaid parental leave – An employee taking unpaid parental leave under the fair work act, may request to increase their leave for a period up until 12 months. The amendment would require the employer to give the employee the opportunity to discuss the request in person or over the phone before refusing it. The discussion cannot be had by email or sms.

• Payment for unused annual leave – under the Government’s proposed amendment, payment for unused annual leave is to be made at the employee‘s base rate of pay for ordinary hours as applicable immediately before dismissal (unless an applicable modern award, enterprise agreement or employment contract expressly provides for a more beneficial entitlement).  Base rate of pay does not include penalties, loadings, allowances or any other separately identifiable amounts.

• Taking or accruing leave while receiving workers’ compensation - An employee who is absent from work due to workers compensation is unable to take or accrue leave under FW act during the compensation period.

• Transfer of Business -The transfer of business provisions will not apply to the transfer of an employee between associated entities where the employee sought the transfer at their own initiative. The proposed amendments would “switch off” the FW act transfer of business rules when an employee becomes employed by an associated entity of his or her former employer if the employment was sought on the workers own initiative before termination of employment with the old employer.
  
  For example if an employee is looking to progress their career or change their lifestyle and pursues a career opportunity within their own company or affiliated company this would be considered seeking his or her own initiative. If an employee who was made redundant accepted alternative employment this would not be considered his or her own initiative.
  
  Note that this change would only apply to transfer of enterprise agreements and not to continuity of service-based entitlements. The automatic continuity (subject to exceptions) provided in the FW Act when employees transfer between associated entities would continue to apply.

• Fair Work Commission (FWC) hearings and conferences - The proposed amendment would allow the FWD to dismiss an unfair dismissal claim on certain grounds without a hearing. The FWC will be able to do this if the applicant has failed to attend a conference or hearing, comply with a FWC order or discontinue an application after a settlement agreement.
  
  This would also apply where the FWC found the application to be frivolous or had no reasonable chance of being successful. The FWC must invite all parties to provide further information to the FWC to show its use is warranted before exercising this power.

• Individual Flexibility Arrangements - All employees party to an IFA made under a modern award flexibility term would need to sign a 'genuine needs' statement.
  
  Employees entering an independent flexibility arrangement are required to give a written statement indicating why they believe an independent flexibility agreement under a modern award or enterprise agreement meets their needs and leaves them better off.
  
  Individual flexibility arrangements allow for unilateral termination only upon 13 weeks of notice, as opposed to the current 28 days of notice.
  
  The proposed amendments improve the utility of individual flexibility arrangements by requiring enterprise flexibility terms to permit individual flexibility about all five minimum matters listed in the model flexibility term; namely arrangements about when work is performed, overtime rates, penalty rates, allowances and leave loading.

• Greenfields Agreements –The FWA amendment proposes many changes to the Greenfields agreement process intended to avoid employers being convinced to agree to inflated wages and conditions and employment preference to avoid delays in a project. Under the proposed changes, an agreement would provide for pay and conditions consistent with the prevailing standards and conditions within the relevant industry for equivalent work. The FWC may take into account the prevailing pay and conditions in the relevant geographical area.  These changes include the extension of good faith bargaining requirements to single enterprise Greenfields agreements. They also include provisions for an employer to apply to the FWC for an agreement to be approved where the parties are unable to reach agreement in a reasonable period following a three month negotiation period notified by the employer.

• Protected action ballot orders - The Amendment Bill proposes that an application for a protected action ballot order will not be able to made until the employer is obliged to give employees notice of representational rights in bargaining.

• Right of Entry - The amendment bill introduced changes to the right of entry rules regarding the rights of union officials who hold entry permits. The employer will no longer be required to organise transport and accommodation arrangements for permit holders in remote areas.
  
  Interviews with employees by union officials or permit holders must be held in an area agreed between the business and the permit holder or in the place the business employees take lunch breaks. The FWC will also be able to deal with disputes regarding the frequency of visits by permit holders.

How to Investigate a Bullying Claim

Workplace bullying is a serious, and very real issue that requires attention and care to prevent and deal with any cases that may arise. Failure to implement procedures to prevent and address bullying in the workplace can put employers in danger of breaching OHS policies and the Fair Work Act.

Implementation of workplace policies is the first step in prevention of bullying; such policies should be thorough, and must outline the standard of behaviour expected of members of the workplace. 

Implementation of policies to all new and existing members of the workplace is crucial; they should be discussed in meetings and frequently submitted for review to guarantee functionality and effectiveness.

It is vital that an employer deals with issues of bullying at their immediate awareness as failure to do so can contribute to risk of health and safety in the workplace. 

Employers may look to either internal or external sources to investigate a bullying claim; regardless, it is important that the selected investigator is well trained, has a proper understanding of procedural fairness and any associated legal issues. External investigators are usually the go-to for a serious claim, where as an internal investigator may be more useful for more minor issues, or in cases that need to be dealt with more promptly.

Investigation should be used for:

•          Ongoing reports
•          In any case where a threat is involved
•          Cases where multiple employees have been reported
•          Where an informal, early intervention approach has not solved the issue.

An investigation needs to assess the issue and find a resolution. The appointed investigator should be neutral to both parties; they should determine what allegations will be tested and how the process will take place, including prospects to be interviewed and the overall timeline. Professionalism of the investigator is a must, as is objectivity in examinations, sufficient time allowance, consultation with relevant witnesses, informing all involved parties of possible investigation results and outcomes, fact based conclusions, set up of private hearings from all parties and documentation of facts.

To ensure fairness and efficiency of investigation it is crucial the respondent is made aware of

·         reports against them

·         investigation processes to be executed

·         possible consequences,

and:

·         has an opportunity to seek advice or representation

·         is provided with the opportunity to reply to complaints

·         is kept confidential and,

·         informed of how they may submit a review of the outcome.

The investigator must report on the accusations made, processes undertaken, evidence discovered including interviews and a conclusion of whether the case of bullying may be validated.

Further action should be taken if necessary, and outcomes should be communicated gently to the respondent. 

Contact Annette at End2End Business Solutions on (02) 8977 4002 for advice on establishing workplace policies and dealing with bullying claims for your business.

Changes to Bullying Measures in the Fair Work Act - 1 Jan 2014

Under the Work Health and Safety Act 2011, employers are obliged to take all reasonably practicable steps to manage health and safety risks in their workplaces.  Bullying is one such health and safety risk, and failure to manage and prevent bullying could constitute a breach of the Act and could have serious repercussions, not just for those bullying or being bullied, but for your organisation as a whole.

As from 1 January 2014, the Federal Government will introduce new federal anti-bullying laws which are designed to stop workplace bullying promptly.  However, the laws do not give bullying victims an entitlement to monetary compensation or reinstatement of their position.  From 1 January 2014, a worker who is being ‘bullied at work’ or believes they have been bullied at work will be able to apply directly to the Commission for an order to stop the bullying.

These new laws will cover contractors, subcontractors, outworkers, apprentices, trainees and students gaining work experience as well as volunteers.

Under the new provisions, a worker can bypass his or her employer and lodge a claim directly with the Commission. The Commission is required to deal with an application within 14 days after the application is made - the time limits will mean an employer will have very little time to investigate, assess, and respond to a claim. Under the new laws, employees can formally require the Fair Work Commission to order employers to take action against bullying colleagues and managers. The FWC will have the power to issue an order to the alleged bully or bullies, to put a stop to the disputed behaviour. 

With the introduction of these new laws, it is essential that an organisation has an effective workplace bullying policy which includes:

1. a definition of workplace bullying, including a statement that workplace bullying is unlawful;

2. a complaints process; and

3. information about the consequences for a worker who has engaged in workplace bullying.

Bullying is defined as follows:

A worker is bullied at work if an individual or a group of individuals repeatedly behaves unreasonably towards the worker or a group of workers of which the worker is a member and that behaviour creates a risk to health and safety. 

It is irrelevant whether the individual or individuals who are bullying intend to bully the victim.

It is important to note that bullying involves repeated unreasonable behaviour. An isolated incident is insufficient. 

Importantly, the definition has retained the exemption for reasonable management action which is carried out in a reasonable manner.  (A performance assessment/review that you disagree with will not constitute bullying!) 

Bullying can include more obvious and overt behaviours, such as: 

•                    intimidation

•                    verbal abuse

•                    assault

•                    physical aggression/violent behaviour

•                    spreading rumours about someone

•                    constant name calling

•                    practical jokes

•                    harassment/sexual harassment,

•                    trolling on social media.

But bullying can also include behaviours such as:

•                    constant unjustified criticism or complaints

•                    constant threats to sack or demote

•                    excluding someone from workplace activities

•                    inconsistent and arbitrary enforcement of rules

•                    setting unreasonable timelines

•                    deliberately changing work arrangements in order to inconvenience someone

•                    setting tasks that are unreasonable

•                    excessive scrutiny of work performance

•                    withholding information or tools required to perform work, and

•                    taking credit for another employee's work and failing to acknowledge that employee.

Examples of the sorts of orders the Commission may make include:

•             regular monitoring of behaviours by an employer;

•             compliance with the employer’s workplace bullying policy;

•             provision of information by the employer;

•             additional training to employees; and

•             amendment of the employer’s workplace bullying policy.

What will this mean for Employers?

It would be expected that employers' processes for handling complaints about bullying will be in the spotlight. Therefore, over the next few months until 1/1/2014, it will be important that employers use the time remaining to review and improve their policies and framework regarding bullying. 

Businesses should ensure that performance management and investigation processes are fair and reasonable.

They should have appropriate policies that detail the action taken when an employee makes a grievance or complaint about bullying behaviour, and appropriate mechanisms in place for addressing concerns of workplace bullying.  All employees should have a copy of the policy, or at least know where and how to access the policy.

In the event of an application to the FWC, any workplace investigations conducted will be open to scrutiny. You must be able to show that you have acted with fairness. Organisations may also need to prove that they have given employees training or guidance in relation to their policy, so all employees are aware of what they need to do if they think they are being bullied.

1 July 2013 - Legal changes for Small Business

It's the new financial year and there are a raft of legal changes taking effect today for the business community to adhere to.  

In summary:

Minimum wage increase

Effective July 1, Australia's 1.5 million minimum wage workers are set to receive an additional pay raise of $15.80 per week, a 2.6 % increase over their existing wages.

The effect of this increase will see the National Minimum Wage increase from 1 July 2013 to $622.20 per week, or $16.37 per hour. The new rates will need to be paid from the first full pay period on or following July 1, 2013.

Increase in High Income Threshold/Unfair Dismissal

The high income threshold increases from 1 July 2013,

• the high income threshold increases to $129,300
• the compensation limit under unfair dismissal increases to $64,650.

The high income threshold is indexed annually on 1 July.

The high income threshold affects how modern awards apply to employees. It also affects employees’ ability to access unfair dismissal. Higher income employees are generally not allowed to apply for unfair dismissal since the terms of employment can be different above this threshold. As well as affecting unfair dismissal rights, the threshold impacts the maximum amount payable for an unfair dismissal case. This amount is capped at either half of the high income threshold or six months of the dismissed employee's wage.

Superannuation

From July 1, employers will contribute 9.25% to superannuation for each of their eligible employees, an increase of 0.25% from the current rate of 9%.
Also from July 1, businesses will be required to pay elderly people aged 70 and above superannuation entitlements, as the existing upper age limit for employee super guarantee eligibility will be removed.

If you were making super payments at the minimum 9% rate, you need to adjust payments to the new rate from 1 July 2013.

Superannuation is paid on top of the minimum entitlements in the award or agreement that applies.

Loss carry-back measures

Small businesses are now able to carry back their losses to offset past profits and receive a tax refund. Businesses can carry back up to $1 million in deductions against profits made in the previous year to receive a refund of up to $300,000 each year from tax previously paid – representing the company tax rate of 30 cents in the dollar.

Changes to Fair Work Act

On Wednesday 28 November 2012, Federal Parliament passed the Fair Work Amendment Act 2012 (Cth) (Amendment Act) which implements a number of recommendations of the Fair Work Act Review Panel.

The changes to the Fair Work Act 2009 implemented by the Amendment Act are mostly administrative and technical in nature, and to that extent will not make a major difference to employers’ workplace arrangements.

However, there are some significant changes to the FW Act provisions dealing with unfair dismissal and general protections claims, certain aspects of agreement-making, and ballots for protected industrial action that employers need to be aware of. Changes have also been made to the structure and operation of Fair Work Australia (FWA), and the tribunal has been given new functions in relation to default superannuation funds in modern awards.

The Government’s intention in changing the unfair dismissal provisions of the FW Act is “to ensure the right of an employee to bring an unfair dismissal claim is better balanced against the right [of] an employer to ensure they are required to respond to applications that are genuine, and to ensure that [FWA] has the power to deal with unreasonable conduct in relation to a claim”. Whilst on the face of them, these changes appear beneficial to employers, the strong likelihood is that they will, in practice, provide little relief to employers from the challenges of the unfair dismissal regime.

The key changes that will be implemented are summarized as follows:

Contracts and Enterprise Agreements

1.  Individual union officials will not be able to act as bargaining representatives for employees not covered by the official’s union.
2.  Employees will not be able to opt out of an enterprise agreement.
3.  Employers will be prohibited from making enterprise agreements with only one employee.

Unfair Dismissal

4.  Aligning the timeframes for making unfair dismissal claims and general protections dismissal claims at 21 days.  The time limit for lodging an unfair dismissal claim has been extended from 14 to 21 days from the date that the dismissal takes effect. The time limit for lodging a general protections claim based on dismissal has also been changed from 60 days to 21 days. This should be welcomed by employers, as employees will now need to decide whether to lodge an unfair dismissal or a general protections claim (rather than one, followed by the other; or the pursuit of a general protections claim that should properly have been brought as an unfair dismissal claim).

5.  Under certain circumstances Fair work Australia will be capable of dismissing unfair dismissal applications at their discretion. This will apply where the parties have concluded a settlement agreement, when an applicant fails to attend a proceeding relating to the application or where the application fails to comply with Fair Work Australia directions or orders relating to the application.

6.  Fair Work Australia will be able to demand a party pay costs if through an unreasonable act or omission they have caused the other party to incur a cost. This recommendation reflects concerns that unscrupulous lawyers or agents are encouraging dismissed employees to pursue unfair dismissal claims without merit on a no-win, no-fee basis. They can also demand a party pay a cost order if they fail to agree to a settlement that is deemed reasonable.

Change of Name

7.  It was proposed that the name of Fair Work Australia would be changed to a new title containing the word ‘Commission’ and no longer containing the words ‘Fair Work’ due to the considerable confusion caused by having a number of agencies with similar names (e.g. FWA, the Fair Work Ombudsman (FWO), and more recently Fair Work Building and Construction (FWBC).

The Amendment Act has made several important changes to the structure and operation of FWA, and has re-named  the tribunal as the Fair Work Commission (FWC). The Government opted for FWC, indicating that the word “Commission” more accurately reflects the tribunal’s functions.

Superannuation

8. The establishment of an ‘Expert Panel’ to deal with minimum wage decisions and default superannuation funds for employees who do not nominate their own superannuation fund and are covered by a modern award.

The commencement date of the changes introduced by the Amendment Act is currently unclear.

As an employer, you should obtain advice about how these changes affect your contracts, Enterprise Agreements and HR policies and procedures.

Be aware what the pending changes to unfair dismissal could mean for you as an employer:

• check the date of unfair dismissals applications and general protection claims relating to a termination of employment complies with the new time limits; 
• seek advice on whether the applicant's initial documentation lodged with the Fair Work Commission provides sufficient information about the alleged circumstances of their dismissal;
• seek advice on whether there are grounds to apply for a cost order; and
• seek advice on whether there is scope to apply to the Fair Work Commission for an unfair dismissal application to be dismissed.

To minimize your risk as an employer, you should consider contacting Annette at End2End Business Solutions on (02) 8977 4002 for advice on employee dismissals for your business.