Australia: Key changes set to shape Australian workplaces in 2017

What you need to know

• Several key changes affecting Australian workplaces have recently taken effect and another round of reforms are in the pipeline.
• Some of these changes will have a significant impact on the way businesses manage their people and industrial relations issues, from the engagement of independent contractors to the administration of excessive annual leave balances.
• All business leaders and people managers should be aware of the changes that lie ahead and be prepared to take action where and when it is needed.

Key changes to consider in 2017

New protections against unfair contract terms for independent contractors

The way businesses engage independent contractors will be impacted by the reform to extend the Australian Consumer Law protections against unfair contract terms to small business operators, which took effect in late 2016.

The new protections apply to 'standard contracts' entered into or renewed on or after 12 November 2016 where at least one of the parties is a small business that employs fewer than 20 people and the upfront price payable falls below certain limits. For more detail, see our previous article on the new unfair contract term protections.

Businesses that use standardised contracts with independent contractors who run small businesses are now at risk of having these contracts, or some of their individual terms, being declared unenforceable if they are deemed unfair. Businesses should review these agreements to determine whether they are subject to the new protections, and also ensure that affected agreements do not contain any terms which may be considered unfair, such as terms that permit unilateral variations or contain unreasonably wide indemnities.

New clause in awards to deal with excessive annual leave

A number of modern awards were recently changed to give employers the right to direct an employee with an excessive leave balance to take annual leave in certain circumstances.

On 29 July 2017 a new clause will come into effect entitling employees to notify their employer that they will take a period of leave. Employees covered by an award affected by the changes will be able to dictate when they take excess annual leave in limited circumstances if they are unable to reach agreement with their employer.

Tightening of rules for 457 visas

The time that 457 visa-holders can remain in Australia after their employment ceases has been cut from 90 to 60 days for visas granted on or after 19 November 2016. Businesses that employ skilled visa-holders should ensure compliance with these new restrictions, as sponsors can be liable for the removal of 457 visa-holders who overstay their visa.

As of January 2017, new 457 visa-holders who work in South Australia are also required to contribute to the cost of educating their children in government schools in that state. An equivalent obligation will extend to all 457 visa-holders across Australia from 1 January 2018.

New body to regulate union conduct

As part of the Federal Government's response to the corruption uncovered by the Royal Commission into Trade Union Governance and Corruption, a new regulator will be established to oversee the governance of unions and employer associations. The regulator, to be called the Registered Organisations Commission (ROC), will have a range of investigative powers that will be similar to those of Australia's corporate regulator, ASIC.

Under the Fair Work (Registered Organisations) Amendment Act 2016, which is expected to commence in the first quarter of 2017, the ROC will take over some of the regulatory functions previously performed by the Fair Work Commission but will have wider powers to conduct inquiries and investigations. The changes are intended to align the regulation of unions with the standards that currently apply to companies, by introducing new financial reporting obligations and a higher civil penalty regime.

Re-introduction of the construction industry regulator

The Australian Building and Construction Commission (ABCC) is back, following the approval of the Federal Government's industrial reform agenda to re-establish the construction industry regulator late last year.

For the first time, new provisions which prohibit unlawful picketing have been introduced. These provisions are designed to capture conduct that disrupts the supply of goods, services and labour to building sites for the purpose of advancing industrial claims.

A new building code has also been issued which applies to all new tenders for Commonwealth-funded building work. All enterprise agreements entered into after 2 December 2016 must comply with the new code. Businesses covered by enterprise agreements made before 2 December 2016 will have until 29 November 2018 to ensure their agreements are code compliant. However, all businesses in the construction industry should review the new code and their agreements and arrangements with contractors to ensure they prepare for the changes during the transition period.

Potential changes in the pipeline

Broader powers for FWO to combat worker exploitation

As part of its commitment to protect vulnerable workers, the Federal Government is expected to introduce new legislation early this year to increase the powers of the Fair Work Ombudsman (FWO). The Government intends to broaden the existing investigative powers of the FWO, which already enable it to conduct workplace inspections and require the production of records. The Government is also expected to create a new offence and penalties for providing misleading or false information to Fair Work Inspectors. A proposal to introduce ten-fold increases in the penalties, which can be imposed on companies that deliberately and systematically underpay workers, is also being considered.

While businesses should not need to be reminded that the exploitation of vulnerable workers is problematic, these proposed changes are indicative of how closely the issue is likely to be watched.

FWO targeting accessories to breaches of workplace laws

The proposal to increase the FWO's powers to investigate worker exploitation coincides with the FWO's recent focus on extending liability for breaches of workplace laws beyond direct employers, to capture head franchisors, directors, HR managers and others involved in the exploitation of workers. The FWO has made it clear that it will continue to push the boundaries in its use of the accessorial liability provisions of the Fair Work Act 2009 (Cth), following reports that it pursued accessories involved in breaches in 90% of the cases it lodged in court last financial year. For more on the FWO's increasing focus on worker exploitation, see our previous update.

In the wake of the hefty penalties recently imposed on the head franchisor of frozen yoghurt chain Yogurberry for its involvement in the exploitative practices of one of its franchisees, ¹ all businesses should be turning a keen eye to the treatment of all workers in their networks.

Limits on government-funded parental leave pay

Employers that provide paid parental leave may want to reconsider the structure and benefits offered under these schemes if the Federal Government's proposal to limit access to government-funded parental leave pay takes effect.

The Senate is due to consider and report on the Fairer Paid Parental Leave Bill 2016 this month. If the Bill's provisions are implemented, government-funded parental leave pay will be reduced by the number of weeks of paid parental leave an individual receives from their employer. This means employees with 18 or more weeks of employer-funded parental leave will no longer be eligible for government-funded parental leave pay.

Be prepared to take action

It is clear that all businesses will be affected by these changes in some way.

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories