There are three essential types of employees, Full-Time who works the 38 hour week, Part-Time works to a fixed schedule for less than the 38 hours and, Casual Employee. Where Modern Awards are concerned, the definition of “Casual Employee” is particularly vague with references like, “a casual employee is an employee engaged and paid as such”.
Casual employees are not entitled to employee benefits such as holiday or sick leave and accordingly are paid a loading of 25% on top of what a normal full-time equivalent employee would earn. The rather simplistic definition of what constitutes a casual employee belies an often confusing scenario which can result in the employer finding themselves in hot water.
Courts and Tribunals have defined a casual employee as essentially an employee who works irregular hours and has no reasonable expectation of systemic and ongoing work. It doesn’t matter therefore what you’ve written in the contract. If your casuals are working regular predictable hours with a reasonable expectation of the work being ongoing, then the employee has a solid case in arguing that they are not casual but, rather, full-time or part-time employees; with all the benefits associated with that definition. Conversely, if you were to find yourself in front of the tribunal defending your “casual’ classification, the court would look to factors such as the informality of the appointment, the uncertainty of continued future work and the irregularity of work hours for you to prove your case.
So what every employer should be looking out for is; a) are your casuals guaranteed a fixed amount of hours, b) are they on fixed roster, and c) do they have a level of certainty of future work with you? If your answer to these questions is yes, then you may have misclassified your employee.
Should you find yourself in this situation, talk to the staff member/s concerned and agree on a plan of action. Taking aggressive action like terminating the “casual” could also lead to unfair dismissal claims. Yes, casuals do have access to the unfair dismissal provisions. A recent ruling you Fair Work Australia, Ponce v DJT Management, found that the casual employee did have entitlement to lodge an unfair


 

Under the new Fair Work Act a company that is employing an employee disguised as an Independent Contractor may be subject to a $33,000 fine per instance. Companies should therefore be very careful that the appointment of an independent contractor is exactly that and not, inadvertantly, an employee. There are a number of ways in which you can tell the difference.

  1. A worker who’s an employee will have a contract of employment,
  2. An employee will work under the control of, be dependent on or in a subordinate relationship, i.e. control factors, who is in control of the employee's work activities or is the independent contractor free to undertake the task on their own terms.
  3. An Independent Contractor will supply you with an invoice for the worker’s services via another company.
  4. A Independent Contractor will have their own public liability, professional indemnity and worker's compensation insurance and will not be reliant on their client's policies.
  5. An Independent Contractor will provide services regularly to a number of other clients
  6. The independent contractor does not receive leave of any kind.
  7. Independent Contractors do not have tax deductions taken from payments made to them.
  8. The independent worker derives less than 80% of their income from the services provided to you.
  9. The independent worker is free to deliver the service according to a flexible work schedule.
  10. The independent contractor receives milestone payments and is only paid for the work when completed, and
  11. The independent contractor will advertise their services to the world at large.

What Does the ATO Say?

'Contract of Service' verses 'Contract for Service'
The ATO has issued a Taxation Ruling (TR1999/13) which makes the following distinctions between the forms of contractual relationships:
"The relationship between an employer and an employee is a contractual one. It is often referred to as a contract of service (or in the past, as a master/servant relationship). Such a relationship is typically contrasted with the independent contractor/principal relationship that, at law, is referred to as a contract for services. An independent contractor typically contracts to achieve a result whereas an employee contracts to provide his or her labour (typically to enable the employer to achieve a result)…"
"A user of labour or service requirer may contract with a labour hire firm for the provision of labour of a specified kind. The labour hire firm does not contract to perform the work; it merely contracts to provide labour to work under the direction of the user.
The labour hire firm then ascertains the availability of suitable workers on its books. Contacted workers may accept or reject the work offer. On acceptance, a contract is formed between the labour hire firm and each worker."
If in doubt, have an expert check the arrangement as well as the wording of your agreements to ensure your business is not unwittingly falling into the ‘sham’ contract trap.
Remember the Fair Work Inspector can enter your workplace at anytime, without notice, to inspect your arrangements so do take the time to make sure you've got it right.


The Paid Parental Leave scheme was introduced on 1 January 2011.
The aim of the scheme is to provide primary carers of new born or adopted children with 18 weeks paid leave at the national minimum wage. There are two primary messages that employers should be aware of:

  1. The scheme will be fully funded by the government, and
  2. There will be a six-month phase in period for employers during which period parents will be able to claim directly from the Family Assistance Office. The phase in period is optional and is designed to make the transition easier for the employer.

After 1st July 2011, employers will be required to make payments on behalf of their long term employees. Long term employees are those who have been with the company for12months or more. In this scenario the employer will receive advanced payment from the government thereby avoiding any cash flow difficulties. Funds may be received from the government fortnightly or in three six week instalments.
Under the legislation, the Fair Work Ombudsman is empowered to investigate any employer who fails to pay. Parental Leave pay is not a leave entitlement, but it will complement parents’ entitlements to leave such as unpaid parental leave under the National Employment Standards.
Parents are only entitled to paid leave after the birth or adoption of the child, not before, and may be taken any time thereafter so long as the entire 18 weeks are taken within the first 12 months of the date of birth.

Who is eligible?

To be eligible, a parent will need to meet the Paid Parental Leave work test, the income test and the residency requirements. Typically this means that the parent has worked for at least 10 of the 13 months before the birth or adoption of the child, worked a minimum of 330 hours during that period and there was not a break of more than 8 weeks between work periods. Only parents with an adjusted taxable income of $150,000 or less will be eligible. Australian citizens, permanent residents, New Zealand citizens who entered on a NZ passport and some specified temporary visa holders are all eligible to claim Paid Parental leave.

Paid Parental Leave verses Baby Bonus?

It should be noted that parents who claim Paid Parental Leave will not be eligible to claim the Baby Bonus at the same time. Consideration should therefore be given to the employees own personal and family circumstance with regard to claim Paid Parental leave. It is estimated that 85% of families will be $2000 better off under the Paid Parental Leave scheme.

How does it Work? The Process...

  1. The employee will lodge their claim no more than 3 months prior to the expected birth or adoption directly with the Family Assistance Office. The first claims can be lodged from the 1st October 2010.
  2. If the Family Assistance Office approves the claim they will notify the employer confirming your eligibility and advising of start date of payments and asking for specific information relating to the receipt of funds from the Family Assistance Office.
  3. The Payment is taxable so all normal pay and payment slip details must be provided to the employee.

Many organisations are still signing up new employees using the same pre-Fair Work Employment Contract they have always used. At the same time most employees who joined the company before July 2009 are still on the same contracts they signed at that time. This means that almost certainly these agreements will not comply with the legal requirements stipulated by the Fair Work Act. This post therefore discusses some of the important issues the Small to Medium Enterprise should be aware of? If in doubt, you should have yours agreements reviewed. Note this discussion relates to national employers only (most of you).

 

 

Employment Contracts and the National Employment Standard (NES)


The NES came into effect on the 1st July 2009 and specifies the minimum employment conditions for an employee. If you are not familiar with the NES refer to the post below dated 22 Sept 09 which provides a comprehensive summary of the minimum employment stipulated under the ACT.
Should there is a conflict between your Employment Agreement and the NES; the conditions stipulated under the NES will prevail. As an example, many existing agreements stipulate that the employee is to work 40 hours a week and is entitled to 5 days non-cumulative sick leave. You may be under the impression that as these are stipulated in the contract that these ARE the terms agreed to. WRONG. Under the legislation, the employee is required to work no more than 38 hours per week plus “reasonable” additional hours as the job may require from time to time. This means that on average an employee’s work hours should average 38 hours. Whatever is stipulated in the employment agreement is immaterial, the NES prevails. The same is true of sick leave which is now referred to as Personal Carer’s Leave where the NES stipulates 10 days cumulative paid leave per year. So, at the very least, it is imperative that you align your agreements with the requirements of the Fair Work Act.

 

 

What happens if I don’t have a written Employment Agreement?


Some employers believe that by not having a signed agreement that they are safer from a workplace relations perspective. NOT TRUE. Once an employer agrees to pay an employee for services rendered, whether or not there is a written agreement, an Employment Contract has been deemed to exist. The employment conditions will be determined by the Fair Work ACT as will any implied and express terms. Naturally this form of agreement is a formula for a disaster. So whatever you, make sure you have your employees sign an agreement.

 

 

What the difference between and Employ Agreement and an Enterprise Agreement

An Employee Contract is an agreement between and individual employee and an employer outlining the terms and conditions that have been agreed between the parties. An Enterprise Agreement is a mechanism where a collective of employees and the employer negotiate common terms and conditions of employment. These negotiations may be initiated directly by the employees themselves or via a union representative of the employees. The Enterprise Agreement requires ratification via Fair Work Australia whereas the Employment Agreements does not. Once the Enterprise agreement has been ratified it becomes a Statutory Agreement meaning that the employer and employee become subject to statutory penalties if either party were to breach the agreement. Enterprise Agreements are complex instruments. If you are considering introducing an Enterprise Agreement into your workplace we strongly recommend that you seek external support.

 

 

Terms that should be included in any employment agreement

  1. Employee full legal name and address
  2. Title of the job to be performed and Job specification
  3. Commencement date
  4. Type of employment, i.e. full-time, casual, fixed term
  5. Remuneration and how this is made up.
  6. Termination conditions; notice periods required to be given to end the employment relationship
  7. Provision clarifying the status of the company policies and procedures. Note that care should be exercised when referencing the company’s policies as they may form part of that contract holding the employer liable to the terms therein.
  8. Provision where over-award payments are offset against non-wage entitlements, i.e. penalties, overtime. This ensures that the relevant modern award is taken into account.
  9. Ensure that there is acknowledgement that employee is legally entitled to work in Australia, and
  10. A provision which reflects how changes to the employee’s role or function is to be handlhttp://www.blogger.com/goog_1378430121"}">ed.

Background

Awards are age old mechanisms that guaranteed workers fundamental employment rights such as minimum wage, holidays, sick leave etc. Historically, depending on the industry or occupation, awards have been governed by State, Territory or Federal Legislation providing a complex and confusing Industrial landscape for all concerned. Accordingly the federal government via the Fair Work Act (see posting September 2009), set about modernising the myriad awards with a view of creating a system of “Modern Awards”. This process of modernisation has now been completed with the modern awards coming into effect on the 1st January 2010. As the 122 modern awards have replaced about 1700 federal and state-based awards, the impact of the wages and conditions in modern awards vary between states, industries and employers

Modern Award & employees who are Information Technology specialists.

Under the new modern awards, two employer/employee situations prevail.

Scenario 1:

The employer’s main area of business is not “principally engaged in the information technology industry”. For these employers and their employees there would appear to be no relevant modern award applicable to their IT workers.

Scenario 2

The employer is “principally engaged in the information Technology Industry”. The IT workers working for this employer full under the Professional Employees Award. Under this award the employer must a) make copies of the award available to employees, b) the parties may vary the award by agreement, c) minimum salaries are nominated (typically well below what is regarded as ‘industry standard’, d) salaries may not be reduced because of the award, e) Dispute resolution mechanisms are mandated. Future Posts will discuss this award in more detail.


How do I identify what Modern Awards effect my business?

Remember, modern awards only affect employees who work for companies that are defined as national employers governed by the Fair Work Act of 2009. The Sept 09 posting on this newsblog will help you work out what jurisdiction you fall under. The Fair Work website provides a search facility that will assist you with this. http://www.fairwork.gov.au/Pay-leave-and-conditions/Awards/Pages/Find-an-award.aspx?role=employees"}">Find Modern Award Remember, if in doubt, don’t be afraid to seek advise.

National Employment Standard (NES) and Modern Awards?

If you are unfamiliar with the NES, the October 2009 posting on this NewsBlog provides a succinct overview. All awards incorporate the NES as the minimum standard that the award can offer. An award may offer benefits in excess to the NES but not less then. All employers and employees should therefore be familiar with the NES.