In this edition:
- Changes to thresholds and rates
- Casual conversion
- Casual loading and double dipping
- Long Service Leave Act
- New Victorian Long Service Benefits Portability Scheme
- New Labour Hire Licensing Scheme for Victoria
- Enhanced Protection for Whistleblowers
Changes to thresholds and rates
A new financial year brings important changes to various thresholds and rates from 1 July 2019. These include:
High income threshold
The High Income Threshold has increased from $145,400 gross per annum to $148,700 gross per annum.
Award/agreement free employees’ access to the unfair dismissal regime is restricted by the high income threshold. This threshold also affects which employees may be offered a “guarantee of annual earnings” that will result in no modern award applying to those employees for the period of the guarantee.
Employers must take care when determining whether an employee’s earnings are above this threshold because some amounts paid to the employee may not be counted (for example, commissions, bonuses, overtime, reimbursements and compulsory superannuation contributions).
National Minimum Wage
The National Weekly Minimum Wage that applies to employees not covered by an award or enterprise agreement (“award/agreement free employees”) has increased from $719.20 to $740.80 per week, or $18.93 to $19.49 per hour.
Superannuation contribution
The maximum superannuation contribution base has increased from $54,030 to $55,270 per quarter. An employer is not required to make superannuation contributions on behalf of employees on earnings in excess of this maximum contribution base.
The superannuation guarantee contribution rate remains at the rate 9.5%.
The ETP cap and Whole-of-income cap
The ETP cap has increased to $210,000 and the Whole-of-income cap has increased to $180,000.
Amounts over this cap are not subject to concessional tax treatment and are taxed at the highest marginal tax rate.
Tax free part of bona fide redundancy payments
The tax-free component of a bona fide redundancy payment has increased to a base limit of $10,638 and $5,320 for each complete year of service.
Casual conversion
Most modern awards now give regular casual employees the right to request to convert to permanent employment. Employers can only refuse the request on reasonable business grounds.
The entitlement applies once a casual employee has been employed for at least 12 calendar months providing that over that period they have worked a pattern of hours on an ongoing basis which could continue to be performed on a part-time or full-time basis (without significant adjustment). An employer may refuse the conversion request on reasonable grounds including that it is known or reasonably foreseeable that:
- a significant adjustment to the employee’s hours would be required to accommodate the request;
- the employee’s position will cease to exist within the next 12 months; or
- the employee’s working hours will significantly reduce or change within the next 12 months.
Employers must also provide all casual employees with information about the right to request casual conversion under the award. Failure to make the disclosure within the specified time frame will amount to a breach of the award resulting in exposure to liability for civil penalties. For example, most awards require employers to give all casual employees a copy of the conversion clause within the first 12 months of their first engagement. However, for casual employees already employed as at 1 October 2018, employers must have provided them with a copy of the conversion clause by 1 January 2019.
Earlier this year the Morrison Government introduced the Fair Work Amendment (Right to request casual conversion) Bill 2019 to extend the right to request conversion from casual to permanent employment to award and agreement free casual employees covered by the NES. The bill lapsed following the dissolution of the House of Representatives on 11 April 2019 and it is not clear whether it will be reintroduced following the review of workplace laws launched by new Industrial Relations Minister, Christian Porter last week.
Casual loading and double dipping
Casual employees are excluded from various entitlements under the National Employment Standards (“NES”) and applicable awards. These include, for example, paid annual leave, paid personal/carer’s leave, paid compassionate leave and notice of termination and redundancy pay. It is generally accepted that casual loading paid to casual employees is instead of these entitlements.
However, in Workpac v Skene [2018] FCAFC 131 the Full Court of the Federal Court found that employers could nevertheless be required to back pay NES entitlements to employees who were incorrectly classified as casuals, but, were in fact permanent employees during some or all of their employment.
In response to employer concerns about this decision, the Federal Government varied the Fair Work Regulations 2009 to provide employers with the right to claim that casual loading payments made to employees incorrectly characterised as casuals should be offset against any NES entitlements they subsequently claim they were entitled to receive because they were not in fact casual employees. This right will only apply where the casual loading paid to the employee was clearly identified as payment to compensate the employee for not having NES entitlements during their employment. This could include in correspondence, pay slips, contracts and relevant industrial instruments.
The new regulation avoids the employee ‘double dipping’ – that is, receiving payment in lieu of one or more NES entitlements while retaining the benefit of the casual loading previously paid to them in lieu of these NES entitlements.
Long Service Leave Act 2018 (Vic)
The new Long Service Leave Act 2018 (Vic) commenced operation on 1 November 2018. It replaced the Long Service Leave Act 1992 (Vic).
The new Act will make a number of changes to the long service leave entitlements of Victorian employees covered by the Act including:
- an employee is now entitled to take long service leave after 7 years’ continuous service with one employer
- an employee is now entitled to request to take long service leave for a period as short as a day
- any period of unpaid parental leave up to 52 weeks will count as service for the purpose of leave accrual
- the method by which normal weekly hours of work are calculated when an employee’s working hours have changed prior to taking long service leave.
New Victorian Long Service Benefits Portability Scheme
Employees in the contract cleaning, security or community services industries will now have access to long service leave after working for seven years in their industry, regardless of any changes to their employer.
Employers in these industries will be required to register themselves and their employees with the new Portable Long Service Benefits Authority.
Employers will be required to report to, and pay a levy to, the Authority each quarter. The current levy payable by employers, which will be imposed on the ordinary pay of each employee is:
- 1.65% for community services;
- 1.80% for contract cleaning; and
- 1.80% for security
This new scheme commenced operation on 1 July 2019. We recommend that employers in the contract cleaning, security or community services sector immediately seek advice on whether they are covered by the new scheme. Penalties apply for a failure to comply.
Certain “contract workers” in the contract cleaning, security or community services industries may also be covered by the new scheme. In this situation, it is the contract worker who will be required to report to and pay the applicable levy to the Authority. The levy will be imposed on the ordinary pay of the contract worker.
New Labour Hire Licensing Scheme for Victoria
The new scheme regulates the provision of labour hire services and imposes significant civil and criminal penalties on unlicensed providers and users of unlicensed providers. The main purpose of the scheme is to provide barriers to entry to the labour hire sector, ensuring that all providers are legitimate businesses and can meet strict licensing standards. The scheme potentially covers a very wide range of arrangements from traditional labour hire to those which recruit or place their own workers for or with another business.
All labour hire providers who want to continue operating in Victoria will have until 29 October 2019 to apply for a licence. All users of labour hire providers will need to take steps to ensure that their providers have a licence from this date. There will be a register of licensed providers on the Labour Hire Authority Website.
If you believe that you may be covered by the new licensing scheme (whether because you are a provider or a host of labour hire services) we recommend you obtain advice now. Significant penalties exist, with breaches exposing unlicensed providers and users of unlicensed providers to maximum penalties of $516,000 in Victoria.
There is a separate labour hire licence scheme already operating in Queensland and labour hire service providers must now have or have applied for a licence. There has already been a conviction of a Queensland labour hire provider who supplied workers to a business without a licence. The business was found guilty and fined $60,000 for operating without a licence.
Further, applications for licences under the South Australian labour hire licensing scheme re-opened on 14 June 2019. Labour hire service providers within the South Australian scheme must lodge their applications by 31 August 2019.
Finally, the Federal Government in this year’s Budget has also allocated $26.8 million over four years and $6.2 million per year ongoing to establish a national labour hire registration scheme. The scheme will require the registration of labour hire operators in high-risk sectors such as horticulture, cleaning, meat processing and security.
Enhanced protection for whistle blowers
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 commenced operation on 1 July 2019.
The Act repeals the existing financial sector whistleblower regimes contained in the Banking Act, Insurance Act, Life Insurance Act and Superannuation Industry (Supervision) Act and brings them into the Corporations Act 2001 (Cth) (Corporations Act).
The Act amends the whistleblower protections in the Corporations Act so that a single strengthened whistleblower protection regime covers the corporate, financial and credit sectors. Key changes include:
- An eligible whistleblower can now be an individual who is or has been in a relationship with a regulated entity about which the disclosure is made. Eligible whistleblowers include current and former officers, employees, suppliers of goods and services and their relatives or dependents. The motivation of the eligible whistleblower is no longer relevant and disclosures are protected even if they are anonymous.
- The type of entity that may be subject of a qualifying disclosure has been expanded. These entities are defined as “regulated entities” and include all companies, foreign corporations and trading and financial corporations formed within the limits of the Commonwealth, banks, life insurers, general insurers, superannuation entities and trustees of superannuation entities.
- The type of conduct that may be the subject of a qualifying disclosure has been expanded and now includes actual or suspected conduct by a regulated entity that is:
- misconduct, or an improper state of affairs or circumstances in relation to a regulated entity;
- contravention of any law administered by ASIC and/or APRA; or
- conduct that represents a danger to the public or the financial system; or
- an offence against any other law of the Commonwealth that is punishable by imprisonment for a period of 12 months or more.
However, disclosures that concern personal employment grievances of the discloser only, and do not have significant implications for a regulated entity, have limited protection.
- Disclosures to legal practitioners for the purpose of obtaining legal advice or legal representation now expressly qualify for protection. Public interest disclosures and emergency disclosures to members of Parliament or journalists also qualify for protection.
- The level of protection provided for whistleblowers has been increased including by requiring public companies, large proprietary companies and registerable superannuation entities to have a whistleblower policy from 1 January 2020, and to make the policy available to their officers and employees. Failure to have and make available a whistleblower policy is an offence of strict liability which will be enforced by ASIC.
- The remedies and protections available to whistleblowers and other individuals who suffer detriment or a threat of detriment in relation to a qualifying disclosure have been expanded.
The Act also creates a new whistleblower protection regime in the Taxation Administration Act 1953 (Cth) for disclosures of information by individuals about breaches or suspected breaches of tax laws or misconduct relating to the entity’s tax affairs.
We can assist employers understand their obligations under the new laws and to prepare an appropriate and compliant whistleblower policy. We can also provide training to staff including officers, senior managers and other authorised recipients of qualifying disclosures.
