Wages deduction law to start Dec (VIC)
18 November 2008
Victorian legislation concerning deductions from wages is due to commence on 1 December 2008.
The legislation is in response to perceived problems with young people having deductions taken from wages to cover accidental breakages or shortfalls, or with some ‘457-visa’ migrants being deducted excessive amounts for food and accommodation provided.
The legislation, the Workers’ Wages Protection Act 2007, applies to all Victorian employers and employees. Importantly, it provides that wages must be paid in money (eg cash, cheque, postal or money order, or bank deposit).
It also provides that deductions from wages can only be made if the employer has received a valid written authorisation from the employee, or if the employer is required by law, ie. court order, to make the deduction. If an employee is under 18 years the authorisation must have been consented to by the employee's parent or guardian.
In addition, where a deduction is made for the benefit of the employer or a related party, it will be unlawful if it is considered to be 'unreasonable'.
Unreasonable
The legislation provides examples of deductions which might be considered to be unreasonable — if it results in the employee being paid less than the legal minimum, or where it relates to the cost of replacing clothing or other property provided to the employee, unless the loss was intentionally or recklessly caused. It also expressly excludes deductions being made for the provision of employment placement services. This is directed at issues that apparently relate to some s.457-visa holders.
The Victorian legislation appears to confirm the types of deductions that have been deemed 'unreasonable' by courts and tribunals in other states and territories, but have not been enunciated in statutes.
Effect of Federal WR Act
While the federal Workplace Relations Act overrides most employment laws, certain state or territory laws continue to regulate an employee's minimum conditions of employment.
The Victorian 'deduction of wages' legislation will be enforceable as the Workplace Relations Act uses the term 'non-excluded matters', which refers to the nature of state or territory laws which continue to apply under WorkChoices.
One of the 'non-excluded matters' includes any law relating to 'deductions from wages or salaries'. This usually covers laws relating to time and wages records, and the nature of any deductions from an employee's wage or salary.
Unions can inspect records of non-members: Gillard
18 November 2008
The new federal workplace laws (coming in 2010) will allow unions to inspect the employment records of non-members, IR Minister Julia Gillard has confirmed.
Under the new laws, union officials will be able to inspect time and wage records for all employees at a workplace,as long as the union has at least one member there.
This will allow the union to check if union members and non-members have different wages and conditions, including which shifts they are offered.
Gillard said, at a press conference: ‘If they are trying to investigate a breach of an award or agreement — that is, they’ve got a reasonable suspicion someone’s being underpaid or badly treated — in those circumstances they will be able to look at records.'
‘But they will have to abide by every obligation under the Privacy Act and there will be strict penalties for misusing information, so people’s privacy will be guaranteed and protected,’ she concluded.
AWAs extended in new IR system
17 November 2008
The Federal Government’s new IR laws will allow AWAs to continue indefinitely where both sides are happy with them.
IR Minister Julia Gillard said, in a
speechto the Australian Labour Law Association in Melbourne on 15 November, an initial proposal was that all such agreements would sun-set after five years (the ‘drop dead date’), with the aim of tidying up the system and encouraging parties to make a new agreement.
AWAs ‘to stay’
She said the feedback she received, particularly from Australian Mines and Metals Association, was that this proposal would ‘disturb long-standing and satisfactory arrangements and create an unnecessary requirement to alter those arrangements’.
Gillard has now decided that old Act agreements, such as old 1993 IR Act agreements, AWAs, ITEAs, s170LK and LJ agreements, will continue to apply until such time as a new agreement is made.
After the nominal expiry date of such agreements, parties can bargain in the new system.
NES
To balance this, Gillard said that the National Employment Standards (NES) will come into effect on 1 January 2010 for all employees and will override any inferior conditions.
‘This will ensure that employees on sub-standard AWAs made under WorkChoices will receive the full benefit of the NES,’ she said.
Other details
Other details of how the new system will work that were contained in the speech which are relevant to the payroll function include:
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modern awards and minimum wages will be set and adjusted by Fair Work Australia (FWA) with the participation of unions, employers and those with an interest. They will be reviewed every four years, and test cases as existed in the old award system will continue
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a new small claims jurisdiction will be provided for claims up to $20,000. The Court will not be bound by the rules of evidence and may act in an informal manner, without regard to legal forms and technicalities. The Courts will now be able to make ‘any order they consider appropriate’ to remedy a breach, and to issue injunctions to prevent breaches
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Sydney construction sites next inspection target
17 November 2008
The Workplace Ombudsman has started random audits of up to 400 companies at construction sites throughout the Sydney metropolitan area.
Inspectors are checking company employment records to ensure workers are getting their proper wages, penalties, overtime and other entitlements.
Workplace Ombudsman Executive Director of Field Operations Bill Loizides says the industry was earmarked for scrutiny following consultation with the Australian Building and Construction Commission.
'This campaign is aimed at pro-actively improving compliance with workplace laws in a sector which generates a fair number of complaints,' he said.
Mr Loizides says part of the role of the Workplace Ombudsman is to better educate employers about their workplace obligations.
'A lot of construction companies use smaller sub-contractors and simple mistakes are often the result of genuine oversight or lack of information,' he said.
'Where we find employers have made an error, we work with them to rectify problems, and most are happy to voluntarily comply.
'If, however, the employer has a history of avoiding responsibilities or in our view has deliberately or systematically attempted to avoid their obligations, we will consider legal action.'
The maximum penalty for a breach of the Workplace Relations Act is $33,000.
457-visa workers should get market rates: report
14 November 2008
Employers may have to pay market rates to skilled migrants on 457-visas, rather than award rates, following the release of a report into the temporary skilled-migration program.
The
report, by IR expert Barbara Deegan, says that if skilled migrants are paid market rates they will not be used to undercut the wages and conditions of Australian workers.
Major recommendations of the report are:
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abolish the Minimum Salary Level in favour of market rates of pay for all temporary visa holders on salaries less than $100,000
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develop an accreditation system or risk matrix to ensure rapid processing of low-risk visa applications so employers can meet skills needs quickly
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develop new lists setting out the skilled occupations for which temporary work visas can be granted
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limit visa holders to a stay of no longer thaneight years in Australia (ie two 4-year visas or four 2-year visas) while providing a pathway to permanent residency for those who have the required language skills
Among the recommended 66 changes to the scheme is a change of name to 457-visas, calling them Temporary Employment Visas, to reinforce the purpose of the visa.
Deegan said she had heard migrants were misinterpreting the scheme as a ticket to permanent residency.
‘Where a visa holder has permanent residency as a goal, that person may endure, without complaint, substandard living conditions, illegal or unfair deductions from wages, and other similar forms of exploitation,’ the report said.
Transfer to new employers
Another recommendation is that workers should be assisted in transferring to new employers. Temporary migrants should be able to stay in the country for 90 days while finding a new sponsor and workers should receive wages for 28 of those days from the original sponsor.
Labour agreements
As well, employers with more than twenty 457-visa workers would be required to be part of a labour agreement.
One recommendation not likely to be supported by the Federal Government is that employers pay a levy to fund services such as Medicare for 457-visa holders.
Burden on health care system
Immigration Minister Senator Chris Evans said this was contrary to Government policy, and he did not want to see temporary skilled workers place an additional burden on Australia’s public health system.
Senator Evans said the report has been referred to the Skilled Migration Consultative Panel, which comprises representatives from business and industry groups, state governments, and unions. The Panel will provide feedback and advice to Government.
He said Deegan’s recommendations and the views of the Consultative Panel will inform the development of the Government’s reforms to the temporary skilled-migration program as part of the 2009 Budget.
‘We are closely assessing the report and decisions to implement individual recommendations will be taken as part of the Budget process,’ Senator Evans said.
No more red tape
He said the Government has made significant improvements to the processing times of Subclasss 457-visa applications this year, and has ‘no intention of complicating the process or adding red tape to the program’.
‘The temporary skilled-migration program plays a critical role in providing industry with skilled labour across a wide range of professions, in areas where there are serious skills shortages,’ Senator Evans said.
Economic conditions will slow demand
‘While the number of workers coming to Australia under the scheme is likely to slow given the current economic conditions, there will continue to be demand for skills in some sectors.'
‘The Government is committed to ensuring the Subclass 457-visa scheme operates as effectively as possible in continuing to supply skilled labour where needed, while protecting the employment and training opportunities of Australians and the rights of overseas workers.’
Checklists to help employers change work agreements
13 November 2008
The Workplace Authority has published checklists to help employers who are making, varying and terminating a workplace agreement.
The
checkliststake employers step-by-step through the process for each agreement type.
Legislative requirements
They provide information to ensure that certain legislative requirements are met.
The Workplace Authority is encouraging employers to download the appropriate checklist and work through it when they set about drafting, approving, and lodging a workplace agreement.
Following the checklists will help employers avoid fines for not following correct procedures, such as ensuring all employees are given the correct information statement.
There are 20 checklists in total, covering termination of Australian workplace agreements and Certified agreements making, varying, and terminating agreement types allowed under the transitional legislation (Forward with Fairness), which include:
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individual transitional employment agreements
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union collective agreements
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employee collective agreements
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union greenfields agreements
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employer greenfields agreements
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making and varying a multiple business agreement.
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14 November 2008
Payroll professionals who have to trawl through the vast amount of information on the ATO website will be please to hear that the ato.gov.au website will have a new look from 22 November.
The ATO is ‘refreshing’ its website in response to feedback from users. Enhancements will include redesigned menus, new Google search, and quick links to the most popular information, calculators, and online services.
Modernised awards to add to wages costs: ARA
6 November 2008
The Australian Retailers Association (ARA) has estimated a new modernised retail award would cost small retailers an average of $22,000 a year in extra wages.
In a submission to the AIRC, the ARA costed the extra burden on a small retailer with two full-time and two casual employees. It estimated a total cost over a year of $22,000 in wages.
The ARA has argued for an award on which ordinary shifts would be on a seven-day, 24-hour basis before overtime rates applied.
Its state-by-state breakdown for the alleged extra costs under a modernised award is:
New South Wales — $30,094pa — 22% increase
Victoria — $20,443 pa — 11% increase
Queensland — $27,024 pa — 19% increase
Western Australia — $21,117 pa — 14% increase
South Australia — $27,745 pa — 20% increase
Tasmania — $25,314 pa 18% increase
Australian Capital Territory — $26,484 pa — 18% increase
Northern Territory — $17,202 pa — 11% increase
ARA executive director Richard Evans said its cost analysis indicated an average 14% wage bill increase for retailers across Australia.
Evans said Prime Minister Kevin Rudd has warned the immediate economic future ‘is going to be … very tough indeed for Australia’.
Need for a ‘modern’ award
‘Retailers need a modern award to suit the modern consumers’ demand for deregulated shopping hours, but the exposure draft’s penalty rate structure is reminiscent of the 1960s regulated Monday to Friday working weeks.'
‘There are always winners and losers — and unfortunately this time the loser is the consumer. The retail award exposure draft has ensured prices will go up and consumers will pay at a time when they can least afford it.’
From the Courts
No excuse for annual leave loading mistake
31 October 2008
An employer who refused to pay annual leave loading in the belief that it had been abolished, has been fined $20,000 in the Federal Magistrates Court.
In addition, the court ordered the garden and building supplies business to backpay $12,500.
The circumstances of the case were that when an employee complained about being underpaid, the employer said that he did not want to see her at work for four days. When the employee repeated her claim, she was told that that she ‘should consider herself on annual leave’ and not come back to work. Two days later her employment was terminated.
The Workplace Ombudsman became involved, and the parties agreed to consent orders on most of the issues. The Court had to decide the appropriate penalty.
The court accepted that the breach had not been deliberate, but noted that ‘lack of expertise’ should not result in a discounted penalty:
‘An employer dealing with an employee and their rights under the law has a responsibility to make enquiries to find out what the employee is entitled to, and what is required of the employer.
It is no defence for an employer to obtain advice but say that it left him frustrated by things that he knew nothing about ...’
Failure to check references costs recruiter $160,000
11 November 2008
The importance of checking referees for new recruits is highlighted in this case, where a recruitment company which failed to properly check the references of a man subsequently appointed as a senior manager at a client company, has lost its appeal against the awarding of $164,224 damages.
Had Driver Recruitment checked the background of Stephen Riddell properly, it would have discovered that his claimed qualifications had been false, he had been bankrupt and was an undischarged bankrupt, and in his business activities he had engaged in fraudulent practices.
After credit card fraud at Wedeco, and costs to the company to repair damage caused during his employment, the company sued Driver Recruitment for recovery of loss or damage suffered by conduct in contravention of s52 of the Trade Practices Act 1974.
Appeal
Wedeco was successful and awarded $164,224, but Driver then appealed the decision on both liability and quantum.
The saga began when Wedeco, a supplier of water treatment equipment, engaged Driver to find them someone suitable for appointment as its sales manager for South East Asia.
Robyn Holt of Driver, Wedeco managing Director William Dive and regional director for South East Asia Pacific were involved in the selection of the candidate. Mario Di Noia, Driver personnel manager, signed the contract for the recruitment process.
Referees and follow-up
Riddell provided Driver with a curriculum vitae, according to which he had since July 2001 been employed as an area manager with Tyco Measurement and Controls ('Tyco'). He nominated as referees Adam Caly and Glenn McDermott. The trial judge considered that the contract required Ms Holt to contact Messrs Caly and McDermott by telephone.
Caly and McDermot gave evidence that they had received a telephone call from a woman in 2003 regarding Riddell.
They told the caller that Mr Riddell was no longer employed with Tyco and were unable to speak of his work performance, and that she should speak to Vernon Costelow to whom Riddell had reported at Tyco.
Reference would have been unfavourable
Costelow gave evidence that he had not been contacted by an employment agency for a reference, and that if he had been contacted he would not have given a favourable reference.
His reasons for this were that Riddell was an unsatisfactory employee in a number of respects: he had been given two warnings, and when he left Tyco, Costelow was in the process of recommending his dismissal.
The trial judge said that she accepted that the evidence did not establish whether it was Holt who spoke with Caly and McDermott. Her Honour considered that it could be inferred either that she did and failed to pass on to Dive and Perschk what she was told, or that she did not make any enquiries of them.
The judge did not accept a third possibility that Holt had passed on what she was told to Di Noia.
Breach of contract
She found that Driver was in breach of contract, and of its duty of care owed to the respondent by the failure of Holt:
- to either speak to the two referees; or
- if she did, to speak to Costelow; and
- to communicate this information to the plaintiff.
‘I consider this to be the primary and most basic of the enquiries the defendant was required to undertake, and that had Holt done so the evidence suggests overwhelmingly it would have become apparent immediately that Riddell was an unsuitable candidate,’ she said.
Grounds of appeal
Driver’s grounds of appeal were:
- The trial judge erred in finding that it breached its contractual obligations or its duty of care in the provision of recruitment services to Wedeco.
- The trial judge erred in finding that it had contravened section 52 of the Trade Practices Act 1974.
Evidence ‘not borne out’
Driver called a ‘recruitment trainer’ as a witness who said that that a recruitment agency would not have contacted Costelow without permission of Riddell.
‘On examination of [this witness’s] evidence, this was not borne out,’ said Judge Giles.
‘In any event, if Holt had spoken to Caly and McDermott but, because Riddell did not give permission, did not speak to Costelow, that should have been included in the information she gave to Dive or Perschk.
‘The inability to speak to Costelow would be likely, in itself or through provoking further enquiry, to be fatal to Riddell’s suitability as a candidate. The submission did not advance the appellant’s position.’
Wedeco had asked in the original trial for full damages covering Riddell’s salary, credit card fraud, travel expenses for Wedeco executives to resolve problems brought about by Riddell’s employment ,and the service fee paid to Driver for Riddell’s employment.
Not properly monitored
The claims regarding salary and credit card fraud were reduced in the original trial because Riddell had not been properly monitored by Wedeco, which if done could have prevented some of the losses by early discovery, but the full amount of the service fee, $14,028, was allowed.
The appeal was dismissed with costs by Giles and Judges Hodgson and Bell.
Your questions – Our answers
Q. Changes to working hours or benefits
Is it imperative for employers to give out a new employment contract whenever there is a change to the employee’s work hours or benefits? Can any written correspondence suffice?
A. Written correspondence is sufficient in such cases. The employee’s HR file should contain relevant correspondence, and the history of contract changes can be traced that way.
Note that unilateral variation of employment contracts is not permitted, but improved employee benefits like increases in salary etc would not normally be changes that an employee would object to.
What is the rule with regards to paid examination leave? How many days can be granted to an employee?
A. Paid examination leave, or study leave, is a matter for individual arrangement or company policy. As such there is no general rule.
A company may wish to design a policy that addresses such an issue and limits as to time etc could be provided in such a document.
See also: Educational assistance
Q. First Home Saver accounts
What are the procedures for this? Where does the employer remit the funds to?
A. From 1 October 2008, employees may be able to make contributions to a First Home Saver Account (FHSA) to save for a home. This is a matter for individual employees to pursue if they wish to do so. If employees request that part of their wages/salaries are directed into such an account, then the employees would be expected to provide the employer with relevant account details.
Q. Averaging of hours and accruing of annual leave
Our employees working on Fly-In, Fly-Out rosters of 3 weeks on 3 weeks off, and 2 weeks on and 2 weeks off, may pose an issue with annual leave.
Our accounting system is set up to accrue 4 weeks leave over the year, based on 38 hours being worked or leave taken. The staff only work 26 weeks of the year with 26 weeks on R&R. From time to time additional weeks are worked. Do we meet our legal requirements with only paying the accrual across weeks worked (26 weeks plus additional weeks worked)? Accrual is based on 4 weeks leave over 52 weeks.
- FIFO 26 weeks work 2 weeks leave
- Perm 52 weeks work 4 weeks leave
My understanding is that the Standard only allows you to accrue on nominal hours worked up to 38 hours per week. Can we average the hours over a four week period, as the employees work 168 hours per fortnight with the second fortnight off giving the employees 168 hours every 4 weeks?
Furthermore, can we then direct them to take the leave in two week blocks of 168 hours?
A. It would be legitimate to consider that the average week has 38 hours — assuming the employees remain employed over the whole period. This would mean that leave is calculated in the usual way — ie average week is 38 hours and accrued on this basis.
Note that it would seem that the workers would be seven-day shift workers, and so entitled to an additional week’s annual leave under the Standard.
Under WorkChoices [ie current situation], there are two situations where the employer retains the right to send an employee on annual leave. Firstly, where the employee has an annual credit of more than 1/13 of the number of nominal hours worked by the employee during the period of 104 weeks, prior to the time of taking the annual leave, the employer may direct the employee to take up to 1/4 of the employee's annual leave credit. Secondly, an employer may direct an employee to take annual leave during an annual shut-down, however the employer may only send the employee on annual leave already accrued by the employee or providing the employee with paid annual leave in advance. This may not be an attractive proposition for most employers.
Q. Long-service leave — standard provision across Australia
Our head office is in New South Wales, however, we have operations in every state. Some employees are covered under the respective state NAPSA, although most are under an individual contract of employment.
For administrative expediency, we would like to configure our payroll system to a ‘standard’ long-service leave entitlement for all our employees.
We read that the Federal Government intends to introduce an across-the-board long-service leave entitlement in its new industrial relations legislation. Is this the case and, if so, when is it anticipated to be introduced?
A. At the moment, the company would be required to comply with the relevant state or territory long-service leave statute applicable to employees working in that jurisdiction.
Standardising long-service leave within the company would require the entitlement to be equal to the most beneficial provision.
In the case of the amount of long-service leave, South Australian and Northern Territory legislation currently provides for 13 weeks leave after 10 years of continuous service with the employer.
In the case of an entitlement to pro rata payment on termination of employment, the most beneficial pro rata entitlement is currently under NSW and ACT legislation, which provides payment on termination (under certain circumstances) after five years of continuous service.
The current system of state or territory statutes or pre-reform federal award providing minimum conditions for long-service leave is expected to continue, because the proposed National Employment Standard (NES) intends (at this stage) to maintain the status quo until the government develops a uniform long-service leave NES.
No time factor has been proposed by the Federal Government for the introduction of the long-service leave NES.
