Managing workforce risk during COVID-19: Legislation Changes

NICK DUGGAL – PARTNER, WORKPLACE RELATIONS, MORAY & AGNEW & CHARLES CAMERON – CEO, RCSA

If the work from home situation continues to run for months to come, who is responsible for the health and well-being and OHS of contingent workers?

This is a tricky situation. And it’s best described as the following: the so-called ‘site occupier’, or the principal/employer continues to have responsibility for the duty of care of all of its workers.

Now this responsibility can be obscured or delegated in the context of some categories of workers, especially contingent workers. As such, organisations need to be very careful as to how worker duty of care is demarcated. For example, something as simple as ‘who takes out the worker’s compensation insurance?’ can be a tricky one. Is it the contingent worker? Or is it the employer? Importantly, all parties need to be across the legislation changes.

This is a good example of how little things can slip through the cracks for non-traditional forms of labour. And it’s really important that it’s analysed closely so that employers don’t fall into a situation where they’re non-compliant with the relevant legislation.

Keep in mind, the starting position for the OHS Act in respect to this issue is, that a worker can be someone who’s not just an employee. So this analysis needs to take place contextually, in respect of the many forms of non-traditional labour.

A case example provided by Charles Cameron was very relevant.

One of the RCSA’s members was the provider of labour to Cedar Meats – a meat processing facility in the western suburbs of Melbourne, where the largest number of COVID-19 cases were reported for the month of May. Some of the workers at this facility were agency workers, supplied by the RCSA member. They notified the relevant parties (the agency, the workers) as soon as the contagion was evident. Cedar Meats then worked with the agency to incorporate these workers, as part of their workforce.

The interesting factor here, rather than one category of worker being held responsible for the situation, was the obvious benefit of approaching risk, in a total workforce framework. Irrespective of all new legislation changes, by undertaking holistic risk management, every party to the working relationship has a level of responsibility.

With often multiple parties to the relationship, the importance of maintaining the ethos of consult, communicate and coordinate, under the legislation, is a powerful option for complete transparency and worker/employer compliance.

NATALIE JAMES – PARTNER, DELOITTE

Is wage theft still an issue in light of the COVID-19 pandemic?

Two related observations here, in relation to underpayment of wages.

First, the Fair Work Ombudsman (FWO) during these times, like every other organisation, has had to do a giant pivot. This includes with their own people, making sure they’re safe and that they’re able to continue operating. And of course, being the primary and authoritative source of advice about the rules (which have been changing at lightning speed), they have, understandably, been hit with an extraordinary amount of enquiries, often about ‘can I stand my people down?’… which, the answer being, no more likely than yes, at this time.

Hence the wild west behaviour noted previously. Some of the bad conduct would not have been valid, irrespective of COVID.

This brings us to the second observation: if you’ve stood people down during the COVID crisis, and that wasn’t a legitimate action – knowing that the stand-down clause in the Fair Work Act is very narrow, and uses language built for a production line (like ‘stoppages’ for example) – and if that stand-down wasn’t legitimate, and the business should have paid them for the period during which they’ve been let go, then that action represents an underpayment that the workers are legally entitled to.

As a result of COVID, we’re seeing behaviours that could be problematic in the future.

In respect of Deloitte’s clients, there are some who with the use of data analytics, Deloitte are working with them through a series of long-standing underpayments. Many any of these have begun their engagement with the Fair Work Ombudsman.

A recent action undertaken by the FWO, was writing to a large number of Chairs and CEO’s and putting them on notice, to get their act together around underpayment of wages, compliance and general legislation changes. As a result, Deloitte has experienced a spike in enquiries from organisations, seeking to check that what they’re doing is legitimate and legal.

Also noted is that there’s been a great unravelling of annualised salary arrangements, which continues to be a challenge for many businesses and a root cause for long-standing underpayments. And this great unravelling has happened because of a divorce – and that divorce is that salaries and rates of pay are happening in isolation (by remuneration experts who use benchmarking and the like), with little or no reference to an underlying instrument – an award, and EBA or a worker classification. And with no link between the two, the risk of underpayment is heightened.

Every week, especially now during COVID, the FWO is dealing with new organisations, seeking to rectify wrongs. Most of these engagements are still ongoing – but a good example is to consider the FWO’s enforceable undertaking of one of Australia’s airlines. Take a look here to get a feel of the sorts of terms the FWO is looking for organisations to sign up to, when an organisation has had to concede that there’s been an underpayment.

Ignorance of legislation changes is no defence.

These terms set out by the FWO are onerous. They include contrition fees that are calculated as a percentage of the underpayment, they also include third-party verification of your remediation process, and they include terms that seek to ensure there’s been no ‘unlawful offsetting’. What is and isn’t an unlawful offsetting is debated by lawyers; but with regards to casual worker entitlements, the FWO’s position on offsetting is that it does not accept it in remediation when you have fallen below the line of compliance. Often to meet the line of compliance, especially if you haven’t kept records, you need to go above and beyond the requirements of the FWO to demonstrate you’ve done the right thing.

NICK DUGGAL – PARTNER, WORKPLACE RELATIONS, MORAY & AGNEW

Has there been any updates to Awards due to the COVID-19 pandemic?

The awards in Australia have had a raft of pandemic-specific variations. With these, there’s built-in flexibility, but they are specific to this unique time we’re living through at the moment. For example, Jobkeeper which has an end date.

So the real question is: what do we go back to after those sunset clauses pass?

The key points to this issue are these:

1. When it comes to the definition of a casual, and the definition of an independent contractor, business has had to tolerate for far too long, these nebulous, impressionistic legal concepts. The problem being, different judges would interpret these differently and introduce a level of uncertainty. If, as an alternative, there was a more ‘tick the box’ approach as to what is a casual, what is an independent contractor, what is an SOW, the landscape would be far easier to navigate, and would greatly fare more certainty for business.
2. Notwithstanding these temporary laws that are in place because of the pandemic, there is still no substitute for the flexibility that can be negotiated between a worker and their employer directly. When there’s trust and a common mutual goal in that relationship, without having to interpret an award or a law, that’s the best flexibility available. A positive by-product of this is that employers can express that they’re in it together – and the worker can go and deliver on the agreement.
3. After the health crisis abates, we’re going to have an economic crisis, where people are going to be out of work, organisations will be faced with challenging decisions, plaintiff firms and class-action funders will be ready to go and if employers still have uncertainty about the state of the law, then it will potentially be crippling whilst in a fragile situation. So these issues need to be resolved not only for the purpose of the time of the pandemic, but for the economic situation we will all face when the crisis is over.

FINAL COMMENTS…

What is one key take away piece of advice you can give, for managing workforce risk during the current climate?

Charles Cameron, CEO, RCSA

• Stay close to your workers; and to your total workforce
• Start to forecast what the future looks like from a workforce standpoint
• Look to deal with those things that you can genuinely control: corporate mindfulness

Natalie James, Partner Deloitte, Former Fair Work Ombudsman

• Leverage this environment to take the opportunity to reimagine different ways of working. Where are you at? Where’s your business at? What might you do differently? Leverage and learn from this great, unplanned experiment
• Understand the barriers and obstacles in place right now, what are the rules that apply, what have you done that may need correcting, what are the enablers and obstacles? What legislation changes do you need to be across?
• Think about whether you need to review or enforce an EBA or workforce policies in order to step in line with what the FWO is laying out

Nick Duggal, Partner, Workplace Relations, Moray & Agnew

• This pandemic is a dual crisis: health and economic. And at the front of the economic crisis is the labour market,
• We all have an obligation to do what we can to support the labour market, as it’s so important to our economy and our livelihood

As one of the world’s leading providers of contingent worker management solutions, CXC is well positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across five continents and decades of experience, we can assist with every aspect of your program.

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