Award free employee… not any more

By 28 October 2020Workplace

On 19 August 2020, we wrote about the amendment of the Miscellaneous Award 2020 (Award) (Read Here) which significantly expanded coverage to a large number of employees, previously thought to be Award-free.  A recent Fair Work Commission decision highlights the significance of the amendments and the impact it had on a redundancy during COVID-19.

Recap of the 2020 amendments

Historically, the 2010 Award had limited application.  Any employee employed by an employer who was covered by another industry award was excluded from being covered by the Award.

This exclusion rendered the 2010 Award largely irrelevant for many of employers.

On 1 July 2020, the Award was substantially redrafted, renamed with the 2020 date and the exclusion relating to industry coverage was removed.

Recent decision – Mr Darren Roche v Tunstall Plant Hire Pty Ltd (U2020/10682)

The employer’s business involved sourcing and supplying sub-contractors to perform civil construction services in exchange for a fee.

The employee was paid an annual salary of $76,440 and his duties required him to receive phone calls from customers and arrange sub-contractors to perform civil construction services.

The employer was suffering a significant down turn due to COVID-19 so it decided to make the employee’s job redundant.

The employee argued he was unfairly dismissed, while the employer argued the dismissal was not unfair and was a case of genuine redundancy.

An employee’s dismissal is only a case of genuine redundancy under the Fair Work Act 2009 (Cth) if:

  1. the person’s employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
  2. the employer has complied with any obligation in a modern award or enterprise agreement to consult with the person about the redundancy.

The parties were unable to resolve their dispute at conciliation so the matter went to trial in the Fair Work Commission.

Deputy President Masson (DP Masson) found the employer had a valid reason for making the employee’s position redundant as, due to the impact of COVID-19 on Victoria’s economy, the employer had seen quarterly declines in business of 37% and 70% in the period from April to September 2020.

Interestingly, both parties believed the employee was award free.  However, DP Masson considered the coverage provisions of the Award and found that it applied to the employee.  Accordingly, the employer should have complied with the consultation obligations under the Award but failed to do so.

Having regard to the duties of the employee, DP Masson was satisfied the employee would fall within the classification found at clause 12 of the Award.

12. Classifications

12.1 A description of the classifications under this award is set out below.

(a) Level 1

An employee at this level has been employed for a period of less than 3 months and is not carrying out the duties of a level 3 or level 4 employee.

(b) Level 2

An employee at this level has been employed for at least 3 months and is not carrying out the duties of a level 3 or level 4 employee.

(c) Level 3

An employee at this level has a trade qualification or equivalent and is carrying out duties requiring such qualifications.

(d) Level 4

An employee at this level has advanced trade qualifications and is carrying out duties requiring such qualifications or is a sub-professional employee.

While it was not clear, whether the employee had a trade or other formal qualification, DP Masson found he would certainly be classified as a Level 2 which requires that he had been employed for 3 months and not required to carry out duties at or above the trade qualified Level 3.

In failing to comply with the Award’s consultation obligations, DP Masson found:

  • the employee’s dismissal was not be a case of genuine redundancy;
  • the employee was unfairly dismissed; and
  • the employee was entitled to compensation.

What employers should do

Any employer who has previously employed workers on an award-free basis should review their arrangements and confirm whether the Award now applies.

If Award applies, an employer should:

  1. notify its affected employees of the change, the employee’s classification under the Award and document the arrangement in a new employment agreement;
  2. ensure they are meeting minimum financial obligations under the Award (which are more generous than the National Minimum Wage Order which would have previously applied);
  3. review the Award and ensure they comply with it;
  4. review its policies and procedures to ensure they are based on industry best practice;
  5. when dealing with a major workplace change, irrespective of whether an Award applies, consult with the employee about the major workplace change is best practice.

Getting help

If you need assistance reviewing your current employment arrangements in light of these changes please contact:

    Contact Information

    Direct Line: 07 4616 9860