Will JobMaker deliver the clarity business needs?
Businesses continue to work through very challenging times as they start to find their way through this path of recovery, which is shrouded by so much uncertainty. Depending on the industry and business model, business owners must make some important decisions over a critical aspect of their business: their employees. What is frustrating is that compounding the tough economic conditions is businesses being forced to be distracted by navigating the complex, cumbersome, and outdated workplace legislative framework.
So, what’s been happening in this space recently that lays the foundation for some of the issues that will be considered in Scott Morrison’s ‘JobMaker’ initiative?
In 2018, Worrells’ Simon Cathro and Ivan Glavas were appointed to Foodora, a food delivery business. In that matter, it was determined that the delivery riders should have been treated as employees and not contractors, resulting in millions of dollars of employee entitlements having to be paid to the delivery riders. This followed a case initiated by the Transport Workers Union (TWU) and a former Foodora delivery rider.
Conversely, in 2019, TWU were served a blow when the Fair Work Commission's (FWC) Full Bench accepted Uber's argument that its 60,000 drivers are not employees, rejecting an unfair dismissal claim argued by former driver, Amita Gupta. The FWC ultimately concluded Uber drivers were not employees because they lacked some of the "essential hallmarks of an employment relationship".
And most recently, WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato) reinforced an earlier decision in WorkPac Pty Ltd v Skene [2018] FCAFC 131 that held a casual employee working regular and systematic hours is also entitled to the same paid leave entitlements of a permanent employee. Rossato appears to go one step further in potentially preventing an employer from claiming back casual loading, exposing employers to even greater financial risk in dealing with employees. This was the case in a matter Worrells dealt with in 2017, when a former contractor contacted the Australian Taxation Office (ATO) advising they should have been treated as an employee, leading to an ATO audit and a Director Penalty Notice (DPN) being issued to the director for unpaid superannuation. Ultimately, the director had to file for bankruptcy to extinguish this debt.
What have we seen so far in COVID-19 related cases? Among all the JobKeeper-enabling direction matters, in HyperLife Pty Ltd T/A Acme Preston v Kelly Brennan [2020] FWC 3080 (12 June 2020) (Preston) the FWC reduced former employees’ combined redundancy payouts by two-thirds from $44,000 to $14,400. Their employer submitted to the FWC that the company was under severe financial strain due to COVID-19’s impacts and was not entitled to the JobKeeper scheme.
Currently, business and union representatives are coming together across various working groups to assess whether some common ground exists to overhaul Australia’s industrial relations, which will undoubtedly help the country on its path to recovery. However, to what extent a consensus can be reached, and when changes will be implemented is anyone’s guess. Now is a critical time more than ever for business owners to have the confidence to employ and for employees to have greater certainty of their entitlements.
In the short term, with the JobKeeper scheme ending in less than 90 days, employers must seriously consider what they do with their employees. The longer they hold onto stood-down employees not required post September, the larger the potential termination payouts as service periods tick over and annual leave continues to accrue. Careful scenario planning around staffing arrangements must start now so that businesses can soften the blow once the government “turns off the tap” in the months to come.
At Worrells, we deal with a full range of businesses that are vulnerable to insurmountable debts crystalising from misunderstanding or misapplying of worker designations. Your local Worrells partner is here to help. Contact us for a complimentary and confidential discussion.