Legal Updates

A new set of .au Domain Administration (.auDA) Rules have been announced affecting the eligibility, allocation, and terms and conditions for .au domain registration and renewal.  The new .auDA Rules will come into effect on 12 April 2021, and will apply to all .au country code Top Level Domains (.au ccTLD) registered, renewed or transferred on or after that date. 

Within the new .auDA Rules, there are some significant changes that will affect .org.au domains.  This will be particularly important for Australian NFPs, whom we know largely operate .org.au domains.

One of the key changes here will be that some NFPs that may have previously been eligible to hold .org.au domains, will no longer be eligible to do so.

.auDA Rule changes for .org.au domains

Changes to the eligibility rules for .org.au domains

Under the new .auDA Rules, an unincorporated association will not be eligible to hold a .org.au domain name unless it appears on the Australian Charities and Not for Profit Commission’s (ACNC) Register of Charities.  The only exception to this is where an unincorporated association falls under the definition of not-for-profit organisation in another of the 11 categories within the .auDA definition, as set out below.

To satisfy .auDA’s definition of not-for-profit organisation, an organisation must be:

1. an incorporated association under State or Territory legislation;
2. a company limited by guarantee under the Corporations Act 2001 (Cth);
3. a non-distributing co-operative registered under State or Territory legislation;
4. an indigenous corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) and which appears on the Register of Aboriginal and Torres Strait Islander Corporations;
5. a registered organisation that is:
   
   
6. an association of employers;
7. an association of employees (union); or
8. an enterprise association registered under the Fair Work (Registered Organisations) Act 2009 (Cth) and which appears on the Register of Organisations;
9. a charitable trust endorsed by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR);
10. a non-trading cooperative under State or Territory legislation;
11. a public or private ancillary fund endorsed by the ATO as a DGR;
12. an unincorporated association that appears on the Register of Charities established under the Australian Charities and Not for Profit Commission Act 2012 (Cth);
13. a political party registered under the Commonwealth Electoral Act 1918 (Cth) or State or Territory Electoral Act and which appears on the Register of Political Parties or as otherwise named; or
14. government, being either the Crown or a Commonwealth, State or Territory statutory agency.

The impact of this change will primarily be felt by unincorporated associations such as sporting, social, recreational, and other clubs.

If an unincorporated association fails to meet .auDA’s new definition of not-for-profit organisation, they will need to consider either:

• becoming an incorporated association;
• becoming a company limited by guarantee; or
• registering for a .asn.au domain name.

Changes for .org.au allocation rules

Under the new .auDA Rules, the allocation rules (i.e. what name you can register, and how it must relate to you as a registrant), will broaden from requiring a ‘close and substantial connection’ between the not-for-profit organisation and its .org.au domain name, to requiring that a .org.au domain name must be:

1. a service that the organisation provides;
   
2. a program that the organisation administers;
3. an event that the organisation registers or sponsors;
4. an activity that the organisation facilitates, teaches or trains;
5. premises which the organisation operates;
6. an occupation that its members practise,

2. and which that organisation is providing at the time of the application;
3. a match of the organisation’s legal name, business or statutory name or the name of the unincorporated association;
4. an acronym of the organisation’s legal name, business name, or statutory name;
5. a match of the organisation’s Australian trade mark; or a match

Changes to the rules for State and Territory namespaces

There have also been exciting changes to the .auDA Rules regarding Australian State and Territory namespaces, e.g. qld.au, nsw.au, vic.au etc.  Previously, only community groups could register in these namespaces, however, under the new .auDA Rules, the eligibility criteria have been expanded to allow State and Territory peak bodies to register in these namespaces.

The .auDA Rules specify that peak State or Territory bodies means a not-for-profit entity that represents:

1. not for profit societies, associations or clubs, established for community service (but not political or lobbying) purposes;
2. not for profit societies, associations or clubs established for the encouragement of art, literature or music; or
3. not for profit societies, associations or clubs established for the encouragement of animal racing or a game or a sport or recreational activity.

.auDA provides some examples of peak State or Territory bodies around Australia, including:

• Football Federation Victoria – being a peak Victorian body for sport and recreation;
• Carers NSW – being a peak New South Wales body for community service organisations; and
• Propel Youth Arts WA – being a peak Western Australia body for the arts.

The effect of this change will be that peak State or Territory bodies will have an opportunity to attain enhanced recognition of their status.

Recommendations

These changes, together with a number of other changes to the .au ccTLD , will come into effect on 12 April 2021.  It would be prudent for NFPs to review their domain name portfolios to ensure compliance with the new .auDA Rules going forwards.

If you operate a not-for-profit entity, and are unsure as to whether you will continue to be eligible for your .org.au domain name after 12 April 2021, the team at NFP Lawyers would be more than happy to assist. 

If you otherwise have any questions about any of the above, your eligibility for a .org.au domain, registrability as a charity with the ACNC, or whether any alternative structures may be appropriate, please do not hesitate to contact us.

Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.

With the introduction of time and wage recording for award covered employees on annualised wage arrangements (commonly referred to as salaries) occurring 12 months ago, as of 1 March 2021 affected employers must audit the time and wages records for employees working under annualised arrangements, to ensure they have been paid for all the hours they have worked in the last 12 months.

The changes introduced last year were a result of the Fair Work Ombudsman’s ongoing investigations and reports on underpayment of employee entitlements. In recent years, some of the country’s biggest employers have gotten it wrong. These cautionary reports suggest that it is well worth every employer having their employment arrangements reviewed, to ensure they do not fall foul of the Fair Work Act 2009 and related industrial instruments.

Organisations like Disability Services Australia, BaptistCare NSW & ACT, Uniting Aged Care, Activ Foundation Inc. (a WA disability enterprise) and home-care services organisation Lifestyle Solutions Ltd have had their employment misdeeds documented in the media, and the list goes on. Even some top tier law firms that advise organisations on their employment obligations got it terribly wrong by paying graduates salaries that did not cover the excessive amounts of overtime they required those employees to work.

The Fair Work Ombudsman’s 2019-20 Annual Report revealed the depth of the underpayment problem across all sectors, identifying that an astounding $123.5 million was recovered for over 25,000 employees, including $90 million in underpayments that were self-reported by employers over that financial year.

Addressing the issue

In early 2020, because of the ever-increasing reports of wage and salary underpayments, the Fair Work Commission added new rules about annualised wage arrangements  to a range of modern awards. The rules started from the first full pay period on or after 1 March 2020 and now that 12 months has passed, employers must reconcile the time and wage records they have (or should have) kept, to ensure they are paying their employees properly. It is critical that employers are keeping time and wages records for all salaried award covered employees who earn under the high-income threshold (which is currently $153,600).

Employers must now carry out an annual reconciliation of their employees' salaries, for relevant employees who were working for the employer 12 months ago. Employers must ensure there is no gap between the annualised wage agreement and what the employee would have earned under the modern award.

Who does it affect?

The rules affect full-time employees who are paid an annual wage under one of the awards that allow for annualised wage arrangements. Award covered part-time and casual employees cannot have annual wage arrangements.

Employers must make sure their employee’s annual wage is high enough to cover the award entitlements that have been included in an arrangement. An employee's annual wage cannot be less than the amount they would have been paid over the year if they were paid all their award entitlements for their work.

As each award is slightly different, it is important that you read the annual wage arrangement clause in the modern award that applies to your workforce. Social, Community, Home Care and Disability Services Industry Award 2010 does allow for salary arrangements.

What is required for an annual wage agreement?

Annual wage agreements provided to employees must include:

• the annual wage that will be paid;
• which award entitlements are included in the annual wage;
• how the annual wage has been calculated, including any assumptions used in the calculation; and
• the maximum (or ‘outer limit’) number of penalty hours and overtime hours the employee can work in a pay period or roster cycle without extra payment.

Additionally, employers must keep a record of start and finish times, as well as unpaid breaks taken for their employees on annualised wage arrangements. These records must be signed off by the worker at the end of each pay cycle. Many organisations have brought in technology for employees to log into electronic timesheets, to maintain payroll efficiency and make it easier to comply with the recording obligations.

The rules effectively require employers to keep two sets of calculations: one data set to capture the amount paid under an annualised wage agreement; and another to show the amount required under the modern award. Maintaining and regularly reviewing these records enables employers to identify gaps between the two and adjust an employee’s pay if necessary. If employers have not prepared for the changes, they are at risk of accumulating underpayments and possibly penalties for breaching their obligations.

When do the annual reconciliations happen?

Employers must undertake a reconciliation of their employees' annual wages:

• every 12 months after the arrangement starts;
• when the arrangement ends; or
• when the employment ends.

Employers must make sure their employees have been paid at least the same amount they would have been paid under the award if they were not on an annual wage, for all the hours they worked. If an employee's annual wage is less than the award payments that they would have received, their employer must pay them the difference within 14 days.

Common award payment errors

In addition to the changes in time and wage recording for salaried employees, there are some other issues that commonly arise in payroll non-compliance, such as:

• incorrectly classifying employees as Modern Award free;
• applying the wrong Modern Award to employees;
• misclassifying employees under a Modern Award or Enterprise Agreement;
• applying annualised salaries that are not sufficient to cover all entitlements arising under the award, especially over time where they do not keep up with increased award rates;
• relying on the BOOT and not documenting annualised arrangements;
• including incentives (food, gift cards, etc.) in lieu of payment;
• incorrectly calculating overtime and penalty rates; and
• poor time and recording keeping.

Regardless of any discussions taking place in the media about industrial relations changes, the modern award terms must be complied with. It is safer to assume that your employees are covered by a modern award because the 121 Modern Awards were created to cover the vast majority of Australia’s workforce.

We recommend that payroll audits should be conducted generally to ensure all staff are paid under the correct award and classification for all their hours worked, unless they have a ‘time off in lieu’ agreement documented for overtime worked.

Do not risk penalties and unnecessary legal costs for non-compliance. If you are unsure whether your organisation complies with its wage and salary obligations, NFP Lawyers can audit your payroll and employee records to ensure you are paying your employees properly.

The Federal government introduced the JobMaker Hiring Credits scheme (JobMaker), to assist organisations to recover and rebuild from the impact of COVID-19 closures through 2020, and to encourage employment opportunities for people who had previously been unemployed. The subsidy is available to NFPs and social enterprises that meet the eligibility criteria.

JobMaker opened for claims on 1 February 2021, for organisations that register and meet the eligibility requirements before the scheme ends on 6 October 2021.

Contents

1. Accessing JobMaker
2. Eligible Employers
3. Payroll Increase and Headcount Increase
4. Reporting Requirements
5. Ineligible Employers
6. Effect of other payments

1. Accessing JobMaker

NFPs and social enterprises wanting to take advantage of the scheme must:

• register with ATO online services, the Business portal, or through their registered tax or BAS agent;
• nominate their eligible additional eligible employees by running payroll events through their Single Touch Payroll (STP) enabled software; and
• claim payments – employers need to enter their headcount and payroll for the JobMaker period in the ATO online service. The ATO will calculate claim amounts based on the information provided.

Both employers and employees must satisfy the eligibility criteria for employers to claim the JobMaker. Employers cannot receive JobMaker if:

• they also receive a JobKeeper for any employee in a fortnight that started during the JobMaker period they claim for, or
• if other government wage subsidies applied to the nominated employees.

JobMaker is paid to employers every three months in arrears. The first JobMaker period that can be claimed for (7 October 2020 to 6 January 2021), opened for claim on 1 February 2021. Unlike JobKeeper, JobMaker is not payable to the employees.

Eligible employers may receive payments of up to:

• $200 a week – for each eligible additional employee aged 16 to 29 years old inclusive; or
• $100 a week – for each eligible additional employee aged 30 to 35 years old inclusive,

if their eligible employees:

• have worked or have been paid for an average of at least 20 hours per week they were employed in the JobMaker period;
• prior to employment, had received JobSeeker, Parenting Payment or Youth Allowance (except if they receive the allowance because they are undertaking full-time study or are a new apprentice); and
• have not filled in a JobMaker employee notice for another employer they work for.

The subsidy is available for eligible additional employees for up to 12 months from their employment start date, hired up until 6 October 2021.

2. Eligible Employers

Employers wishing to claim JobMaker must:

• register for the JobMaker; and either 
• operate a business in Australia; or
• be a not-for-profit organisation operating in Australia; or
• be a deductible gift recipient (DGR) endorsed either as a public fund or for a public fund you operated under the Overseas Aid Gift Deductibility Scheme (DGR item 9.1.1) or for developed country relief (DGR item 9.1.2); and
• hold an Australian business number (ABN);
• be registered for pay as you go (PAYG) withholding;
• have not claimed JobKeeper for a fortnight that started during the JobMaker period (on or after 12 October 2020);
• be up to date with income tax and GST returns for the two years up to the end of the JobMaker period for which they are claiming;
• satisfy the payroll increase and the headcount increase conditions;
• satisfy reporting requirements, including up to date Single Touch Payroll (STP) reporting; and

not belong to one of the ineligible employer categories.

3. Payroll Increase and Headcount Increase

To receive JobMaker, an organisation must demonstrate that it is creating new employment opportunities. Organisations will be required to show that they have legitimately increased their employee headcount and payroll to qualify for the payment.

Employers will not be eligible, or will be disqualified, if they enter into an arrangement to artificially inflate their headcount or payroll by terminating or reducing the hours of any existing employees in an attempt to access or increase payments under JobMaker.

An employer who is disqualified in this way loses all entitlements to JobMaker for any JobMaker period that ends after the termination or reduction in hours occurred, and as well as subsequent periods.

The rule would generally not apply to a termination or reduction in hours that the employee has volunteered for, to meet their needs or preferences. However, the employer could be subject to disqualification if the employee were manipulated or coerced into agreeing to the changes.

4. Reporting Requirements

To remain eligible to receive JobMaker, employers must comply with single touch payroll (STP) obligations and provide any further information required in STP. Employers must then complete a claim form for each JobMaker period in which they are eligible.

STP reporting is due three days before the end of the JobMaker claim period an employer claims for. Eligible employers must report the following information in STP for each employee they intend to claim for:

• tax file number (TFN)
• date of birth
• full name
• start date of employee (if occurring in the JobMaker period)
• end date of employee (if occurring in the JobMaker period)
• whether your employee met the hours requirement.

5. Ineligible Employers

An employer may not be entitled to claim JobMaker for a range of reasons. Most relevant to small and medium sized businesses, the following employers are ineligible to receive JobMaker:

• a company is in liquidation or provisional liquidation; or
• an individual wishing to claim has entered bankruptcy; or
• the entity is disqualified because it terminated the employment or reduced the hours of work of an existing employee or employees for the sole or dominant purpose of receiving or increasing payments under JobMaker.

6. Effect of other payments

Employers receiving the following  Australian Government wage subsidies:

• Supporting Apprentices and Trainees Wage subsidy;
• Australian Apprentice Wage subsidy;
• Boosting the Apprenticeship Commencements Wage subsidy; or
• Restart, Youth Bonus, Youth, Parents or Long-term Unemployed Wage Subsidies,

cannot also claim JobMaker Hiring Credits.

Employers only need to register once for the scheme but will need to report their headcount and payroll in each reporting period they wish to claim for.

If you plan to make a claim for the first JobMaker period, you must register by 30 April 2021.

If you need assistance in understanding or complying with obligations for JobMaker or JobKeeper, or have other questions related to the effect of COVID-19 on your NFP or social enterprise, please do not hesitate to contact us.

The Queensland Parliament passed legislation in mid-2020 to include community service workers in the portable long service leave (PLSL) regime that had previously been introduced for the contract cleaning and building sectors. The Community Services Industry (Portable Long Service Leave) Act 2020 (Qld) (the Act) and Community Services Industry (Portable Long Service Leave) Regulation 2020 (Qld) (the Regulations) took effect on 1 July 2020 and requires employers in the community service sector to register with QLeave (the authority formed to administer PLSL) from 1 January 2021.

The PLSL provides community service workers access to long service leave provisions that might not otherwise be available because of the short-term nature of engagements in the industry.

The PLSL applies to both for-profit and not-for-profit organisations in the Queensland community services industry, and provision has been made for recognition of service in a similar programme with partner states in the future.

PLSL will provide workers with an entitlement after 7 years’ service with accrual at the rate of the existing statutory entitlement of 8.67 weeks after 10 years’ service as prescribed in the Industrial Relations Act 2016 (IR Act).

The PLSL legislation requires employers to pay a levy calculated on an employee’s ordinary wages and report on an employee’s service, on a quarterly basis. There is also provision for refund of relevant levy amounts if an employee completes service with the employer so that they would be entitled to long service leave, even though they have not qualified under the PLSL programme.

In short, the PLSL does not alter the entitlements of existing long term employees, but provides access to employees who in the past have not been able to access long service leave because of the nature of their work.

Employers have until the end of March 2021 to register and will then be required submit quarterly returns and pay the levy from April 2021, with the first quarterly return due on 14 April 2021. Returns can be submitted online and payments made electronically.

However, some community service employers are finding the programme confusing and, in this article and attached guide, we look at how PLSL came about for the community service sector, how it effects employers and what your NFP or social enterprise needs to do to ensure you comply with the PLSL legislation.

Summary of key considerations

Employers engaging workers in community services must register with QLeave by the end of March 2021 to avoid the risk of penalties.^[1]

Employers must notify QLeave of changes to the employer’s information within 28 days after the change happens.

Registered employers must submit quarterly reports and levy payments no later than:

• 14 April 2021;
• 14 July 2021;
• 14 October 2021;
• 14 January 2022

and then ongoing in the same routine.

Employers must report the number of days each employee was engaged ( or ‘on the books’) in the quarter and the ordinary wages that were paid to each employee for that quarter.

The levy is 1.35% of the ordinary wages paid for each employee in the relevant quarter. For example, if you paid $125,000 to your workers in a quarter but $25,000 of that amount was for overtime, you will pay 1.35% on the $100,000 only, resulting in a levy payment of $1350.

Employers must maintain the prescribed records for all employees for at least 6 years after the last entry is made for the relevant employees. However, employers are required under federal legislation, to keep employment records for 7 years, so the PLSL obligations fit within existing obligations.

A more detailed guide is attached if you need further information about PLSL for your organisation, also attached is a brief video presentation.

If you are an employer in the community services sector and are unsure of your obligations under the PLSL scheme, NFP Lawyers can assist you.

[1] Section 54 of the Act requires that an entity must apply for registration on the register of employers within 28 days after becoming an employer. For the commencement of the scheme, section 126 of the Act extends the period for employers to register to 90 days after the commencement of the scheme, which is 1 January 2021.

On 1 December the Cooperatives Act 1997 (Qld) was repealed and replaced by the Co-operatives National Law Act 2020 (Qld).

Replacing Queensland’s Cooperatives Act 1997 with the Co-operatives National Law Act will mean that Queensland co-operatives benefit from a consistent system of law for co-operatives.

Other key reforms of the Co-operatives National Law Act include:

• updating of provisions to ensure consistency of laws across all jurisdictions;
• automatic mutual recognition of co-operatives by other states and territories resulting in lower costs and paperwork for co-operatives trading interstate;
• simplification of financial reporting and auditing requirements for small co-operatives;
• updating of directors’ and officers’ duties to modern standards of corporate governance, integrated with co-operative principles;
• new fundraising provisions for co-operative capital units; and
• referencing of the Corporations Act 2001 (Cth) has been updated.

What does my co-operative need to do?

As a co-operative, you don’t need to do anything to transition to the Co-operatives National Law Act. Co-operatives registered under the Cooperatives Act had their registration transferred to the Co-operatives National Law Act automatically on 1 December 2020.

What are the law changes?

• Types of co-operatives

Trading co-operatives are now known as distributing co-operatives and non-trading co-operatives are now known as non-distributing co-operatives.

Co-operatives are categorised as either small or large.

A co-operative is a small co-operative if:

• it satisfies at least 2 of the following:
• the consolidated revenue of the co-operative and the entities it controls (if any) is less than $8 million for the financial year;
• the value of the consolidated gross assets and the entities it controls (if any) is less than $4 million at the end of the financial year;
• the co-operative and the entities it controls (if any) had fewer than 30 employees at the end of the financial year;

and none of the following apply to the co-operative:

• it issues shares to more than 20 prospective members during that year and the amount raised in that year by the issue of those shares exceeds $2 million; or
• it has securities on issue to non-members during that year, other than shares in the co-operative and securities issued in respect of the co-operative’s obligations under section 163 of the Law.

A co-operative is a large co-operative if it does not satisfy the criteria for a small co-operative.

• Co-operative rules

Your co-operative can continue to use its existing rules without the need to update them. However, if there is an inconsistency between your co-operatives rules and the Co-operatives National Law Act the rules set out in the Co-operatives National Law Act will prevail.

• Operating freely across borders

Co-operatives from different states have mutual recognition, which means they can operate freely across borders. 

• Financial reporting

Although there are no changes to reporting requirements for large co-operatives, a small co-operative only need submit a simplified annual return to the Office of Fair Trading.

A small co-operative is not required to have their financial statements audited.

• Fundraising

Co-operative can now raise funds by issuing co-operative capital units to its members or non-members. However, if the co-operative wishes to raise such funds it must update its rules (section 349 of the Co-operatives National Law Act).

• Director and officer responsibilities

The Co-operatives National Law Act has modified the duties and responsibilities of directors and officers. The corporate governance standard is now consistent with the standards under the Corporations Act 2001 (Cth).

Queensland charitable institutions must now ensure that certain provisions are expressly stated in their governing documents in order to be eligible for exemptions from state taxes and duties.

The Taxation Administration Act 2001 (Qld) (TAA) was amended on 30 October 2018 by the Revenue and Other Legislation Authority Amendment Bill Act (Qld), and the transition period for the legislated changes will end on 8 November 2020 (for charities who were registered charitable institutions with the OSR as at 9 November 2018).

What are the changes?

Part 11A of the Taxation Administration Act 2001 (the Act) provides for the registration of charitable institutions. Registration as a charitable institution is a pre-condition to certain exemptions under the Duties Act 2001, Land Tax Act 2010 and the Payroll Tax Act 1971.

Under s.149C of the Act, there are several restrictions on registration. Section 149C(1) of the Act provides that an institution may only be registered if any of the following applies:

1. it is one of the types of institutions mentioned in s.149C(2)
2. its principal object or pursuit is fulfilling a charitable object or promoting the public good and is not a leisure, recreational, social or sporting object or pursuit
3. it is the trustee of an institution mentioned in (a) or (b), other than a university or university college.

Additionally, s.149C(5) of the Act provides that an institution generally must not be registered unless its constitution, however described, expressly provides that:

4. its income and property are used solely for promoting its objects
   and
5. no part of its income or property is to be distributed, paid or transferred by way of bonus, dividend or other similar payment to its members
   and
6. on its dissolution, the assets remaining after satisfying all debts and liabilities must be transferred:
   
   
7. to an institution that, under s.149C, may be registered
   or
8. to an institution the Commissioner is satisfied has a principal object or pursuit mentioned in s.149C(3)(a)
   or
9. for a purpose the Commissioner is satisfied is charitable or for the promotion of the public good.

Section 149C(6) of the Act states that a constitution includes a law, deed or other instrument that constitutes the institution and governs the activities of the institution or its members.

OSR explanation

On 9 November 2018 the OSR released a public ruling to clarify when a constitution will satisfy the requirements of s.149C(5).

To qualify for registration as a charitable institution, an institution’s constitution need not contain the exact words in s.149C(5)(a) to (c) of the Act. It is sufficient for an institution’s constitution to contain similar words that have the same effect.

Institutions that have adopted template rules may qualify for registration as a charitable institution, if the template rules satisfy s.149C(5) of the Act and the institution meets the other requirements in s.149C.

What do you need to do?

If your NFP is registered with the OSR as a charitable institution:

         Check your governing documents to ensure compliance with the changes            Where changes to your governing documents are needed, hold a general meeting for the members to pass a special resolution amending the governing documents            If your NFP is a company notify the ACNC of the changes to the governing documents            If your NFP is an incorporated association lodge an application for rules amendment with the OFT, then notify the ACNC of the changes to the governing documents            If you NFP holds an authority or licence to fundraise, notify the relevant regulatory of the amendment to the governing documents  

If you NFP is unsure if it is a registered charitable institution contact the OSR for verification.

In this article, we look at how the new ‘wage theft’ amendments to the Criminal Code (Queensland) came to be and what they mean for employers.

What is wage theft?

Broadly speaking, wage theft occurs when employers deliberately do not pay employees their lawful entitlements, including superannuation, award rates, penalty rates, leave and other entitlements set out in the Fair Work Act 2009 (the FWA) or industrial instruments (Modern Awards or Enterprise Agreements) formed under the FWA.

‘Deliberate’ does not simply mean that the employer chose to not pay what an employee was entitled to, it also covers instances when an employer does not apply the terms of an industrial instrument that pertains to the workplace, when they should have known it applied.

The issue of ‘wage theft’ became prominent in 2015 when the ABC documentary series Four Corners revealed 7- Eleven’s use of illegal work practices to reduce its labor costs.[1] Since then, the issue has continued to escalate and both State and Federal Governments have identified that they have to take steps to address the economic and social impact of the activity.

In recent years, the Fair Work Ombudsman (the FWO) has actively pursued underpayment claims and conducted audits to identify breaches of the FWA, to ensure employers are aware of their obligations and that employees are paid no less than their minimum entitlements.

In addition to the activities of the FWO, some state governments, including Queensland, undertook reviews of the impact of wage theft to address an issue that appears to be increasingly problematic. The Queensland inquiry determined that, based on the evidence available, which may not capture all the instances of alleged wage theft, $2.5 billion is lost from the Queensland economy every year. This amongst other considerations underpins the recent legislative changes.

Investigation and recommendations

The Queensland Government introduced the Criminal Code and Other Legislation (Wage Theft) Amendment Bill 2020 as a result of a report prepared by the Queensland Parliament – Employment and Small Business Committee (the Committee).[2]  The Committee made 17 recommendations aimed at reducing the instance of ‘wage theft’ and making it easier for employees to pursue payment of their unpaid entitlements. The 17 recommendations are annexed to this article.

The most controversial of those recommendations, was that wage theft be made a criminal offence where the conduct is proven to be deliberate or reckless (Recommendation 15). Those provisions passed Parliament and were assented to on 14 September 2020, amending the Criminal Code (Queensland) and other relevant State legislation.[3]

Criminalising ‘wage theft’

The issue of criminalising wage theft is not unique to Queensland. The Victorian Government has implemented similar provisions and other states are considering the option. The Federal Government has also formed an Industrial Relations working group, to review compliance and enforcement measures. The concept of increased penalties, possibly criminal, has been identified as a real possibility in reforms expected to be tabled in early 2021.

The Queensland legislation means that employers could now face up to 10 years’ imprisonment under the criminal provisions where their conduct is proven to be deliberate or reckless; or 14 years if the conduct is proven to be fraudulent and the amount in issue is between $30,000 and $100,000. There are heavier penalties for fraud amounting to more than $100,000.

The changes have been made through minor amendments to the Criminal Code (Queensland), by including a new section 391(6A) (Stealing) as follows:

For stealing that is a failure to pay an employee, or another person on behalf of the employee, an amount payable to the employee or other person in relation to the performance of work by the employee…

and s408C (Fraud):

A person who dishonestly—

(1) (a)applies to his or her own use or to the use of any person—

(i) property belonging to another

and

(2)  …the offender is or was an employer of the victim.

Existing Compliance and Enforcement

The FWO regularly publish media releases about back payments recovered for employees, self-audit outcomes and prosecutions in the Federal Court, amounting to many millions of dollars each year.

Most recently the FWO reported on the outcome of random audits of fast food, restaurant, café and retail operators in West End prior to the COVID-19 pandemic, resulting in $309,073 being reclaimed for 369 workers across 44 businesses. The audits uncovered that 88% of businesses investigated were not compliant with Australia’s workplace laws. The most common contraventions were failures to correctly pay penalty rates, followed by underpayments of the minimum hourly wage. It is those issues the new ‘wage theft’ laws will address.

Getting it right is important

Whilst it has always been important to get your business’s employment administration right, the stakes have now gotten higher, with the risk of criminal penalties being added. It is now vital that you can demonstrate you have exercised proper due diligence by taking all reasonably practicable steps to ensure your business complies with its industrial obligations. Employment law advice should be sought, payroll compliance audits conducted and control measures applied and regularly reviewed. 

We know from experience that accountants, bookkeepers and HR advisors are not always sufficiently aware of the employment provisions that relate to your business, nor are they strictly obliged to. There is no substitute for getting professional advice from a lawyer experienced in employment matters and advising businesses. Proactive advice will help you to establish compliant processes and help protect your business investment. Importantly, legal professional privilege ensures that any confidential legal compliance advice you obtain cannot be used in evidence against your business interests and those of its corporate officers.

Our team have real world experience in managing workplaces and advising employers and are ready to assist you. If you are concerned that your business could be at risk, do not ignore those concerns. We encourage you to contact us on 07 3160 0010 or email us at reception@nfplawyers.com.au.

Annexure – Recommendations

Arising from the Committee’s 17 recommendations about how the issue of wage theft can be addressed, 11 of those recommendations were matters that only the Federal Government could resolve. The 17 recommendations were:

1. the Queensland Government conduct a public education campaign to assist in the fight against wage theft, including outlining information on the findings from this inquiry and the measures the Queensland Government is taking in response, and how and where affected workers can go for help to recover their lost wages.
2. the Queensland Government re-establish the tripartite Industrial Relations Education Committee under the auspices of the Office of the Industrial Relations to conduct visits to schools, TAFE and VET providers, and universities. The visits would be conducted on an opt-in basis and provide information focusing on the rights and responsibilities of both workers and employers.
3. the Queensland Government, through the Department of Education, work with the higher education sector in Queensland to ensure international students have access to relevant information and advice on their workplace rights in Australia, including the right to join a union and where to go for further information.
4. the Federal Government introduce a national labour hire licensing scheme so the benefits of the Queensland scheme can apply across the country.
5. the Queensland Government ensure its current procurement policies allow for appropriate and proportionate action to be taken against companies that have underpaid workers.
6. the Federal Government consider measures to improve worker access to representation in the workplace and ensure compliance with industrial instruments, using the model of the Industrial Relations Act 2016 (Qld).
7. the Federal Government appoint additional Federal Circuit Court Judges in Queensland, and ensure Queensland retains its proportionate share of Federal Circuit Court judges.
8. the Queensland Government review and take actions available to it, to ensure that wage recovery processes for Queensland workers are simple, quick and low-cost. This should include further investigation of the following options:
   
   
9. establishing a dedicated industrial division within the Queensland Magistrates Court, in line with the example in Victoria
10. investigating the inclusion of the Queensland Industrial Relations Commission or Industrial Court as an eligible state court under the Fair Work Act 2009 (Cth)
11. reviewing relevant forms and processes to ensure the legal process is simple and user friendly for workers and their representatives
12. waiving or reducing current court filing fees for wage theft matters.
13. unpaid superannuation be included as a recoverable entitlement under the Fair Entitlements Guarantee scheme and the Fair Entitlements Guarantee scheme be extended to temporary overseas visa workers who are currently denied access.
14. that the Federal Government fund a workplace rights information and support service based in Queensland, as is funded for other Australian jurisdictions and was formerly the case, up until the removal of funding in 2016 by the then Federal Government.
15. the Federal Government take immediate steps to appoint additional Fair Work inspectors in Queensland under the Fair Work Act 2009 (Cth).
16. the Federal Government establish a full, independent review into the performance, resourcing and culture of the Fair Work Ombudsman to ensure that it can respond to wage theft and support affected workers in an effective and timely fashion. Among other things, the review should consider the findings and recommendations of the Best Practice Review into Workplace Health and Safety Queensland which have driven a cultural shift from education to compliance.
17. superannuation be included as an industrial entitlement in the National Employment Standards.
18. the Fair Work Commission be given the power to assess the status of an employment contract similar to that available to the Queensland Industrial Relations Commission under the Industrial Relations Act 2016 (Qld), and, further consideration be given to removing the ‘reckless defence’ from the offence of sham contracting under section 357(2) of the Fair Work Act 2009 (Cth) and introducing a new ‘reasonable person’ test for determining whether an employer has engaged in sham contracting.
19. the Queensland Government legislate to make wage theft a criminal offence, where the conduct is proven to be deliberate or reckless. The Queensland Government should consider the variety of models and approaches for criminalizing wage theft that were presented to the inquiry and consult further with stakeholders in regard to a preferred model.
20. an automatic termination date be legislated for remaining Work Choices ‘zombie’ agreements, with consideration given to necessary transitional arrangements and protections to ensure no workers are disadvantaged as a result.
21. reform of the Fair Work Act 2009 (Cth) to more adequately accommodate emerging forms of non-traditional employment. This should include consideration of law reform to broaden the definition of worker and provide broader access to the benefits of collective bargaining, minimum standards for pay and conditions, and access to the Fair Work Commission.

[1] Adele Ferguson, 7-Eleven: The Price of Convenience, Four Corners, Australian Broadcasting Commission, online https://www.abc.net.au/4corners/7-eleven-promo/6729716

[2] A fair day’s pay for a fair day’s work? Exposing the true cost of wage theft in Queensland,

Report No. 9, 56th Parliament Education, Employment and Small Business Committee,

November 2018 < https://www.parliament.qld.gov.au/Documents/TableOffice/TabledPapers/2018/5618T1921.pdf>.

[3] Schedule 1, Criminal Code Act 1899.

Since the start of the COVID-19 pandemic, the FWC has considered a range of temporary provisions for inclusion into industry awards, to assist in managing the effects of the virus on workplaces and employees. But not all the applications for award variation are being granted, as can be seen in the latest FWC award variation decision.

Application to FWC

The most recent FWC decision arises from an application by:

• the Australian Municipal, Administrative, Clerical and Services Union (ASU);
• the Health Services Union (HSU);
• the United Workers Union (UWU); and
• National Disability Services (NDS),

to add a new temporary COVID related clause, providing for an additional ‘Care Allowance’ for award covered employees working in social and community services, undertaking disability services work. Under the proposed clause:

“Where an employer requires an employee to work in personal contact with a client who:

1. is required by government or medical authorities to self-isolate in response to the COVID-19 Pandemic;
2. is required on the advice of a medical practitioner to self isolate in response to the COVID-19 Pandemic;
3. the employer reasonably suspects has COVID-19; or
4. has COVID-19,

the employee will be paid an hourly allowance of 0.5% percent of the Standard Rate.

The additional payment would have resulted in disability support workers receiving an additional $5.03 per hour if the terms of the clause applied to them.

Objections

Submissions opposing the application were filed by Australian Business Industrial and the NSW Business Chamber (ABI), the Australian Industry Group (Ai Group) and the Australian Federation of Employers and Industries (AFEI), who argued that the proposed allowance “was not likely to have any appreciable impact on employment growth, inflation and the sustainability, performance and competitiveness of the national economy” and was not linked to conduct that necessarily created a higher risk to employees, nor was the risk unique to the disability sector.

Employers presenting evidence in the hearing of the matter, drew attention to the high standards of infection control implemented in response to the pandemic that resulted in increased costs to employers and the effective control of risks relating to virus transmission that significantly reduced risks for employees. The opposing statements also submitted that the financial impact for employer organisations facing restrictions in their activities, would further reduce income and make the additional payment untenable in a sector reliant on limited government funding.  

Ministerial intervention

The Minister for the NDIS, Stuart Robert, also filed a submission regarding funding issues, outlining additional COVID-19 support measures specific to providers. The Minister submitted that “depending on the Commission’s final determination, a number of Commonwealth programs which fund disability support services could also be impacted” adversely and that generally the further payment may also negatively impact on existing NDIS providers' ability to deliver services.

FWC decision

The FWC observed that the exercise of modern award powers in this case would not have any macro-level economic effects on employment growth, inflation and the sustainability, performance and competitiveness of the national economy, required considerations under the Fair Work Act 2009.

The FWC considered that the evidence presented suggests that employers had demonstrated the capacity to deal with the issues at the enterprise level, referring to Aruma and Lifestyle Solutions management of their experiences.

The FWC resolved to disallow the proposal on the basis that:

1. the circumstances in which the proposed allowance would be payable are comparatively rare and temporary, calling into question whether the exercise of modern awards powers is a necessary and proportionate response in this instance;
2. the proposed allowance would impose an additional cost on disability service providers that is likely not recoverable through the NDIS, and which would operate on top of other additional costs that would arise in the management of the pandemic; and
3. the circumstances are for all practical purposes indistinguishable from those applying in other sectors where such an allowance is not applied.

Ultimately, the FWC could not identify a basis to award the proposed allowance for disability service employees only, and were concerned that in granting the claim, the floodgates would be opened to similar applications under other awards.

If you require advice about the operation of the Social, Community, Home Care and Disability Services Industry Award 2010 or other awards affect your operations, our team can assist you. Please do not hesitate to contact us.

Following on from our newsletter on 13 August 2020, the FWO has announced that another NFP has been found to underpay staff. BaptistCare NSW & ACT now have to:

• back pay more than 2000 current and former employees a total of $1.279m;
• make a $40,000 contrition payment into the Commonwealth’s Consolidated Revenue Fund;
• fund an independent organisation to operate a Hotline for the next four months; and
• display public, workplace and online notices detailing its workplace law breaches and apologise to workers.

The FWO’s focus on Award compliance has prompted many employers to review their employment arrangements and many are shocked to find that they are not conforming with their obligations.

Getting the right advice

In our experience, many employers have not sought professional advice about what they have to do with regards to their employees or, they have relied on hearsay to establish their recruitment, pay and administration processes. Relying on poor advice is no defense if you are found to breach your obligations and substantiable penalties can apply.

The Modern Award framework is not as complicated as many people think. It is different to the way many people see employment arrangements in the media and in other countries. If you become familiar with the way your relevant Modern Award works, it can be enormously helpful to your operations and you are less likely to fall foul of the FWO.

Checklist

In this update, we take a quick look at some hot points in your employment administration that may need your attention. If you don’t tick all the boxes in the attached checklist, we recommend that you seek professional advice about your employment arrangements to avoid the pitfalls that a number of NFPs have recently faced.

The checklist is formed from the obligations that are prescribed in the Fair Work Act 2009 (the Act), the Fair Work Regulations 2009 (the Regulations) and the good practice standards that arise from decisions of the Courts and Commissions.

Regardless of the outcome of any employee claims, if you are found to have breached your obligations under the Regulations, civil penalties may apply and both the organisation and individual officers can be found liable.

If you are unsure of your organisation’s obligations to employees under the FWA, the relevant modern award or a workplace agreement, we can assist you to understand your obligations and assess the risks to your organisation.

On 12 August 2020, the Office of the Fair Work Ombudsman (FWO) released information about the Uniting Church in Australia Property Trust (NSW) (Uniting NSW), a registered charity that runs more than 70 residential aged care facilities as well as other community services under the Uniting brand in NSW and the ACT.

The FWO reported that Uniting NSW is back-paying employees more a total of $3.36 million to 9561 employees and has entered into an Enforceable Undertaking (EU) with the FWO.

Uniting NSW identified underpayments when it conducted a payroll review after receiving complaints from a number of its employees about payment errors relating to laundry, uniform and vehicle allowances as well as failing to provide shift workers an extra week of annual leave they were entitled to each year.

Many of the affected employees worked as front-line carers and as community and disability services workers in NSW and ACT, covered by several different Enterprise Agreements.

The back payments include interest, for underpayments that occurred between 2013 and 2019 and individual underpayments range from less than $1 to more than $11,000.

While Uniting NSW has already back paid the majority of workers, the EU requires the organisation to pay any outstanding amounts to former employees by 15 August 2020. The EU also imposes a range of other obligations to ensure future compliance, including funding an independent organisation to operate a Hotline for the next four months so that employees can make enquiries in relation to their entitlements, underpayments or related employment concerns. Uniting NSW is also required to display public, workplace and online notices detailing its workplace law breaches and apologise to workers.

The FWO Sandra Parker said that an EU was appropriate, rather than pursuing the matter in the Federal Court, because the organisation had cooperated with the investigation.  Ms Parker said:

“This matter serves as a warning to all organisations that if you don’t prioritise workplace compliance, you risk underpaying staff on a large scale and face not only a massive administrative exercise calculating underpayments but the cost of a significant back-payment bill. Any employers who need help meeting their lawful workplace obligations should contact us.”

Previously:

• a Western Australian NFP disability services provider was required to back-pay employees a total of $13.6 million after discovering that they had incorrectly calculated employee entitlements using a customised wage assessment tool;
• penalties totalling $41,580 have been imposed on the operators of a respite and care facility in Sydney, for deliberately underpaying two disability support workers a total of $84,450; and
• a Western Australian home-care services organisation having to back-pay foster carers more than $6 million under a Court-Enforceable Undertaking with the Fair Work Ombudsman in December 2019,after self-disclosing that it underpaid 124 current and former employees.

Employers are reminded that the FWO will pursue matters to the full extent of the law where they have identified that employees have been underpaid and employers have failed to comply with their obligations, whether that failure is intentional or a lack of understanding of their employment obligations. The standards are no different for NFPs and social enterprises as they are for commercial ventures.

It is crucial that directors and managers in the NFPs and social enterprises are aware of and comply with their obligations under their relevant modern award. A failure to do so could result in individuals being found to be personally liable and penalties being personally awarded against them by the Court.

If you are unsure of your organisation’s obligations to employees under the FWA, the relevant modern award or a workplace agreement, we can assist you to understand your obligations and assess the risks to your organisation.