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Experts warn of traps in WorkChoices

Experts warn of traps in WorkChoices

DESPITE NUMEROUS amendments, the WorkChoices legislation is still riddled with snags that employers are dangerously unaware of, lawyers and academics say.David McLaughlin, Piper Alderman’s…

DESPITE NUMEROUS amendments, the WorkChoices legislation is still riddled with snags that employers are dangerously unaware of, lawyers and academics say.

David McLaughlin, Piper Alderman’s Victorian employment relations partner, said that “the Workplace Relations Act and its associated regulations have already been amended three times, but continue to reveal consequences for employers we can only assume were unintended”.

These consequences relate to changes to the way workers compensation, public holiday pay, and sick, personal and annual leave are regulated under the new legislation, in some cases leaving nasty surprises that employers may have failed to budget for.

Consultant to Piper Alderman and recognised authority on WorkChoices, Professor Andrew Stewart, criticised “the artificial cut-off point of $55,000 base annual salary for time-recording requirements [that] has created as many problems as it sought to correct”.

“I hope that the Government is listening to the concerns being raised by employers and that a comprehensive review of the legislation will occur, at least before the time-recording regulations become operative in March 2007,” Stewart said.

And according to David Thompson, employment law partner at Hunt & Hunt, employers still unaware of the changes made to the calculation of payment for accrued sick, carer’s and compassionate leave under WorkChoices will be alarmed to discover they may have underpaid staff for accrued leave entitlements.

Changes introduced by the Australian Fair Pay and Conditions Standard involve a different method of calculation for payment of personal, carer’s and compassionate leave than for regular accrued annual leave, Thompson said.

This creates a potential financial and administrative minefield for employers. Under the new regulations, the calculation of these leave payments is made on the basis of what the employee would reasonably have expected to have earned if he or she had worked during that period.

“What this means is that an employee has an entitlement to receive overtime payments, shift allowance and penalties if these would reasonably have been paid to the employee on the day(s) the leave was taken,” Thompson said.

“This has the potential to significantly increase the amount of leave payments owed, especially in workplaces where overtime, shift allowance and penalties are common.”

The new calculations could place an additional administrative burden on employers, according to Thompson, as each time an employee took personal, carer’s or compassionate leave, the employer must make an assessment of what the employee would reasonably have been paid for each day of leave taken had they worked instead.

To complicate matters further, the different calculation method only applies to leave accruing from 27 March 2006, being the date the WorkChoices legislation came into effect, whereas leave accrued before 27 March is calculated in the same manner as before.

“Employers would be wise to ensure that they set up separate systems of leave accrual and payment, for leave accrued prior to and after 27 March, where the potential to pay more than base rates is an issue,” he said.

“Now that we are six months into the new regime, where leave under the new calculations may have been accrued, we are likely to see more cases where employees discover that they were potentially underpaid, unknowingly, by their employers. In that case, employers may be in for a nasty surprise.”

By contrast, the payment rule for accrued annual leave provides that the employee must be paid no less than his or her basic periodic rate of pay.

Aside from problems outlined by Thompson, Stewart and McLaughlin isolated other items they believe all Australian employers should be made aware of.

Section 237 of the Act will mean Victorian employees absent on workers compensation will continue to accrue full annual leave entitlements, regardless of the length of the absence, while under many awards, annual leave had ceased to accrue after four weeks, they said.

WorkChoices prohibits a workplace agreement to require that an employee provide proof of the reason for an absence the day before or after a public holiday, or forfeit the public holiday pay, they said. An employee who was rostered to work a public holiday, but is sick, will be paid personal leave at penalty rates.

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Experts warn of traps in WorkChoices
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