By Victor Song Senior Associate | Australian Business Lawyers & Advisors

Written by Australian Business Lawyers and Advisors 

Recent changes in the industrial relations landscape in Australia, which include amendments to the definition of casual employee, wage-theft laws, pay secrecy and multi-employer bargaining, mean that outdated employment contracts and policies can leave businesses exposed to significant legal, financial, and reputational risks if they are not compliant.

This article explores the importance of compliance, highlights key risks associated with non-compliance and outlines proactive steps businesses can take to conduct self-audits to ensure that their workplace policies and contracts are up to date and in line with legislative requirements and changes.


Ensure Compliance with Industrial Relations Landscape

The industrial relations landscape in Australia is constantly evolving and one of the most important reasons for auditing workplace policies and employment contracts is to ensure compliance with changing legislation.

Recently, the Fair Work Act 2009 (Cth) (and its subsequent amendments) have introduced significant changes to workplace rights and obligations. Some of these changes include (but are not limited to) changes to fixed term contracts, rights to casual conversion and the prohibition of sexual harassment in the workplace and business obligations to eliminate sexual harassment in the workplace.

Failure to keep policies and contracts up to date and in line with legislative requirements can result in significant legal and financial consequences. In the context of the recent changes, some of these deficiencies may include (but are not limited to):

  • Failing to provide casual conversion rights or correctly classify casual employees;
  • Using fixed-term contracts that exceed new maximum duration limits; and
  • Not implementing sexual harassment prevention policies required under the Respect@Work reforms
  • Prohibiting employees from exercising their right to discuss their pay and working conditions with others, if they choose.

It is important that businesses regularly audit and update policies and contracts (where necessary) to avoid significant penalties, including civil and criminal fines, as well as reputational damage. For example, there are maximum penalties of up to $93,900 for a body corporate found in breach of the sexual harassment prohibitions.

 

Mitigate Legal and Financial Risks

Case study

An employee requests to work from home due to personal circumstances, but the employee’s contract has no provisions relating to flexible working arrangements and the employer has no relevant policies on the issue. A manger employed by the employer denies the request, without following an appropriate process.

The employee claims discrimination based on their carer status, a legally protected ground under the Fair Work Act. The employee takes legal action for failure to accommodate the request.

In this scenario, the employer could face substantial legal fees if the case proceeds to a tribunal and/or a court. If the employer is found to have discriminated against the employee, they may be required to pay compensation and/or accommodate the request.

An audit can identify whether clear frameworks are established for considering flexible work requests so a proper decision making process can be applied that minimises exposure to risk. This ensures that any decision makers understand what is required of them when considering these types of issues,

 

What should businesses be auditing and how audits should be conducted

A comprehensive policy and contract audit should assess (but not limited to):

  • Employment contracts (including casual, permanent, and fixed-term agreements)
  • Workplace policies (e.g., Code of Conduct, Sexual Harassment Policy, Flexible Work Policy)
  • Disciplinary and grievance procedures
  • Remuneration terms, including overtime, bonuses, and leave entitlements
  • Workplace health and safety policies
  • Equal opportunity and anti-discrimination policies.

 

When conducting audits, businesses should:

1. Identify which policies and contracts need updating.

2. Consider whether employee leave entitlements, redundancy terms and pay are complaints with the Fair Work Act and the National Employment Standard;

3. Consider whether the documents have incorporated changes to legislative changes (e.g., casual employment rights, wage compliance, and multi-employer bargaining?)

4. Consider whether rates of pay, penalty rates, and allowances up to date and in line with the operational requirements of the business?

5. Consider whether do policies align with new protections (e.g., right to disconnect and delegates rights).

6. Consider whether there are there additional workplace regulations in its location/jurisdiction (e.g., wage theft laws in Victoria)