My quick wrap of the year and what to expect in 2025

I’ve ranked my top employment and industrial relations issues for 2024 below. I reckon my year as a legal and strategic advisor to clients pretty well reflects the issues and work balance that many HR/ER/IR professionals are experiencing also. 

 After a relentless two years of IR reform (primarily, Secure Jobs, Better Pay and Closing the Loopholes reforms) following the election of the Albanese government, the impact of Labor’s reforms has been every bit as impactful as the Liberal government’s WorkChoices reforms of 2005/06.

While there will no doubt be plenty of commentary about this as we approach a federal election in the first half of 2025, some things are abundantly clear to me:

• unions are empowered
• wages are growing faster
• enterprise bargaining is (somewhat) enlivened, and
• employers are facing a more hostile environment in which agreement-making is more difficult and requiring greater strategic investment than ever before.

And, shock, according to the ABS, union membership has actually increased (albeit only marginally) for the first time since 2011. 

 1. Workplace investigations, the positive duty to prevent workspace sexual harassment and whistleblowing complaints.  

I know, I’ve thrown a few concepts into one heading here, but the reality is that these issues are frequently aligned and the combined impact on clients is much greater than ever before. These issues are attracting serious Board level attention. One of my first major instructions in 2024 was helping an ASX20 company with a workplace review and investigation arising from various red-flags in one area of their business. Understanding red-flags like this is a key element for insightful leadership to address the positive duty to take ‘reasonable and proportionate’ measures to prevent workplace sexual harassment. Separately, I’ve been advising more employers than ever before about responding to claims alleging breaches of the whistleblowing protections in the Corporations Act. I’ve advised clients this year on a variety of investigations into whistleblower complaints and grievances as diverse as employee suicides, governance irregularities, financial fraud, and multiple examples of employee misconduct including the almost inevitable out of hours work function misadventures. Overall, financial settlements of claims in this space are increasing markedly, as are the expectations of litigants.  I strongly suspect this trend will continue into and beyond 2025.

2. Same Job, Same Pay.

The new laws in this space commenced on 1 November 2024 and there is a key testcase in the resources sector that our firm is running that is expected to clarify the scope and extent of the laws in early 2025. In essence, where labour hire employees perform ‘work of the same kind’ alongside enterprise agreement covered employees, those workers can seek a “Regulated Labour Hire Arrangement Order” unless it is not ‘fair and reasonable in all the circumstances’ to do so, or the work being provided is ‘for the provision of a service, rather than the supply of labour’. It’s not hard to imagine some clarity is needed here. So far, only a very small number of applications for a RLHAO have been made, and all of the Orders made so far have been by consent. This includes one of my matters for a large global employer just last week where they (and the labour hire provider) consented to orders which reflected a situation where no reasonable objections could be made.  I’ve also been advising other clients whose arrangements are ‘service contracts’ but are concerned that these laws might apply to them. Despite the very strict anti-avoidance provisions that apply, it’s important for employers to get advice and understand their options before applications are made against them. It’s inevitable that orders in this space will lead to increased labour costs and it will be interesting to watch the impact of this on employment in the fullness of time. 

 3. Intractable Bargaining.

This key IR reform allows parties to enterprise bargaining disputes to apply to the Fair Work Commission for an arbitrated outcome where either bargaining has continued unsuccessfully for nine months or nine months have passed since the current agreement passed its nominal expiry date. Many observers (including me) accurately predicted that this would make it harder for employers to extract concessions from unions in bargaining negotiations - especially considering the last-minute amendment which prevents the Commission from arbitrating a less favorable outcome than the existing enterprise agreement terms in relation to non-agreed matters. But there is some upside in this for employers. Just last week before the Commission my team was arguing for an order to be made based on the position that was ‘agreed’ between the employer and the sole union bargaining representative, despite that agreement being unanimously rejected by the union members at the site.  There’s not much law in this space yet and our case will be worth following. But what is clear is that employers need to get very clear and strategic advice about how to adapt their bargaining strategy to confront the intractable bargaining regime. 

4. Underpayments and the Fair Work Ombudsman (FWO).

This topic has been on my list of hot topics for at least the last five years, and it again makes to list in 2024, as it will, inevitably, again in 2025. Our team nationally has been busy helping many clients improve their systems compliance arising from enterprise agreement and award underpayments. These issues are never simple and pejorative terms like ‘wage theft’ are often bandied around to capture all examples of underpayments without a proper understanding of the context. This year saw the FWO successfully prosecute CBA/Commsec for their $16m underpayments, with the Federal Court imposing a $10m+ penalty. In the Sushi Bay case, the court ordered more than $15m in civil penalties where a much lower quantum of underpayments was accompanied by multiple findings of worker exploitation. Just this month, the FWO has announced Enforceable Undertakings with the University of Melbourne and Sydney University in light of their respective $72m and $23m remediation of underpayments. Under their EUs, both employers are required to make contrition payments exceeding $500,00 to the Commonwealth Consolidated Revenue Fund and implement a broad range of measures to prevent future non-compliance with workplace laws. These are significant amounts, but they don’t reveal the full extent of the costs of a FWO underpayment investigation.

My team is currently responding to a formal Notice to Produce (NTP) documents served by the FWO on a client which self-reported underpayments some years ago. The logistics and costs associated with complying with the NTP are enormous, and involves locating ‘in scope’ documents over a ten-year period. The HSF Digital team is deploying a variety of filtering and AI systems to facilitate this process, but the task is so large that we will be utilising the resources from our Digital teams in Belfast and Johannesburg offices over the Christmas break to ensure the client meets the production deadline in the new year. Unfortunately, other employers are also grappling with these issues. 

 It’s important to note that many employers are anxiously awaiting the Federal court’s decision in the FWO’s prosecution in the Supermarkets case. Justice Perram is expected to deliver his decision in the new year. The most anxiously awaited aspect is how employers can rely on set-off clauses and annualised salaries in employment contracts to offset any specific enterprise agreement or award entitlements that arise during a particular pay period. The HSF Melbourne team has been running that matter for our client Coles Supermarkets, and we’ll be sure to keep clients informed of developments in the new year. One final issue in the compliance space: watch out for a focus on long service leave in 2025. This issue is largely the responsibility of state regulators, albeit with some federal overlap. LSL laws are a proverbial dog’s breakfast, and my experience is that many well-meaning employers remain confused about accruals and calculations – understandable given that national businesses need to comply with multiple legal regimes within the inherent inflexibilities of their payroll systems. 

 5. And on a slightly different note . . .

I’ve had an exciting year in joining the Board of Directors of Berry Street Victoria, after many years of providing probono legal advice to them. Berry Street is one of the country’s largest independent charities providing family crisis and support services to children, young people and families. In an exciting development, Berry Street merged in December this year with Yooralla, a leading non-profit disability services provider. So, it will be busy for me and our new Board in 2025 helping the merged business integrate and improve services for those families and communities in need.  I’m also extremely proud that HSF acted probono for Berry Street in the merger process – a very significant contribution led by our corporate and employment teams. Our probono work is very important to the HSF Employment team and that commitment will continue again in 2025.

Tony Wood,

December 2024