Article by Andrew Gill, Solicitor at Law Compliance
Despite 2020 being dominated by the impacts of COVID-19, the pace of legislative and regulatory change did not slow down. The analysis undertaken by Law Compliance indicates that more than 500 Acts and Regulations which had a compliance impact on their clients were passed in 2020, with the most significant developments occurring in the areas of privacy, employment, consumer, OH&S, criminal and corporations law. Each of these developments had, and will continue to have a compliance impact for almost all Australian businesses.
In this article, Law Compliance explores the most significant compliance developments and trends of 2020 and looks ahead at what is to come in 2021. These insights have been informed by recent legislative and case law developments, along with proposed changes outlined by government inquiries, releases and reviews.
Holding those in charge accountable
Once again, in 2020 we saw the spotlight directed at those who are in charge. Several new laws were introduced to hold employers more accountable and we anticipate that more will be introduced in 2021.
In 2020, all Australian States and Territories either, introduced or considered introducing, a criminal offence for wage theft.
Without wage theft legislation in place, it is said that there is little deterrent for employers who underpay or do not pay their staff. As without wage theft laws, organisations caught are often only required to pay back to their staff what is owed.
To address this issue, and in response to several high-profile cases, both Victoria and Queensland introduced wage theft legislation in 2020. These new offences make employers, directors and officers who deliberately underpay their workers criminally liable.
Other jurisdictions have introduced draft legislation or have considered creating their own version of the legislation. Consequently, we can expect to see more legislation addressing this issue in 2021.
In 2020 we saw Western Australia, Northern Territory and Victoria join Queensland and the Australian Capital Territory by introducing industrial manslaughter laws, which allow an employer to be held criminally liable if they cause the death of an employee.
The penalties for industrial manslaughter laws are high across all jurisdictions. For example, in Victoria, a body corporate can face fines of $16.522 million and individuals can face fines of $1.65 million and imprisonment terms of up to 25 years.
In 2020, Queensland’s first conviction against company was recorded for industrial manslaughter offence in R v Brisbane Auto Recycling Pty Ltd & Ors  QDC 113. Recently, also in Queensland, industrial manslaughter charges have been laid against a director. This will be the first prosecution for an industrial manslaughter offence against an individual under the Queensland laws.
We anticipate new industrial manslaughter offences to be introduced in 2021 with both South Australia and Tasmania recently tabling their own legislation.
Officer of a company
In 2020, we saw the High Court of Australia in ASIC v King  HCA 4 provide long-awaited clarification of the meaning of an ‘officer’ of a company and importantly, who may be personally liable for penalties under the Corporations Act.
Significantly, the definition has been expanded to include anyone providing they can affect significantly the financial standing of the company and is not limited to someone who holds or occupies a named office within a corporation or a recognised position.
As such, the decision reinforced the existence of the category of officer known as a ‘shadow officer’. The case also served to erode the corporate veil, as those who hold the requisite influence over an organisation will not avoid liability by distancing themselves from the organisation.
Socially distant and more modern work practices
In 2020 we saw a range of temporary legislation introduced across all jurisdictions to address the impacts of COVID-19. These temporary changes ranged from allowing the electronic delivery of prescriptions and moratoriums on rental evictions to virtual court hearings. Whilst some of this legislation will be repealed once the pandemic is behind us, we expect some of the changes to stay permanently.
For example, we saw the Federal Treasurer utilise his special power under section 1362A of the Corporations Act 2001 (Cth) to introduce legislation that modifies the Corporations Act allowing companies to utilise technology to meet their legislative obligations. Among other things, the changes allowed companies to virtually hold meetings, send notices, ask questions, vote and electronically execute documents.
Companies quickly adopted these changes. The changes enabled socially distant alternatives, increased productivity and participation whilst decreasing the cost of industry compliance.
Given the success of the temporary changes discussed above, the Federal Government has recently released draft legislation which proposes to permanently reform the Corporations Act to continue to allow:
- electronic execution
- virtual company meetings
- electronic service of notices, and
- electronic storing or minutes.
It is unclear when, or if, the proposed changes discussed above will commence. However, we anticipate that Federal and State Governments will use this opportunity to permanently modernise some of Australia’s more dated corporate requirements.
Considerable change to employment laws
Employers had to remain adaptable to manage the unexpected challenges of 2020, in addition to an unusual amount of legislative and regulatory change.
Perhaps the most significant employment development in 2020 was the Federal Government’s JobKeeper wage subsidy scheme. In addition to the financial support which JobKeeper (continues to) provide, JobKeeper also empowered eligible employers to provide employees with a stand-down direction and reduce usual hours of work, potentially down to zero in certain circumstances.
The expiry of JobKeeper (at the time of writing, 28 March 2021) will be one of the most significant impacts on employment in 2021 and its effects on employers and employees are likely to be severe in certain industries. In addition to the wage subsidy, any stand down directions will no longer be in effect once the scheme expires, entitling employees to return to their pre-Covid hours.
Whilst it is unclear (at the time of writing) whether the JobKeeper scheme will be extended, we anticipate that the Government will introduce new support measures for the industries hardest hit by COVID-19. For example, the Federal Government has announced a new scheme ‘JobMaker’ to commence in 2021. JobMaker is intended to incentivise employers to hire young job seekers. Under this scheme, the Government will pay an employer up to $200 per week for each eligible employee they hire.
Paid Parental Leave
In 2020, changes were made to the Paid Parental Leave Act 2010 (Cth) and the Fair Work Act 2009 (Cth) providing parents with greater parental leave flexibility.
Previously, parents were only able to take one continuous 18-week block of parental leave. The amendments enable parents to take up to 30 days of their 18-week entitlement to paid parental leave flexibly. The flexible leave can be used anytime within 2 years after the child’s birth or adoption.
Similar changes also enable employees to take up to 30 days of their unpaid 12-month entitlement to parental leave under the Fair Work Act flexibly.
The paid parental leave entitlements have also been expanded to apply to parents of stillborn children or children who die within the first 2 years of their life. In essence, this means that employers will be unable to require an employee return to work early from parental leave in these circumstances.
In 2020 there was a lot of confusion and uncertainty over the meaning of the casual employment relationship and therefore the financial impact of incorrectly classifying a permanent employee, as a casual staff member.
In WorkPac Pty Ltd v Rossato  the Full Federal Court held that an employer had misclassified an employee as casual, rather than permanent and, consequently, the employee was owed benefits. Controversially, the Court held that the casual loading the employee received during his employment (which is paid to casual employees in place of permanent employment benefits) was not able to be set off from the amount owed to the employee. This meant that the employee received his casual loading rate, along with the benefits paid to permanent employees.
This controversial decision is to be appealed to the High Court. In the meantime, however, it remains a concern for employers who may now be liable for additional costs if an employee is misclassified.
In December 2020, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth) was introduced. To address the uncertainty surrounding the meaning of casual employment, the Bill intends to introduce a statutory definition of a casual employee and a procedure for the conversion of a casual employee to a part-time or full-time arrangement. Contrary to the Rossato decision, the Bill also requires the Court to offset the amount of casual loading paid to any employee against any amounts owed by the employer. If the bill passes, this will be the first time Australia has a statutory definition of casual employment.
Privacy changes are coming
In 2020 the Federal Government commenced its long-awaited review of the Privacy Act 1988 (Cth). The review considers whether the current scope and enforcement mechanisms contained within the Act are appropriate in a digital landscape.
Recently, the Attorney General’s Department released their issues paper, which contained the terms of reference for the review. The issues paper proposed changes to the application of, protections and enforcement of privacy rights in Australia. Some of which will, if implemented, have a significant compliance impact on organisations.
We note that the privacy review is expansive and only the areas we considered most notable, have been mentioned below. The review is scheduled to be completed in 2021.
The issues paper considers extending the Privacy Act to apply to more types of information, small businesses and employee records.
Broadly, the Privacy Act regulates the handling and use of ‘personal information’. The issues paper suggests expanding the definition of personal information to capture certain technical data, such as IP addresses and other online identifiers someone leaves when operating online. This definition would align more closely with the definition of personal data in the General Data Protection Regulation. Any change to the definition of personal information is significant and will need to be carefully reviewed by organisations subject to the Privacy Act.
Initially, small businesses (i.e. those with an annual turnover of $3 million or less) presented a low risk to privacy because they did not hold significant amounts of personal information. However, over the past 20 years, the amount of personal information, even small businesses handle has dramatically increased. As a result, the $3 million threshold is likely to be decreased, meaning that more small businesses will be captured by the Privacy Act.
Personal information contained within an employee record is also currently exempt from the Privacy Act. However, employee records are increasingly containing more sensitive information (e.g. health information, biometric data, etc.) and the issues paper questions whether its use and handling should be regulated. We consider it likely that the employee records exemption will be removed or narrowed significantly in 2021.
Generally, an organisation can handle personal information in a particular way providing they have consent from the individual to whom the personal information relates. We consider that the way an organisation can obtain this consent will likely become more prescriptive in 2021.
The issues paper has proposed changes to the consent practices. In particular, the paper identified the practice of obtaining a wide range of consents through ‘bundled consents’ in a ‘take it or leave it’ format as a significant concern. Even though these practices are advised against in APP guidance, we wouldn’t be surprised if they are soon prohibited.
Finally, the issues paper suggested the introduction of a right for individuals to seek compensation for the mishandling of their personal information. The form of this right is unclear, but it may be that in 2021 we finally see a statutory tort of privacy in Australia.
Increase in Consumers Protections
Work on the reform of the Australian Consumer Law continued in 2020. In particular, the Australian Consumer Law (ACL) will soon apply to many businesses who were previously exempt.
Meaning of ‘consumer’
In 2020 the Federal Government passed legislation expanding the application of the ACL by amending the definition of a ‘consumer’.
The meaning of consumer is fundamental to the operation of the ACL. Among other things, someone who meets the definition of a consumer will automatically be entitled to protection by the consumer protection provisions of the ACL (e.g. consumer guarantees), so for example, businesses dealing with consumers must honour the consumer guarantees, regardless of any warranties provided.
Currently, consumer means any person who acquires goods or services for $40,000 or under (or if the goods or services are for personal, domestic or household use).
As of 1 July 2021 the $40,000 threshold will increase to $100,000.
This change is significant. Organisations supplying goods valued between $40,000 and $100,000, will need to update their contracts and processes to ensure they are compliant with the ACL – including the changes discussed below.
The Federal Government has also proposed changes to the definition of a ‘major failure’ under the ACL. If a supplier or manufacturer fails to comply with a consumer guarantee, and that failure is considered major, a consumer will be entitled to more types of remedies, including compensation for the loss.
If a breach is minor, however, the consumer’s options for remedies are limited.
The proposed changes specify that multiple minor failures can amount to a major failure.
Unfair contract terms
The Federal Government has also announced plans to strengthen the existing unfair contract term regime in the ACL. Currently, if an unfair contract term is included in an eligible small business contract it is void. The Government, however, proposes to make unfair contract terms unlawful and punishable by civil penalties.
The types of contracts subject to the unfair contract terms regulation may also be expanded. Currently, the protections only apply if 1 party to the contract is a small business (i.e. employs less than 20 people) and the upfront price payable under the contract is less than $300,000. The proposed changes will remove the upfront price requirement and change the definition of small business to include businesses with fewer than 100 employees or those who have an annual turnover of $10 million or less. If this change to the definition of a small business comes into force, considerably more contracts will have to comply with the unfair contract terms provisions.
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