As we all return from what has hopefully been a refreshing and relaxing break, the team at PCS are excited about what 2016 has to offer and are making our predictions for the year ahead.

Here is a list of the hot topics for labour and employment law in 2016:

1. the death of the yearly performance appraisal;
2. diversity in the workplace;
3. the Final Report of the Productivity Commission; and
4. the debate over penalty rates.

Performance Appraisals

Employers are increasingly recognising that, in some instances, a once a year, “tick-a-box” performance appraisal is an arbitrary method of assessing an employee’s performance and an ineffective means of building employee engagement.

Rather, a trend is emerging towards more organic and fluid styles of performance appraisal that seek to align the goals of the organisation and the employee. This new style of performance appraisal involves:

1. A focus on career development – while assessing previous performance is important, employees will respond better if a performance appraisal looks at their future and how they can develop and progress through the organisation.

2. Setting clear and measurable goals – it’s easy to use language that is ambiguous and set unrealistic goals, or goals that the employee is not aligned to. The employee should have “buy-in”, the goals should be achievable and there should be a clear path on how they will be achieved.

3. Customising your method – if the same appraisal method or goals are used across your organisation you run the risk of failing to recognise the individual skills and talents of your employees.

4. Engaging regularly – it’s common in a once-a-year performance appraisal for an employee to be surprised by any negative feedback that is being raised.

That’s usually because it is only discussed with the employee at this juncture. If employees receive regular performance feedback, quarterly, or even monthly, there is less room for surprises, employees are more likely to achieve their goals and there is a greater alignment of expectations.

Diversity in the Workplace

PCS has seen a surge in clients looking for ways to properly include employees from diverse backgrounds (for example, transgender employees) within their policies, and the importance of this topic is highlighted by the fact that a whole article is dedicated to it in this issue of Strateg-Eyes.

This area of law remains a developing one, and as such there are a number of questions that are yet to be answered about how far the protections afforded by the law extend and how they are applied in practice, including in the workplace. For example, while it is clear that, from a discrimination perspective, transgender employees must not be prevented from using toilets and change rooms and other facilities designated to the gender with which they identify should they choose to do so, it is less clear what employers are required to do in a number of administrative matters relating to the employment of transgender employees, such as whether a transgender employee who is not a “recognised transgender person” can insist that their employment records reflect their preferred gender.

Final report of the productivity commission

On 21 December 2015 the Productivity Commission released its final report on its assessment of Australia’s workplace relations framework. The purpose of the inquiry was to examine the current operation of the Fair Work laws and identify future options to improve the laws, bearing in mind the need to ensure workers are protected and the need for business to be able to grow, prosper and employ.¹

Of particular interest in the final report were recommendations that the Government should:

1. amend the Fair Work Act 2009 (Cth) (“FW Act”) to create a new employment instrument, the enterprise contract, that would allow businesses the flexibility to vary an award or awards for a class of employees (as nominated by the employer) to suit their business operations;²

2. give the Fair Work Commission more discretion to order that an employment arrangement (such as an enterprise agreement) of an old employer does not transfer to a new employer, where that improves the prospects of employees gaining employment with the new employer;³

3. remove the emphasis on reinstatement as the primary goal of the unfair dismissal provisions in the FW Act;⁴ and

4. create a statutorily independent Workplace Standards Commission with responsibility for reviewing and varying the national minimum wage and modern awards (including the making of equal remuneration orders).⁵

It will be interesting to see if these recommendations play out in changes to legislation or government policy.

Debate over penalty rates

One of the hottest topics in 2016 will be penalty rates and their role in the modern workplace relations system. How this plays out may be dependent on the outcome of this year’s Federal election.

The Australian Government is under increasing pressure from stakeholders in affected industries (including retail, hospitality and entertainment) to make changes to the current penalty rates system, particularly with respect to new public holidays and Sunday penalty rates.

Defenders of the penalty rates regime argue that it is necessary to compensate employees working “unsocial” hours and that the increase in revenue for businesses that attaches to public holidays largely offsets any increase in wages.

While the Labor Party is attempting to persuade voters that Prime Minister Turnbull is in favour of slashing penalty rates, Employment Minister Michaelia Cash has said that, while the idea was something the Fair Work Commission may adopt, the Turnbull Government currently has no plans to change the penalty rates regime.⁶

1. Productivity Commission, Productivity Commission Inquiry Report Volume 1 (30 November 2015), v.

2. Productivity Commission, Productivity Commission Inquiry Report Volume 1 (30 November 2015), 63.

3. Productivity Commission, Productivity Commission Inquiry Report Volume 1 (30 November 2015), 65.

4. Productivity Commission, Productivity Commission Inquiry Report Volume 1 (30 November 2015), 56.

5. Productivity Commission, Productivity Commission Inquiry Report Volume 1 (30 November 2015), 49.

6. Gareth Hutchens, Coalition voters reject cut in Sunday penalty rates, Sydney Morning Herald (27 December 2015).