ANDERSON, Ms Jody, First Assistant Secretary, Safety and Industry Policy, Attorney-General's Department

DURBIN, Ms Alison, First Assistant Secretary, Employment Conditions Division, Attorney-General's Department

HEHIR, Mr Martin, Deputy Secretary, Industrial Relations Group, Attorney-General's Department

HUENDER, Ms Sharon, First Assistant Secretary, Attorney-General's Department

KUZMA, Ms Janey, First Assistant Secretary/Chief Counsel, Attorney-General's Department

SAINT, Ms Ashleigh, Acting First Secretary, Employee Entitlement Safeguards and Policy Division, Attorney-General's Department

CHAIR: I now welcome the Attorney-General's Department. I understand information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I remind senators that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Officers of the department are also reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis for the claim. I now invite you to make a short opening statement. At the conclusion of your remarks, I will invite members of the committee to ask questions.

Mr Hehir : Thank you for the opportunity to attend this hearing. I'd like to use this opening statement to address some of the misconceptions raised during the hearings and in some submissions.

There have been claims that the statutory definition of 'casual employee' allows employers to simply call any employee 'casual'. The proposed definition includes what courts have described as 'the essence of casualness' in that the employer makes no firm advanced commitment to continuing and indefinite work according to an agreed pattern of work, and the employment status will reflect what was agreed between the parties.

Some stakeholders also said that an employer can avoid offering an employee casual conversion under the reasonable grounds provisions in the bill. We know that these provisions are based on the Fair Work Commission's casual conversion model clause. The Fair Work Commission spent four years hearing parties' views to develop this clause. All casual employees will have a mechanism to resolve disputes about conversion. Firstly, the terms of the relevant industrial instrument would apply. If no instrument applies and the party's contract or agreement doesn't include such a term, the bill provides a mechanism based on the model modern award dispute resolution procedure.

There have also been claims that the part-time flexibility provisions will lead to workers being exploited. Modern awards already allow these arrangements to different extents, but their provisions can sometimes be unclear and underused. The bill provides a clear and uniform pathway that is supported by strong employee protections. For example, the existing award terms that ensure a part-time employee's ordinary hours of work cannot be reduced unless the employee expressly agrees will continue to apply; employees have an express right to refuse to work additional hours when offered; if their employer directed them to work, overtime would still apply—as it does now. There are in fact more employee protections in this reform than there are in some modern awards. For example, these arrangements will also only be available to employees who work an average of 16 hours per week. This is to ensure part-time employees retain access to secure work and is higher than the minimum weekly hours in most awards.

In relation to enterprise bargaining, contrary to what some submissions have asserted, the bill makes no changes to existing employee rights to be represented by a union in bargaining. Unions will continue as the default bargaining representative for employees who are union members, and unions can still apply to be covered by an agreement to which they were a bargaining representative. Parties not involved in agreement and negotiations may still intervene at the approval stage where there are exceptional circumstances.

The bill does not change the requirement that employees must have genuinely agreed to the agreement. The new provisions are less prescriptive about the steps the employer must take, to shift the focus to the quality and substance of those steps leading up to employees being asked to vote on an agreement. If specific steps described in the bill are not taken, employees must still be provided a fair and reasonable opportunity to decide whether or not to approve an agreement. Fair and reasonable depends on the particular circumstances of the employees.

The proposed 21-working day approval time frame for the Fair Work Commission will not prevent it from taking the appropriate time to assess more complex agreements, but it will ensure that for more complex agreements parties have transparency about why the approval process is taking longer. This is designed to improve confidence in the process.

In terms of greenfields agreements, the reforms do not mandate an eight-year nominal expiry date for greenfields agreements. Employers and unions can agree the period of the agreement up to a maximum of eight years. Finally, the bill does not alter the current capacity for employees to resolve disputes that arise during the nominal life of the agreement. In conclusion, I hope the department will be able to assist the committee today with any questions.

Senator O'NEILL: Chair, may we have a copy of the opening statement? That would be very helpful. You've just been reading from it, Mr Hehir. If you could forward it that would be helpful, if the secretary can provide it to us as soon as possible.

Senator SHELDON: Clearly we've got a situation where we've got poor wage growth. The Reserve Bank has highlighted that as a stumbling block for the economy, that we need to have more certainty, job security, to make sure that people are able to spend and have the confidence to spend. That's been highlighted on a number of occasions, pre-COVID, actually, and during COVID. The bill has a number of presumptions about it. But one of the questions I want to ask you, one of the critical questions that's on everyone's mind, is: how many jobs can the department guarantee will be created by this bill?

Mr Hehir : The bill doesn't guarantee the creation of any particular number of jobs. The bill seeks to provide additional certainty and clarity, which we know are important in terms of giving employers confidence to hire.

Senator SHELDON: Are you able to tell us, on the basis of the assumptions about this bill and the consequences of this bill, which are significant—even the countering views from parties who have given evidence here over the last number of hearings—you have done no calculation to assert that there will be any jobs created at all?

Mr Hehir : Let me clarify: I said I wasn't able to give a guarantee about a particular number of jobs. Our view is that the certainty and clarity provided by the amendments to the bill will give employers the confidence that they can hire. We know that confidence is an important component in the decision to hire.

Senator SHELDON: Mr Hehir, it is not beyond the realm of many departments that come before various hearings to say 'This is our estimation' so the general public knows what the expectation is. What is the expectation on this bill of the number of jobs being created? You don't have any. The next question is, how many jobs were created by penalty rate cuts in the hospitality and retail industry?

Mr Hehir : I think we have given evidence on that matter in front of estimates committees in the past, and our response to that has been that it's actually not possible to do the regression analysis required to determine what the impact is. There are within the labour market too many factors that are operating at any one point in time that can work either for or against employment for us to be able to quantify what one individual act or measure within that field of activity that's occurring, to actually be able to quantify that.

Senator SHELDON: We're relying on the department to be the experts in this matter and to give considered advice when we're making decisions about this very weighty bill, which will affect many, many people—I would say negatively. But to counter those arguments it would seem logical—it's unfortunate that we're now in a position that we don't how many jobs will be created because the department's not able to tell us. We don't know in the circumstances such as with penalty rates cuts in the past in the hospitality and retail industry. That had an assertion that jobs were going to be created. There's no saying that any jobs were created, and a lot of small business, including the small business association, have said there were no jobs created and it actually took money and jobs out of the economy as a result.

Can we see how we go with this final question: can you guarantee no workers will lose pay or entitlements as a result of this bill?

Mr Hehir : The bill doesn't provide mechanisms in addition to the existing mechanisms within the current Fair Work Act that would mean that employees would be worse off. Indeed, in our view it provides mechanisms that provide greater clarity and certainty and opportunity for employees.

Senator SHELDON: Sorry, it might be just me—I'm a bit slow this afternoon—but can you guarantee that no workers will lose pay or entitlements?

Mr Hehir : The current act doesn't guarantee that.

Senator SHELDON: Thank you. And you're saying that your proposed act will not guarantee that no workers will lose pay or entitlements?

Mr Hehir : My answer was that the bill does not propose any changes that would have a significant impact on employees' entitlements around what they're owed.

Senator SHELDON: You're saying not a significant impact. So there is an impact—is that correct? So you can't give the guarantee?

Mr Hehir : The question is very, very broad. No, I'm not prepared to give a guarantee to that.

Senator SHELDON: Thank you. So you won't give a guarantee that no workers will lose pay or entitlements?

Mr Hehir : Perhaps an example will help here. There's nothing in the current act or this bill—

Senator SHELDON: A clear answer would help.

CHAIR: The witness is answering the question. Can you please let the witness have the time to answer the question. Thank you, Senator Sheldon.

Mr Hehir : The act currently provides for enterprise bargaining. The test that the act requires the Fair Work Commission to administer is that the agreement is better off overall against the award. There are many agreements which are substantially above the award and it's entirely possible that the next agreement negotiated will be lower than that. So will they be worse off against that existing level of pay? It's entirely possible in those circumstances. That's why I'm not prepared to give the guarantee.

Senator SHELDON: Righto. So people will be worse off. Thank you.

Mr Hehir : That's certainly not what I said, Senator.

Senator FARUQI: Thanks for coming in to present evidence today and answer our questions. I have a few questions about the consultation process for these changes. How many meetings were held with business groups and employer groups regarding the changes to the industrial relations system following the conclusion of the roundtable discussions in September?

Mr Hehir : I might ask Ms Huender to answer that.

Ms Huender : The department was not a party to any discussions that were held post the working group process when it ceased in September 2020.

Senator FARUQI: So you're not aware of how many meetings were held?

Ms Huender : I'm aware of how many meetings were held during the working group process—

Senator FARUQI: But not after?

Ms Huender : Not after.

Senator FARUQI: The ACTU have claimed that the provision weakening the BOOT was not raised with them. I recognise that that provision is now gone, but I find it pretty remarkable that a significant change to our industrial relations systems was not canvassed with such a key stakeholder. So while you were involved in that process, do you know of any other provisions that are in the bill that were not part of that consultation with the unions?

Ms Huender : I think the Attorney has said that the government used the working group process to develop the bill, had a range of material put before it, and made decisions around the material put before it and any additional material that was put before it following the working groups.

Senator FARUQI: Of the changes that are in this bill in front of us, do you know how many of them were requested by business and industry groups?

Ms Huender : I'm not able to quantify it.

Senator FARUQI: Can you take that on notice?

Ms Huender : I can see what we can do, yes.

Senator FARUQI: There have been a lot of concerns raised about the wage theft provisions in the bill, in the sense that they don't go far enough. Raising criminal penalties with a very high threshold, I must add, is not enough to deal with the core issues of wage theft. But the WA, Victorian and Queensland governments have also expressed serious concern that the provisions in this particular bill will undermine their existing state laws. So can you give an assurance to the committee that these provisions won't undermine state based wage theft laws?

Ms Kuzma : The state legislation in Victoria and Queensland in some regard purports to deal with very similar content to the civil penalty regime in the Fair Work Act. The Fair Work Act is a national system that's supported by referrals of powers from the states. It provides entitlements for national system employers and employees, and it has a compliance and enforcement framework for that. So there is a question about the interaction currently, as it is today. At a generalised level, there may be some issues of inconsistency with the current framework and, to the extent to which there is inconsistency, those provisions may be inoperative to that extent.

What the bill does is to clarify that situation so that, for national system employers and employees, there's one approach that applies across Australia—and it's not just the underpayments criminalisation; there are also other measures in the package that are designed to deal with conduct that is less than imprisonable, such as increasing civil penalties by 50 per cent. That's a pretty significant uplift. There's a new alternative method for calculating high penalties, which is based on the benefit obtained by the contravention for businesses other than small businesses. That's quite a significant change. There's an improvement to the small-claims process—there's an uplift in claims that can go through that process, from $20,000 to $50,000. The recovery of filing fees is another new approach in here for successful applications, so reducing the costs to access that jurisdiction—

Senator FARUQI: You still haven't answered my question, though: will these laws undermine the laws that already exist in the states?

Ms Kuzma : I don't think it's a question of undermining. These provisions in the bill will be enforceable and operative, so there is a question about the extent to which there may be some inconsistency in the state laws. You can only undermine something if it actually applies—that's the way I would answer that. I think it's an important point to make, though, in relation to long service leave. The Fair Work Act has carve-outs for certain provisions in state legislation, and long service leave is one of those, so that is certainly an area of operation in state legislation.

Senator FARUQI: I want to focus a little on migrant workers, because we know—over the pandemic, especially—how the vulnerabilities already faced by migrant workers have increased manyfold. Obviously, they are targets for exploitation and wage theft. Witnesses to this inquiry have suggested that the effect of these laws would be to make migrant workers even more vulnerable. Does this bill actually include any measures to support migrant workers?

Ms Kuzma : I might defer to my colleague, Ms Saint, who may wish to add things, but the provisions in the Fair Work Act and in this bill don't distinguish between whether someone is a migrant or not a migrant. They apply—

Senator FARUQI: Well, they do if they increase casualisation and underemployment and put a stop to wage growth. It is, really, migrant workers who are in those areas, which are rampant with precarious work, who will be affected.

Ms Kuzma : I think that, legally, the position is that, under the Fair Work Act and under this bill, the same protections and entitlements apply for all workers, but Ms Saint may wish to add in relation to other matters.

Ms Saint : As Ms Kuzma said, the protections available under the Fair Work Act extend to migrant workers as they do to Australian citizens. There are a number of measures in this bill which respond directly to a number of recommendations made by the Migrant Workers' Taskforce. So, in addition to the criminal offence for the first time establishing a national criminal offence for wage underpayment, the civil penalty increases and the sham contracting civil penalty increases are another example of how this bill directly implements the recommendations of the Migrant Workers' Taskforce. The small claims process reforms are another example of how this bill directly responds to the Migrant Workers' Taskforce. We've spoken previously about the taskforce and how those findings were particular to migrant workers. While this bill responds equally across all workers or employees under the national scheme, the recommendations identified as necessary to assist that vulnerable cohort are being addressed through this bill.

Senator FARUQI: So what you're saying is that the bill makes things worse for every worker, but when that happens things are even worse for migrant workers.

Ms Saint : I did not say that the bill makes this worse.

Senator FARUQI: I'm saying that.

Ms Saint : I didn't.

Senator FARUQI: Another question on that: the act actually removes reference to culturally and linguistically diverse workers, young workers and workers without bargaining representatives. From my perspective, that actually weakens the provisions in the bill, particularly for vulnerable workers. Why was that done?

Ms Kuzma : Can I ask which provision you're referring to?

Senator FARUQI: At the moment I don't have the exact number, but, from what I understand, the act removes reference to these workers? Maybe you could take that on notice?

Ms Kuzma : We could take that on notice, but it's certainly not the case that existing protections for migrant workers are removed.

Senator O'NEILL: I have a block of questions a little later on, but if I can just ask this one: it's clear from your opening statement, Mr Hehir—have you been able to send it to us yet?

Mr Hehir : I have.

Senator O'NEILL: Wonderful; it's on its way, thank you. You have been listening to evidence we've received today. I'm particularly interested if you heard the evidence of Professor Stewart this afternoon?

Mr Hehir : I heard bits of Professor Stewart's evidence.

Senator O'NEILL: So you may be aware that Professor Stewart indicated that there could be some unintended consequences with regard to the definition of 'casual', and, if I can paraphrase what I understood of what he put on the record today, it's entirely possible that in addition to people losing pay—which you've already said is possible with the current legislation—it's also entirely possible for the definition of a casual to capture workers who are on contracts, even if it's three to five years, and remove the capacity for them to actually be considered full-time workers and, with that, lose annual leave and other entitlements. Can you respond to Professor Stewart's comments today?

Ms Kuzma : I caught part of that. I wouldn't agree with that and I can take you through the reasons why that is. Proposed section 15A of the bill sets out the definition of what a casual employee would be, and it has at the centre of it 'that the employer makes no firm advance commitment'. I think the Professor was saying an employer has made a 'firm advanced commitment' in the three to five years and that they would be inadvertently captured. But I think I would like to draw your attention to subparagraph (2), where, for the purposes of what is a 'firm advanced commitment', there's a list. The list is: 'whether the employer can elect to offer work and whether the person can elect to accept or reject work'. So, when Professor Stewart was talking about fixed term contracts on an ongoing basis that criterion would probably not be met in that circumstance.

Senator O'NEILL: When you say 'probably', again, the Australian people deserve a little bit more than a 'probably'. We need some firm commitments. We need guarantees it's going to give more jobs. We need guarantees it's going to be better pay. We need guarantees that people who are on contracts are not going to lose their annual leave. We don't need 'perhaps' and we don't need 'maybes' and 'we believe'. That's not satisfactory.

CHAIR: Senator Small, on a point of order?

Senator Small: I understand the intent is to question the witnesses here rather than speak for them.

Senator O'NEILL: That's not a point of order.

CHAIR: I'll let the witness answer the question. If we could let her finish her answer, please, before interruptions occur.

Ms Kuzma : The next criterion is whether the person is described as being in casual employment. So that wouldn't be met in that circumstance. On whether the person would be entitled to a casual loading, for casual employees under the terms of the offer or a fair work instrument, it wouldn't be met in that circumstance. When you read what is relevant to the definition in that list, we wouldn't agree with Professor Stewart.

Senator O'NEILL: Ms Kuzma, are you so confident in the way that you have designed that little piece that you can guarantee that the professor is incorrect and that people on three- to five-year contracts are safe?

Mr Hehir : If I may, ultimately these things are tested by the courts. It's certainly our very clear view that the definition of 'casual' would not allow fixed-term contracts to be caught up within it unless the terms of that contract are that they are included as a casual so they have those other key elements. The element we normally wouldn't see in a fixed term contract is the ability to accept or reject work on when and how it's offered. So, if you've been offered a three-year contract, you're required to attend work for the required hours per day for those three years, subject to the normal circumstances such as sick leave or other things. We think it's very clear. Ultimately these matters are tested by the court if need be, but we believe it's very clear.

Senator PRATT: Would you make it clearer?

CHAIR: The call is going to Senator O'Sullivan, please.

Senator O'SULLIVAN: Thank you very much. I have a number of questions, which I will run through reasonably quickly, on casuals. I want to clear things up. We've heard assertions that the casual conversion provisions in the bill are unenforceable. That's not correct, is it?

Mr Hehir : The casual conversion clauses within the bill, as I said in my opening statement, are actually modelled very closely to the existing Fair Work Commission's model's clauses. They are, as I said, the result of four years of negotiation. In actual fact, they're more thorough in that they now require employers to make an offer. The exception provided is that the employer has a reasonable basis for not making an offer. Where they do so, they are required to provide written statements as to why they don't believe they're required to make that offer. So we certainly believe it increases transparency and enables employers and employees to have those discussions if there is a disagreement. I would note that the dispute clause is proposed to be included in the National Employment Standards and that dispute resolution procedures have been included in that.

Senator O'SULLIVAN: So it's operated under the Fair Work Act, which as we know has operated since its introduction by the former Labor government in 2009. It's the case that the dispute resolution provisions in relation to the casual conversion provisions are consistent with the Fair Work Commission's own model's clause which it settled on following lengthy discussions with the unions and other stakeholders.

Mr Hehir : Let me clarify. The Fair Work Act already requires awards and agreements to have dispute resolution mechanisms for all the NES entitlements. This is a NES entitlement, so it's required to have dispute resolution procedures. In addition to that, for those employees who aren't covered by awards or agreements, we've included the Fair Work Commission's model dispute resolution clause within there. Ultimately these are all enforceable by taking them to the Federal Court.

Senator O'SULLIVAN: So it's the case then that the reasonable grounds that govern when an employer must offer casual conversion reflect the grounds decided by the Fair Work Commission?

Mr Hehir : That's correct. Ms Durbin, did you want to add to that in terms of the particular wording that's there so it's not just a whim, not a feeling? They must have reasonable evidence in front of them.

Ms Durbin : The grounds on which an employer can reasonably refuse are modelled on the Fair Work Commission clause. It's quite clear that that decision needs to be taken on the facts that are known or reasonably foreseen to be known. That was something that, through the Fair Work Commission process on casual conversion, was discussed in detail. The bill replicates, really, the four main provisions. The first is that, basically, the job will cease within 12 months, the second is that the hours of that job will substantially reduce and the third is that the days or the times of that job will change substantially, which can't be accommodated by the employee.

Senator O'SULLIVAN: The Fair Work Commission, the same body that some may suggest should be given decision-making power over whether or not someone can convert, have already laid down what they think is reasonable to do so, and this is reflected in the bill?

Ms Durbin : That's correct. It was, as Mr Hehir indicated, a very lengthy process. Some of the issues that have been ventilated through this hearing were similarly raised by the commission. And the commission, in fact, made a decision that, in that circumstance, it was unreasonable that the employer would not be given the right to be able to consider reasonable business circumstances in making their decision.

Senator O'SULLIVAN: Okay. And on that point—

Senator SHELDON: Through you, Chair, if Senator O'Sullivan is okay with it I just wanted to ask for a clarification.

Senator O'SULLIVAN: Yes, of course.

Senator SHELDON: So that I'm clear: if the person doesn't get the opportunity to be made permanent, and they disagree with it, they can't go to arbitration? They have to go to the Federal Court?

Mr Hehir : As we said, the dispute resolution process is the same as the Fair Work Act currently requires for all elements of the National Employment Standards—that there must be a dispute resolution process outlined in the awards, that there must be a dispute resolution process outlined in the agreements, and, for the agreement-free or the award-free, we've included the model clause for dispute resolution into the bill.

Senator SHELDON: I'm sorry, I'm not clear with that answer. Does it mean that the person has to have consent from the employer to go to arbitration and the Fair Work Commission? If they don't get that consent, then an individual, ordinary worker has to go to the Federal Court? Yes or no?

Mr Hehir : That depends on the terms of the awards and the agreements, so (audio not available from 3:47:03 to 3:47:14) to mandate an arbitration, in either the award or the agreement, it is possible that, to get a final determination, you need to go to the Federal Court.

Senator SHELDON: There's no arbitration in model clauses?

Mr Hehir : There's consent arbitration in the majority of—

Senator SHELDON: That's right. There's consent agreement to go to arbitration. That means the model clauses leave either consent to go to arbitration or, otherwise, an individual worker, on their own back—a casual employee—then has to take their employer to the Federal Court?

Mr Hehir : As is required—

Senator PRATT: So how can you say that—

CHAIR: Senator Pratt!

Senator PRATT: Sorry.

CHAIR: Senator Sheldon put the question to the witness. The witness, I think, got the grand total of three words out before you came in.

Senator PRATT: My apologies, Chair.

CHAIR: It's Friday afternoon. Can we just let the witness finish Senator Sheldon's question? Then we will go back to Senator O'Sullivan, who does have the call.

Mr Hehir : Sorry, Senator, could you repeat the question?

Senator SHELDON: Under the model clause, there is no arbitration in the model clause. That means that we could only do arbitration by consent, and it also means that, in that circumstance, under the model clause, if there's no consent then you would have to take it to the Federal Court as an individual worker. A casual worker would have to take their employer there.

Mr Hehir : I might start, and then pass to Ms Kuzma, if that's okay?

Ms Kuzma : It's not different to the current provisions that the bill is modelled on, as we have been through from the award provisions. What is different is that it's part of the National Employment Standards and there are civil penalties that attach to it. Now, that's the difference.

Senator SHELDON: Through the Federal Court?

Ms Kuzma : Correct.

Mr Hehir : As was said earlier, this is the same for all national employment centres. So annual leave, carers leave et cetera are all subject to the same requirements under the existing award.

Senator SHELDON: Senator O'Sullivan's been very patient, so I will just ask this last part. Can you tell me, in very clear terms, that, if they don't get consent, there is a model clause which doesn't consent to arbitration? The model clause doesn't have automatic arbitration in it. Then the person would go to the Federal Court to get the matter dealt with. You're saying a casual employee in those circumstances would have to go to the Federal Court for it to be dealt with.

Ms Kuzma : What they may wish to do is call the Fair Work Ombudsman, who can assist with that. So, as for the suggestion that people wouldn't be supported with those issues, there is that mechanism through the inspectorate to support—

Senator SHELDON: I'm not going to take up any more of Senator O'Sullivan's time. You did not answer the question.

CHAIR: Senator Sheldon. Please let Senator O'Sullivan take the call back.

Senator O'SULLIVAN: Thank you. Can you please confirm for me the definition of 'casual employee' in the bill does not allow an employer to label someone as casual, and that's what they are? I think that's what you were referring to as 'on a whim' earlier, Mr Hehir

Ms Kuzma : That's correct.

Senator O'SULLIVAN: So this definition is based on the common-law essence of casualness test in the WorkPac v Rossato case; is that right?

Mr Hehir : It's probably a longer evolution of the common law, but, yes, that is one of the more recent cases.

Ms Kuzma : It's the concept of the 'no firm advance commitment'.

Senator O'SULLIVAN: Just on casuals again, can you confirm for me that the effect of the WorkPac v Rossato Full Federal Court decision is that an employee can be paid a casual loading to reflect that they don't get leave entitlements. For instance, they might get, say, $50 per hour instead of the $40 per hour that they'd lawfully be paid if they were not casual. But, if it turns out that the same employee should have been classified as a permanent employee and is entitled to leave payments, the employer cannot rely on the fact that they paid the employee the extra $10 per hour in figuring out what they now owe?

Ms Kuzma : If question is about when someone makes a mistake and so is mistakenly paid a loading that was intended to be in lieu of entitlements but then they are subsequently found to be an ongoing employee, as opposed to a casual with a casual loading, then the answer to the question is yes.

Senator O'SULLIVAN: Okay. So the employer has to pay the casual loading upfront on the basis that the employee doesn't get leave but then has to give that same employee leave payments on top. Is that right?

Ms Kuzma : The casual loading is intended to compensate for entitlements that casual employees are not entitled to—things like annual leave and personal carers leave. That is what the loading is intended to compensate for.

Senator O'SULLIVAN: Then this bill ensures that employers in that situation don't end up having to pay for entitlements twice?

Ms Kuzma : Yes, that's what it's intended to do.

Senator O'SULLIVAN: Thank you.

CHAIR: We will go back to Labor. Senator Watt. You have got 10 minutes.

Senator WATT: I've got some questions about the BOOT. Just before I go to that, I want to go back over some of the points that Senator Sheldon raised with you. I think you said that you're not in a position to estimate the number of new jobs that you say will be created by this legislation. That's correct?

Mr Hehir : That's correct.

Senator WATT: So what evidence do you have that this legislation will create new jobs—because there are certainly a lot of claims being made to that effect?

Mr Hehir : As I said, I think, in my earlier response, we know through survey and other exit sources that certainty around employment and clarity around employment conditions is a key factor in terms of how businesses think about their employment needs. Having confidence about employment conditions and their ability to meet those is a key factor in whether the business will make an offer of further employment.

Senator WATT: So you're relying on some surveys that tell you employers will create more jobs, but you don't know how many?

Mr Hehir : That's correct.

Senator WATT: Who are these surveys being conducted by?

Mr Hehir : I would need to take that on notice. I don't have a particular survey in mind, but I'm certainly aware of broad evidence in this space. I'll take that on notice.

Senator WATT: Has the department conducted surveys?

Mr Hehir : No.

Senator WATT: Is it employer group surveys that you're relying on?

Mr Hehir : I'll have to take it on notice. No, I don't believe so, but I'll take that on notice.

Senator WATT: I'd actually also ask that you table those surveys, if that's the evidence base that the department has for these claims.

Senator SMALL: Can I ask a supplementary on that?

Senator WATT: Sure, as long as it's not going to eat into my time.

Senator SMALL: No, no.

CHAIR: As long as it's not as long as Senator Sheldon's supplementary, which took four minutes. I'm sure it won't; it'll be just one, won't it? Yes, thank you.

Senator SMALL: Would it be accurate to say that, in addition to those surveys you just mentioned, a very extensive consultative process—including roundtables between various groups, including those that actually employ people—occurred in the run-up to this reform being tabled?

Mr Hehir : It's true a very extensive consultation process occurred, and the view was put by employers that confidence and clarity is critical in employment decision-making.

Senator WATT: But it would also be fair to say that not every participant in those consultation sessions agrees that these changes will lead to jobs growth, right?

Mr Hehir : I think that's clear from the evidence they have provided.

Senator WATT: I think you also said that it's not possible to estimate the number of jobs that have been created as a result of the penalty rate cuts; is that correct?

Mr Hehir : That's correct.

Senator WATT: Does that mean that we'll also never be able to estimate the number of jobs created as a result of this legislation?

Mr Hehir : Without additional data or information, it will be very difficult to do so. As I said before, the primary problem that we have in terms of identifying growth in job numbers, attributable to a particular incident, is that the labour market is so dynamic and that so many factors affected it at one point in time that it's almost impossible to do regression analysis to identify the impact that particular changes in the employment market are having at any one point in time.

Senator WATT: I'm sure that's right. But that means, then, you cannot produce any evidence to us today that backs up your claims that these changes will create jobs, and, if this legislation passes, you will never be able to present any evidence to show that, in fact, they did create jobs. Are we just supposed to take someone's word for it?

Senator O'SULLIVAN: The regression model doesn't allow you to do it.

Mr Hehir : The evidence that we have tends to be at the firm level. In respect of wage rises, we would say that productivity changes do lead to wage growth. Bargaining can improve productivity, and where it does improve productivity at the firm level we would expect that to flow through. But being able to actually regress that isn't possible. When we go down and see the correlation in wage growth, we know that wage growth has a very clear correlation to productivity growth, particularly over the long-term, and we would anticipate that flowing through where we see the opportunity for firms to improve their productivity.

Senator WATT: Can you understand why workers might be a little bit nervous about this legislation when there is no evidence, beyond some surveys that we may or may not hear about, that these changes will create jobs growth? There's also no evidence that demonstrates that previous changes made, such as cutting people's penalty rates, ever delivered the jobs growth that it was claimed they would create.

Mr Hehir : The lack of evidence is always concerning. We would welcome improvements in the evidence base, and we're looking for that. Yes, the lack of evidence or ability to accurately predict is always a concern.

Senator WATT: It sounds like, to the extent there is any evidence, it's based on a theory that these changes will increase productivity growth, which will lead to wage growth. But you would concede that over the last few years we have had productivity growth in Australia, albeit not at particularly high levels, and we haven't seen wages growth. Isn't this theory actually totally wrong?

Mr Hehir : The long-term relationship—

Senator WATT: Not in the last eight or nine years.

Mr Hehir : is there. Internationally, productivity growth, including in Australia, has been low for quite some period. We're seeing wage growth at lower levels than perhaps in the 10 years prior to that. But there is a long-term relationship between productivity and wage growth. There are other factors, of course, that impact on wages growth.

Senator WATT: I might use the remainder of my time to focus on the casual issues. You have rejected the assertion that under this legislation employers will be able to designate people as casuals, but you do concede, I assume, that the way an employer describes an employee is a factor that would be used to determine whether they are a casual or not.

Mr Hehir : Yes. Certainly the agreement that's entered into between the employer and the employee is a factor. So it's the agreement that is entered into by both parties.

Senator WATT: Yes. So, if an employer when making an offer of employment which says 'offer of casual employment', even if the reality is that someone is a permanent, that designation of them as a casual will be a factor which would guide a decision that they are a casual.

Ms Kuzma : The situation that we have at the moment is that we have people that don't know at any point in time whether they are a casual employee or an ongoing employee. The changes in the bill are designed to improve that certainty for everybody. So, at the start of an employment relationship, the employer makes an offer of employment for a casual which says 'casual employee' at the top of the contract—and the employee can see that's what the offer is; it is a casual employment offer—and the employee agrees to that. Then you go down the list of factors, which include that the person can decline to accept shifts. They—

Senator WATT: Can I just pull you up there. That does mean that the label that is applied to an employee, such as labelling them as casual, may result in them being deemed to be casual, even if the reality of their employment shows completely the opposite.

Senator PRATT: Everyone knows you can't decline, because you're not offered the next shift.

Ms Kuzma : I wouldn't agree with that categorisation. I think you're saying that if an employer says someone is a casual then they are. That's not what the definition does. That's not what the provisions do.

Senator WATT: No, but clause 15A(2)(c) clearly says that, if employment is described as 'casual employment', that is a factor indicating that the person will be deemed to be a casual.

Ms Kuzma : Yes, that's right. I think it's right that a person knows upfront the basis on which they are employed and they agree to that.

Senator WATT: But isn't it also right that an employee is classified correctly—

Ms Kuzma : Yes—

Senator WATT: that, in fact, if they are a permanent, they are paid and given the conditions of a permanent?

Ms Kuzma : We've got the definition where everybody at the start is saying, 'Here is what we want to apply, and here are the criteria including whether a person can reject shifts, whether there is a loading et cetera.' After a period of time, they make a decision and say, 'Actually, I want to convert to ongoing employment,' and the bill puts that in a universal form in the National Employment Standards. So there is that change. It's not you're a casual and you're a casual forever. There is as part of the bill that the two work together. I would also say that if there are circumstances of somebody engaging in misleading conduct—for example, saying, 'Here's your contract,' and having no intention whatsoever of actually having that operate—then there are misrepresentation provisions in the Fair Work Act already that would deal with that. So it's not a case of someone thinking—

Senator WATT: That might be right in theory, but do you seriously think any person who is applying for a job, as a so-called casual, is going to take some kind of misrepresentation argument to the Fair Work Commission or any other tribunal?

Ms Kuzma : If they're aggrieved by that then absolutely.

Senator O'NEILL: How? They're in casual employment. They haven't got much money to go on. They've got no job security, and you're saying: 'Off you go. Take your case to court.'

Senator PRATT: And no right to arbitration.

CHAIR: Let the witness have one question to reply to, please.

Ms Kuzma : In standing provisions—and I think this comes back to a point about enforcement and things like that that we were talking about with Senator Sheldon earlier—employers are not the only persons with standing to enforce entitlements. There's the Fair Work Ombudsman. There are also union representatives. I think that that's important to note as well. There are a range of supports for people to take that to. But I think the most important point is to note that this definition comes with a statutory conversion process. The whole package is designed to resolve the current uncertainty that we have where, on any day, somebody does not know whether they are a casual or ongoing employee and what they are entitled to be paid. That's what it's designed to do.

Senator WATT: The other point I was just going to make is that, with the way casual employment is defined in the bill, it really connects to the offer of employment. So am I right, then, that, if I accept a job on the basis it's going to be casual but over time things change and actually I end up having a firm advance commitment to continuing and indefinite work, I will remain as a casual, regardless of the reality?

Ms Kuzma : No, because that is the point of the conversion. This is not a case of you sign up to a casual employment relationship and that's it forevermore. That is not the case. That is why the conversion process that we were talking about is in there so that if it is the case that, after a period of time, circumstances have changed, then there is that conversion process in there.

Senator WATT: On the conversion process, you would concede, wouldn't you, that the decision as to whether someone is allowed to convert to permanency rests with the employer? There are certain conditions that have to be fulfilled, but ultimately the decision rests with the employer.

Ms Kuzma : So what's different under the statutory framework—in the current awards process, the employee has to ask. Under the bill, the employer has to offer, unless, as you say, there are reasons and there are set out reasons why not to. If an employer does not have those reasons, they need to be conscious that that's a civil remedy. That is an enforceable thing, and that has quite serious consequences.

Senator WATT: Sure. But, and as we've already discussed, I accept there is a limited right to conversion provided for in the bill, but, the way it's drafted, it leaves the decision whether to agree or not to the employer. For an employee who is unfairly refused, their only remedy is to go to the Federal Court, because they only get to the Fair Work Commission for conciliation, not for arbitration. That's correct, isn't it?

Ms Kuzma : If you are an employer and you did not have reasonable grounds not to convert, then you would be vulnerable to a civil penalty for that. So that, in terms of influencing behaviour—

Senator O'NEILL: Policed by who?

CHAIR: Senator O'Neill, sorry—

Ms Kuzma : Well, a union could bring a claim.

CHAIR: Senator Watt has the call and I do need to give the call to Senator Small. Have you finished answering that question?

Senator WATT: I hear what you say about a civil penalty, but if I'm the employee wanting to become permanent, because I've been working the regular shifts, my employer can say no, and even if that's unfair or unreasonable, the only way I can actually get an external body to decide the matter is by going all the way to the Federal Court, which is pretty expensive, last time I was in the Federal Court.

Ms Kuzma : Yes, it can be expensive, but, under the dispute resolution provisions, that's the very last step. So before you're getting to that point, you're in a conciliation, you're discussing the issues with your employer, and you can go to the tribunal for that. The employer may agree to arbitration in the tribunal. If they are facing—

Senator WATT: They may. But if they don't, I've got to go to the Federal Court.

CHAIR: We let the witness—

Senator PRATT: And in the meantime, they're still a casual who could be sacked at any time.

CHAIR: Could we just please stop with all the different questions from different senators to the witness? Senator Watt did have the call, and the witness was answering Senator Watt's question. Once that answer is finished, I am handing over to Senator Small.

Ms Durbin : If I can add, there are other safeguards within the framework. So if the employer does have reasonable grounds not to make the offer, they must advise the employee in writing. So again, as Ms Kuzma said, that change of focus and that obligation to advise the employee is a very new feature. Similarly, there is a requirement for the employer to provide a casual information statement to all casual employees to advise them of their rights—

Senator WATT: I accept all of that, but ultimately the point is that if you've got an employer who's being unreasonable and I want to convert to permanent, the only way I can actually get an arbitration is by going to the Federal Court, if the employer won't agree to it at the Fair Work Commission.

CHAIR: You might have to take that on notice.

Senator WATT: Is that correct?

CHAIR: Senator Watt, put that on notice, please, because we have 20 minutes left. I have 10 minutes from Senator Small, and Senator Faruqi wants five minutes, which leaves five minutes for Labor because we need to adjourn at 4.30.

Senator SMALL: I'd start with just an observation, more than a question. Various witnesses today representing employers have made it clear that they will employ more people, thanks to the changes in this bill. But I will pick up Senator Watt's point. Isn't it the case now that, under awards operating in Australia today, a casual employee is characterised as engaged and paid as such, which we've heard from other witnesses as well, which therefore makes the agreed label relevant to determining the relationship as a relevant factor in ascertaining whether or not someone is a casual? I would also ask for your view in relation to the Federal Court making that clear as well in the Rossato case. Finally, then, does this bill do exactly the same thing and, crucially, also require that other factors be taken into account?

Ms Kuzma : In every employment relationship, there's usually an understanding about what somebody is, because as an employer you would have to know what to pay them and as an employee you would have to know what you're entitled to be paid. Putting people into a category, such as in awards, where they are paid and engaged as such, makes it clear what entitlements flow from that relationship. So the idea of having a concept is neither new nor surprising. I think we spoke earlier about different types of employment contracts. They are categorised so you know what entitlements flow from that. That's why we have classifications, for example, in enterprise agreements that say, 'You're this classification and here are your entitlements that flow from that.' If you didn't have a descriptor of what it was, how would the entitlements flow that go with that particular category? So it's certainly not a new concept, either in this bill or generally in employment law.

Senator SMALL: Okay. Moving away from new jobs, regarding the changes in this bill as they relate to awards, can you confirm for me the policy intent to the provisions as they seek to address underemployment—I'm particularly thinking here of the retail and hospitality sectors—and do you have any detail on the extent to which part-time employees in those sectors are currently missing out on work?

Ms Durbin : The bill proposes two broad changes to a cohort of awards, and those changes are around part-time employment and around flexibility when it comes to the location of work and the duties of that work that an employee undertakes. Those changes are particularly focused on awards in the accommodation and food services industry and in the retail industry, and those industries share a number of characteristics. The first is, really, that they're characterised by a high representation of small business, and, linked to that, they also have very high levels of award reliance. In fact, accommodation and food services have the highest number of award reliant employees across all the ABS industries. Retail, similarly, has a very high representation. They also do have high rates of part-time employment, and from the ABS data we also know that a number of those part-time employees are interested in working more hours and are available for working more hours. In accommodation and food services, it's around 39 per cent of employees who are permanent part-time who would like to work more hours and, in retail, it's around 30 per cent of people who would like to work more hours and are available. The award puts in place, for those part-time employees, an optional supplementary provision that employers and employees can agree to utilise with the intent of increasing the hours that part-time employees can work.

Senator SMALL: If we take that almost 39 per cent and 30 per cent of those sectors, how many people are we talking about, roughly?

Ms Durbin : Of those part-time employees who are seeking more work there are just over 68,000 in retail trade and around 42,500 in accommodation and food services.

Senator SMALL: So this is effectively aimed at more than 100,000 currently-working Australians who, as a result of this reform passing the parliament, would have employers who would be incentivised to give them more hours, with paid leave entitlements and unfair dismissal protections, rather than use more traditionally flexible forms of employment, such as casual?

Ms Durbin : That's certainly the intent of the provisions, yes.

Senator SMALL: Thank you. We've also heard suggestions today that employees might be forced into agreeing to work extra hours under those same part-time flexibility provisions contemplated in the bill. Can you confirm for me that those provisions can only be entered into by mutual agreement? As well can you discuss the protections that are available to stop employees being discriminated against should they not choose to proceed?

Ms Durbin : As Mr Hehir indicated in his opening statement, any take-up of the part-time flexibilities in the 12 awards is voluntary. It needs to be agreed by the employer and employee. There has been a lot of discussion throughout the proceedings that, in order to access the flexibility, the part-time employee needs to be guaranteed a minimum of 16 hours a week. I'm sure the committee has heard evidence that there are existing award provisions that do provide some flexibilities around part-time employment. None of them have that 16-hour benchmark. In fact, that 16-hour benchmark is higher than any of the existing award provisions that are in place.

If the employee is working in a pattern that is a requirement for penalty rates—for example, on a Sunday or shift work—those other penalties will continue to apply. Similarly, it will trigger other award obligations—for example, if they are in an award that has a maximum number of hours that the person can work a day, if it's more than 38 hours a week, for example, overtime provisions will kick in there and the hours that the employee works in addition will need to be in three-hour blocks, so a minimum of three hours, and those hours will continue to count for annual leave accrual and things like superannuation.

Senator SMALL: We've seen some speculation that the term 'NES interaction' will somehow mean that employees can work under terms that breach the National Employment Standards. I don't understand that to be correct. I contend that, in fact, it makes it clear to everyone that breaches of the NES are unlawful, as they are now. Can you also speak to whether or not this reform includes the same, and, in some cases, new and increased, penalties for breaching the NES?

Ms Kuzma : Yes. It is right to say that there's no change. An enterprise agreement cannot undercut the National Employment Standards. There is no change to that. That's a fundamental principle. The bill requires enterprise agreements to include a term that makes that explicitly clear on the face of the agreement. Of course, there are penalties for failure to comply with that. There are some significant compliance uplifts in this bill. We spoke about that a little bit earlier. There's a whole suite of packages in terms of increased penalties, including alternative benefit gain tests. I might ask Ms Saint if she wants to outline those as a whole package.

Ms Saint : The bill makes a range of penalty increases across the civil penalty framework that attaches to contraventions under the act. The maximum civil penalties for ordinary remuneration related underpayments, for sham-contracting contraventions and for noncompliance with a compliance notice will be increased by 50 per cent. In addition, a new alternative method of penalty calculation based on the benefit obtained from a contravention will be introduced. There will also be an increase in the maximum penalty that can be imposed by the Fair Work Ombudsman under an infringement notice, so increasing from one-tenth up to 15 per cent of the base penalty. The aim of this, in addition to the introduction of the criminal offence, is to enable more proportionate penalties to be imposed for contraventions under the act and to strengthen the deterrence measures generally in terms of the compliance and enforcement framework.

I would add that there are complementary reforms through the compliance and enforcement package which are directed at supporting and promoting active compliance, rather than just responding to noncompliance. Measures such as the deferred litigation policy that the Fair Work Ombudsman and the Building and Construction Commissioner will be required to issue will prompt noncompliant employers to come forward, cooperate and remedy any underpayments sooner.

Senator SMALL: So it gets money into workers' pockets sooner?

Ms Saint : Yes. There are also other measures under the bill that promote the wage recovery process, through the small claims jurisdiction, including increasing the threshold from $20,000 to $50,000. That simplified pathway for underpaid employees to seek to recover their wages will be expanded. We've got the introduction of the ability for the courts to award filing fees as costs in those matters for the first time, as well.

Senator SMALL: I've only got a little bit to go, so I'll try and hustle along. Some have suggested that there are changes to the agreement-making process being contemplated by this reform that will mean that workers won't know what's going on. Can you clarify for me exactly what is the case there—particularly the existing requirement that the Fair Work Commission must be satisfied that employees have genuinely agreed before an agreement is made, and whether or not that remains the case after this reform?

Ms Kuzma : Employers are required to provide employees with notice of their representational rights in bargaining, which we call the NERR, as soon as practicable after they agree to bargain. The bill expands the maximum timeframe in which that can be issued by 14 days, to 28 days. Employees cannot be asked to vote on an agreement until at least 21 days after the last notice is given to the last employee in that case. Unions remain the default bargaining representatives for their members—there is no change to that.

Senator SMALL: My last one is on agreement-making. Where the Fair Work Commission takes more than 21 days to approve an award, isn't it the case that, where that agreement is complex or for whatever reason does require further consideration, the Fair Work Commission is not compelled to tick and flick an agreement but, rather, can simply outline the complexities and underlying reasons as to why that additional consideration is required—and, therefore, that there is no case in which an agreement would be ticked and flicked?

Ms Kuzma : There should not be any case where an agreement is ticked and flicked. The tribunal has statutory responsibilities to scrutinise enterprise agreements according to the statutory test, including the better off overall test. It's not the case that you either make the decision within 21 days or that's it—absolutely not. It is a requirement, as I think Mr Hehir mentioned earlier, to keep parties updated in a transparent way about why things may be taking longer. We have to remember that enterprise agreements have superior benefits for people. So the objective is to get them done properly, but more quickly, so the enhanced entitlements can flow through more quickly.

Senator SMALL: Yes or no: is there any difference between a union agreement and a non-union agreement in that process?

Ms Kuzma : No.

CHAIR: We'll go to Senator Faruqi—

Ms Kuzma : Sorry, could I just add: genuine agreement is still a critical part of the system. That has not changed.

Senator FARUQI: Can you tell me if secure work was mentioned in the minister's speech when he introduced the bill in parliament?

Mr Hehir : I'll have to take that on notice and go through Hansard and check.

Senator FARUQI: And is secure work mentioned in the explanatory memorandum for the bill?

Ms Kuzma : Just to be sure about that, I would have to take that on notice to check.

Senator FARUQI: Can you tell me if secure work is mentioned in the actual bill?

Ms Kuzma : I can take that on notice, too, but 'secure work' probably wouldn't be a legal term. But I can take it on notice.

Senator FARUQI: Was secure work mentioned in the minister's media release announcing these very significant industrial relations reforms?

Ms Durbin : Similarly, I haven't got it in front of me, so we'd need to take that on notice. But, similarly, as Ms Kuzma said, I understand that 'secure work' and 'insecure work' are used in a range of different contexts. It's not a legally defined definition. It has been looked at in terms of things like the OECD, but they agree that there is no definition, that there's no unified terminology that actually can be put together—

Senator FARUQI: I'm not asking for a definition. And I can tell you—because I've looked at all those documents: the minister's speech, the memorandum, the medium release—that secure work is not mentioned once. So, I guess my question to you is: given that there has been no mention of secure work in all those documents—the minister's speech, the media release, the bill or the memorandum—would you say that ensuring job security is actually not a key objective of this bill?

Mr Hehir : I don't think that characterisation is correct. Certainly the intent around the casual conversion clauses is absolutely about that. Providing for the first time that employers must make an offer or provide a written explanation for eligible employees is a significant change, and it certainly has the intent of actually having more people being given the opportunity to move from casual to ongoing employment. So no, I don't think that's an accurate characterisation.

Senator FARUQI: Throughout the inquiry we have heard from a number of workers who have expressed how stressed and anxious they have been as a result of precarious employment, and also the stress of trying to assert their workplace rights in the face of resistance from employers under the current system. They have told us again and again that if this bill passes there will be more stress and anxiety for workers. What is your response to that?

Mr Hehir : I would note that the percentage of casuals in employment hasn't changed substantially for nearly 25 years. I think it hit just over 24 per cent in 1996, and it's just over 24 per cent now. So, it's a longstanding issue. The bill is intending to actually make it less stressful for employees—

Senator FARUQI: That's not what the workers are telling us.

Mr Hehir : Senator, may I answer the question? The intent is that, rather than having an employee being required to ask their employer, the employer actually has to make the offer. Where they don't make the offer they need to be clear about why they're not making the offer, and they need to provide that in writing. It's certainly our view that having the responsibility provided to the employer should make it less stressful for the employee.

Senator O'NEILL: You're familiar with the phrase 'The road to hell is paved with good intentions' I'm sure, Mr Hehir?

Mr Hehir : I've certainly heard it.

Senator O'NEILL: You've expressed much of your articulation of what the bill's going to do as an 'intent', but you can't guarantee the outcomes that you've been characterising this afternoon, can you?

Mr Hehir : I think I've answered the question before. Ultimately the courts will have to make some of the determination here. In terms of other factors, we believe the intent is clear and the legislation is clear and will have the intended effect.

Senator O'NEILL: I want to go to what was clearly intentioned but is now being very much questioned, and that's the benefit to employees and the economy of the provisions of this bill. What's the benefit of what you're doing, given that it's going to weaken the existing requirements of the Fair Work Act, the proposed agreement, and its effect to be explained to employees? Isn't it more likely, given the construction of the bill, that substandard agreements like the one key workforce agreement will be approved if the changes that are proposed pass the House and the Senate?

Mr Hehir : No, we don't believe that to be the case.

Senator O'NEILL: Can you guarantee me that that's not the case? Or are we going to rely on intention once again?

Mr Hehir : The answer to the question is that the provisions still require that employees are given a reasonable opportunity to understand and either agree or not to the agreement that's put before them. That fundamental requirement remains. The test still provides or allows for the current explicit steps, and if you meet those steps then you are taken to have met the requirement. It does allow flexibility in how particular employers and employees can discuss and be given the opportunity to understand what the issue is.

Senator O'NEILL: Can I go to the flexibility that you just mentioned there. How will the flexibility of the kind that you've described, which includes no longer having to explain the terms and effect of those terms of a complex enterprise agreement to a young worker or a migrant worker, help Australian workers?

Ms Kuzma : In order to approve an enterprise agreement, the Fair Work Commission has to be satisfied that the employer has taken reasonable steps to ensure the employees are given a fair and reasonable opportunity to understand it. Then there is a list of factors, including providing that information to them as being relevant to them—

Senator O'NEILL: But that's not mandatory.

Ms Kuzma : It's not mandatory in the sense that the tribunal needs to be satisfied that the employees understand—

Senator O'NEILL: But, Ms Kuzma, you must know that there are good businesses and bad businesses. The way that this is constructed leaves it to the will, because there is no mandatory requirement for the workers to actually get information in a language they understand and in a way they understand. You have taken that responsibility out.

CHAIR: Senator O'Neill, can you let the witness answer the question, please.

Ms Kuzma : It's not a matter for an employer to choose whatever they want to do. This is a statutory test wherein the Fair Work Commission must be satisfied that employees have been given a fair and reasonable opportunity to have—

Senator O'NEILL: What sort of workforce—

CHAIR: Senator O'Neill, please. The witness is halfway through the answer.

Ms Kuzma : For example, in the explanatory memorandum, there is a range of examples of how that would work in practice. For example, if you have a cohort of workers with English as a second language at a workplace then you would be explaining in a language that people understand.

Senator O'NEILL: The expectation might be there, but how is that going to be enforced? Who is watching?

Ms Kuzma : The tribunal—

Senator O'NEILL: Is it the Fair Work Commission? In what form? How are they going to be in the room and observing that basic rights are actually operating in the workplace?

Ms Kuzma : They need to satisfy themselves by asking—

Senator O'NEILL: They have to satisfy themselves?

Ms Kuzma : No, that's—

Senator O'NEILL: Employees have to satisfy themselves?

CHAIR: Please let the witness finish answering the question before verballing the witness and badgering the witness. Please finish answering the question.

Ms Kuzma : It's not the employer satisfying themselves; it's the Fair Work Commission being satisfied that that has occurred.

Senator O'NEILL: But they are not there. There is no-one there.

CHAIR: We are going to go to Senator Pratt for a final question.

Senator PRATT: You asserted in your opening statement that the reforms don't mandate an eight-year expiry date for greenfields agreements and they could agree up to a maximum, but I can already see in the history of greenfields agreements that they are kick-started by not all the relevant unions or workers already being under the current law. So there's a big motivation for casual workers who are being offered work on a new project to sign up to an agreement. Surely, then, there's going to be an onus that sees long greenfields agreements out to eight years? While I appreciate there's some bargaining that can take place, there is a high likelihood they can be locked in for eight years. I can't see how in any way your statement that they are not necessarily going to be eight years is relevant.

Mr Hehir : There are a number of things that are probably worth addressing. Greenfields agreements are negotiated with a union. They must be.

Senator PRATT: That's not true.

CHAIR: Senator Pratt, let the witness answer the question, please.

Mr Hehir : Greenfields agreements must be negotiated with a union. The status of casual or other employees isn't relevant because the status of the agreement is that there aren't any employees to bargain with. That's why it's called a greenfields agreement and that's why it's negotiated with the union. There are a number of criteria, which I will ask Ms Anderson to outline, in terms of why it will not necessarily be up to eight years. The major one of those requirements is the agreement can only be for the construction period. So if the project has a construction life of five years then that's as long as it can be. For agreements for construction periods below four years, the current greenfields agreement arrangements are already in place. But the agreement cannot be negotiated for longer than the construction period.

Senator PRATT: Can the—

CHAIR: No, Senator Pratt; I said that was your final question. That concludes the answer. There will be lots of questions to go on notice. You can put them in in the normal manner. This concludes today's proceedings into the committee's inquiry into the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020. I thank all witnesses who have given evidence to the committee. I thank the department for coming along. Thank you, secretariat, Broadcasting and Hansard. I thank everybody who should be thanked.

Committee adjourned at 16:35