Centrepoint Alliance Limited (CAF) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Understanding Your HR Obligations in 2020, brought to you by the founder of People Focused, Christine Bau. I'm sorry if I have butchered your last name there. Please correct me if it's different pronunciation. A reminder that...

You're absolutely fine.

Okay, great, awesome. Thank you. A reminder that throughout this session there will be polling feature, so to you receive your CPD, you must contribute to the discussion by selecting your preferred answer to each question on your screen as the polling is launched. If there is time at the end, we will get around to answering your questions. However, if we do run out of time, we will get back to those unanswered queries personally. If you would like a copy of today's presentation and the presenter biography, please navigate to the handouts section on the right-hand side panel to download a copy. All right, that's enough for me, so let's jump right into it. Take it away, Christine.

Thanks very much, appreciate that. So can everyone see my screen now?

Yes, and your webcam.

Yes, and my webcam. Great, wonderful. So thank you very much for that lovely introduction, Jessica. As Jess has suggested, the intention today is to provide you with a master class that really does talk to understanding some of those core HR obligations, in particular changes that have occurred over the last 6 to 12 months in relation to the law. So the intention by the end of this session is that you will have a clear understanding of some of those key instruments that are influencing the nature of the employee-employer relationship; that you will have an appreciation of aspects of the relevant award and in particular again those key changes that have happened more recently, along with some federal court decisions and the impacts that they have on the legislation. And finally, we will discuss penalties. What happens? And what are the implications of not adhering to those obligations? So there'll be key intentions out of the course of this session. And as Jess has suggested, certainly we'll try and leave some time for questions if you do have them, but if we don't get that opportunity, then we will follow up those post this session. So where is the starting point? I thought we would kick off with a little bit of an understanding of what is the obligation that you have. And what's the foundation essentially behind that obligation that you have, along with some of those key artifacts and documents that help you to articulate your obligations towards employees? So as you can see on the screen there, that very -- sorry, can anyone see me? Or it sounds like I've disconnected.

Yes. No, don't worry about it. You're good.

Oh, that's all right. It sounded like it's disconnected. So just in the context of the idea of the Fair Work Act. So that sets out your fundamentals. What are your key obligations to your employees? And essentially there are 10 core obligations, and they're set out in the National Employment Standards, or the NES, which you're possibly already quite familiar with. Now those 10 obligations essentially apply irrespective of the nature of the employment relationship in the context of: it doesn't matter how much you earn, it doesn't matter the nature of your role or the industry that you're in. All employers are obliged to adhere to those. And they relate to things like the fact that you need to provide 4 weeks of annual leave. There is personal leave entitlement for part-time and full-time employees, the nature of a working week and the fact that it should only be 38 hours long, the fact that employees can have access to flexible working arrangements or requests that access after 12 months of service. So those are the fundamentals, and then on top of that, you potentially have awards. So there are 120 awards in action in Australia at the moment, which essentially means that most employees are covered by an award. And an award really articulates additional terms and conditions that you as an employer are required or obliged to adhere to in addition to those fundamental obligations that are set out in the National Employment Standards. We're going to talk to those in a little bit more detail in a moment. I've also mentioned there, contracts. One of the things that often gets asked of me is do I actually [indiscernible] hear to adhere to the award -- sorry. "Do I actually need to hear -- to adhere to the award or -- and the Fair Work Act if I've got a contract in place?" The answer, very simply, is yes. So essentially a contract will be articulating those key expectations that you have of an employee. They will articulate those minimum obligations, and they'll build upon them. So I'd encourage everyone, if you don't already have contracts in place for your employees, to make sure that you're working with a HR consultant or a practitioner or an employment lawyer to really ensure that you've got the right contracts in place for all your employees. And then finally, I've said there, policies. So I'm not a big fan of copious manuals that have a policy for absolutely everything, but I do think that there are some core HR policies that everyone absolutely needs to again reiterate what are the obligations of the employee and the employer under the award under the Act and also just in terms of your business. How do you want people to perform? How do you want them to act? And those key ones that I would suggest everyone should have at minimum really do relate to things like occupational health and safety. You definitely want something around employment, equal employment opportunities, so harassment, bullying, discrimination. And in some states, you'll find that bullying, for example, there's an expectation you will have a policy around that. In this environment, I'd strongly encourage everyone to have a working-from-home policy in place, along with a policy that talks about flexible working arrangements because again there's potential for employees that have been working from home to want to be able to continue that. How does that look? What's your obligation? And what's the process attached? So some core HR policies certainly are advantageous. Now I wanted to just touch back on awards. As I said, your awards are going to articulate the minimum requirements that you have as an employer. Now most people are covered by an award, and that includes people in the banking, finance and insurance industry such as yourselves. So if you have a financial planning or a wealth management practice, it is fair to say that your employees are going to be covered by the banking, finance and insurance award. So if you haven't already checked that and you're not across that, then I'd encourage you to make sure that you are across it moving forward. So again, just take some time post this session to look at that. That said, a couple of things to note. Firstly, it doesn't really matter what state you're in, in Australia. This award and -- will apply irrespective of whether you're in Western Australia, South Australia or Victoria. As I've already articulated that the banking, finance, insurance award applies to everyone in the financial planning and insure -- sorry, wealth management industries. The exception there is going to be employees that are earning over $148,700. So if you can guarantee that before someone gets a bonus or superannuation, that they've got -- or they will receive $148,700, then you can enter into an arrangement with them that says, "We'll guarantee that particular salary, and in exchange, what you will be doing is to waiver that right to the award." They're essentially the only employees that are actually, while still covered, won't actually be leveraging the entitlements in terms of conditions under the award. I've also said there that you've got 2 different types of awards. You've got industry-specific and occupational awards. The reason I mentioned that, as I said, most employees in Australia are covered by an award. I do appreciate that some people on this webinar have an accounting practice or an accounting arm to their business. If you have a private sector -- sorry, a private accounting practice, your accountants are actually not covered by an award. The association was very good at negotiating that at the time awards came into play. That said, there will be other employees in the business that are covered by an award. So for example, if you have a client services staff, they will be connected -- sorry, they will be covered by an award. If you have financial planning [ employees that ] [indiscernible], then they will also be covered by an award. So again, if there's industry-specific and occupational awards in play, if you've got an industry-specific like the banking and finance awards, that will take precedence. And as I've said a couple of times now, an award builds on those entitlements set out in the Fair Work Act, and it really sets out those core terms and conditions that are applicable to employees in this particular sector, in this particular industry. Now I wanted to move on and have a little bit of a chat about some of the key changes that have happened in relation to the awards. Because there are 2 significant changes that have happened over the last couple of months. The first one that I wanted to talk to you about was with respect to minimum wages. So in relation to the banking and finance award, it sets out the minimum wage that you need to pay someone who is covered by the award; and it's important to acknowledge that, that rate is going to be greater than the minimum award under the National Employment Standards. So the banking and finance award sets out at different levels that you need to pay employees depending upon how you classify their roles. So there are 6 levels. A financial planner, for example, will be a level 6 position, whilst typically -- again it depends on the nature of the role, but typically a paraplanner would be a level 3. You might find a client services or an associate adviser would be a level 4 position. Effective 1 July, so a couple of weeks ago now, those rates went up so that they are now 1.75% greater than what they were pre 30 June. So it's really important, again post this conversation and I'd encourage everyone to make sure that you're classifying each of the positions in your business according to those levels and then understanding, "What is the minimum rate that I need to be paying an individual in that particular role?" We -- again, we don't have time to go into that in detail today, but certainly I encourage you to have a look at that. This is not so much to people at the upper end. Typically, a financial planner, for example, is going to be earning more than $60,000 as a base, but typically, my experience is that it's more the administrative staff at the lower end where we tend to have some difficulties. Essentially, you need to be paying at least $50,000 for some of those entry-level roles. So that's typically where you find the challenges. I've also included the [ dot ] table in relation to the clerks. So again similar scenario, it's gone up by 1.75%. The change here, though, is that it's only going up 1 November. So the Commission, when they did these increases, decided to actually phase them in. Banking and finance was in that first stage, so that's why they're effective 1 July, whereas the clerks private sector is in the third phase and hence the reason it doesn't actually change until 1 November. All right, so we've actually covered off just a little bit in there already. So as a starting point, I thought, just to make sure everyone's comfortable with everything that I've discussed so far, we'd do a polling question. So if you wouldn't mind, Jess, that polling question: Who's covered by the banking, finance and insurance award? Is it...

[indiscernible] that one launched.

Oh, perfect. Glad to say that everyone is all over this, which is great. So it looks like those numbers are changing slightly, but very clearly most people are suggesting -- it's something around 80% of people are suggesting that it's actually answer B. So absolutely. So your employees are covered. With respect to -- again, a contract isn't necessarily going to alleviate your need to adhere to the award and the federal legislation. And with respect to C, only employees below management, that might be the case to the extent that, an individual, because they're at management, they might have earnings greater than $148,700, and therefore, they're waiver-ing that right, but in terms of are they actually covered, they are still ultimately covered. It's just that they're waiver-ing that right to the award. So that's great. The second piece that I wanted to talk to everyone about was with respect to annualized salaries. And this is actually quite a significant change that's happened in the last couple of months. So every 4 years, the Commission undertakes a review of the awards, and this year was that fourth year where they finalized that review. And the big-ticket item out of that review was essentially the idea of wage theft and making sure that employees are actually receiving the money that they're working in the context of, if I work 70 hours, I'm actually being remunerated for that. As a consequence, they altered a number of awards and the annualized salary clauses in those awards. The banking and finance was one area -- or one award, I should say, where they made some significant changes to this particular clause. You would have heard -- and if you can cast your mind back pre-corona, there was a lot of media attention to organizations that were really self- reporting in relation to this issue. George Calombaris got a lot of negative press for want of better words, in relation to this issue. Interestingly, though, when we actually look into that situation, for example, a lot of the employees that were getting under-remunerated, weren't actually getting small salaries. They were actually getting 6-figure salaries. It's just that, when you actually took into account all the allowances and the penalties that they should have been able to access, they were getting paid less than what they would have received if they had received each of those penalties as they were incurred. So again it's really that premise that led to this change. And as a consequence, what essentially the award now says is this -- sorry, I skipped ahead. So what it's suggesting is that as an employer you now, if you are going to pay someone an annualized salary. So you're going to say, "I'm going to give you $70,000, plus superannuation. I'm going to give you a package of $100,000." Under the award, your obligation is to ultimately write to the employee and keep a record of the following things. You need to be articulating what the salary is that you're paying that employee. You also need to be articulating the provisions that are going to be covered or satisfied by that salary. So it's base wage. It's also additional overtime. It might be the fact that all employees under the award are actually entitled to leave loading. It might be shift allowances or meal allowances, et cetera. So what is it that's going to be covered by the award? And also that add a limit in terms of, given the minimum wage that I'm required to pay you versus the amount that I'm actually paying you, how much of a buffer in terms of additional hours could you work before I needed to pay you extra money? Now in addition to that, there's an expectation you need to reconcile the amount of hours an employee works with what they're being paid; and that should be done per pay cycle, so whether that's weekly, fortnightly or monthly. You then need to pay them the excess if they've worked more than they're being remunerated for. And you need to maintain time records or time sheets detailing when someone started, finished and took an unpaid break. Now if you're looking at that, going on, "Gosh, that's a lot that I need to do." It's pretty onerous from an administrative perspective, especially if you're a small practice. I meet [indiscernible]. And I've seen a couple of employers doing this, and it is, it's quite an exercise. So there is some good news in terms of the award absolutely articulates this clause, but it also gives you a couple of alternative options. So in -- as an alternative, if you still want to pay an annualized salary but don't necessarily want to go down that onerous path or quite an onerous path, you can, as an alternative, look at introducing a setoff clause. And potentially your contract already articulates a set-off clause, which says that, whilst there might be some ebbs and flows, so at Christmas time maybe you don't do as many hours, but towards the end of financial year, you do, do lots of hours, so consequently, to accommodate those ebbs and flows, we're going to pay you a salary. We'll do a reconciliation every 12 months to make sure that you're getting paid accordingly for what you're doing, but we're not necessarily going to, a, share with you the outer limit of hours. And we're not going to do that exercise of reconciling every pay cycle and paying every pay cycle. So that's an alternative. The other alternative is individual flexibility agreements, and you do have the capacity to vary some terms of the award. This is one of those terms that you can do that by agreement with the employee. If you've got an employment lawyer, I'd encourage you to talk to them about this. I suppose one of the challenges associated with this is that then you've got lots of very individual contracts in play with each of your employees. And then finally, which to some degree we've already spoken about, you can enter into guaranteed annual earnings. So again, if you've got people with base salaries greater than $148,700, you can, via the contract or a separate letter, ask that individual to waiver that right. And if that's the case, then again, whilst they're covered by the award, those entitlements such as needing to keep time sheets, et cetera, won't actually apply. So there are a couple of alternatives and, again, going to be very individual. A lot of my clients would typically utilize the set-off clause. A lot of people do come back and say to me, "Are you sure, Christine, we really do need to keep time sheets? It seems very archaic, very 1950s of us to be doing that. Do we really want to go down that pathway?" I think the reality is you can get a variety of different responses. I personally think that, yes, as archaic as that might seem, it is an important piece. And so whilst you don't necessarily need to articulate to staff how many hours can they work and pay them on a monthly basis, the excess hours that they have, it is important to keep time sheets. And the reason I would say that or I do make that call is for a couple of reasons. Number one -- so I'm just going to skip through 1 of -- 2 of these slides, but firstly, the penalties for getting caught out for a breach are very significant. So as you can see there, per contravention, a company can incur a penalty of $63,000. Now if you don't adhere to your obligations in terms of having clear time sheets, which not only apply in the award but there's an expectation that you're going to, by law, remunerate people accordingly, you can face very significant penalties. The other piece of the puzzle is that I think we're starting to see that, from a federal and a state level, the government is saying that this is a really important piece of the puzzle that we want to get on top of. In Victoria, they have very recently introduced a Wage Theft Bill, and that bill says that, if you deliberately or recklessly underpay an employee or falsify records, you will incur penalties, and they're going to be even greater than that $63,000. They are close to $1 million or 10 years imprisonment, so really substantial penalties associated with wage theft. Now I'm not anticipating anyone here would potentially incur those penalties because none of you are going to act dishonestly or withhold records or withhold entitlements to employees, but I think the point needs to be made that it is certainly on the radar of the Commission. And so if an employee -- and that's I think the real risk. If an employee self calls the Commission or calls the ombudsman and makes a call to say, "I think I've been under-remunerated," I think that's where your real risk comes about. Because if someone does make that decision to call and to inquire, for want of better words, then that's when an investigation will happen into your business. And that's potentially where you'll find that, again, the law will come down. So it's not that an investigator is just going to offer, straight come and inquire about your business, but I think you do have to appreciate that employees are becoming more savvy. In an environment as we are in, particularly on the East Coast, there's not a lot to lose from asking if I've been remunerated correctly. So I think that's potentially your real risk. And so for that reason, I'd encourage you to certainly make sure you're keeping good time records of what people are working and then consider how you actually implement the expectations under the award. Now I've covered off quite a bit there, so I just wanted to touch on a couple more polling questions to test your knowledge about what we've talked about. So the first question here is a true or false. So if you could take a moment to answer that, that would be great. [Voting]

Excellent. Everyone is listening. Love it. So yes, absolutely, only employees who -- sorry, I've been preemptive. Some people are saying true, and some people have -- saying false. So question there: only employees whose annual salary is on or around the award rate need to maintain time sheets? The answer is false, which about 2/3 of you have suggested is the answer. The reason I've suggested the answer is false is the only people that will not need time sheets are those that are waiver-ing their right out of the, I suppose, right to the award terms and conditions because they've got $148,000. Everyone else, I'd encourage you to be keeping time sheets for because, again, you need to be able to demonstrate that you're remunerating your employees correctly. Even if you've got a $100,000 salary, are they getting paid for everything that they've done, is ultimately the question that you need to be able to satisfy. You might think, of course, that's the answer. Who on earth is going to work that many hours that's going to justify them tipping over $100,000? Ultimately, there's an expectation you need to be able to demonstrate that. So the answer there. The second question I just wanted to touch on from a polling perspective, again another true or false: To ensure employees are remunerated correctly, an employee must -- an employer, sorry, must start by classifying the role under the award. Again, true or false? [Voting]

Okay. Looks like a lot more people are getting this one right. So essentially everyone has said that this one is true. So yes, absolutely. You want to start by understanding under the award who is impacted and therefore who -- or how much of a buffer do you have. So -- sorry, there's one probably just question that I should go back to, and if you don't mind, I'm just going to scroll back. We don't need to do the polling questions again, but just in terms of when you're looking at annualized salaries, again, start by looking at your contracts. Understand whether you have a setoff clause already built into them or guaranteed annual earnings. Understand who's going to be impacted; and classify, as you just said, each role under the award. Again, you can determine outer limits for yourself. You may need to, depending upon what option you go down, share that information with the employee. Again, you want to inform employees accordingly if you are going down that pathway in accordance with the award. Either way, keep time sheets, and then you want to be able to reconcile those payments versus what someone's worked. You certainly want to be able to do that at least on an annual basis. Now a couple of other things that I wanted to share with you in terms of changes. So there have been some significant legislative changes as a result of federal court decisions recently. One of those relates to personal leave, which as you'd all appreciate, a personal leave pertains to someone's sick leave entitlement or the ability to take care of someone that is wholly or substantially dependent upon them for care, including in an unexpected emergency. And what the recent decision was, was in relation to Mondelez. And essentially, back on the 21st of August last year, so nearly 12 months ago now, there was a decision by the federal court that an employee is entitled [ 10 days ] working -- sorry, personal or carer's leave irrespective of the hours they've worked or the days that they've worked. And historically, what we've always said is that a full-time employee gets access to personal leave of 10 days; and that, if someone is working on a part-time basis, they're actually entitled to that on a pro rata basis. And what we've now identified through this federal court decision is that actually everyone gets 10 days, with the exception of casual employees. So if you have part-time employees, whilst this decision is being appealed, it's really important that you do a couple of things. Number one, you need to be accruing 10 days per year for all employees that are part time or full time. Essentially, part-time employees that are not accruing personal leave are casuals. You want to make sure that your paying system or your payroll system is also accruing these days and not hours. So that was another key thing, and it's again based on a legislation. So talk to your payroll provider or your HR consultant in relation to that. And finally, I encourage you just to make sure that your contract is getting read in such a way that the -- they accurately reflect the legislation. I appreciate that some people [indiscernible] their contracts that any part-time employee will get prorated leave entitlements. That's actually not the case anymore. So I'd encourage you again post this session to have a look at that and certainly talk to your HR consultant. Talk to your employment law -- lawyer in relation to that. The second case that I wanted to share was [ in respect ] to casual employees, and this isn't so much of a change but a clarification as to what does a casual employee look like by definition. So in this particular case, essentially the high -- or sorry, the full federal court decided or defined, more importantly, that actually calling an employee casual in their contract was not adequate justification for someone being a casual. If you are genuinely going to have a casual employee, they need to fulfill a certain number of criterion, and they are as follows there. The individual needs to be employed on an ad hoc basis. That essentially means that you shouldn't be able to guarantee that someone, 4 weeks in advance, is going to be working 3 days, 2 days, 4 days. You should be -- you should have potentially a roster, but that roster should be coming out on a regular basis and it's open for change. So there's no predictability. It's not systematic, is essentially what they said. The individual also has the right to accept and reject those shifts, so they're not obliged to take them up. And then finally, and again a good contract will articulate this, each shift essentially contracts -- or sorry, constitutes a separate offer of employment. So you're paying that person for a shift and any shifts that you've given them that they've accepted, but really, beyond those listed shifts they're actually -- it's the end of the contract in the sense of you're renewing that contract every shift that they get. You don't have to give them notice. They don't have to give you notice. So it's only in those conditions that someone will constitute a casual employee. If you've got other situations where you're giving someone regular hours, as in that they work every Tuesday or every Wednesday or every second Thursday, then potentially they've been misclassified as a casual, when in fact they're a part-time or a full-time employee. So as per the award, really critical that if you've got casuals, you are offering them the opportunity to convert into part time but also making sure that you are appropriately classifying your employees at the time of appointment and revisiting that on a 6-monthly or a 12-monthly basis to make sure that they continue to be classified correctly. Final point that I've got there is around set-off clause. And one of the other key things that came out of this particular decision was the fact that, just because you are now deciding to convert someone from casual to part-time or full-time employment and give them annual leave and sick leave entitlements, you can't set off the leave loading necessarily that you're giving them with those entitlements. In order for you to do that, it's really important that you can clearly articulate what was the hourly rate and what was the entitlement that they were getting in terms of that loading and what, more importantly, did that loading represent. In that case, you've got a better chance of being able to set off the loading with the entitlements that you have to pay them, but again it's not a guarantee. In terms of penalties. So I've discussed a lot about key changes. What are the consequences of not adhering to them? Again, I've mentioned the $63,000. There's also a $12,600 per contravention for an individual. And then in addition to that, there's a variety of other penalties that you can incur, everything from orders to pay what's owed, plus interest; through to rehiring an employee; or compensating them for their loss. So again, it's really critical to adhere, not just because it's good business practice, but certainly there are implications financially of not adhering to those obligations. Before we move to questions, there are a couple of things that I wanted just to touch on very quickly. It would be remiss of me in this environment not to acknowledge health and safety and the fact that everyone here has an obligation at the moment to make sure they're creating a healthy and safe workplace for their employees. And ultimately the way that we respond to that is -- or sorry, we respond to COVID is being influenced by this obligation. And in particular, I just wanted to acknowledge the national COVID safe workplace principle. So again I'm sure most of you, if not all of you, are really familiar with these, but just important to reiterate, you do have not only an obligation to create a safe and healthy workplace, but at the moment there's also some extra obligations in relation to COVID-19. And they are that you're consulting with employees in relation to this particular issue to identify and mitigate risks; that you are actively controlling against the transmission of COVID-19 at work; and that you've got really clear plans in place for what happens if someone does contract the illness, how do we deal with that; that you're reviewing those measures on a regular basis to acknowledge that fluid situation; and again, adhering to OHS guidance by your particular state or territory. Just finally, I realized afterwards that this is possibly not the nicest thing to be ending on, but anyway, I just wanted to acknowledge industrial manslaughter and the fact that -- in Victoria that this also came into play 1 July 2020. Now I appreciate the nature of professional services means that none of you will have work sites where people are liable to fall off scaffolding or anything of that nature, but I think what's really critical is to understand that industrial manslaughter really does extend beyond that in the context of mental health. So it's not about just physical health, mental health will also be impacted in this context. And in particular, that final point there, to acknowledge that, if an individual is incurring mental health issues in the workplace as a consequence of work and you become aware of that and you're not adhering to that obligation and it ultimately, unfortunately, results in the suicide of someone, then industrial manslaughter may apply in that particular circumstance. So I'm sure everyone does, but absolutely really critical to make sure that you're offering whatever support you can in terms of employee systems, programs, et cetera; that you're also making sure people raise those types of concerns about bullying, harassment, discrimination, et cetera, or stress because of excessive workloads; that you're dealing and addressing and trying to mitigate that as promptly as you can. So with all of that, hopefully, from this, you've gained some information again around those core learnings around the instruments that are influencing employment relationships, in particular, Fair Work Act, the awards, employment contracts and policies. You, hopefully, also have a appreciation of the importance of the awards; and the fact that if you're a financial planning organization, that you will have employees, if not all employees, covered by the banking, finance and insurance award; and if you're in an accounting business, that you may have some clerical staff as well as possibly financial planners covered by awards; that there are some key legislative decisions that have influenced and changed the legislation and -- but there are certainly penalties, which hopefully we can all void but do -- or will be incurred if there are breaches. I'm very conscious of time, but I'm very happy to take some questions if we've got time, Jess. Otherwise, certainly, as Jess said at the outset, we can respond to those. All my details are there so that people can contact me independently to actually inquire about any of those topics discussed.

Yes, we definitely have time for questions. And we do have 2 questions here for you. So I'll read them out, if you like, Christine.

That would be great.

Awesome. So our first question is from Tom, and he has asked, if a client is paid by the hour for a set number of hours, not an annual salary, for example, not an annual salary so they don't need time sheets. Did that make sense, or should I rephrase?

So is it the client or the employee? Sorry.

If a client is paid by the hour.

Sorry. I'm not quite sure I understand that question. So if you're -- if the legislation that I'm talking about is obviously in context of employees -- sorry, can you just repeat that one question again?