Forward with Fairness – Workplace Relations in Flux

It is timely to consider both the detail of the Government’s proposed “Forward with Fairness” reforms and the first steps that have been taken along the path of reform with the Transitional Bill, which appears now to have the support of the Opposition and, subject to the outcome of a Senate Committee Inquiry into the Bill, is likely to pass into law relatively unscathed.

Although released prior to the election, the Government has not stepped away from its “Forward with Fairness” policy since gaining power.  “Forward with Fairness” proposes the following changes to industrial relations legislation:

• A new organization called “Fair Work Australia” is to be established.  It is to exercise an administrative function (similar to that currently exercised by the Australian Industrial Relations Commission (“the AIRC)), and have a separate arm capable of exercising the judicial power of the Commonwealth (currently exercised by the Federal Court and the Federal Magistrates Court).
• Fair Work Australia is proposed to undertake both informal and formal dispute resolution as well as containing an inspectorate that would monitor compliance with the new laws.
• AWAs are to be abolished.  Rather, collective enterprise agreements (“CAs”) are to be the only industrial instruments that can override an award.
• CAs are to be measured against a safety net consisting of 10 legislated minimum employment conditions, to be known as “National Employment Standards” or “NES”, in addition to the relevant award.  The 10 NES will regulate hours of work, parental leave, flexible work for parents, annual leave, personal, carers and compassionate leave, community service leave, public holidays, information in the workplace, termination of employment and redundancy and long service leave.  
• On 14 February 2008 the Government released a discussion paper on the 10 proposed standards which may be located at: www.workplace.gov.au/workplace/Publications/WorkplaceRelations/DiscussionpaperonNationalEmploymentStandards.htm.
• It is proposed that the new standards will take effect from 1 January 2010.
• Awards will be simplified so as only to regulate 10 additional areas, being minimum wages, the type of work performed, arrangements for when work is performed, overtime rates, penalty rates, provisions for minimum annualised wages, allowances, leave, superannuation and consultation, representation and dispute settling procedures.
• If a majority of employees at a workplace want to bargain collectively, their employer will be required to bargain collectively with them in good faith. Good faith bargaining will become a legislative requirement in relation to the negotiation of CAs.  
• There will be no restriction on the matters that parties can put into a CA.
• CAs will only be approved if they meet a “no disadvantage test” by comparison with the relevant award and the 10 legislated minima.  Fair Work Australia would be responsible for assessing the “no disadvantage test”.  CAs will have to be approved “on the papers” within 7 days of lodgement.
• Industrial action will not be allowed during the period of an enterprise agreement.  Even outside the period of an enterprise agreement, industrial action will only be able to be taken after a secret ballot.
• The restriction on employees of organizations with 100 or less employees bringing a claim for unfair dismissal will be removed.  Apparently the only restriction upon bringing a claim for unfair dismissal will be, for employees of organizations with fewer than 15 employees, that they first must have been employed for 12 months, and for employees of organizations with 15 or more employees, that they first much have been employed for 6 months.  Additionally, a remuneration cap for non-award employees (set at $98,200 to be indexed), above which one would be ineligible to make a claim, will continue to apply.
• Unfair dismissal applications will have to be lodged with Fair Work Australia within 7 days (rather than the current 21days) and after receiving an application, Fair Work Australia will call the parties together for a “conference” to determine the matter.  Fair Work Australia will have local offices in regional and suburban areas and be able to go to a workplace or other agreed venue to conduct such conferences.  Although the parties will be allowed to have representation, the employer and employee will be required to respond directly to questions from Fair Work Australia.
• Unlawful dismissal applications will be heard by the judicial arm of Fair Work Australia rather than by the Federal Magistrate’s Court or the Federal Court.

Consistent with the Government’s “Forward with Fairness” policy, the Transitional Bill proposes to ban the creation of any further AWAs.  Instead it creates Interim Transitional Employment Agreements (“ITEAs”) which will cease operation on 31 December 2009.  ITEAs will only be available to employers that on 1 December last year employed at least one worker under an individual employment agreement such as an AWA.  

ITEAs will be subject to a no disadvantage test which will be applied by the Workplace Authority Director who will be required to ensure that a worker’s overall terms and conditions are not reduced in comparison with a “reference instrument”.  ITEAs will operate from the date of lodgement, subject to them later failing the no disadvantage test.

However, AWAs made before the commencement of the new legislation, and lodged within 14 days will be able to operate until terminated or replaced.  Expired AWAs can be terminated by either party on 90 days notice, and upon termination the employee would revert to the CA or award that applied in the workplace.

Collective union and non-union agreements must also pass a no disadvantage test prior to being approved by the Workplace Authority Director and will not commence operation if they fail “fundamental” requirements.  The Transitional Bill also removes the concept of protected award conditions and allows CAs to incorporate terms from other industrial instruments into agreements.

Further, the Transitional Bill commences the award modernisation process, by inserting a new part 10A into the Workplace Relations Act 1996 which requires award modernisation in accordance with a request from the Minister to the AIRC’s president, pursuant to which the AIRC would complete its modernisation process by the end of 2009.  The AIRC will be required to publish an exposure draft of each modernised award and will have the power to hold conferences with unions and employer organizations when developing the draft.  The finalised awards will have to be created by a full bench of the AIRC.

Andrew Rich