July 2008

And then there were 10 ..... what employers need to know about the National Employment Standards

On 17 June 2008 Julia Gillard announced the ten National Employment Standards (NES) that would apply to all workers come 1 January 2010. This is up from the five matters mandated currently under the Australian Fair Pay and Conditions Standard (AFPCS).

While it is some time before the ten NES come into effect, employers would be well advised to consider what is coming and think about the impact on their business.

Like the AFPCS, it will not be possible to contract out of the NES. They will apply to all employees, unless specifically excluded by regulation, or because the employees are not covered by the Federal scheme. Those earning over $100,000 may be excluded from some of the NES. If the States agree to transfer their industrial relations powers to the Commonwealth, or the system becomes harmonised some other way, then the NES will have universal application.

Four of the NES are similar, but not exactly the same, as those in the AFPCS:

  1. maximum weekly hours - still 38 a week with reasonable additional overtime

  2. parental leave - still unpaid, but now with each parent having a right to 12 months leave, and the ability to ask for any untaken leave of one parent to be transferred to the other, subject only to a right of the employer to refuse on reasonable "business grounds"

  3. annual leave - still four weeks, but now no limit on cashing out if done via a modern award

  4. personal/carer's leave and compassionate leave - still 10 days, but again no restriction on cashing out if done via a modern award

The new standards are:

  • the right to request flexible working arrangements

  • community service leave

  • long service leave

  • public holidays

  • notice of termination and redundancy pay

  • Fair Work Information Statement

It is worthwhile looking at some of these new ones in a bit more detail.

Right to request flexible working arrangements

An employee who is a parent, or has the responsibility for the care of a child under school age, may request a change in working arrangements to assist in caring for the child.

The request can only be made if the employee has at least 12 months continuous service, and can be refused by the employer on reasonable business grounds. These grounds are not specified in the NES, nor is any right of review of the decision.

Long service leave

So much for a consistent national standard on long service leave. Award?derived long service leave provisions still apply, and in the absence of an award, any other entitlements are enshrined as a preserved State agreement. The NSW Long Service Leave Act lives to fight another day, operating as a preserved State agreement. Unlike annual leave no ability to cash out.

Notice of termination and redundancy pay

A minimum notice period is not new, and the NES picks up the requirements under the Workplace Relations Act that provided a maximum period of notice of 5 weeks if the employer had more than 5 years service and was over 45. What is new is the addition of a legislative right to redundancy payments in accordance with the following table;

Continuous service (years)

Redundancy pay (weeks)

1-2

4

2-3

6

3-4

7

4-5

8

5-6

10

6-7

11

7-8

13

8-9

14

9-10

16

10+

12

No redundancy pay if the employer had less than 15 employees. No payment on a transmission of business if the new employer recognises the service with the old employer and the offer of employment is substantially similar to, and overall no less favourable than the old employment terms.

An application can be made to Fair Work Australia (the Labor one-stop IR shop) if the employer obtains other acceptable employment for the employee or cannot pay the amount.

Fair Work Information Statement

This is to be given to each new employee, and must contain information about the NES, modern awards, agreement-making, the right to freedom of association and the role of Fair Work Australia. It will replace the Workplace Fact Sheet that you were meant to be handing out to new employees under Work Choices, until abolished in the first round of reform earlier this year.

What should I be doing now?

The NES is not law yet, but will come into effect on 1 January 2010. Employers should be thinking about their current contractual arrangements, and whether they are offering something greater than the NES, or whether there is any advantage in trying to negotiate any industrial instrument that might be able to deal with some matters, such as cashing out long service leave, prior to the operation of the NES.