July 2009

Fair Work Act 2009 comes into force

The Fair Work Act 2009 has now come into force (as of 1 July 2009) and is the centrepiece of the Labor Government's Forward With Fairness workplace reforms. Not all of the new laws take effect on 1 July.  Two significant components of the new system, namely the introduction of modern awards and the new National Employment Standards (NES) will not take effect until 1 January 2010.

The new legislation is less complex than its predecessor, Work Choices.  Nonetheless, employers will need to grapple with a new set of transitional rules as they move from a myriad of industrial instruments made under previous legislation to the new system.  Employers will also need to understand some new areas of law such as good faith bargaining and the "right to request" procedures for flexible working arrangements and extended unpaid parental leave. 

This bulletin recaps the major changes and summarises the key dates for employers going forward.

The main changes

These are as follows:

  • The introduction of a new set of legislated minimum standards to replace the Australian Fair Pay and Conditions Standard (AFPCS) in Work Choices.  In many respects the National Employment Standards are the same as the AFPCS but with a few significant changes including;

    • a reformulation of the 38 hour maximum hours standard and the inclusion of part time workers in the maximum hours standard;

    • expansion of parental leave entitlements giving employees a right to request an additional 12 months unpaid parental leave.  Employee couples may now take up to a maximum of 24 months unpaid parental leave between them;

    • introduction of a right to request a flexible working arrangement for employees who are responsible for a pre-school aged or disabled child;

    • in certain cases employees may be able to cash out annual leave and personal/carer's leave.

    • certain employees will be entitled to redundancy pay.

  • Most Federal awards and  Notional Agreements Preserving State Awards (NAPSAs) will be replaced by modern awards.

  • Employers and employees may bargain for \"enterprise agreements\" and will be subject to good faith requirements when bargaining.

  • AWAs will continue to operate until terminated or replaced.  Individual Transitional Employment Agreements may continue to be made up until 31 December 2009.  They continue to operate unless terminated or replaced.

  • New unfair dismissal laws - in particular;

    • The small business exemption for employers with less than 100 employees has been removed.  Instead, employees working for companies with 15 full time equivalent staff or less must have worked for the employee for a "minimum employment period" of one year before being entitled to make the claim.  Service prior to 1 July 2009 counts when determining whether an employee has worked for 12 months.

    • The "genuine operational reasons" exclusion in Work Choices has also been abolished.  Instead, it is a defence to show that the dismissal occurred through "genuine redundancy".

    • To be eligible to claim unfair dismissal, employees must earn less than the "high income threshold" which is now $108,300.

    • Unfair dismissal claims must now be lodged within 14 days of dismissal and will be dealt with by Fair Work Australia.

  • Employees may now also bring claims against employers for breaches of their "workplace rights".  Workplace rights include entitlements under the NES, freedom of association and protection from discrimination under a new anti discrimination provision in the Fair Work Act.

The key dates

As of 1 July 2009:

  • Fair Work Australia has replaced the Australian Industrial Relations Commission.

  • Transfers of business occurring from 1 July 2009 are covered by the Fair Work Act.

  • Statutory collective and individual instruments will become "transitional instruments".

  • The new unfair dismissal provisions take effect.

  • Employers and employees can start bargaining for enterprise agreements.

After 1 January 2010:

  • The NES takes effect.

  • Modern awards commence.

Now is the time to

  • Start reviewing employment contracts and any statutory instruments to ensure that they will comply with the NES from 1 January 2010.

  • Review your unfair dismissal procedures to comply with the new unfair dismissal regime, especially if you employ less than 100 staff and were exempt under Work Choices.

  • Start thinking about what implications modern awards might have for your business and whether now is the time to start bargaining for an enterprise agreement.