Reflecting on Forward with Fairness - the Fair Work Bill and how it will change employment law

Labor's new workplace relations system is at our doorstep.  The Fair Work Bill 2008 was introduced to Parliament on 25 November 2008 and is expected to be passed in March 2009.  On 19 December, the Australian Industrial Relations Commission issued the first tranche of 17 new modern awards to replace more than 500 awards.  In this bulletin we examine the developments and identify some matters that need to be considered by employers.

Early assessment of the new laws and thoughtful preparation will enable employers a smooth transition to 2010, when the new laws will have commenced full operation.

The new laws require a change in behaviour.  The 'Workplace Rights' provisions have far reaching application.  Employees and unions are supported with access to powerful remedies for a breach of their 'Workplace Rights'.

The Labor system

The Bill bears some similarities with the Howard Government's Work Choices but departs in significant areas. 

For example, the Bill still relies on the corporation's power to have a national system covering all corporations and their employees.  The Bill overrides most state industrial laws but leaves workers compensation, occupational health and safety, discrimination and some other areas, to be regulated by the States.

However, the Bill seeks to restore some bargaining power to workers and the unions with its theme of "fairness".  At the same time, the Bill provides business with some needed "flexibility". 

The new system will be supported  by a safety net of protections for workers:  the National Employment Standards, modern awards, a no-disadvantage test for enterprise agreements; and greater access to unfair dismissal laws.

The Bill introduces a new agency, Fair Work Australia (replacing the AIRC, AFPC and the WAD) to implement the new laws.  The investigative and prosecuting body is the Fair Work Ombudsman.  Both the Federal Court and Federal Magistrate's Court will have Fair Work Divisions.

National Employment Standards (NES)

Ten new minimum standards will underpin employment conditions for most employees. Employers cannot contract out of these obligations.  Modern awards and enterprise agreements cannot breach the NES. The new minimum standards deal with:

  • maximum working hours (38 hours/week),

  • right to request flexible work arrangements,

  • parental leave (12 months unpaid, extendable),

  • annual leave (4 weeks/year),

  • personal/carer's leave (10 days/year),

  •  community service leave,

  • long service leave,

  • public holidays,

  • notice of termination (up to 5 weeks) and

  • redundancy (up to 16 weeks pay, small business exempt). 

The standards are not immutable.  Modern awards and enterprise agreements can contain ancillary and supplementary terms to the NES.  Certain standards are flexible, such as averaging of working hours and cashing out of annual and personal/carer's leave by agreement.  More flexibilities are expected in the regulations which may include some exceptions for those on high salaries.

National Minimum Wage

For award/agreement free employees, their minimum wage will be specified in the National Minimum Wage Order.

Modern Awards

The more than 4500 existing awards will be reduced into 100 or so modern awards. Modern awards will be industry and occupation focussed.  For example, some of the new modern awards are:  Clerks - Private Sector Award 2010 for clerical employees, General Retail Industry Award 2010 and Hospitality Industry (General) Award 2010 for those employed in those industries. From the first tranche of awards, and the Bill, the following observations can be made:

  • Specified terms in an award, such as hours of work, overtime, allowances and loadings, can be varied by an individual flexibility arrangement provided the employee is better off overall;

  • There will be obligations to consult on workplace changes;

  • Disputes can more readily be referred to FWA;

  • There will be no salary sacrificing provisions ? so there will be a need to make an enterprise agreement;  and

  • There will be an ability to direct the taking of annual leave.

Modern awards commence 1 January 2010.

Enterprise Agreements

Employers and employees can make collective agreements to suit their workplace.Unions and employee representatives are given a greater role in the bargaining process.  Before negotiating, employees must be given a notice informing them of their right to be represented.  Unions have a default right to represent their members.

Employers must bargain in good faith.  Parties can get orders from the FWA facilitating good faith bargaining. Enterprise agreements must pass BOOT camp, the Better Off Overall Test.  The agreement is compared to the modern award.  Agreements cannot contain unlawful or discriminatory terms. Like modern awards, agreements must contain consultation, dispute resolution and flexibility provisions.

Unfair Dismissal

Access to the unfair dismissal regime has been expanded.  Employees have access if

  • they have been employed for more than 6 months or 12 months for a small business, and

  • the employee is not a high income earner

No claim for unfair dismissal can be made in respect of a "genuine redundancy".  A genuine redundancy requires consultation and that there are no redeployment opportunities.