December 2005

Work Choices: how the changes will affect employers, employees and unions

On 7 December 2005 the Federal Government passed the Workplace Relations Amendment (Work Choices) Bill 2005 which is expected to commence in March 2006.

Work Choices is a fundamental and significant change to workplace relations in Australia. A century of the resolution of industrial disputes by conciliation and arbitration has been replaced with a system of workplace regulation by negotiated agreements.

Key points for businesses, employees, unions and industrial practitioners are:

  • Work Choices will apply to all "constitutional corporations", meaning trading or financial corporations formed within the limits of the Commonwealth;

  • All such corporations will come under the new legislation, leaving unincorporated associations, partnerships, sole traders, and the core state public sectors to be regulated by state systems;

  • Work Choices overrides most state industrial laws but leaves workers compensation, occupational health and safety, discrimination and some other procedural matters, to be regulated by the states;

  • Unfair contract claims under the NSW Industrial Relations Act will no longer apply to a corporation's employment contracts;

  • The NSW Annual Holidays Act 1944 no longer applies to corporations but the NSW Long Service Leave Act 1995 will still operate;

  • The existing no-disadvantage test is removed for Australian Workplace Agreements making it easier for businesses to introduce and implement changed terms and conditions of employment;

  • Work Choices introduces tighter right of entry rules for unions, including regulating union entry into workplaces for occupational health & safety reasons;

  • No unfair dismissal claims for employers with less than 100 employees;

  • No employee can bring an unfair dismissal claim if the reason for dismissal included an "operational reason";

  • Workplace rights and obligations will no longer be determined by the making of awards to settle industrial disputes;

  • Industrial action is outlawed, except during a bargaining period;

  • There is a role for unions in the bargaining process but there will be no option to approach the Commission to make the decision for the parties if agreement is not reached.

The Australian Fair Pay and Conditions Standard

Work Choices establishes five key minimum employment standards called the Australian Fair Pay and Conditions Standard. The standards are:

  • a basic rate of pay and casual loadings: the federal minimum wage is $12.75 an hour with a casual loading of 20%;

  • maximum ordinary hours of work: of 38 hours a week plus reasonable additional hours;

  • annual leave of 4 weeks a year, 2 of which can be cashed in;

  • personal leave of 10 days a year; and

  • parental leave of 12 months unpaid.

All other employment terms are matters for the employer and employee to agree, individually or collectively, at the workplace level.

Points to keep in mind:

  • The contract of employment will become crucially important in determining the rights and obligations within the employment relationship;

  • Employers can expect employees to negotiate more about the terms of their employment and to sue for breach of contract;

  • Employees are still able to pursue unlawful termination of employment on prohbited grounds, and make claims of discrimination;

  • The workplace is still regulated and employers cannot assume that Work Choices frees businesses to do as they please;

  • Employers are largely required to maintain the status quo in the transitional period until a workplace agreement is made or any pre-reform award or preserved instrument is terminated.

Work Choices introduces numerous changes to workplace relations with more to come when the Work Choices regulations are published.

Expect another bulletin from us in the New Year. If your business requires a debriefing or an explanation of any aspect of Work Choices please contact us.

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