Federal industrial relations changes brought forward

Some of the Federal Government’s Forward with Fairness amendments to the Workplace Relations Act 1996 (Cth) (Act), scheduled to take effect from 1 January 2010, have been brought forward amidst criticism the Federal Government is not acting fast enough to “tear up” Work Choices.  

Fair Work Australia

The central government agency created to administer the Federal Government’s new workplace relations system is Fair Work Australia.

There are currently seven government agencies in the workplace relations system.  It is intended that by 1 January 2010 the Australian Industrial Relations Commission (AIRC), Australian Industrial Registry, Australian Fair Pay Commission, Australian Fair Pay Commission Secretariat, Workplace Authority, Workplace Ombudsman and the Australian Building and Construction Commission, will be replaced by Fair Work Australia - a “one stop shop” to be granted investigative and arbitral power.

This new independent umpire will move away from adversarial and legalistic processes in favour of less formal, user friendly processes and services.  It is also intended that specialist Fair Work Divisions will be created in the Federal Court and the Federal Magistrate’s Court.  The small claims mechanism in the Federal Magistrate’s Court will also be increased from $10,000.00 to $20,000.00.

The Substantive Bill

The bulk of the Federal Government’s reforms will be outlined in a Substantive Bill which will be released in the coming months and some proposed reforms to the Act, relating to enterprise bargaining and unfair dismissal (set out below), are now planned to take effect from 1 July 2009. The remaining changes (including the new National Employment Standards and the modern award system) are set to commence on 1 January 2010.

Enterprise agreements

The proposed reforms to the Act will enable employers and employees to bargain over a wider range of matters in relation to enterprise agreements than are currently permitted under the Act.  The concept of “prohibited content” under Work Choices will be removed, and the focus will be shifted to whether the matters relate to the direct employment relationship between the employer and the employees and, where relevant, the Union(s) involved.

Similar to the current system, enterprise agreements will need to be approved by Fair Work Australia before commencing operation.  Fair Work Australia will apply the “Better Off Overall Test” (yet another name for the no-disadvantage test) to ensure each employee covered by the agreement is better off overall in comparison to the relevant Modern Award.

Parties to an agreement will not be able to take industrial action in relation to matters that do not pertain to the employment relationship covered by the agreement, further, matters not relating to the employment relationship will not be enforceable.

Bargaining

There is currently no requirement under the Act to bargain in “good faith”.  The Federal Government intends to amend the Act by imposing the following obligations on parties involved in collective bargaining:

  • attend and participate in meetings at reasonable times;
  • disclose relevant information in a timely manner;
  • respond to proposals made by a party in a timely fashion;
  • give genuine consideration to proposals of other parties; and
  • refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining.

The Federal Government is quick to note that these good faith bargaining requirements will not force parties to make concessions or sign up to agreements where they do not agree to their terms.

Where an employer refuses to bargain, and there is a majority of employees who wish to negotiate an enterprise agreement, those employees may approach Fair Work Australia. If Fair Work Australia determines that there is majority employee support for pursuing an enterprise agreement, the employer will be required to bargain collectively with those employees.

Fair Work Australia will also be able to make orders to ensure the “integrity and fairness of the bargaining process” in situations where:

  • employees refuse to respond to an employer’s proposal about new work methods to increase productivity;
  • a party pursues a claim that could not lawfully be included in the agreement (such as one which does not comply with the National Employment Standards);
  • bargaining representatives are being prevented from consulting with employees;
  • employers refuse to communicate with bargaining representatives; and
  • the group of employees to whom the agreement would apply has been unfairly selected.

There is also a proposal for multi-employer bargaining in a low paid bargaining stream.  Here it is intended that a bargaining representative may apply to Fair Work Australia to bargain with a specified list of employers on behalf of low paid employees.  This proposal is designed to assist those employees who historically have not had the skills, resources nor means to access collective bargaining.

Industrial Action will not be “protected” without the approval by a secret ballot of a majority of employees and the provision of 72 hours notice.  It is intended that the Australian Electoral Commission will conduct any such ballot.

Importantly there will be no compulsory arbitration to resolve bargaining disputes. However, arbitration may be ordered by Fair Work Australia if the industrial action is protracted and causing significant harm to the Australian economy.

Unfair dismissal and the fair dismissal code

Under Work Choices, the ability of many employees to access unfair dismissal rights has been severely restricted if not removed altogether.  The Federal Government is proposing substantial changes to the unfair dismissal system, including new special arrangements for small businesses.  The proposed special arrangements for small businesses, which are those with fewer than 15 employees, include:

  • lengthening the qualifying period from 6 to 12 months, during which time employees cannot make an unfair dismissal claim; and
  • the creation of a fair dismissal code which, if followed by small business employers, will ensure a dismissal is not unfair.

Under the six-paragraph fair dismissal code, multiple warnings will not be required, and if a warning is to be issued, it is desirable for it to be in writing.  A single warning and a reasonable opportunity for the employee to rectify the problem before he/she is dismissed will satisfy the code.

The Code does not abrogate employers’ common law rights to summarily dismiss employees for serious misconduct.  However, a summary dismissal will be deemed “fair” if the employer reports the conduct to the police (where relevant) or if the employer had reasonable grounds for believing the conduct took place.

Larger employers, with more than 15 employees, will not be able to rely on the code and their employees will be entitled to make an unfair dismissal claim if they have been employed by the employer for more than  6 months.

Conclusion

The Substantive Bill is due to be released in October 2008, with the abovementioned reforms to commence on 1 July 2009.

If you have any queries in relation to the proposed amendments, please contact a member of HWL Ebsworth’s Workplace Relations and Safety Team.