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New Industrial Relations Legislation

November 2008

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The Minister for Employment & Workplace Relations, Julia Gillard today introduced the Rudd Labor Government's substantive workplace relations legislation, the Fair Work Bill 2008, into the Australian Parliament.  This bill adds to the measures the Government has already taken to reform the national industrial relations system, including:

Abolishing Australian Workplace Agreements The Government has abolished key aspects of the WorkChoices legislation and is working to produce a fair and balanced industrial relations system. The Government’s first piece of legislation, the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 ensured that no new Australian Workplace Agreements (AWAs) were created. This Act allows for existing AWAs to remain in operation for their full term and provides for Individual Transitional Employment Agreements (ITEAs) for use in limited circumstances to assist employers and employees transition from AWAs.
Building a safety net for workplace agreements The Government committed to building a safety net of minimum wages and conditions in legislation and modern awards with the safety net coming into effect from January 2010. The Workplace Relations (Transition to Forward with Fairness) Act 2008 establishes a new no disadvantage test that applies to ITEAs and to collective agreements. The no disadvantage test ensures that workplace agreements cannot disadvantage an employee in comparison to the underlying industrial instrument in a workplace, for example, an applicable collective agreement (for ITEAs only) or award.  The Australian Fair Pay and Conditions Standard will continue to apply in the transition period.
Establishment of National Employment Standards On 16 June 2008 the Government released its ten National Employment Standards (NES) which contain the key minimum entitlements for all Australian employees (further detail below).
Review of Comcare On 23 January 2008 the Government announced the terms of reference for the review of Comcare which was completed in July 2008. The Government will announce its response to that review in the near future.
Modern Awards As a result of a formal request from the Deputy Prime Minister on 28 March 2008, the Australian Industrial Relations Commission (AIRC) commenced the process of developing modern awards.  Modern awards will be industry or occupation based and will streamline and simplify thousands of awards.  Modern awards build on the national Employment Standards and may include an additional ten minimum conditions of employment tailored to the needs of the particular industry or occupation.  These include minimum wages, types of employment, arrangements for when work is performed, overtime and penalty rates, annualised wage or salary arrangements, allowances, leave related matters, superannuation and procedures for consultation, representation and dispute settlement.
Small Business Consultation The Government established a Small Business Working Group to consult over matters of particular importance to small business such as unfair dismissal.  The Small Business Working Group included representatives of peak small business employer organisations including from the retail, hospitality, pharmacy, accommodation, farming, automotive and fast food industries.  On 17 September 2008 the Government released the Fair Dismissal Code for small business that provides a simplified process under which summary dismissal is warranted, including cases of theft, fraud and violence.

The Fair Work Bill 2008

The Fair Work Bill 2008 will establish a new institutional framework for the administration of the new workplace relations system.

The Government has consulted extensively with employers and employee representatives as well as States and Territories in the design of the new workplace relations system, including through its Business Advisory Group, Workers Advisory Group and the Committee on Industrial Legislation.

Key aspects of the Fair Work Bill 2008
Legislated Minimum Employment Standards for all employees The National Employment Standards will come into effect from 1 January 2010.  The expanded safety net of entitlements provides for:

  • maximum weekly hours of work;
  • the right to request flexible working arrangements;
  • parental leave and related entitlements;
  • annual leave;
  • personal/carer’s leave and compassionate leave;
  • community service leave;
  • long service leave;
  • public holidays;
  • notice of termination and redundancy pay; and
  • provision of a Fair Work Information Statement, which will detail the rights and entitlements of employees.
Modern awards

The Australian Industrial Relations Commission (AIRC) is currently preparing modern awards, which will form a safety net from 1 January 2010.

Modern awards must be:

  • simple to understand and easy to apply, and must reduce the regulatory burden on business; and
  • together with any legislated employment standards, must provide a fair minimum safety net of enforceable terms and conditions of employment for employees; and
  • must be economically sustainable, and promote flexible modern work practices and the efficient and productive performance of work; and
  • must be in a form that is appropriate for a fair and productive workplace relations system that promotes collective enterprise bargaining but does not provide for statutory individual employment agreements; and
  • must result in a certain, stable and sustainable modern award system for Australia.

The AIRC will ensure that the awards promote the efficient performance of work having regard to the nature of the work and the characteristics of the workforce covered by the award.

The AIRC must include the following matters in modern awards:

  • an award flexibility term to enable employers and employees to negotiate an individual flexibility arrangement to meet their needs that may vary the application of specified award terms;
  • a dispute resolution term;
  • terms providing ordinary hours of work;
  • terms about rates of pay for pieceworkers (where necessary);
  • terms identifying shift workers eligible for five weeks annual leave under the NES; and
  • terms facilitating the automatic variation of allowances

Modern awards will not cover employees earning over $100,000 per year (indexed) who will be free to agree to their own pay and conditions without reference to awards.

Fair Work Australia will undertake four yearly reviews of each modern award to maintain a relevant and fair minimum safety net.  The first review will take place in 2014.

Bargaining Framework The Fair Work Bill 2008 contains important changes to the collective bargaining framework, including:

  • The introduction of good faith bargaining.
  • Less regulation regarding the content of agreements.
  • The creation of a single stream of agreement making.
  • A streamlined process for the approval of agreements.
  • The introduction of Fair Work Australia facilitated bargaining for the low paid.

For further detail about the Bargaining Framework see the Explanatory Memorandum p. xxxi

Unfair dismissal

The current unfair dismissal laws only apply to employees working in businesses with more than 100 staff and who have met a six month qualifying period of employment. The new system will remove this 100 employee exemption and introduce new qualifying periods that have to be met before an unfair dismissal claim can be made;

  • 12 months for employees of businesses with fewer than 15 employees; and
  • 6 months for employees of businesses with 15 or more employees.

Casual employees will have to meet these same qualifying periods provided they have been employed on a regular and systematic basis for the requisite period and that they had a reasonable expectation of continuing employment by the employer.

There will also be a Small Business Fair Dismissal Code for businesses with fewer than 15 employees.

Industrial action

Industrial action, secret ballots and strike pay

The Fair Work Bill 2008 provides clear rules to govern industrial action. The Bill distinguishes between protected industrial action which may legitimately occur during bargaining and unprotected industrial action taken outside of bargaining.

The Bill requires employees to approve industrial action through a secret ballot, while streamlining the ballot process.

When protected industrial action occurs, employers must deduct pay for the actual period of time the employee stopped work. If partial work bans are implemented, employers will be able to issue a notice and deduct a proportion of pay, with any disputes resolved by Fair Work Australia. The Bill provides that pre-emptive lockouts – taken by the employer where the employees have not taken any industrial action – will no longer be protected action.

For unprotected industrial action, such as industrial action during the life of an agreement, the Bill provides that employees will face a mandatory minimum deduction of four hours' pay.

Right of entry

The Bill provides a fair and proper balance between the rights of employees and their union to meet in the workplace and the rights of employers to run their businesses without interference.

The Bill provides a right for members of a union that is eligible to represent their industrial interests (and potential members of that union) to meet with their union at the workplace during non-working hours for the purpose of holding discussions. No employee can be discriminated against for participating in, or declining to participate in, such discussions.

The Bill provides that the right to enter premises to hold discussions comes with strict obligations, including the holding of a valid right of entry permit, the giving of 24 hours' notice to enter and requirements for conduct while on site.

Unions will continue to be able to investigate alleged breaches of workplace obligations that affect a member or members of the union. The right is subject to strict requirements. Unions will be able to look at and copy employment records of all employees but only where those records are relevant to the suspected breach being investigated.

The Bill includes new protections against misuse of information obtained by the union investigating suspected breaches.

For further details of the changes see the Explanatory Memorandum p. LV.

Institutional Framework

Fair Work Australia

The Government will establish Fair Work Australia (FWA), which will replace the Australian Industrial Relations Commission, the Australian Industrial Registry, the Australian Fair Pay Commission, the Workplace Authority and the Workplace Ombudsman from 1 January 2010, and the Australian Building and Construction Commission from 1 February 2010.

FWA will be an independent, statutory body with a range of functions and powers including:

  • minimum wage-setting and adjustment by a specialist Minimum Wages Panel to be established within FWA;
  • award variation;
  • ensuring good faith bargaining;
  • facilitating multi-employer bargaining for the low paid;
  • dealing with industrial action;
  • approval of enterprise agreements; and
  • resolution of disputes and unfair dismissal matters.

The Fair Work Ombudsman

Whose key function is to promote harmonious and cooperative workplace relations and compliance with the Fair Work Bill 2008 through education, assistance and advice.  Where necessary the Ombudsman will undertake enforcement activities such as investigation, issuing compliance notices and initiating court proceedings.

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