Supp7rev6 Fair Work Legislation Mar09 - Federation …...The AIRC was required to identify certain...

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The Fair Work Legislation March 2009

Having campaigned successfully against the Work Choices reforms at the 2007 federal election, the Rudd Government in the process of implementing its own ‘Forward with Fairness’ policies. The centrepiece of its reforms, the Fair Work Act 2009 (FW Act), has now been passed by Parliament.

The Act builds upon the changes already made by the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008, which took effect on 28 March 2008. That ‘Transition Act’ prevented the making of any further Australian Workplace Agreements (AWAs), reintroduced a no-disadvantage test for all types of agreements, and initiated a process for the award system to be ‘modernised’ by the end of 2009.

Among other things, the FW Act introduces a new set of National Employment Standards (NES). These will replace the existing Australian Fair Pay and Conditions Standard (AFPCS) in providing basic statutory conditions for all employees covered by the federal system. The Act will also restore unfair dismissal rights, impose an obligation of good faith in bargaining, and create a new agency, Fair Work Australia (FWA).

Until the new legislation takes effect, the Workplace Relations Act 1996 (WR Act) will continue to regulate employment conditions and workplace relations for parties covered by the federal system. If all goes to schedule, however, the FW Act will replace the WR Act, as from 1 July 2009. However the NES will not commence operation until January 2010, and nor will the ‘modern awards’ presently being formulated by the Australian Industrial Relations Commission (AIRC).

The FW Act is divided into six Chapters and runs to some 575 pages (not including the tables at the start). Although still lengthy, it has a far more simple and straightforward style than the WR Act. Outlines appear at the beginning of each main part and there are frequent ‘signposts’ to alert readers to other relevant provisions. Definitions of the various words and phrases used in the Act are conveniently listed in a Dictionary that appears in s 12.

One subject not dealt with at all in the Act is the registration of trade unions and employer associations. This will continue to be dealt with by Schedule 1 (the Registration and Accountability of Organisations Schedule) to the WR Act, together with other issues relating to the rules and internal affairs of such bodies. While the great majority of the WR Act will be repealed, Schedule 1 (and also Schedule 10, dealing with transitionally registered state associations) will remain in effect as part of a renamed Fair Work (Registered Organisations) Act 2009.

Stewart's Guide to Employment Law Andrew Stewart

© The Federation Press All Rights Reserved

The Fair Work Legislation

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The government’s intentions in that regard are revealed in the Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009 (TPCA Bill), which was introduced on 19 March 2009. This deals with the many issues that arise in relation to the transition from the current system to the new Fair Work regime. The government will obviously need to have that legislation passed ahead of the planned commencement of the FW Act in July 2009. A further Bill is scheduled for May 2009, to deal with consequential amendments to other federal laws. There will also need to be new regulations and tribunal rules.

This supplement commences by summarising some of the changes already made by the 2008 Transition Act. It explains what has happened to date in relation to the modernisation of awards, and how the modern award system will operate once it commences in 2010. It then goes on to examine the various other changes proposed by the FW Act. The supplement concludes by outlining the transitional arrangements for completing the shift to Labor’s new system.

Changes Already Made by the 2008 Transition Act

Abolition of Australian Workplace Agreements

There is no longer any provision in the WR Act for federal system employers to offer or make AWAs. Existing AWAs can still operate, even beyond their nominal expiry date, until terminated. But it is not possible to vary them by consent.

It should be noted that the WR Act now refers both to ‘pre-reform’ AWAs made before Work Choices, and ‘pre-transition’ AWAs made between 27 March 2006 and 28 March 2008. Pre-reform agreements continue to be regulated by Schedule 7, while a new Schedule 7A is devoted to pre-transition AWAs. (There is also a Schedule 7B for pre-transition collective agreements.)

Individual Transitional Employment Agreements

Under the amended s 326 of the WR Act, employers who had previously been using AWAs can now offer Individual Transitional Employment Agreements (ITEAs) instead, but only to new employees, or to existing employees already covered by an individual agreement. An ITEA is not allowed to have a nominal expiry date any later than 31 December 2009 (s 352(1)(aa)). But as with other workplace agreements, it may continue to operate after that expiry date until it is terminated.

When agreements take effect

For a new employee, an ITEA can take effect as soon as it is lodged with the Workplace Authority, as can a greenfields agreement. For other agreements, however, there has been a reversion to the pre-Work Choices approach. Union collective




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agreements, employee collective agreements and ITEAs offered to existing employees can only now take effect when they are approved by the Authority (s 347(1)).

The no-disadvantage test restored

The Transition Act abolished the fairness test introduced by the Howard Government. Just as was the case prior to Work Choices, workplace agreements now have to satisfy a no-disadvantage test (NDT). Under the new Division 5A in Part 8 of the WR Act, this applies to both collective agreements and ITEAs.

The Workplace Authority must generally be satisfied that the agreement would not result, on balance, in a reduction in the overall terms and conditions to which the relevant employee(s) would be entitled under a ‘reference instrument’ (s 346D). The term ‘reference instrument’ is defined in s 346E. It can most obviously be an award or NAPSA (notional agreement preserving State awards) that would otherwise have applied to the employee. For ITEAs, it also includes any collective agreement that would otherwise apply.

Content of agreements

The rules in s 355 of the WR Act restricting workplace agreements from ‘calling up content’ from other instruments were abolished. However the broader restrictions on the inclusion of ‘prohibited content’ remain.

Termination of expired agreements

Where an ITEA reaches its nominal expiry date, s 393 of the WR Act permits either party to terminate it unilaterally by giving 90 days’ notice. By virtue of the transitional provisions in Schedule 7A, the same continues to apply in relation to a pre-transition AWA.

For collective agreements, by contrast, there is no longer a right of unilateral termination, unless that right is specified in the agreement itself (s 392). Instead an application must be made to the Australian Industrial Relations Commission (AIRC), which must be satisfied that it would not be contrary to the public interest to terminate the expired agreement (s 397A).

Section 399 was also repealed. This means that when an agreement of any type is terminated, and not replaced by another agreement, the whole of any relevant award can apply, not just the ‘protected conditions’ in that award.

New rules for pre-reform agreements

Prior to the Transition Act, pre-reform certified agreements could continue in operation, but could not be altered by the parties. The same was true of preserved




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collective State agreements. But in each case, the parties may now apply to the AIRC to vary such an instrument, and/or extend its nominal expiry date for up to three years (WR Act Sch 7 s 2A; Sch 8 s 16A).

The significance of this change is that where a pre-Work Choices collective agreement has reached or is approaching its expiry date, the parties now have the option of negotiating changes to that agreement, rather than drafting a replacement instrument that would take effect as a new workplace agreement. By doing so they can avoid the effect of various restrictions introduced by Work Choices that would otherwise apply, notably the prohibited content rules in s 356. This has proved a popular option in practice.

Extension of NAPSAs

It was originally provided that all NAPSAs would expire by March 2009. The Transition Act amended Schedule 8 of the WR Act to permit them to remain in effect until at least 31 December 2009.

Curtailment of Australian Fair Pay Commission powers

In order to avoid overlaps with the AIRC’s work in modernising awards (see below), the Transition Act amended Division 2 of Part 7 of the WR Act to curtail the powers of the Australian Fair Pay Commission (AFPC). The only real power remaining to the AFPC is to conduct wage reviews for the purpose of adjusting the rates set by existing pay scales, as well as the standard FMW and the special FMW it had created for workers with a disability (WR Act s 22(1)).

Workplace Relations Fact Sheet

The repeal of Division 3A of Part 5 of the WR Act means that employers need no longer provide each new employee with a Workplace Relations Fact Sheet, a document widely derided as an advertisement for the previous government’s policies. It will ultimately be replaced by a new Fair Work Information Statement, as explained later on, but not until January 2010.

Award Modernisation

The Rudd Government might have chosen to pursue its plans for the reform of federal awards through the previous (but never used) provisions about award rationalisation and simplification in Part 10 of the WR Act. Instead, those provisions were repealed and replaced. A new Part 10A, inserted by the 2008 Transition Act, allows for a ‘modernisation’ process to replace pre-reform federal awards (and also NAPSAs) with ‘modern awards’.




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The award modernisation process

Despite the change in language, the new process is essentially the same as that envisaged by the Work Choices amendments. It must be carried out by the AIRC in accordance with a formal request, which can be varied or revoked at any time, by the Minister (WR Act s 576C). The first such request was made on the very day that Part 10A took effect, though the request has been varied on a number of occasions since then: see now Minister for Employment and Workplace Relations, Request Under Section 576C(1) – Award Modernisation: Consolidated Version, 18 December 2008.

The request expressed the government’s intention that there should be many fewer awards, with all State-based differences in award conditions to be eliminated or phased out (at least after a transitional period). Enterprise awards, however, were to be left untouched. Modern awards should generally operate by way of common rule, rather than named respondency as had traditionally been the case with federal awards.

The request required the creation of a miscellaneous award for work of a similar nature to that historically regulated by awards, so as to plug any gaps in coverage; but award coverage was not to be extended to managerial or other classes of employees who had historically been award-free. The request also suggested that, as far as possible, the modernisation process should not either disadvantage employees or increase costs for employers.

The AIRC was required to identify certain ‘priority’ industries or occupations and formulate modern awards for those sectors by the end of 2008, a deadline it was able to meet: see Award Modernisation [2008] AIRCFB 1000. Awards in all other sectors were to be reviewed and replaced by the end of 2009. But, as s 576Y of the WR Act specifically provides, no modern award, even in a priority sector, can take effect until 2010.

The award modernisation process has proven challenging and time-consuming, for the AIRC and interested parties alike. At present it appears that it will be completed more or less on schedule. One matter yet to be resolved, however, is the formulation of transitional provisions for each modern award. These will be of critical importance in minimising the negative impacts that are bound to occur with any shift to a standardised set of minimum conditions — especially in ‘award-reliant’ sectors such as retail and hospitality, where standards have traditionally varied considerably across the country, and/or in different parts of the sector.

Content of modern awards

Division 3 of Part 2-3 of the FW Act 2008 largely replicates the provisions in Part 10A of the WR Act dealing with the content of modern awards, although it also incorporates various features of the Minister’s award modernisation request.

Section 139 of the FW Act provides a list of allowable modern award matters. Modern awards will once again be able to regulate minimum wages, as opposed to




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having them set by separate pay scales. Other permissible inclusions are provisions relating to:

• types of employment;

• arrangements for when work is performed;

• overtime and penalty rates (including for shiftworkers);

• annualised wage or salary arrangements;

• allowances;

• leave and leave loadings;

• superannuation;

• procedures for consultation, representation and dispute settlement; and

• pay and conditions for outworkers.

Modern awards may also set pay and conditions for outworkers (s 140) and contain industry-specific redundancy schemes (s 141). In addition, they must include certain provisions, including coverage terms (s 143), terms for the settlement of disputes (s 146) and, as discussed below, terms facilitating ‘individual flexibility arrangements’ (s 144).

Provisions that may not be included in modern awards include objectionable terms (s 150), terms that discriminate against employees on a range of grounds (s 153), or any provisions relating to right of entry (s 152) or long service leave (s 155). Also prohibited, after a five-year transition period, are any terms that set employment conditions by reference to State or Territory boundaries (s 154). In addition, modern award provisions are of no effect to the extent that they purport to exclude the NES (ss 55–56). More is said about modern awards and the NES below.

On a more general level, s 138 of the new Act makes it clear that a modern award may only include terms to the extent necessary to achieve the ‘modern awards objective’ set out in s 134. This objective, which is also to guide FWA in exercising its functions or powers in relation to such awards, speaks of providing a ‘fair and relevant minimum safety net of terms and conditions’.

Individual flexibility arrangements

The Minister’s request envisaged that each modern award would contain a clause permitting employers and individual employees to enter into arrangements that vary the operation of award terms to ‘meet their genuine individual needs’, so long as no employee was ‘disadvantaged’. This is also now reflected in s 144 of the FW Act.




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In a June 2008 ruling, the AIRC decided on a model flexibility clause for modern awards: see Award Modernisation [2008] AIRCFB 550.Under the clause, an employment relationship must commence before any arrangement can be agreed. The AIRC also confined the operation of such an arrangement to the operation of award terms concerning the time at which work is performed, overtime or penalty rates, allowances, or leave loadings.

To be valid, a flexibility arrangement must be made without coercion, and must leave the employee better off overall. There is to be no approval process as such, though the AIRC assumed that the operation of flexibility clauses would be monitored in some way. As the FW Act now stands, FWA will indeed be specifically required to conduct research into the use of flexibility arrangements (s 653(1)(b)).

Flexibility agreements will need to be made in writing and signed, with a copy to be provided to the employee. They can be terminated at any time by mutual consent, or by either party giving four weeks’ notice.

Coverage of modern awards

Section 143 of the FW Act makes it clear that modern awards may cover parties that are specified either by name or by class. But they must not apply to any employees of a type, or doing work of a type, not ‘traditionally’ regulated by awards.

Section 47(2) of the FW Act provides that a modern award will not apply to a ‘high income employee’ . This term is defined by s 329 to mean an employee whose guaranteed annual earnings exceed a ‘high income threshold’ set by regulation. ‘Earnings’ for this purpose includes wages and non-monetary benefits that are capable of valuation, but not reimbursements or mandatory superannuation contributions.

As for the threshold, the Explanatory Memorandum for the Fair Work Bill 2008 indicates that it will be $100,000 for full-time employees (or pro rata for part-timers), indexed from 27 August 2007, the date this policy was originally announced by the ALP.

Importantly, it is not enough that such an employee have a contractual entitlement to the relevant amount. For an award not to apply, the employer must give a formal written guarantee that is accepted by the employee. Any failure to comply with that guarantee will be treated as a contravention that may be the subject of proceedings under the compliance provisions in Part 4-1 of the Act (s 328).

Variation of modern awards

The FW Act provides that once modern awards take effect in January 2010, they must be systematically reviewed by FWA every four years (s 156). Otherwise, they can only be varied:




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• as part of the annual wage review that FWA is obliged to conduct under Division 3 of Part 2-6 of the Act, with each adjustment to take effect on 1 July;

• where the variation (or the making of a new award) is considered necessary by FWA to achieve the ‘modern awards objective’ quoted above (s 157(1));

• where a variation of minimum wages is justified on work value grounds (s 157(2));

• to update or omit a party’s name (s 159);

• to remove an ambiguity or uncertainty, or to correct an error (s 160); or

• to review discriminatory provisions at the request of the Human Rights and Equal Opportunity Commission (s 161).

The Explanatory Memorandum speaks of such variations occurring only in ‘limited circumstances’. But it also notes that it will be up to FWA to ‘balance the considerations contained in the modern awards objective’ in order to decide whether a variation is necessary in the period between each quadrennial review. It will be interesting to see just how willing the new agency will be to entertain claims for new or updated entitlements, both in 2014 and before.

Towards a National System?

At present, the main provisions in the WR Act cover somewhere between 75 and 85% of the Australian workforce. The constitutional powers on which the Act is based allow it to apply to anyone who works for a trading, financial or foreign corporation, or for a Commonwealth agency. It can also apply to any other type of employer in a Territory or (by reason of the 1996 reference of powers) in the State of Victoria. But in other States sole traders, partnerships and most State government agencies remain subject to State industrial laws. So do corporate bodies that do not have sufficient trading or financial activities to qualify as trading or financial corporations.

The Rudd Government has made clear its desire to have a single, national system of regulation, at least for private sector employers. But to do so, it will need the co-operation of the States.

A series of proposals as to how a national regime might be created were set out in a report prepared by Professor George Williams at the behest of the New South Wales Government: see Working Together: Inquiry into Options for a New National Industrial Relations System, Final Report, November 2007. The Williams Report envisaged an intergovernmental agreement that would establish a process for drafting the text of a national law, as well as a Ministerial Council to provide ongoing oversight of the national system. Once the text was agreed, each State would have the option either of referring power to the Commonwealth to enact a law in those terms,




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or of enacting its own statute. It would also be up to each State to determine whether it wanted to maintain separate arrangements for its own public sector, including local government.

Despite regular meetings during 2008, the Commonwealth and the States were unable to agree on a model for co-operation. The federal government, while being willing to consult the States over the drafting of its new legislation, was not prepared to share that responsibility. For their part, most of the State governments indicated that they would reserve any decision about participating in a national system until they saw the final text of that legislation, as enacted by Parliament. The new Liberal government in Western Australia has indeed rejected any suggestion of a referral of powers, preferring instead to review its own industrial laws.

In the absence of any agreement, the Rudd Government will continue to use the corporations and other powers to give the widest possible scope to the federal system. So much is indeed clear from the FW Act.

Coverage Provisions in the FW Act

At the beginning of each separate Part of the FW Act, there is a provision which explains the meaning of the terms ‘employer’ and ‘employee’, as used throughout that Part. In some instances, those terms are given their ‘ordinary meanings’. But more commonly, they are taken to refer to a ‘national system employer’ or a ‘national system employee’.

It is the term ‘national system employer’ that holds the key to the coverage of the new legislation. It is defined in s 14 of the Act to include the same types of employer as are listed in s 6 of the WR Act: that is, constitutional corporations, Commonwealth agencies and Territory employers, together with certain employers of flight crew officers, maritime employees and waterside workers.

One change is that there are no special provisions for Victoria. As the FW Act stands, therefore, it does not apply to unincorporated small businesses and government agencies in that State. However, a new reference of powers is being negotiated that will allow the FW Act to apply to all employers in Victoria. It is expected that the necessary amendments to the FW Act will be introduced to federal parliament in May 2009.

If the Rudd Government is successful in persuading other States to refer their powers, whether just for the private sector or for State public sector employers as well, there will need to be further amendments to reflect those arrangements.

There are also certain provisions in the FW Act that are able to apply to all employees, not just those who work for a national system employer. Parts 6-3 and 6-4 extend certain entitlements and protections (for example relating to unpaid parental leave and unlawful termination) to non-national system employees. This is done




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through the use of the Commonwealth’s external affairs power, in the same way as under the WR Act.

Operation of State and Territory Industrial Laws

Where the FW Act applies to a national system employer, it generally does so to the exclusion of State or Territory industrial laws (s 26). As with the WR Act, however, this is subject to certain exceptions (s 27). For example, State and Territory laws on ‘non-excluded matters’ will still be able to apply to parties otherwise covered by the federal system.

The list of non-excluded matters is indeed longer under the FW Act than under the WR Act. It includes subjects such as leave for victims of crime, emergency service leave, workplace surveillance, business trading hours and the enforcement of employment contracts. The only major omissions, compared to the list in s 16(3) of the WR Act, each relate to the payment of wages, a subject now to be covered by new federal standards (see below). It is also made clear that there is no intention to exclude the main state or territory anti-discrimination or equal opportunity laws, which are specifically listed in s 27(1A) in lieu of a more general exception.

A further change is that where a State or Territory law deals with a non-excluded matter, that law will generally prevail over anything to the contrary in a federal award or enterprise agreement (s 29). Under s 17 of the WR Act, that is only true of laws dealing with occupational health and safety, workers compensation, child labour and (to some extent) training.

There are also provisions that make it clear that State or Territory laws can validly provide employee entitlements in relation to flexible working arrangements or community service leave that are more beneficial to employees than those applicable under the NES (ss 66, 112).

While the Rudd Government is content (at least for the present) to leave the various non-excluded matters to the States and Territories, in some of those areas it is actively promoting national consistency. For example, it has brokered an intergovernmental agreement in relation to the harmonisation of occupational health and safety regulation, and established a committee to review existing legislation and prepare recommendations as to a model law: see <nationalohsreview.gov.au>. Its Safe Work Australia Bill 2008, which would have established a new statutory authority to drive this reform agenda, was blocked in the Senate. But it is proceeding nonetheless to establish a similar agency on an executive basis.

The Fair Work Institutions

Labor’s Forward with Fairness policy envisaged the creation of Fair Work Australia (FWA) as a ‘one-stop’ agency that would take over the roles performed by the AIRC,




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the AFPC, the Workplace Authority, the Workplace Ombudsman and the Australian Building and Construction Commission.

In the result, the FW Act has moved some way from the original vision. For one thing, Part 5-2 provides that the responsibility for compliance and enforcement will rest with the Office of the Fair Work Ombudsman (FWO), an obvious successor to the Workplace Ombudsman. This will be a separate body from FWA, although the Explanatory Memorandum suggests that ‘its day-to-day operations will be practically integrated with FWA’. Its inspectors will have slightly broader powers than under the WR Act, including the right to demand a person’s name or address, if that person is reasonably believed to have contravened the legislation (s 711).

As for FWA itself, the provisions in Part 5-1 of the FW Act suggest that in certain respects it may operate in a manner similar to the (pre-Work Choices) AIRC. It will continue to have a President, Deputy Presidents and Commissioners, and there will still be Full Benches to hear appeals. It has also been announced that existing members of the AIRC will be offered positions with FWA.

But there are differences between the two bodies. For instance, s 593 emphasises that FWA is not always required to hold a hearing to discharge its functions, and there is provision in s 625 for any FWA staff member (not necessarily a Commissioner or Deputy President) to be given delegated authority to gather information or even conduct a conciliation conference.

There is also provision for a separate Minimum Wage Panel to conduct annual wage reviews. Although headed by the President, this seven person body must include at least three separately appointed Panel members (s 620). These specialist members are appointed on a part-time basis (s 628(3)). Once again, it seems evident that the Panel is intended to be a successor to the AFPC, and to operate in a broadly similar fashion to that body.

As for the courts, specialist Fair Work divisions will be added to the Federal Court and the Federal Magistrates Court to handle workplace relations matters: see FW Act Pt 4-2; TPCA Bill Sch 17. It is unclear whether new judges and magistrates with specialist credentials will be appointed to these divisions, or whether existing appointees will be transferred to them.

Part 4-1 of the FW Act also confers jurisdiction on various State and Territory courts to deal with certain types of matter, including underpayment claims, although as explained later on those courts will have more limited powers compared to their federal counterparts. There is also a small claims process for monetary claims of up to $20,000, which can apply in any magistrates court, including the Federal Magistrates Court (s 548).




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Employment Conditions under the FW Act: Core Provisions

Around half of the entire FW Act is contained in Chapter 2, dealing with ‘Terms and conditions of employment’. Among other things, this Chapter deals with the NES, modern awards and enterprise agreements.

Part 2-1 sets out certain ‘core provisions’ that apply to each of those laws or instruments. Section 44 provides that an employer must not contravene the NES, while there are also provisions prohibiting a person from contravening any modern award (s 45) or enterprise agreement (s 50) that applies to them.

The Part goes on to explain when an award or agreement ‘covers’ a person, when it ‘applies’ to them, and when it is ‘in operation’. The distinction between these terms is important, because they are used throughout the legislation. In broad terms, an instrument covers a person if they are included within its scope. But an instrument only applies to that person when it actually has the effect of conferring rights or imposing obligations on them, and is not for instance excluded by another instrument.

There are provisions explaining the interaction between the NES, awards and enterprise agreements. Except where otherwise provided in the legislation, awards and agreements cannot exclude the NES, and will have no effect to the extent that they purport to do so. They can ‘supplement’ the NES, but only if their effect is ‘not detrimental to an employee in any respect’ when compared to the NES. An agreement may also mirror particular provisions in the NES (ss 55–56).

As under the WR Act, an award cannot generally apply to any employment relationship that is covered by an enterprise agreement (s 57), while only one agreement at a time can apply to an employee (s 58).

The National Employment Standards

Part 2-2 of the FW Act deals with the NES, the minimum entitlements that from 1 January 2010 will apply to all national system employees. The provisions largely reflect the version that was announced by the government in June 2008, following an earlier consultation process.

As already noted, both modern awards and enterprise agreements must be consistent with the NES. They are allowed, however, to affect the operation of the NES in certain specified ways – for example, by specifying what constitutes an employee’s ‘ordinary hours of work’, defining a ‘shiftworker’, regulating the taking of annual leave, and so on.

In certain instances, the terms of employment contracts may affect the operation of the NES. But this is generally only for an ‘award/agreement free employee’, and the arrangement in question must usually be in writing, as for example when averaging hours of work over a period of longer than a week (s 64). An exception in this regard is an award/agreement free employee’s ordinary hours of work, which may simply be




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‘agreed’ between the parties, though the figure in question cannot be less than the employee’s usual weekly hours (s 20).

Section 129 also contemplates the possibility of regulations being made to regulate the extent to which an employer and an award/agreement free employee may reach agreement on matters covered by the NES, beyond what is already provided in Part 2-2. Otherwise, the Act appears to assume (without expressly stating) that an employment contract may validly provide entitlements that are more favourable to an employee, but not less.

Turning to the content of the NES, they regulate four of the five matters covered by the existing AFPCS: that is, maximum working hours, annual leave, personal leave and parental leave. Minimum wage rates are not dealt with in the NES, being left primarily to modern awards, though as explained later on the Act makes separate provision for a ‘national minimum wage order’. The NES also cover requests for flexible working arrangements, community service leave, long service leave, public holidays, notice of termination and redundancy pay, and the Fair Work Information Statement. What follows is a brief summary of what is proposed for each standard.

Maximum working hours

Under s 62(1) of the FW Act, the maximum is to remain 38 hours per week for full-time employees, plus any reasonable number of additional hours that they are required or requested to work. For part-time employees, the standard is expressed by reference to their ordinary hours of work (up to a maximum of 38), again plus reasonable additional hours. It is specifically provided that an employee may refuse to work unreasonable additional hours (s 62(2)).

The Act specifically allows awards and enterprise agreements to average the working of ordinary hours over a period of greater than a week (s 63). This may also be done for award/agreement free employees, though the period may not exceed six months (s 64). But unlike the position under the WR Act, it will remain necessary in all cases to ensure that the total hours worked in any given week are not unreasonable. The fact that an averaging arrangement is in place will not prevent the standard being breached, although it is a factor to be taken into account in determining whether any additional hours are unreasonable. Other relevant factors include the nature of the employee’s role, their level of responsibility, and the ‘usual patterns of work’ in the relevant industry (s 62(3)).

Requests for flexible working arrangements

Section 65 of the Act creates a new right for employees with at least twelve months’ service to request ‘a change in working arrangements’ to assist them in caring for pre-school age children, or for children with a disability. Employers will be permitted to refuse if they have ‘reasonable business grounds’ which are specified in writing.




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So long as an employer gives a written response to an employee’s request, the Act limits any challenge to any refusal. No court order can be made against the employer for an alleged failure to specify reasonable grounds (s 44(2)). However, an employer may consent to dispute resolution by FWA or some other person under the terms of an enterprise agreement, employment contract or other written agreement (ss 739(2), 740(2)).

Parental leave

Under Division 5 of Part 2-2 of the Act, minimum entitlements to unpaid parental leave will remain much as they are under the WR Act. But one change is that the provisions are now expressed to apply in relation to same sex couples: see the definitions of ‘employee couple’ and ‘de facto partner’ in s 12.

Another new feature is that two spouses or partners will each be entitled to take up to a year of leave at separate times (s 72), where under the WR Act their combined leave must not exceed a year. Alternatively, one can ask for an extra year’s leave, a request that can only be rejected on reasonable business grounds (s 76). Just as with flexible working arrangements, an employer’s refusal cannot be challenged, except through an agreed dispute resolution process (ss 44(2), 739(2), 740(2)).

Where a pregnant employee continues working during the six weeks before the expected birth, her employer will now be able to demand a medical certificate as evidence of her fitness to work. If no such evidence is supplied, and no safe alternative is available, the employee can be forced to start her leave (s 73).

In a separate move, the government has asked the Productivity Commission to look into the feasibility of creating a minimum entitlement to paid parental leave. The Commission has released a draft report proposing a publicly-funded scheme for 18 weeks’ paid leave: see Paid Parental Leave: Support for Parents with Newborn Children, Draft Inquiry Report, Productivity Commission, Canberra, 2008. A final report was due to be given to the government by February 2009.

Annual leave

The basic entitlement under Division 6 of Part 2-2 remains four weeks’ leave, or five weeks for shiftworkers. The new provisions are somewhat simpler than under the AFPCS, for example in stating that leave accrues continuously according to ordinary hours worked, rather than in four-week blocks (s 87).

One important change relates to the cashing out of annual leave. For employees covered by an award or an enterprise agreement, this is only permitted if the instrument itself allows the practice, and there must be a separate agreement in writing on each occasion (s 93). Award/agreement free employees, on the other hand, may agree to cash out leave at any time (s 94). But in all cases the employee must retain a balance of at least four weeks’ untaken leave.




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Employers are also given an express right to require an award/agreement free employee to take annual leave, so long as the requirement is reasonable (s 94(5)). This is not necessarily limited to shutdowns or cases where excessive leave has been accrued. Awards or enterprise agreements may likewise confer such a right (s 93(3)).

Personal leave

The AFPCS entitlements are for ten days’ paid personal/carer’s leave per year, plus two days’ paid compassionate leave and two days’ unpaid carer’s leave as needed. These are to remain under Division 7 of Part 2-2 of the FW Act, though with the addition of a right for casuals to take two days’ unpaid compassionate leave. The capping of paid carer’s leave to a maximum of ten days in any twelve-month period is removed. There is also far less specification as to details such as notification and justification.

Community service leave

In the first instance, this new entitlement under Division 8 of Part 2-2 is to cover two rights. One is to unpaid leave for any reasonable absence associated with voluntary emergency management activities (such as firefighting). The other is to leave for jury service. But there is also provision for regulations to add further examples of an ‘eligible community service activity’ (s 109(4)).

Where a non-casual employee is absent on jury duty, their employer must make up any difference between their ordinary pay and any compensation they may receive from the relevant government, though only for up to ten days of absence (s 111).

Long service leave

The Rudd Government has indicated that is committed to working with the States and Territories to develop a new national standard on long service leave. For the time being, however, s 113 of the FW Act simply states that employees must receive whatever entitlement is specified in a pre-reform federal award in operation before the commencement of the NES, except where that entitlement has been excluded by a workplace agreement.

Where there has been no applicable (or potentially applicable) award entitlement to long service leave, State or Territory long service leave laws can generally still apply (s 27(2)(g)). In certain circumstances, however, FWA may order that collectively bargained arrangements that operate in more than one State or Territory may override those laws (s 113(4)–(6)).




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Public holidays

The basic entitlement under Division 10 of Part 2-2 of the FW Act is the same as under the WR Act – that is, an employee is entitled to a day off on a public holiday, unless their employer has reasonable grounds for requesting them to work. There is a statutory right to be paid for any absence on a public holiday, at least at the employee’s ordinary rate of pay. But this does not apply to any casual or part-time employee who would not have been rostered to work on that day (s 116).

Notice of termination and redundancy pay

Division 11 of Part 2-2 of the FW Act covers both notice of termination and redundancy pay.

The minimum standard for notice of termination by employers, as set out in s 117, is the same as that specified in s 661 of the WR Act. Modern awards (and enterprise agreements) will also be able to specify the minimum notice required by an employee (s 118), but there is no legislated standard on that matter.

More significantly, and for the first time at the federal level, there is to be a general standard on redundancy pay that potentially applies to all employees, not just those covered by awards. The minimum entitlements in s 119 are as specified in the Redundancy Case (2004) 129 IR 155, with a maximum of 16 weeks’ pay for someone with between nine and ten years’ service. There are the usual exclusions for casuals, those on fixed term contracts, those who lose their jobs due to ‘ordinary and customary turnover of labour’, those who transfer to a new employer with continuity of service, and so on (ss 119(1)(a), 122, 123). There is also an exemption for businesses with less than 15 regular employees (s 121).

The general standard does not apply where a modern award contains ‘industry-specific’ arrangements on redundancy pay (s 123(4)(b),(c)). The Minister’s award modernisation request indicated that in determining whether to specify such a scheme, the AIRC might have regard to whether the scheme was ‘an established feature’ in the relevant industry, and whether its overall effect was no less beneficial for employees than the redundancy provisions in the NES. But while such schemes may be included during the award modernisation process, s 141 makes it clear that their coverage may not subsequently be extended, and there is no provision for recognising further schemes in awards after the modern award system commences.

Fair Work Information Statement

Division 12 of Part 2-2 provides that a Fair Work Information Statement, to be prepared by the FWO, must be given to all new employees. It will contain basic details as to the NES, awards, agreement-making, the right to freedom of association, termination of employment, individual flexibility arrangements, union rights of entry, and the role of FWA and the FWO.




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Regulation of Wages

As part of the annual wage reviews it must conduct under Part 2-6 of the FW Act, FWA is obliged to make and then periodically adjust a ‘national minimum wage order’ for all award/agreement free employees. Besides setting a general minimum pay rate and a casual loading, this order must specify special minimum rates for juniors, trainees and employees with a disability (s 294). As with award rates, any adjustment is to take effect on 1 July each year (s 287).

Part 2-7 of the Act permits FWA to make ‘equal remuneration orders’ that are designed to secure equal remuneration for male and female workers for work that is of ‘equal or comparable value’. The power is expressed in slightly broader terms than the equivalent provisions in the WR Act, which have been a dead letter in practice since their introduction in 1993. There may well be scope for ‘pay equity’ claims of the type that have been successful in New South Wales for the likes of library staff and childcare workers. But FWA is required to refuse to consider an application where an ‘adequate alternative remedy’ can be sought under another law (s 721).

Finally, Division 2 of Part 2-9 contains general rules as to the method and frequency of payment of wages to national system employees. The new rules include a prohibition on unreasonable deductions from wages for the benefit of the employer (s 326). The regulation of such matters has previously been left to State laws such as the Victorian Workers’ Wages Protection Act 2007, which will no longer be able to apply to national system employers once the new federal legislation takes effect.

Enterprise Agreements

Under Part 2-4 of the FW Act, the collective and individual workplace agreements allowed by the WR Act will be replaced by a new system of ‘enterprise agreements’. An enterprise agreement is a collective agreement that covers one or more employers and whichever of their employees are specified in the agreement.

Types of enterprise agreement

There is no formal distinction under the new system between union and non-union agreements. Except in the case of a greenfields agreement (see below), a union can only become covered by an agreement if it gives a formal notice to FWA to that effect, after the agreement has been made but before it has been approved by FWA (s 183). To do that it must have represented at least one employee in bargaining for the agreement.

Section 172 does, on the other hand, distinguish between single- and multi-enterprise agreements. A single-enterprise agreement can be made by a single employer. Alternatively, it can involve two or more employers that are related corporations, or have a joint venture or common enterprise, or have obtained a ‘single interest employer authorisation’ from FWA.




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A single interest authorisation is available under Division 10 of Part 2-4. It can be granted only where the employers in question have agreed to bargain together, and fall into one of two categories. One involves employers who carry on similar business activities under a franchising arrangement. The other requires a declaration from the Minister, based on a range of criteria. While these criteria are quite open-ended, the Explanatory Memorandum suggests that such declarations are aimed at bodies such as public hospitals or schools ‘which receive a common source of funding, do not compete with each other and which conduct their workplace relations activities through a central body’.

A multi-enterprise agreement, by contrast, is an agreement made by two or more employers that cannot establish a ‘single interest’ in any of the ways outlined above. Protected industrial action may not be taken in support of such an agreement, and nor (subject to what is said later on about certain arrangements in the ‘low-paid’ sector) is there any enforceable obligation to bargain in good faith.

Nonetheless, the Act is notable for freeing up industry, sectoral or regional bargaining. There will no longer be a requirement to obtain a public interest authorisation to make such agreements.

An employer that is covered by a multi-enterprise agreement may at any time choose to enter into an agreement of their own. When that happens, the new single-enterprise agreement immediately applies to the exclusion of the multi-enterprise instrument (s 58(3)).

As for greenfields agreements, they can be made under s 172 for one or more ‘genuine new enterprises’, where no employees have yet been hired who will be necessary for the normal conduct of the enterprise(s) and who will be covered by the agreement. According to the Explanatory Memorandum, the use of the word ‘genuine’ is meant to make it clear that a greenfields agreement may not be made for an existing business that a new employer has acquired as a going concern.

As was the case prior to Work Choices, it will only be possible to make greenfields agreements with unions. However the union(s) involved must be entitled to represent a majority of the employees to be covered by the agreement. Furthermore, FWA must be satisfied that approval of the agreement is in the public interest (s 187(5)).

Content of agreements

Section 172(1) states that an enterprise agreement can only validly deal with the following ‘permitted matters’:

• matters pertaining to the relations between each employer that will be covered by the agreement and its employees;

• matters pertaining to the relations between each employer and any unions that are covered by the agreement;




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• deductions from wages for any purpose authorised by an employee covered by the agreement; and

• matters relating to how the agreement will operate.

This formulation means that it will continue to be necessary to refer to the complex and often confusing body of case law on what constitutes a ‘matter pertaining’ to employment. For a recent example, see Australian Maritime Officers Union v Sydney Ferries Corp [2009] FCA 231, ruling that income protection insurance does not satisfy that test.

At the same time, however, the inclusion of the second and third items on the list will mean that a range of issues that are treated as ‘prohibited content’ under the WR Act may now be dealt with in agreements. Those issues include deduction of union dues, time off for union training or union meetings, and so on. An agreement should also be able to regulate the terms on which contractors or labour hire workers are engaged, something that is expressly prohibited under the WR Act. But an outright prohibition on the engagement of contractors would still be precluded, on the basis of not satisfying the ‘matters pertaining’ test.

Any term of an agreement that is not about a permitted matter is of no effect, as is a term that is inconsistent with the NES. But such terms do not affect the validity of the agreement as a whole (s 253).

The same is true of any term that is ‘unlawful’ within the meaning of s 194. This includes terms that are discriminatory, or ‘objectionable’ (in the sense of requiring or permitting conduct that would contravene the ‘general protections’ in Part 3-1 of the Act, or that compel the payment of a bargaining services fee). Also unlawful are terms that in various ways seek to get around the limitations imposed by the Act in relation to matters such as the qualifying period for unfair dismissal claims, the taking of industrial action, or the requirements for a union to obtain entry to a workplace for discussion or investigation purposes.

The main distinction between an unlawful term, and a term concerning a non-permitted matter, arises when an agreement is submitted for approval. As explained below, FWA cannot approve an agreement unless satisfied that it contains no unlawful terms (s 186(4)). But there is no equivalent obligation for it to look for, or do anything about, non-permitted content. Nor is there any penalty for proposing or adding a non-permitted term (or for that matter an unlawful term) to an agreement. In effect, therefore, the Act allows non-permitted terms to be included in enterprise agreements with impunity — they are simply unenforceable.

An enterprise agreement is also required to contain certain ‘mandatory’ terms. Aside from the need for a nominal expiry date and a dispute settlement procedure, each agreement must have a ‘flexibility term’ that allows for individual flexibility arrangements (much as with modern awards), and a term requiring each employer to consult with its employees over any major workplace changes that are likely to have a




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significant effect on them (ss 202–205). If an agreement fails to include either type of clause, a ‘model’ term prescribed by the regulations will apply. The government has indicated that these model terms will be based on those developed by the AIRC for awards during the modernisation process described earlier.

Section 206 further provides that the base rate of pay for each employee covered by an enterprise agreement can never fall below the minimum rate set by any relevant award or national minimum wage order. So if over the life of an agreement a wage rate is overtaken by adjustments to the safety net, it is automatically increased to match the new minimum.

Approval of agreements

There are two types of approval that an enterprise agreement generally requires under Division 4 of Part 2-4.

First, a non-greenfields agreement must be approved by the employees it will cover, though only after they have been given at least 7 days’ opportunity to consider the agreement. For a single-enterprise agreement to be made, it must be approved by a majority of those casting a valid vote. In the case of a multi-enterprise agreement, there must be a separate vote at each enterprise. Where approval is not given by the employees at any one enterprise, that enterprise will drop out of the agreement. A multi-enterprise agreement can only be valid if there is majority approval in at least one enterprise (s 182).

The second requirement is to obtain approval from FWA. There are many requirements that must be satisfied, but the main ones are set out in s 186. FWA must be satisfied that:

• the necessary pre-approval steps have been taken and the agreement has been ‘genuinely agreed to’ by the employees concerned;

• in the case of a multi-enterprise agreement, all employers have genuinely agreed, without coercion;

• the terms of the agreement are not inconsistent with the NES;

• the agreement passes the new ‘better off overall test’ (see below);

• the group of employees covered by the agreement was ‘fairly chosen’;

• the agreement does not contain unlawful terms;

• the agreement has a nominal expiry date not more than four years from the date of FWA approval; and

• the agreement contains a procedure that authorises either FWA or someone else that is independent of those covered by the agreement to settle disputes




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about any matters arising under the agreement, and also disputes in relation to the NES.

The better off overall test (BOOT) replaces the existing NDT. It explicitly requires each award covered employee to be better off overall under the agreement than they would be if the relevant award applied; although where a particular class of employees would appear to be better off, FWA can assume that this would be true of each employee in that class, in the absence of evidence to the contrary (s 193). According to the Explanatory Memorandum, the new test will involve an ‘on the papers’ assessment of pay and entitlements and will ‘avoid the complicated assessment procedures adopted for the Fairness Test’.

An agreement that would otherwise fail the better off overall test can still be approved on public interest grounds, but can then have a nominal term of no more than two years (s 189).

FWA can also accept undertakings to resolve any doubts it may have about the agreement meeting the statutory requirements, but only where this would not result in substantial changes to the agreement, and only after consulting with all bargaining representatives (s 190).

An agreement cannot come into operation until at least 7 days after FWA approval (s 54).

Variation and termination

Under Division 7 of Part 2-4, enterprise agreements can be varied either with the agreement of the employees concerned, or to remove ambiguity, uncertainty or discrimination. In the case of a multi-enterprise agreement, a majority of employees at each separate employer must approve the variation for it to take effect (s 209(2)). The same applies to any agreed termination (s 221(2)).

An employer, employee or union can also apply to FWA to terminate an agreement that has passed its expiry date. FWA must be satisfied that termination would not be contrary to the public interest (s 226).

Regulation of Bargaining for Enterprise Agreements

Much of the public attention surrounding the FW Act has focused on its provisions concerning the bargaining process. There are a number of initiatives in Part 2-4 of the Act.

Bargaining representatives

Division 3 imposes an obligation on an employer, once they have decided, agreed or been compelled (see below) to negotiate a new enterprise agreement, other than a




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greenfields agreement, to notify all relevant employees of their right to be represented by a bargaining representative of their choice.

Section 176 explains who counts as a bargaining representative. Unions are treated by default as the representatives of their members, unless a member elects to be represented by someone else. Employees can indeed appoint whoever they wish to represent them, including themselves, so long as this is done in writing. An employee who is not formally representing themself does not count as a bargaining representative, and hence does not become subject to the good faith bargaining obligations discussed below.

An employer can also appoint a representative of its choice, though the employer itself is automatically treated as a bargaining representative for any agreement that will cover it.

Following amendments in the Senate, there is no provision in the FW Act for anyone to be a bargaining representative in respect of a greenfields agreement.. That in turn mean that the good faith bargaining obligations set out below do not apply in the context of such agreements.

Good faith bargaining

All bargaining representatives for an enterprise agreement must meet the ‘good faith bargaining requirements’ set out in s 228(1). These oblige each representative to:

• attend, and participate in, meetings;

• disclose relevant (but non-confidential) information;

• respond, and give genuine consideration, to proposals from other representatives;

• ‘recognise’ and bargain with other representatives; and

• refrain from ‘capricious or unfair conduct that undermines freedom of association or collective bargaining’.

The Explanatory Memorandum suggests that examples of this last might include an employer refusing to recognise an employee bargaining representative or allow them to attend meetings, or victimising them for having that status.

It is specifically provided, however, that no bargaining representative is required to make concessions or reach agreement on proposed terms (s 228(2)).

A failure to bargain in good faith does not carry any automatic consequences. Section 228 is not, for example, a ‘civil remedy provision’ that can be enforced under Part 4-1. But a failure by one or more representatives to comply with the provision in relation to a proposed single-enterprise agreement may lead to another representative




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seeking a ‘bargaining order’ from FWA. Such an order may also be sought where the bargaining process is ‘not proceeding efficiently or fairly because there are multiple bargaining representatives’ (s 230).

According to s 231, a bargaining order must specify the actions that must be taken by the representatives concerned to remedy the problem in question. This may include excluding a particular representative, or requiring a group of representatives to appoint one of their number to act on their behalf.

Majority support determinations and scope orders

A bargaining representative for an employee – most obviously a union – can apply to FWA for a ‘majority support determination’. Such a determination may be made where FWA is satisfied (by any means it chooses) that a majority of employees in an enterprise wish to bargain, but their employer does not (s 237). The effect of such an order is that it triggers the obligation to notify employees of their representation rights, and also leaves the way open for bargaining orders to be sought.

A bargaining representative may also seek a ‘scope order’ from FWA that resolves concerns about the proposed coverage of a single-enterprise agreement, in terms of the employees it does or does not cover (s 238).

Multi-enterprise bargaining in ‘low-paid’ sectors

Division 9 of Part 2-4 allows FWA to issue a ‘low-paid authorisation’ in relation to a proposed multi-enterprise agreement. FWA must decide whether it is in the public interest to grant the authorisation, by reference to a lengthy checklist of factors set out in s 243. These factors include whether the authorisation will assist ‘low-paid employees who have not had access to collective bargaining or who face substantial difficulty bargaining at the enterprise level’, the history of bargaining in the industry, current terms and conditions, and the degree of commonality between the enterprises concerned.

The Act offers no definition as such of ‘low-paid’ employees, but the Explanatory Memorandum suggests that the industries or sectors that might qualify for such an authorisation include community services, cleaning and childcare.

The significance of a low-paid authorisation is that it opens the way for a representative to seek bargaining orders from FWA, something that cannot otherwise be done in relation to a multi-enterprise agreement (s 229(2)). It also opens up the possibility of FWA providing certain forms of assistance in relation to the bargaining process, as discussed below.




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Resolution of bargaining disputes

Under the WR Act, the AIRC can play very little role in resolving bargaining disputes, except where all parties consent. It is very different under the FW Act.

For a start, any bargaining representative for a proposed single-enterprise agreement (or a multi-enterprise agreement for which there is a low-paid authorisation) may unilaterally refer a dispute about the agreement to FWA under s 240. While FWA cannot arbitrate the dispute, unless all bargaining representatives agree, it may use its general powers under s 595 to conduct compulsory conciliation or mediation, or to make recommendations to the parties. FWA may likewise deal with any dispute that arises over a proposed variation to an agreement, though in this instance it cannot arbitrate at all, even if the parties agree (s 217A).

There is also a specific power under s 246 for FWA to act on its own initiative to ‘facilitate bargaining’, or to provide other assistance to the parties, where there is a low-paid authorisation in force. This may include requiring the attendance at a conference of any person (such as a head contractor or funding body) who has ‘a degree of control’ over the employment conditions of the workers to be covered by the agreement.

Importantly too, and notwithstanding the government’s original reluctance to embrace the concept of ‘last resort’ arbitration, there are four situations in which FWA may resolve a bargaining dispute by making a binding workplace determination under Part 2-5 of the Act.

One of these possibilities already exists under the WR Act – that is, where either FWA or the Minister determines that protected industrial action is threatening public health and safety, or the economy (FW Act ss 424, 431). But the other three are new. A workplace determination may now be made where:

• the taking of protected industrial action has resulted in ‘significant economic harm’ to an employer and a group of employees (or just the employees, if there has been a lockout), FWA has terminated that action under s 423, and there is no reasonable prospect of reaching agreement over any matters still at issue;

• FWA has made a ‘serious breach declaration’ under s 235, on the basis that serious and sustained breaches of bargaining orders by one or more bargaining representatives have significantly undermined bargaining for the agreement; or

• a low-paid authorisation is in operation, but the parties concerned are genuinely unable to reach agreement over the proposed multi-enterprise agreement (s 262) – so long as no employer to be covered by the determination has previously been covered by an enterprise agreement or workplace determination (s 263).




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A ‘low-paid workplace determination’ may also be made by consent, where this is sought by one or more employers and the bargaining representatives of their employees (s 261).

As is the case under the WR Act, workplace determinations essentially have effect as if they were enterprise agreements (s 279).

Industrial Action

The rules about industrial action in Part 3-3 of the Act are largely similar to those that appear in Part 9 of the WR Act. Employees and their representatives may take protected action in support of a new single-enterprise agreement (s 409), but only after any previous agreement has expired (ss 413(6)), the action has been approved in a secret ballot (Pt 3-3 Div 8), and three days’ notice has been given (s 414). The employees’ bargaining representatives must also have been genuinely seeking to reach agreement (s 413(3)). FWA inherits the AIRC’s capacity to make stop orders against unprotected action (ss 418–421), and employers may go directly to court to stop action taken during the nominal term of an existing agreement or in support of ‘pattern bargaining’ (ss 417, 422).

There are, nonetheless, some changes. For example, it is no longer necessary to initiate a formal ‘bargaining period’ in order to take protected action. Indeed the whole concept of such a period has disappeared from the legislation. FWA can still be asked, however, to suspend or terminate the taking of protected industrial action. Under Division 6 of Part 3-3, this can be done on much the same grounds as have previously applied in relation to bargaining periods (with the exception, as already noted, of the possibility of termination on the ground of significant economic harm to the parties themselves). Protected action will also be precluded whenever a serious breach declaration is in force under s 235 in relation to the proposed agreement, because of a significant failure to bargain in good faith (s 413(7)(c)).

Importantly, employers can no longer take protected action, except in response to action already taken by employees (s 411). Proactive lockouts are not, therefore, permitted, even in support of a new agreement.

Another change is that even where a union is negotiating an agreement, all employees to be covered by the agreement may initiate protected action, not just union members – provided they have been included in a ballot which has been sought on their behalf by the union or some other bargaining representative (see ss 409(1)(b)(ii), 437(1)). Furthermore, the involvement of ‘non-protected persons’ in industrial action no longer has the effect of automatically denying protected status to other participants.

Another obstacle to lawful action that is lessened under the Act concerns the content of a proposed agreement. It is still not possible for employees to take industrial action in support of a claim to include unlawful terms in an agreement (s 409(3)). But employee-initiated action can be protected so long as those involved reasonably believe that their claims relate to permitted matters (s 409(1)(a)). Hence the fact that a




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particular claim may, for instance, not satisfy the ‘matters pertaining’ requirement will not necessarily prevent action being lawful.

There are also significant changes to the rules on strike pay, now located in Division 9 of Part 3-3. The ‘four-hour rule’ for deducting pay in relation to a period of industrial action does not now apply to protected action, for which any deduction is limited to the period of the action. For protected action that takes the form of a partial work ban, the employer may choose to make a proportionate deduction (the scope of which may be reviewed by FWA), or no deduction at all. And in the case of an overtime ban, whether protected or unprotected, the employer may only deduct pay in relation to a period which the employee has been requested or required to work, and which they have refused to work in breach of their obligations.

Unfair Dismissal

Part 3-2 of the FW Act restores many of the unfair dismissal rights taken away by Work Choices. In particular, there is no longer a general exemption for employers with 100 or fewer employees. The government has estimated that its changes will mean that approximately 100,000 previously exempt businesses, with around 3 million employees, will now be covered.

Under s 382, a national system employee is ‘protected from unfair dismissal’ if they have completed the minimum employment period and, in the case of an award/agreement free employee, they earn less than the ‘high income threshold’ mentioned earlier. High-earning award-covered employees will retain their unfair dismissal rights, regardless of whether the award in question no longer applies to them because of a guarantee given under Division 3 of Part 2-9.

The minimum employment period is six months, or twelve months in the case of a ‘small business employer’ (s 383). The latter is currently defined to mean an employer with less than 15 employees at the relevant time, including any employees in the process of being dismissed, and also employees at any ‘associated entity’, but not counting casuals unless they are employed on a regular and systematic basis (s 23). As part of the deal to get the legislation through the Senate, however, the government has agreed that it will amend s 23. At least until 1 January 2011, for unfair dismissal purposes a small business will be one with fewer than 15 full-time equivalent positions. The calculation will be determined by totalling the number of ordinary weekly hours worked in the business (averaged over the four weeks preceding the dismissal), then dividing that total by 38.

There is no longer any general exclusion for employees on a fixed term, fixed task or seasonal contract. However if such employees are not re-hired at the end of their engagement, they will not have been ‘dismissed’ within the meaning of s 386 and hence will not be eligible to seek relief. The exclusion relating to probationary employees has also been removed. As for casuals, those working at larger employers can now qualify for protection after just six months, rather than twelve as has




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previously been the case, provided their employment has been regular and systematic, and there has been a reasonable expectation of continuing employment (s 384(2)(a)).

Section 385 treats a dismissal as unfair when it is harsh, unjust or unreasonable, measured by reference to similar factors as under the WR Act (see s 387). But unfairness cannot be found if a small business employer has complied with the Small Business Fair Dismissal Code. A draft of this Code, which can be declared by the Minister under s 388, was released by the government in September 2008. The Code is extremely short and simple. Among other things, it provides that:

• A dismissal will be deemed to be fair whenever the employer has reasonable grounds to believe that the employee was guilty of serious misconduct, such as theft, fraud, violence or serious breaches of occupational health and safety requirements, and reports the allegation to the police or some other relevant authority. By implication, a dismissal cannot be challenged in such a case, even if the allegation turns out to be unfounded.

• In other cases, employees should receive a warning (which need not be in writing) about their performance or conduct, and be given a reasonable opportunity to improve, before being dismissed.

• Employees will be entitled to have another person present to assist them in any ‘circumstances where dismissal is possible’. But that person cannot be a lawyer acting in a professional capacity.

Section 385 also precludes a dismissal from being treated as unfair where it was a case of ‘genuine redundancy’. This effectively replaces the ‘operational reasons’ defence in the WR Act. But an employer can only rely on this exception if it has complied with any consultation obligations in an applicable award or enterprise agreement, and if there was no reasonable opportunity for the employee to be redeployed (s 389).

As for the process for determining unfair dismissal claims, the Act has moved some way from the government’s original promise of a ‘fast-track procedure’ that would see claims being resolved at a single conference, and without lawyers. Claims will have to be lodged within 14 days of dismissal, but FWA will still have the usual power to grant an extension of time (s 394). The agency will also have a general discretion to decide whether to resolve the matter by private conference or by way of a formal hearing (ss 398–399). Any decision given can be appealed to a Full Bench, although to the extent any question of fact is involved, an appeal can only succeed if there has been a ‘significant error’ at first instance (s 400).

As for legal representation, the general rule for FWA proceedings under s 596 will apply. This requires FWA to determine whether representation by a lawyer or paid agent (other than an employee of one of the parties, or someone from an organisation representing them) would enable the matter to be dealt with more efficiently, or whether it would be unfair to deny representation.




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Plainly then, it will be up to FWA itself just how differently the new system will operate in practice, compared to the previous regime. Nonetheless, some strong hints are provided by the Explanatory Memorandum:

The new system administered by FWA will be simpler and easier for all parties to use. Under the current system, an unfair dismissal claim must go through an initial conciliation stage, which goes on to arbitration if not able to be conciliated. In the new system, FWA will be able to respond to claims in a flexible and informal manner. This includes through initial inquisitorial inquiries, and where there are contested facts, an informal conference or hearing. FWA will be able to make binding decisions following a conference, without the need for a formal, public hearing. Where conferences are held, they will be able to be conducted at alternative venues, such as the employer’s place of business, which will minimise the cost in time and lost earnings an employer may face in defending a claim.

Where FWA finds an employee to have been unfairly dismissed, the remedies available under Division 4 of Part 3-2 are the same as under the WR Act: that is, reinstatement or compensation of up to six months’ remuneration.

Finally, it should be explained that Part 3-2 does not deal with the issue of ‘unlawful termination’. That is covered instead by the ‘general protections’ provisions outlined immediately below.

General Protections

Part 3-1 of the Act contains a radically streamlined set of ‘general protections’ against discriminatory or wrongful treatment. It replaces not just the freedom of association provisions in Part 16 of the WR Act, but the separate remedies scattered around that Act for coercion, misrepresentation, unlawful termination and much more besides.

Among other things, there are prohibitions on:

• taking adverse action against a person because of some ‘workplace right’ that they have, or because of the exercise or non-exercise of such a right (s 340);

• coercing another person as to the exercise or non-exercise of a workplace right (s 343);

• an employer exerting undue influence or pressure on an employee to make various agreements or arrangements (s 344);

• knowingly or recklessly making a false or misleading representation about another person’s workplace rights, or their exercise (s 345);

• taking adverse action against a person because of their membership or non-membership of an association, or their engagement or non-engagement in various ‘industrial activities’ (s 346);




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• an employer discriminating against an employee or prospective employee because of their race, sex, age, disability, etc (s 351);

• dismissing an employee because of temporary absence from work through illness or injury (s 352);

• demanding payment of a bargaining services fee (s 353);

• discriminating against an employer because it is either covered or not covered by a particular instrument (s 354); and

• various conduct relating to ‘sham’ contracting arrangements (ss 357–359).

Each of these prohibitions is a civil remedy provision that may be enforced in court under the general compliance provisions mentioned below.

In addition, FWA may be asked under Division 8 to convene a private conference to deal with a dispute over a contravention of Part 3-1. Where a dismissal is involved, this step is effectively compulsory, and any application to FWA must generally be made within 60 days of the dismissal. Unless this is done, and FWA certifies that all reasonable attempts to resolve the dispute have failed, no court action can be taken in relation to the alleged contravention, other than to seek an interim injunction to restrain a proposed dismissal. Any court action must be initiated within 14 days of FWA granting the requisite certificate (s 371).

FWA may also be asked to deal with non-dismissal disputes as well, but this is optional and a conference will only be held if all parties agree (ss 372, 374).

Compliance and Court Enforcement

As previously mentioned, Part 4-1 deals with the enforcement of the civil remedies provisions that appear throughout the FW Act. This effectively brings together all provisions concerning the court enforcement of rights and protections under the legislation.

The key provision is s 539, which has a lengthy table identifying who can seek a remedy in relation to each civil remedy provision, in what court they may institute proceedings, and the maximum penalty for any contravention.

Besides imposing a pecuniary penalty, any prescribed court may order an employer to pay an amount owing to, or on behalf of, an employee. The Federal Court or Federal Magistrates Court, but not a State court, may also grant any other appropriate order in relation to a contravention, including an injunction, the payment of compensation, or the reinstatement of a person (s 545). This significantly broadens the remedies available for breaches of awards or agreements, compared to the WR Act.

‘Safety net contractual entitlements’ may also be enforced in the Federal Court or Federal Magistrates Court, as if they were statutory entitlements (ss 541–543). These




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are defined in s 12 to mean entitlements under an employment contract that relate to any matter also covered by the NES or by a modern award. They might include over-award wages, or entitlements to annual leave or long service leave that are more favourable than those mandated by the safety net.

Other Resolution of Non-Bargaining Disputes

Tucked away towards the end of the FW Act, in Part 6-2, there are some additional provisions on the resolution of disputes.

These apply where either FWA or some other person is authorised to resolve a dispute under a dispute settlement procedure in a modern award or an enterprise agreement. They also apply where an employment contract authorises FWA or another person to resolve a dispute in relation to the NES, or a ‘safety net contractual entitlement’ (see above).

In each of these instances, a dispute may be arbitrated where the parties concerned have agreed that such a power should exist. Importantly, this provides a means for many disputes over matters covered by the NES, or by awards or agreements, to be resolved without the need to go to court.

But there are two important limitations. One is that no such process can authorise arbitration over whether an employer had ‘reasonable business grounds’ for refusing a request for flexible work arrangements or additional parental leave under the NES provisions, unless the employer has specifically consented in an enterprise or other agreement (ss 739(2), 740(2)).

Secondly, and more generally, no decision can be made, whether by FWA or any other arbitrator, that is inconsistent with the legislation itself, or with a ‘fair work instrument’ (an award, agreement, workplace determination or FWA order) that applies to the parties (ss 739(5), 740(4)).

Rights of Entry

Part 3-4 of the FW Act regulates the right of officials of registered unions to enter workplaces, either for the purpose of investigating suspected contraventions of the Act or of instruments that have effect under it, or for holding certain discussions with workers.

The Act retains many of the restrictions imposed by the WR Act, including the need for an official to obtain a permit, to maintain certain standards of conduct to retain that permit (ss 510, 513), to give notice of entry in most cases (s 487), to comply with various employer directions while on its premises (ss 491–492), and not to misuse any information they obtain (s 504). If an official wishes to enter premises to investigate an alleged contravention, they must have reasonable grounds to suspect that contravention, and the contravention must relate to or affect at least one of the union’s




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members (s 481). The Act also continues to impose conditions on officials seeking to exercise entry rights under a state or territory occupational health and safety law (ss 494–499).

The most significant change is to the right to enter for discussion purposes, which is no longer to be limited to discussions with someone who is covered by an award or agreement binding on the union. It is enough that there are persons on the premises who are eligible to belong to the union, whether members or not, and who wish to participate in discussions (s 484). The change has generated opposition from employer groups, in part because of a concern about interfering with established demarcations. Importantly, however, FWA will be able to resolve any inter-union disputes by making representation orders in respect of a particular ‘workplace group’: see TPCA Bill Sch 22 Pt 3.

Transfer of Employment

The Act proposes important changes in relation to the treatment of employees who move from one employer to another.

Part 2-8 deals with the situation where there is a ‘transfer of business’ from one employer to another. This is defined by s 311 to occur in a much broader range of situations than under the WR Act. The established terminology, which speaks of one employer being a ‘successor, assignee or transmittee’ of all or part of another employer’s business, has been discarded.

For a transfer of business to exist, it is enough that an employee has become employed by a new employer within three months of having left an old employer, that the work they are performing for the new employer is substantially the same, and that one of four types of connection exists between the two employers. Those connections must involve:

• an arrangement between the old employer and the new employer to transfer assets that relate to the work in question;

• the outsourcing of the work from the old employer to the new employer;

• the insourcing of work previously outsourced from the new employer to the old employer; or

• the new and old employers being associated entities.

The most significant effect of s 311 is that a transfer of business will be taken to occur where businesses enter into outsourcing arrangements of a type that, under the WR Act, would not be treated as a ‘transmission’ of business. The new provisions in effect overturn the interpretation adopted by the High Court in PP Consultants Pty Ltd v FSU (2000) 201 CLR 648 and applied in cases such as Stellar Call Centres Pty




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Ltd v CEPU (2001) 106 FCR 302 and Urquhart v Automated Meter Reading Services (Aust) Pty Ltd [2008] FCA 1447.

On the other hand, the situation that arose in Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd (2005) 222 CLR 194, where one contractor replaced another, would still arguably not count as a transfer, in the absence of any transaction or relationship between the two. It should also be stressed that there can be no transfer unless at least one existing employee is taken on by the new employer.

If a transfer of business does occur, any enterprise agreement or workplace determination that previously covered the employee at the old employer will transmit to cover that employee at the new employer. The same will apply to any modern award that applied to the old employer as a named respondent. An instrument that transfers in this way will displace any enterprise agreement or modern award that would otherwise apply to the transferring employee (s 313). Unlike the WR Act provisions, there is no 12-month limit on this.

A transferable instrument may also apply to new, non-transferring employees hired by the new employer to do the same type of work, but only where there is no other agreement or award that would otherwise cover them (s 314).

Importantly, FWA is given various discretionary powers under Division 3 of Part 2-8 to vary the effect of a transferable instrument, so as to deal with any difficulties confronting the new employer in applying that instrument.

Besides these transfer of business rules, there are also provisions relating to transfer of employment in s 22, which defines the meaning of the terms ‘service’ and ‘continuous service’ for the purpose of the Act. These provisions apply where an employee moves from one employer to another within three months, and either there is a transfer of business involved, or the two employers are simply associated entities. If these conditions are satisfied, the employee will generally carry their accumulated service with them to the new employer, for the purpose of entitlements under the legislation.

However, there are exceptions to this principle. A new employer that is not an associated entity of the old employer has the option not to recognise the previous service for the purpose of NES entitlements to either annual leave or redundancy pay (ss 91, 122). In the case of annual leave, this would generally mean that the old employer must pay out any accrued entitlements.

A new employer (again, if not an associated entity) may also refuse to recognise a transferring employee’s accumulated service for the purpose of the employee serving the minimum period necessary to qualify for unfair dismissal protection, though this must be made in clear in writing before the new employment starts (s 384).




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Other Provisions in the FW Act

Besides those matters already described, the Act contains provisions dealing with the stand down of employees (Part 3-5), notification and consultation obligations where 15 or more employees are retrenched (Part 3-6 Division 2), obligations concerning record-keeping and payslips (to be prescribed by regulation under Division 3 of Part 3-6), and preventing multiple actions to enforce similar rights (Part 6-1).

Transitional Arrangements

As previously mentioned, the TPCA Bill deals with a host of transitional matters that arise in relation to the move to a new system of regulation. Some of the key features are as follows:

• there will be no ‘drop dead’ date for pre-FW Act agreements, which may continue to operate until terminated or replaced, although they may not as a general rule be varied by consent;

• the NES will apply to all national system employees as from 1 January 2010, regardless of whether they remain subject to an old agreement or award;

• no employee’s take-home pay is to be reduced by reason of their transition to a modern award;

• parties to old enterprise awards, whether federal or State, will have until 2013 to apply to FWA to have those awards modernised.

The TPCA Bill also deals with what happens after the Fair Work Act commences on 1 July 2009, but before the NES and modern awards take effect. During this ‘bridging period’, the existing AFPCS will remain in force, while new enterprise agreements will be tested against current award entitlements.

As for existing institutions, the AFPC will conduct one last annual wage review in 2009. The Workplace Authority will likewise continue in operation to complete the processing of any workplace agreements made before 1 July 2009, as well as ITEAs lodged during the bridging period. The AIRC too will work alongside FWA for at least the second half of 2009, while it completes the process of award modernisation.



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