Well, the Federal election has come and gone.... and now we can all get on with our respective commercial lives.

It is generally agreed that the main issue in the demise of the former Government was WorkChoices (which, for overseas readers who may not be familiar with that term, is the name generally given to the package of industrial changes brought in by the former Government).

Based on the advertising and comments by Labor regarding WorkChoices, one could reasonably expect that it would be removed entirely; but, although we are definitely destined for some changes in our federal industrial laws, we will not see a return to the pre-WorkChoices regime.

Although much of the detail of the changes Labor will want to implement is not yet known (perhaps not yet developed), we are aware of much of the framework of what they want to do. We have set out below what we might expect in regard to federal industrial laws in the near future - to give everyone a better feel for what is ahead.

This edition of E-Law is longer than usual (we usually try to stay within a page or so) but thought the subject warranted it - because one thing we know is that, one way or another, this is going to affect almost every one of us.....

Regards,

David Heidtman

Commercial Group
Heidtman & Co Lawyers

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Beyond WorkChoices – the new industrial relations arena

The recent election of the Labor party to Federal Government will (if they get their way) herald a period of considerable change to the Australian industrial relations landscape. It is vital for employers to quickly grasp the primary reforms and to familiarise themselves with the impact these reforms will have on their individual workplaces and obligations.

The purpose of this alert is to provide a snapshot of some of the fundamental industrial relations policies and changes which Labor have indicated will be rolled out during their first term in office.

Fair Work Australia

The Australian Industrial Relations Commission, the Australian Fair Pay Commission, the Australian Building and Construction Commission, the Workplace Authority and the Workplace Ombudsman will be abolished.

A new statutory body will be established called "Fair Work Australia" ("FWA"). FWA's primary functions will be to:

• provide information and advice on workplace issues;
• hear and resolve claims for unfair and unlawful dismissal;
• approve collective agreements;
• set minimum wages and award conditions;
• ensure compliance with workplace laws, awards and agreements;
• assist parties to resolve workplace disputes;
• facilitate collective bargaining and enforcing good faith bargaining; and
• regulate unions and registered industrial organisations.

The Australian Building and Construction Commission ("ABCC") will remain in force until 31 January 2010. After this date, the ABCC’s responsibilities will be handled by FWA.

AWAs?

Australian Workplace Agreements (AWAs) will be phased out. Employers and employees will not be able to create new AWAs, or renew existing AWAs, after the Transition Bill is passed into law.

The AWAs that are current when the Transition Bill becomes law will continue to operate as normal, until they are terminated in accordance with the current rules.

Under the new regime, employers who have previously adopted AWAs will be able to enter into a new type of agreement called an Individual Transitional Employment Agreement ("ITEA") with:

• existing employees whose AWAs terminate before December 2009; and
• new employees commencing employment between the implementation of the Transition Bill and 31 December 2009.

An ITEA will not be allowed to have a term extending beyond 31 December 2009. It is a little unclear just what will happen after this date, but our understanding of Labor’s policy is that ITEAs may continue in force but could be unilaterally terminated.

Unfair Dismissal?

Under the new regime, employees will be eligible to bring an action for unfair dismissal unless:

• (if the employer employs 15 or more employees) the employee has been employed for less than 6 months;
• (if the employer employs fewer than 15 employees) the employee has been employed for less than 12 months; or
• the employee is not covered by an award and earns more than the applicable remuneration threshold.

The WorkChoices exemption for employers with 100 employees or fewer will be abolished. Instead, there will be a limited "small business" exemption for employers with fewer than 15 employees, and only for the first 12 months of employment, as mentioned above.

Further, where a small business owner has suffered a downturn and needs to reduce staff to reduce costs, the dismissal will be considered to be a genuine redundancy, not an unfair dismissal.

Any unfair dismissal claim would usually have to be made within 7 days of the dismissal. FWA will have the responsibility of reviewing applications and will have the power to conduct a conference with the parties to determine the issues. Hearing officers will be located in regional and suburban areas, and will be able to attend workplaces to hear claims on an informal basis – there will not be any formal written submissions, cross-examination or trial. Parties will be entitled to use representatives for limited assistance, but the employer and employee will be required to respond directly to questions asked.

Labor has also foreshadowed the establishment of a "Fair Dismissal Code" to provide small business with guidance in meeting obligations under the new regime. Thus, where it can be demonstrated that a small business owner complied with the Code (or with advice provided by FWA), the dismissal will be considered fair and no compensation will be payable to the former employee.

Union Right of Entry

It would appear that the existing WorkChoices’ right of entry rules will be retained. The 'right of entry' rules stipulate that union officials with a right of entry permit are entitled to visit employees in three situations:

1. to investigate alleged breaches of industrial law, agreements or awards;
2. to hold union membership discussions with employees; or
3. to investigate breaches of OH & S laws.

Ten compulsory contract requirements – the employee 'safety net'

There will be 10 national employment standards (instead of the 4 under WorkChoices) written into legislation that must be included or referred to in all employment contracts. These standards are intended to act as a 'safety net'. They are:

1. Hours of work: the standard working hours for a full time employee will continue to be 38 hours per week. Employers can ask employees to work additional hours, but they cannot ask employees to work "unreasonable additional hours".
2. Parental leave: parents must each be given a right to separate periods of 12 months unpaid leave (to a maximum of 2 years). A parent can request additional unpaid leave not exceeding 12 months.. The employer could refuse only on "reasonable business grounds".
3. Flexible work for parents: parents with pre-school-aged children must be given a right to seek flexible working hours. An employer can only refuse such a request on "reasonable business grounds".
4. Annual leave: all full time employees will continue to be entitled to 4 weeks paid annual leave, with an extra week for shift workers. Part time employees will receive a pro rata amount. Casual employees will not be entitled to annual leave.
5. Personal, carers and compassionate leave: full time employees will receive 10 days’ paid personal and carers’ leave each year (pro rata for part time employees). Employees will also be entitled to 2 days’ paid compassionate leave per event. Casual employees will not receive these entitlements. All employees (including casual employees) will be entitled to 2 days of unpaid personal leave for "genuine caring purposes and family emergencies".
6. Community service leave: employees will receive leave for "prescribed community service activities", such as for jury service.
7. Public holidays: public holidays (including prescribed State public holidays) will be guaranteed. If an employee works on a public holiday, they must receive "an appropriate penalty rate of pay or other compensation" which will be outlined in the applicable award.
8. Information in the workplace: employers will be required to provide all new employees with a "Fair Work Information Statement" which will detail the features of the 'safety net' and the FWA.
9. Termination of employment and redundancy: Small businesses (fewer than 15 employees) will not be required to make redundancy payments. However, Labor intends to legislate for a scale which will govern a minimum period of notice of termination and sets out minimum redundancy payment amounts for employees having varying periods of continuous employment.
10. Long service leave: at present, State legislation covers long service leave. Federal Labor intends to work with the State Labor governments to introduce a national long service leave entitlement regime.

Awards

Awards can be reviewed every four years by FWA in order to keep them relevant to the workforce, prevailing economic conditions and standards of living.

Enterprise awards will continue, and will only be reviewed where requested by the parties.

Employees earning over $100,000 exempt from award coverage

From 2010, employees earning more than $100,000 p.a. will be able to bargain directly with their employers and without reference to awards. However, these employees will still be covered by the 10 legislated national employment standards.

Ten standards in awards

In addition to the 10 legislated minimum national employment standards, awards may also incorporate a further 10 conditions, namely:

1. Minimum wages: including skill-based classifications, career structures, incentive based payments, bonuses, wages and apprentice and trainee arrangements.
2. Type of work performed: including permanent, casual, flexible work arrangements and job sharing.
3. Arrangements for when work is performed: including hours of work, rostering, rest breaks and meal breaks.
4. Overtime rates: for long hours.
5. Penalty rates: for employees working unsocial, irregular or unpredictable hours or on weekends, public holidays and as shift workers.
6. Annualised wage or salary: arrangements that have regard to patterns of work in an occupation, industry or enterprise as an alternative to penalty rates.
7. Allowances: including reimbursement of expenses, higher duties and disability payments.
8. Leave and leave loading.
9. Superannuation.
10. Consultation: including representation and dispute settling processes.

Mandatory "flexibility" clauses

It will be mandatory for all awards to provide some form of a 'flexibility clause' to allow employers and employees to negotiate and tailor individual arrangements, such as scheduling and hours of work, rates of pay and flexible working arrangements for parents. Flexibility clauses which have the effect of placing an employee at a disadvantage are prohibited.

Collective agreements

Collective agreements will be at the core of the new industrial relations system. Thus, where a majority of employees at a particular workplace wish to bargain collectively, the employer must negotiate in "good faith". FWA will have the power to determine the level of support for collective bargaining in the workplace if necessary, and will have the authority to approve and ratify collective agreements. As part of its review, FWA must consider whether an agreement satisfies the "better off overall test", including meeting the 10 minimum 'safety net' standards. Collective agreements will have a maximum nominal term of 4 years (currently 5 years).

In non-unionised workplaces an employer and its employees will be able to bargain together to form a non-union collective agreement, without any union participation.

Content of agreements

Agreements will not be restricted as to their contents and bargaining participants will be at liberty to reach agreement on whatever matter is suitable. However, all collective agreements will need to contain a 'flexibility clause' which allows employers and an individual employee to make a flexibility arrangement about certain matters.

'Good faith' bargaining

Both employers and employees will be required to negotiate in "good faith". This is a new and important additional requirement not found in the WorkChoices regime.

FWA is intended to assist negotiating parties with this process and will have the power to make orders where it considers that the parties may not be negotiating in "good faith".

Some indicators of "good faith" are:

• attending and participating in meetings at reasonable times;
• frank disclosure of relevant information in a timely manner;
• responding in a timely manner to proposals made by the other party;
• giving genuine consideration to the other parties’ needs and providing reasons for responses; and
• refraining from unfair conduct that undermines freedom of association or collective bargaining.

However, parties will not be compelled to finalise any agreement, and where an agreement cannot be reached, the parties have a number of further options including:

• abandoning the negotiations;
• requesting FWA assist them reach agreement; or
• taking protected industrial action.

Industrial action

Under the reforms, industrial action can be 'protected' only if it is approved by employees in a secret ballot. The following types of industrial action will not be protected:

• industrial action during the life of an agreement;
• industrial action in support of an industry wide agreement (pattern bargaining); and
• industrial action outside 'good faith' bargaining processes.

The proposed reforms retain many of the measures introduced or strengthened by WorkChoices, including the requirement for a secret ballot, and the prohibition on strike pay.

If industrial action is causing significant harm to bargaining participants, the wider economy or community safety, FWA will have the power to intervene to end the industrial action and determine a settlement between the parties for that particular workplace.

Young workers

Labor proposes to appoint a Young Worker Liaison Officer ("YWLO") within FWA in each State. The role of the YWLO will be to:

• ensure that information provided to young employees by FWA is understandable;
• monitor the terms and conditions within young employee's contracts; and
• monitor complaints that FWA receives from young employees.

Labor plans to publish a "Young Workers’ Toolkit" which is intended to supply information about employment issues to young employees.

Labor intends to develop a voluntary "National Code of Practice for Young Workers". The Code will deal with matters such as rostering arrangements, training, mentoring and safety for young workers.

Conclusion

As always, the devil will be in the detail and we will have a clearer picture of the legislation as and when it is rolled out. We must also bear in mind that, in the transition of the reforming legislation through the Parliament, it will likely undergo amendment.

Notwithstanding this, employers should acquaint themselves with the proposed changes sooner rather than later.

Author: Michael Tzirtzilakis - Commercial Group

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