The Fair Work Bill passed through both houses of parliament last week with a number of significant amendments having been made to the Bill originally presented to parliament. This article summarises those amendments.
The Bill should receive Royal Assent shortly. As such, the government’s Forward With Fairness package of reforms will commence from 1 July 2009, in line with the government’s original timetable.
Agreements, bargaining and industrial action
No requirement to notify all unions of greenfields agreement
Employers concerned about the ongoing attractiveness of greenfields agreements will welcome changes that effectively continue the current union greenfields agreement arrangements. Employers will remain able to make a greenfields agreement with a union or unions of their choice, provided those unions are entitled to represent a majority of the employees covered by the agreement. The requirement to notify all relevant unions has been removed from the Bill. In effect, this means that the good faith bargaining requirements will not apply to the making of greenfields agreements.
Clarification of better off overall test
The way in which the better off overall test will work has been clarified in two ways. First, while the agreement must still pass the test for each individual employee covered by an agreement, the Bill now makes clear that Fair Work Australia (FWA) can consider employees as a class where they share characteristics (for example, if they are all in the same classification). Unlike under the current no disadvantage test, the administration of which many employers have found slow and burdensome, there will be an evidentiary presumption against having to consider an individual employee’s circumstances. Secondly, the Bill now makes it clear that the test operates in the same way for greenfields and non-greenfields agreements.
Changes to the good faith bargaining regime
Most of the good faith bargaining regime remains unchanged. The civil remedy provision requiring an employer to recognise an employee’s bargaining representative has been removed and replaced with a new mutual ‘good faith bargaining requirement’ that bargaining representatives recognise and bargain with each other. Other changes include:
- requiring FWA, when making a scope order or approving an agreement, always to consider whether the group of employees covered by the agreement is ‘fairly chosen’
- enabling FWA to deal with disputes about variations to agreements—but not arbitrate them, and
- removing the requirement that FWA considers the views of a union covered by the agreement when deciding whether to approve a variation.
Clarification of strike pay rules
The provisions governing strike pay have been further clarified, particularly what an employer can and cannot pay where overtime bans or partial work bans are in place.
Transfer of business
Despite pressure from employer groups, the new transfer of business rules remain. A wider range of transactions, including outsourcing, insourcing and movement between related companies will be caught from 1 July 2009.
The government has, however, introduced an important new power for FWA to vary instruments that cover a new employer as a result of a transfer of business. Previously, the circumstances in which these instruments could be varied was very narrow. Now FWA will be able to vary their substantive terms to enable the instrument to operate in a way that better fits the new employer’s enterprise—for example to align ordinary hours of work. Given the increased application of the transfer of business provisions, this may prove a useful mechanism for employers.
The Bill also now requires FWA, when deciding whether to make orders under the transfer of business provisions, to consider the economic and productivity effects on the new employer as well as the synergy between the transferred instruments and the employer’s existing arrangements.
The safety net
The safety net (the National Employment Standards (NES) and modern awards) remains largely unchanged.
The government has introduced some amendments to the long service leave provisions under the NES which will benefit employers that have standardised long service provisions in a collective agreement. Employers should now be able to continue such arrangements pending the introduction of the national long service leave scheme (which the government is still working on).
The Bill also now makes clear that an enterprise agreement can include terms that have the same effect as provisions of the NES and that these matters can be dealt with under the agreement’s disputes process. Parties can also now agree to FWA dealing with disputes about whether an employer has reasonable business grounds for refusing a request for flexible working arrangements or extended parental leave. Employers will need to consider these matters carefully when bargaining.
Right of entry
In response to concerns about the way in which unions might use records obtained by them when exercising right of entry powers, Family First Senator Steve Fielding sought a number of amendments which tighten the requirements surrounding disclosure of information and documents.
A permit holder now cannot inspect non-member records unless the employee provides their consent in writing, or if FWA orders access. These amendments do not apply to union rights of entry under state or territory occupational health and safety laws, or with respect to clothing outworkers.
An employer need not give a union access to documents if that would contravene a Commonwealth or state law—for example, privacy laws. The civil remedy provision directed to the unauthorised use or disclosure of information or documents obtained under the right of entry provisions has been strengthened and better aligned with the privacy legislation. It is now clear that permit holders who seek to enter premises for investigation purposes without reasonable suspicion that a breach of the Act or an instrument is occurring would be liable to be penalised under the provisions of the Bill prohibiting the misrepresentation. Breach of this provision is an automatic ground for revocation or suspension of an entry permit.
A number of other government amendments were passed which provide for specific rules relating to rights of entry to investigate breaches of entitlements of clothing outworkers. There is no requirement for a union member to be present, for the outworker to be present, for the permit holder to reasonably suspect a breach, or for the permit holder to provide 24 hours’ notice.
Unfair dismissal
The definition of a ‘small business’ for the purpose of access to the unfair dismissal regime was the subject of much debate in the Senate.
The Opposition sought an amendment that the unfair dismissal threshold be raised from 15 to 25 employees, Senator Steve Fielding and Independent Senator Nick Xenophon pushed for an amendment increasing the number to 25, and the Labor senators and the Greens maintained that the 15 person limit should remain.
On 20 March 2009, Deputy Prime Minister Julia Gillard wrote to Senator Fielding indicating the government’s agreement to a two-phase approach to the application of the unfair dismissal laws. Ms Gillard provided a commitment from the government that the threshold used to define a small business for the purposes of the unfair dismissal arrangements would be:
- until 1 January 2011, fewer than 15 full time equivalent employees (calculated by averaging the ordinary hours worked by all employees in the business over the four-week period immediately prior to the employee’s termination, and dividing that by 38), and
- from 1 January 2011, fewer than 15 employees, based on a simple headcount.
The unfair dismissal system will be the subject of a review by FWA in 2012.
Other amendments
Other amendments made by the Senate and agreed to by the House of Representatives include:
- providing for the establishment of a specialist information and assistance unit for small and medium sized enterprises within the Office of the Fair Work Ombudsman
- preventing an employee from ‘double dipping’ by bringing more than one action under the general protections regime
- clarifying that state and territory anti-discrimination legislation continue to apply, but that other state and territory laws are otherwise generally overridden, and
- ensuring that where an industry-specific redundancy scheme operated in modern awards the NES redundancy pay entitlements do not apply.
This article was written by Julian Clarke, Special Counsel, and Natalie Spark, Solicitor, Employee Relations, Melbourne.
More information
For information regarding possible implications for your business, contact a member of the Employee Relations team.