Looking forward – Industrial Relations in 2012

February - The Fair Work Review

The Fair Work Act (Act) Review panel will shortly consider submissions in its review of the Act.

The terms of reference, and a background paper, have been released. Any initial submissions must be provided by 17 February 2012.

The Review presents both opportunity and risk for employers, as  stakeholders are likely to pursue  wide ranging amendments to the Act as part of the review process. Whether the Review will ultimately result in any substantive changes remains to be seen.

February - Appointment of a new President

The President of FWA, Justice Geoffrey Giudice, has announced his retirement, which will take effect by the end of February.

As a result, there is much speculation as to who will be appointed as Justice Giudice’s successor. At the time of writing, no official announcements have been made, but they are no doubt imminent.

February and March - From the High Court and Full Court (Rio Tinto, JJ Richards, Barclay, and ADJ Contracting)

In February,  Rio Tinto will seek special leave to appeal to the High Court against a Federal Court decision¹ that held an ‘employee collective agreement’ (ECA) was not validly made. The decision potentially calls into question the validity of some ECAs made under the Workplace Relations Act 1996 (Cth) by reference to their defined scope.

Also in February, the Federal Court will hear an appeal against a Full Bench of FWA in the JJ Richards case². The court will be called to determine whether protected action ballot orders are able to be applied for and made before bargaining actually ‘commences’.

In March, the High Court will hear the appeal of the Barclay decision³, which will consider the Act’s general protections provisions. In Barclay, a majority of the Full Court of the Federal Court found that, despite evidence the decision-maker’s subjective reasons for taking disciplinary action against an employee did not involve any ‘prohibited’ reason, what was important was whether objectively it seemed that the action was taken because of a prohibited reason. This meant that the court could take into account ‘unconscious’ motivations of the decision-maker. As a result, there was some concern by employers that the bar had been substantially raised and that it would be difficult to successfully defend adverse action claims going forward (particularly in relation to conduct by union delegates in the workplace). This is likely to be the most anticipated decision of the year.

Later in 2012, the Federal Court is likely to hear an appeal against a Full Bench of FWA in the ADJ Contracting case⁴. The case relates to a number of clauses that are common in Fair Work Enterprise Agreements, including clauses that require contractors to be engaged on terms no less favourable than those that apply to employees under the agreement, as well as clauses relating to right of entry, and encouragement of union membership.

March - Review of Modern Awards

FWA will shortly be conducting a review of all modern awards⁵, including their transitional arrangements.

This process presents an opportunity for employees to seek variations of modern awards if they do not achieve the modern awards objective⁶, are not operating effectively, or have anomalies or technical problems.

Any application to vary a modern award as part of the review must be filed by 8 March 2012 and should contain:

• grounds in support of the application, 
• a brief outline of the submissions to be made and statements of any evidence to be called.

Employers wanting to take part in the review should commence preparation early - the timeline is tight, and FWA is unlikely to make any such variations lightly.

Throughout 2012 - Modernisation of enterprise awards

Employers or relevant unions who were party to an existing enterprise-specific award have until 31 December 2013 to apply to FWA to have the enterprise award ‘modernised’ for continuation after that date. In the absence of such an application the enterprise award will terminate.

Employers with enterprise awards will need to consider the timing of any application very carefully, and ensure that, if an application is to be made, there is sufficient evidence prepared that justifies modernisation rather than termination.

For example, on 18 November 2011, the Federal Court handed down its decision in Yum! Restaurants⁷, in which two employers had sought to challenge the decisions of FWA to terminate, rather than modernise, two enterprise awards. The decision reinforces the strict approach courts will take in reviewing decisions of FWA and highlights the hurdles for employers seeking to retain coverage under enterprise awards.

Throughout 2012 - Opting out of enterprise agreements

Late in 2011, a Full Bench of Fair Work Australia (FWA) handed down its decision in Newlands Coal⁸. This decision confirmed the legitimacy of ‘opt-out’ clauses in enterprise agreements provided that there are sufficient controls within the agreement to ensure that employees remain ‘better off overall’.

There will no doubt be continued scrutiny of such arrangements, both from the perspective of employers and unions, throughout 2012.

Throughout 2012 - The legitimacy of the lock out

Late 2011 saw a renewed focus by employers on strategies to mitigate industrial action and increase bargaining leverage. There appears to have been an increased willingness on the part of employers to consider locking out employees as a legitimate and necessary response to damaging industrial action.

This trend is likely to continue into 2012, together with an increased focus on good faith bargaining strategies, given their potential to significantly (and legitimately) advance an employer's bargaining agenda (particularly given the demonstrated difficulty in achieving suspension/termination of industrial action in the event of harm).

Where to from here?

Freehills will be analysing these particular issues, and developments in the bargaining space generally, in further detail later in the year through:

• seminars and newsletters on the key ‘issues and trends’ for bargaining in 2012, and
• Freehills’ anticipated third volume of ‘Bargaining under the Fair Work Act’, which will provide a comprehensive analysis of bargaining related decisions over the past 12 months (scheduled for publication in July 2012).

This article was written by Paul Burns, Partner, and Rohan Doyle, Solicitor, Melbourne.

Endnotes

1. CFMEU v Pilbara Iron Company (Services) Pty Ltd [2011] FCAFC 91.
2. J.J. Richards & Sons Pty Ltd v Transport Workers’ Union of Australia [2011] FWAFB 3377.
3. Barclay v The Board of Bendigo Regional Institute of TAFE [2011] FCAFC 15.
4. AIG v ADJ Contracting Pty Ltd [2011] FWAFB 6684.
5. Except modern enterprise awards and state reference public sector modern awards.
6. I.e. provide a fair and relevant minimum safety net of terms and conditions, taking into account: (a) relative living standards and the needs of the low paid; (b) the need to encourage collective bargaining; (c) the need to promote social inclusion through increased workforce participation; (d) the need to promote flexible modern work practices and the efficient and productive performance of work; (e) the principle of equal remuneration for work of equal or comparable value; (f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; (g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; (h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy. 
7. Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia [2011] FCA 1315.
8. Newlands Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FWAFB 7325; and Newlands Coal Pty Ltd [2012] FWAFB 721.

More information

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