Presentation to Ai Group’s National PIR
Group Conference
THE FAIR WORK SYSTEM—
FAIR WORK AUSTRALIA’S
EXPERIENCES AND INSIGHTS
Senior Deputy President Jennifer Acton
19 April 2010
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Introduction
I welcome the opportunity today provides for us to exchange views about the operation of
Fair Work Australia. Fair Work Australia, of course, meets with the Ai Group several
times a year outside the courtroom to discuss operational issues. Speaking at
conferences such as this, however, adds another dimension to that consultation.
In speaking to you, I thought it would be useful to provide you with an overview of the
work of Fair Work Australia before detailing aspects of that work.
Initially, however, I must comment on the nature of Fair Work Australia. It is a national
industrial tribunal comprising members of the former Australian Industrial Relations
Commission, some totally new appointments and some members who have both been
and are members of state industrial tribunals. While a national industrial tribunal is not a
new concept, Fair Work Australia’s reach in terms of the employers and employees its
work covers is unprecedented in Australia. Similarly, although dual appointment to the
national industrial tribunal and a state industrial tribunal is not new, for the first time the
dual appointees are regularly involved in Fair Work Australia’s work, in some cases for
100 per cent of their working time.
I turn then to an overview of Fair Work Australia’s work.
Fair Work Australia’s jurisdiction
Fair Work Australia’s jurisdiction includes:
Maintaining a safety net of modern awards,
Facilitating the making and approval of enterprise agreements,
Arbitrating unfair dismissal applications, and
Assisting in the resolution of workplace disputes.
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From 1 July 2009, when Fair Work Australia commenced, to 31 March 2010, there were
35,554 applications lodged in Fair Work Australia and the Australian Industrial Relations
Commission, although about 13,900 of these applications were to terminate individual
agreements such as Australian Workplace Agreements. The remaining applications were
mostly in the following categories:
Lodgments by Category from 1 July 2009 – 31 March 2010
Category No.
Agreements 6,054*
Bargaining 1,663
Unfair dismissals 8,631
Disputes 2,486
*Excludes applications to terminate individual agreements
It can be seen that there were some 6,000 applications regarding enterprise agreements
between employers and employees.
Further, there were almost 1,700 applications associated with bargaining between an
employer and their employees for such an agreement. Of the nearly 1,700 bargaining
applications, about 800 were for protected industrial action ballot orders, some 450 were
for Fair Work Australia to deal with a dispute which the bargaining representatives were
not able to resolve about a proposed enterprise agreement, and about 200 were for
bargaining orders or majority support determinations.
Some 8,600 of the applications were for a remedy for alleged unfair dismissal.
Finally, of the 2,486 dispute applications over the period, some 1,200 were applications
to deal with disputes in accordance with the dispute settling term of an agreement
between an employer and their employees, about 1,100 were dispute applications in
respect of dismissal in alleged contravention of the general protections provisions of the
Fair Work Act 2009 (Cth) (the Fair Work Act) or unlawful dismissal, and around 150 were
applications alleging a non-dismissal contravention of the general protections provisions.
Fair Work Australia’s substantial work in respect of modern awards, including minimum
wages, is not really reflected in the lodgments as it is work largely undertaken on the
tribunals’ own motion pursuant to statute.
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It is difficult to strictly compare the work of Fair Work Australia with that of yesteryear
because of changes in jurisdiction. Nonetheless, an analysis of the Annual Reports of the
Australian Industrial Relations Commission over the last 15 years suggests there has
been a substantial increase in the national industrial tribunal’s work in facilitating the
making and approval of enterprise agreements between employers and employees and a
decline in the tribunal’s non-bargaining dispute resolution work.
The work of Fair Work Australia is dealt with according to a panel system and by Full
Benches. There are four Industry panels, a Termination of employment panel, an
Organisations panel and the Minimum wages panel.
Each Industry panel is headed by a senior member of the tribunal who is responsible for
administering the work of the panel and has several Fair Work Australia members
allocated to it. The Industry panels predominantly deal with enterprise agreements,
dispute notifications and bargaining applications in the industries covered by the panel.
For example, I am a member of the metals, manufacturing and building industries panel.
I am also head of the Termination of employment panel and responsible for the
administration of unfair dismissal applications by Fair Work Australia. Nearly all Fair
Work Australia members are allocated to the Termination of employment panel.
The Organisations panel is also headed by a senior member of Fair Work Australia and
has another three Fair Work Australia members allocated to it. It deals with matters
relating to registered organisations.
The Minimum wages panel is constituted by the President and includes several Fair
Work Australia members and three Minimum Wage Panel members.
Full Benches of Fair Work Australia comprising at least three Fair Work Australia
members including a presidential member deal with appeals and major cases.
Having given you an overview of the work and organisation of Fair Work Australia, it is
appropriate to further consider the major areas of the tribunal’s jurisdiction, turning firstly
to modern awards.
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Modern awards
Award modernisation commenced before the Australian Industrial Relations Commission
in April 2008 and the making of modern awards was completed in March 2010 by Fair
Work Australia. The award modernisation task was conducted by the same six or seven
member Full Bench, of which I was part, with other members providing reports on issues
from the parties regarding the making of individual modern awards. Utilizing the same
Full Bench for the two year award modernisation process aided in achieving consistency
of approach across the 122 modern awards made to replace some 1,560 Federal awards
and notional agreements preserving State awards (NAPSA’s).
The Ai Group made an enormously positive contribution to award modernisation, not only
in respect individual modern awards but also in respect of the general principles to
govern the award modernisation process.
The modern Manufacturing and Associated Industries and Occupations Award 2010, in
respect of which the Ai Group had a particularly detailed involvement, has replaced some
160 previous Federal awards and NAPSA’s. These included awards and NAPSA’s in the
metals; paint manufacturing; clay products; furnishing; glass making; and rubber, plastic
and cable making industries; and awards and NAPSA’s for the engine driving;
draughting; production planning; technical worker and engineering maintenance
occupations. The modern Food, Beverage and Tobacco Manufacturing Award 2010, in
which the Ai Group also had significant involvement, has replaced nearly 100 previous
Federal Awards and NAPSA’s, including those in the aerated waters; brewery; baking;
dairy manufacturing; confectionary; food preserving; pet food manufacturing; and milling
industries.
At the beginning of award modernisation, your National Workplace Relations Director,
Stephen Smith, was keen on reciting how many hours the Ai Group had put into the
award simplification task in the 1990’s. I don’t know if Stephen has done the Ai Group
hours tally for award modernisation but I am sure the figure will be substantial.
Of course, the award modernisation task is not quite over, with applications in respect of
enterprise awards and other consequential issues still to be dealt with.
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Importantly, Fair Work Australia has an on-going role in maintaining the modern award
safety net through the annual minimum wage review, the four-yearly reviews of modern
awards and the determination of other variations concerning modern awards.
Through such work Fair Work Australia will continue to perform the rights creating role its
predecessors undertook for most of their 105 year history.
Enterprise agreements and bargaining
With respect to collective bargaining, as I have indicated Fair Work Australia’s role in
facilitating the making and approval of enterprise agreements has to date largely involved
assisting parties to resolve issues arising in the course of bargaining, determining
protected industrial action ballot orders and, ultimately, considering applications for
approval of enterprise agreements. While Fair Work Australia has an important role in
maintaining the modern award safety net, the reality is that increasingly it is an enterprise
agreement between an employer and their employees, rather than an award, which
determines the wages and working conditions in a workplace.
Fair Work Australia has been able to streamline the processing of many applications
associated with the making and approval of enterprise agreements. We have done this
through the use of correspondence or telephone mentions of the applications to ascertain
whether there are objections to the applications and to deal with easily resolvable
difficulties. We also determine many applications in chambers without requiring the
attendance of parties.
In the metals and manufacturing areas that I deal with, the making of protected industrial
action ballot orders is often not opposed by employers having regard to the statutory
requirements for the making of the orders and the body of case law in respect of
applications for such orders.
In terms of case law, a recent Full Bench appeal decision in John Holland Pty Ltd v
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known
as the Australian Manufacturing Workers' Union (AMWU) ([2010] FWAFB 526), which
was presided over by the President, dismissed an appeal against the granting of a
protected industrial action ballot order. The appeal was made on the grounds the
questions in the application for the order did not adequately specify the nature of the
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industrial action or the group of employees to be balloted and the AMWU had not been
and was not genuinely trying to reach an enterprise agreement. The Full Bench
concluded, amongst other things, that in most cases the drafting of the questions is a
matter for the applicant, the group of employees to be balloted could be fairly inferred
from the circumstances surrounding the application, and there is no fundamental reason
why a bargaining representative engaged in pattern bargaining is not genuinely trying to
reach an agreement as required by the protected industrial action ballot provisions of the
Fair Work Act. The Full Bench also rejected the suggestion the bargaining representative
was not genuinely trying to reach an enterprise agreement merely because they were
pursuing a claim for incorporation of the metal industry award which contained terms
irrelevant to the relationship between those to be covered by the proposed agreement.
Fair Work Australia’s assistance to parties to resolve issues arising in the course of
bargaining may arise through a variety of applications, including applications for
bargaining orders, majority support determinations, and scope orders as well as
bargaining dispute applications. Typically such applications are used as vehicles for Fair
Work Australia to conciliate bargaining issues, with few applications resulting in final
orders.
The approval of enterprise agreements raises issues going to the validity of applications
for approval, the completeness of declarations accompanying such applications and the
satisfaction of the requirements for approval of such agreements.
Some of these issues were highlighted in a very recent decision of a Full Bench, on
which I presided, in Bupa Care Services Pty Ltd and others ([2010] FWAFB 2762). The
Full Bench was dealing with two appeals against refusals to approve some enterprise
agreements which contained ―preferred hours‖ clauses. The Fair Work Australia
members dealing with the applications at first instance had declined to approve the
enterprise agreements because they considered the ―preferred hours‖ clauses resulted in
the agreements failing to pass the ―no-disadvantage test‖.
The ―preferred hours‖ clauses essentially provided that where an employee advised their
employer they wished to work particular hours, the employer was only obliged to pay the
employee at ordinary rates rather than at any penalty or overtime rates that would
otherwise apply to the employee under the enterprise agreement for working those
hours.
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The Full Bench concluded that the ―preferred hours‖ clauses resulted in at least one term
or condition of employment in the enterprise agreements being less beneficial to
employees than the terms and conditions in the relevant reference instruments and this
was relevant to the ―no-disadvantage test‖. Although, none of the employer declarations
accompanying the applications for approval of the enterprise agreements had pointed
this out. The Full Bench required the employers to file revised employer declarations.
Further, the Full Bench concluded that under s.190 of the Fair Work Act, where a Fair
Work Australia member is satisfied an application for approval of an enterprise
agreement has been made under s.185 of the Fair Work Act and is concerned the
enterprise agreement does not meet the requirements in ss. 186 and 187 of the Fair
Work Act, the member must give the employer or employers covered by the agreement
the opportunity to give an undertaking to meet the member’s concern and the member
must consider any undertaking so given.
On appeal, the employers proffered undertakings rendering the ―preferred hours‖ clauses
of no effect. The Full Bench accepted that the undertakings met the concern that the
enterprise agreements did not pass the ―no-disadvantage test‖ because of their
―preferred hours‖ clauses. The Full Bench quashed the first instance decisions declining
to approve the enterprise agreements, but referred the applications for approval of the
enterprise agreements to single members of Fair Work Australia to determine given that
some of the employer declarations suggested the statutory requirements for making an
application had not been complied with and all of the employer declarations were
incomplete.
Unfair dismissal applications
This then leads me to the other major categories of Fair Work Australia’s work – unfair
dismissal applications and workplace dispute resolution.
The Australian Industrial Relations Commission, the predecessor of Fair Work Australia,
had a substantive jurisdiction in respect of termination of employment applications for
more than 15 years. Commission members conciliated and later arbitrated termination of
employment applications, generally in face to face proceedings at the Commission or in
regional courts. Although, applications from regional locations in Queensland, South
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Australia, Western Australia and the Northern Territory were typically conciliated via
telephone or video conference.
The creation of Fair Work Australia has provided an opportunity to revise the way in
which unfair dismissal applications are dealt with.
Fair Work Australia has taken the opportunity to employ some 23 conciliators across
Australia to conciliate unfair dismissal applications. The conciliators are public servants,
as opposed to statutory members of Fair Work Australia. All of those we have employed
have extensive experience in alternative dispute resolution and many also have
workplace relations experience.
Our alternative dispute resolution model in respect of unfair dismissal applications
involves conciliation rather than mediation. As a result, the conciliators are trained to
play a more activist role than would a mediator in assisting the parties to resolve an
unfair dismissal application.
Their activist role may extend to such matters as reality testing a party’s position against
relevant case law or reality testing their proposed remedy against the remedies available
under the Fair Work Act. It is also likely to involve shuttle negotiation.
An example of the reality testing that a conciliator may engage in includes suggesting to
an employer who is objecting to an unfair dismissal application on the basis their former
employee resigned, that the employee may still be regarded as having been dismissed.
This is because of the definition of ―dismissed‖ in the Fair Work Act and the conduct of
the employer before the resignation. Another example is the conciliator suggesting to an
employee that their claim for reinstatement may have little prospect of success, given
their detrimental post termination conduct towards their former employer and cited case
law on the effect of such conduct on remedy.
The conciliations Fair Work Australia conducts are voluntary, in that the Fair Work Act
does not require conciliation of unfair dismissal applications and so the parties are at
liberty to decide whether or not they want to take part in them. However, it will usually be
in the interests of a party to do so as a conciliation provides a quick, informal and efficient
means of seeking to resolve an unfair dismissal application.
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Our experience is that nearly all employers are prepared to take part in a Fair Work
Australia conciliation and most employers are prepared to do so even if they have an
unresolved jurisdictional objection to an unfair dismissal application.
In terms of logistics, most of the Fair Work Australia conciliations are conducted by
telephone conference. In this regard, between 1 July 2009 and 31 March 2010, some
92% of the conciliations were by telephone, 8% were conducted in person and a very
small percentage were by video conference. The typical telephone conciliation takes
about one and a half hours and is confidential within the limits of the law. Subject to the
parties’ agreement, the conciliation usually involves the applicant outlining their position
and the conciliator asking the applicant questions to clarify issues, then the respondent
outlines their position followed again by questions from the conciliator to clarify issues.
The applicant is subsequently given the opportunity to state anything they wish to say in
reply. The conciliator will then usually go into a private session with each of the parties
to reality test their position and discuss options for settlement. The settlement
negotiations are mostly conducted by the conciliator going back and forth between the
parties with the other party’s settlement proposal until an agreement is reached or it is
obvious no agreement at the conciliation is possible.
A Fair Work Australia conciliation is typically conducted within 25 days of an application
being received. The statistics on Fair Work Australia unfair dismissal application
conciliations between 1 July 2009 and 1 March 2010 reveal that some 81% of the unfair
dismissal applications that go to conciliation settle at the conciliation. Indeed, 92% of the
unfair dismissal applications made to Fair Work Australia are finalised before or at
conciliation.
An application that does not settle at conciliation is allocated to a Fair Work Australia
member for determination. In NSW and Victoria, Fair Work Australia members are
rostered to determine unfair dismissal applications. In Sydney and Melbourne, the first
full week of each month is allocated for the merits arbitration of such applications by Fair
Work Australia members, with a merits arbitration usually being conducted two to three
months after the conciliation. Each Friday is allocated for Fair Work Australia members to
deal with jurisdictional issues in respect of an application. Rosters also exist for Fair
Work Australia members to determine unfair dismissal applications in regional NSW and
Victoria. In other states, Fair Work Australia members determine unfair dismissal
applications as part of the normal course of their work.
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The administration of unfair dismissal applications across Australia from lodgment
through to the conclusion of conciliation is, for the most part, conducted centrally by Fair
Work Australia staff in Sydney and Melbourne, with oversight from me as the head of the
Termination of employment panel.
Post conciliation, the case management of unfair dismissal applications in New South
Wales and Victoria continues to be conducted centrally by the Termination of
employment panel head, in conjunction with Fair Work Australia staff in Melbourne. Such
case management includes determining the date for any jurisdictional proceeding on or
the merits arbitration of an application and requests for a variation to the date, issuing
directions for the filing of material with Fair Work Australia for the proceeding or
arbitration and conducting proceedings on any non-compliance with the directions, and
dealing with orders for the production of documents or for persons to attend the
proceeding or arbitration. The centralised case management of unfair dismissal
applications enables Fair Work Australia to deal with applications that do not settle at
conciliation both expeditiously and efficiently.
In other states, the case management of unfair dismissal applications post conciliation is
conducted by the Fair Work Australia member to whom the application is allocated.
The statistics on the disposal of unfair dismissal applications lodged in Fair Work
Australia are as follows:
Unfair Dismissal Applications Lodged from 1 July 2009 – 31 March 2010
Conciliation settlement rate 81%
Applications finalised before or at conciliation 92%
Applications requiring arbitration Less than 2%
Average time between lodgment and conciliation 25 days
Some 81% of the applications that go to conciliation settle at the conciliation. Around
92% of the applications are finalised before or at conciliation, and another five to six per
cent of the applications resolve after conciliation, resulting in less than 2% of the
applications actually requiring merits arbitration. The average time period between the
lodgment of an application and its conciliation is 25 days.
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Seamless case management of unfair dismissal applications from their lodgment to
determination by a Fair Work Australia member is critical. Our experience is that,
generally speaking, if applications are listed quickly for conciliation and the parties know
that an application that does not settle at conciliation will be listed quickly for
determination, with requests for an adjournment of the determination proceedings only
being granted in exceptional circumstances, then the prospects of resolving the
applications expeditiously and efficiently are enhanced.
Of course speed and efficiency are only one aspect of the criteria against which we
would measure our success in dealing with unfair dismissal applications. The attitude of
the parties to the process is very important. While some of the parties who have
traditionally represented applicants and respondents to unfair dismissal applications were
initially sceptical of telephone conciliations by other than Fair Work Australia members, it
seems that scepticism is beginning to give way in the light of their experience with the
new process. Many are now advising us that they welcome the convenience of having
the applications initially dealt with without having to leave their homes or workplace and
without the quality of the actual conciliation or its outcome being compromised. Further,
they say that telephone conciliations diminish the effect of the posturing that often
accompanies conciliation, thereby providing a more level playing field.
Fair Work Australia, however, does not intend to rely on just the anecdotal feedback we
have received about the new process. We are about to commission research by an
independent body into users’ experiences with and views about the process with the aim
of receiving a report around the middle of this year that we can use to review and adjust
the process as appropriate. We would welcome your involvement in that research.
Workplace dispute resolution
The benefits of streamlined case management are also relevant to the final category of
our work that I wanted to dwell on, namely the resolution of workplace disputes.
The predecessors to Fair Work Australia had over 80 years experience in the alternative
dispute resolution of workplace disputes. Fair Work Australia is continuing that tradition.
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Fair Work Australia’s jurisdiction in respect of workplace disputes includes general
protections disputes, right of entry disputes and disputes that the parties to an enterprise
agreement have empowered Fair Work Australia to deal with, including disputes in
relation to the National Employment Standards.
As we saw earlier, much of the dispute resolution work performed by Fair Work Australia
relates to disputes about matters arising under an enterprise agreement.
The Fair Work Act at s.186(6) requires that an enterprise agreement include a term that
provides a procedure requiring or allowing Fair Work Australia, or another person
independent of the employers, employees or employee organisations covered by the
agreement, to settle disputes about matters arising under the agreement and in relation
to the National Employment Standards.
A recent Full Bench decision in which I was involved in Woolworths Ltd trading as
Produce and Recycling Distribution Centre ([2010] FWAFB 1464) concluded, however,
that Fair Work Australia cannot arbitrate a dispute under a dispute settlement procedure
in an enterprise agreement unless the dispute settlement procedure specifically
empowers Fair Work Australia to arbitrate. The Full Bench also concluded the Fair Work
Act does not require the dispute settlement procedure to provide for arbitration. Further,
s.739(5) of the Fair Work Act provides that Fair Work Australia must not make a decision
that is inconsistent with the Fair Work Act or a fair work instrument, including an
enterprise agreement, that applies to the parties.
The nature of workplace disputes lodged in Fair Work Australia pursuant to the dispute
settlement procedure in an enterprise agreement is many and varied.
In recent times, for example, I have dealt with disputes over:
whether an employee who resigned due to family responsibilities was entitled to
pro-rata long service leave in accordance with a clause in an enterprise
agreement which incorporated the terms of the Long Service Leave Act 1955
(NSW);
the alleged failure of a company to consult over redundancies;
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the health documents that employees returning to work after sick leave need to
provide; and
the correct classification levels for employees on the outsourcing of work to a
contractor.
It is apparent that in dealing with disputes about matters arising under an enterprise
agreement or in relation to the National Employment Standards, or in dealing with
general protections disputes, Fair Work Australia is dealing with ―rights-based‖ disputes
or disputes over employer and employee rights.
As such disputes involve rights they may also attract the attention of the Fair Work
Ombudsman and/or be the subject of litigation in the courts or other bodies.
Fair Work Australia’s, and its predecessor’s, formal role in resolving ―rights-based‖
disputes is a relatively recent phenomenon in the history of the national industrial
tribunal, a body which historically has been more concerned with creating ―rights‖ through
dealing with ―interest-based‖ disputes.
Fair Work Australia’s success in resolving ―rights-based‖ disputes is, in part, dependent
on the skill of its members, with a different skill set being required to resolve ―rights-
based‖ disputes as opposed to ―interest-based‖ disputes. However, our success is also
dependent on how the parties perceive their options at the point at which Fair Work
Australia is dealing with their dispute. In this regard, the seamless case management
that has been critical to the success of resolving unfair dismissal applications may also
have lessons for the successful resolution of ―rights-based‖ disputes by Fair Work
Australia.
Conclusion
In historical terms, I think the juncture at which Fair Work Australia now finds itself is as
critical as it was for the Commonwealth Court of Conciliation and Arbitration when it was
established in 1905 and for the Commonwealth Conciliation and Arbitration Commission
when it was created in the aftermath of the decision in the Boilermakers’ case ((1956) 94
CLR 254). Appreciating that, I believe, will be crucial to the success of Fair Work
Australia, in fulfilling its statutory obligations.
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I thank you for the opportunity to speak to you about Fair Work Australia and, in turn,
receive your views.
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