NM5369077_1 Life after Work Choices and what may happen if there

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NM5369077_1 Life after Work Choices and what may happen if there Powered By Docstoc
					       Life after Work Choices and what may happen if there is a change of Government
                                       By Alan Grinsell-Jones
                                           Special Counsel

Part 1 – Life after Work Choices

1.     Reliance on Corporations Power

       The amendments to the Workplace Relations Act, 1996 (the WR Act) made by the Workplace
       Relations Amendment (Work Choices) Act 2005 (the Work Choices legislation) are regarded
       by many commentators as the most substantial changes to the Federal system of industrial
       relations in Australia since its commencement in 1904.

       One of the fundamental features of the Work Choices legislation was its reliance upon the
       Corporations power in the Constitution. Previously industrial relations legislation at a national
       level in Australia had relied upon the industrial relations power and, to a limited extent, the
       external powers power (e.g. for the introduction of unfair dismissal legislation).

       The use of the Corporations power, along with other powers to legislate in relation to
       Commonwealth employees and employees in Territories, has resulted in the majority of
       employees in Australia now being covered by the Federal system. The Government estimates
       the figure being as high as 85% of all employees.

       The use of the Corporations power also allowed the Government to legislate directly for
       employment benefits rather than simply establishing machinery to enable terms and conditions
       of employment to be set through the processes of the Australian Industrial Relations

       Australian Fair Pay and Conditions Standard

       Relying upon the Corporations power the Federal Government was able to legislate to provide
       minimum terms and conditions of employment in a number of areas. Those areas are in
       relation to minimum wages, casual loading, annual leave, personal leave (including
       compassionate leave), hours of work and parental leave. These terms and conditions are
       contained in what is known as the Australian Fair Pay and Conditions Standard (the
       Standard). The Standard prevails over any term in a common law contract of employment to
       the extent to which any contract provides a benefit which is in any respect less than that in the
       Standard. It also prevails over the terms of any collective agreement or AWA to the extent to
       which that agreement would otherwise provide a benefit which is in any respect less than that
       contained in the Standard.

       Pre-reform AWAs and certified agreements do not have to comply with the Standard.

      Agreement Making

      The legislation retained collective agreements and Australian Workplace Agreements (AWAs)
      as the principle form of agreement making. AWAs have an increased prominence and now
      operate to the exclusion of any other agreement. Previously an employee covered by a
      certified agreement who entered into an AWA during the life of that agreement would only
      have it prevail over the certified agreement if the certified agreement so allowed.

      The Work Choices legislation removed the no disadvantage test. The no disadvantage test
      required that in order to be approved or certified an AWA or certified agreement had to on an
      overall basis provide terms and conditions of employment that were not disadvantageous to

      Agreements are now measured against the Standard although subsequently the introduction
      of the fairness test has provided a limited notion of a no disadvantage test.

      Agreements are no longer tested by the Australian Industrial Relations Commission.
      Agreements commence when they are filed with the Workplace Authority (previously the
      Employment Advocate). However they can subsequently become invalid if they fail to pass
      the fairness test.

      Agreements now will only be valid where any modification or removal of a protected award
      condition is accompanied by reasonable compensation for that change.

      Protected award conditions include rest breaks, incentive based payments and bonuses,
      penalty rates, overtime and shift work loadings, payment for public holidays, annual leave
      loading, and allowances. The fairness test applies to collective agreements and to any AWA
      where the employee is earning less than $75,000 per annum.

      The $75,000 threshold is the base rate of pay and doesn’t include any other benefits the
      employee may receive.

      Work Choices extended the nominal life of agreements from a maximum of three years up to
      five years and introduced the concept of prohibited content.

      Prohibited content is prescribed by the Regulations to be a range of matters including

           ·   Deduction of union dues;

           ·   Employees receiving paid leave to attend training provided by a trade union;

           ·   Right of entry;

           ·   The renegotiation of a workplace agreement;

           ·   Restrictions on engagement of independent contractors and labour hire workers;

           ·   Terms that encourage or discourage union membership;

           ·   Terms allowing for industrial action;

           ·   Remedies for unfair dismissal and

           ·   Terms that restrict AWA negotiations.

      Most importantly they also prohibit any matter being contained in an agreement that does not
      pertain to the employer/employee relationship. Thus, for example, provisions in agreements
      which deal with matters between a trade union and an employer are prohibited content.

      Any term in an agreement that is prohibited content is void and it is an offence to seek to
      include prohibited content in an agreement or to recklessly agree to an agreement that
      contains prohibited content.

      Work Choices also removed requirements for employers to provide employees with
      information as to the changes to the terms and conditions that the agreement would result in
      and requirements to provide information in a language an employee could understand or
      provide special information to groups such as women and young workers.

      Any procedural matters that would have previously resulted in an agreement not being
      certified by the AIRC e.g. failure to give employees sufficient time to consider, now do not
      render the agreement invalid. The Federal Court has recently held in SDA v Karellas
      Investments Pty Ltd (No.2) {2007} FCA 1425 that an agreement was validly made
      notwithstanding that the employer had provided the employees with misleading information in
      relation to the agreement.

      Industrial Action

      Work Choices introduced much tougher laws on industrial action. All industrial action other
      than protected industrial action was made unlawful, the AIRC was obliged to order any such
      action to stop and failure to comply with an order was made an offence.

      Protected industrial action can only be taken with the approval of a secret ballot. Protected
      industrial action cannot be taken in support of pattern bargaining, in support of claims to
      include prohibited content in an agreement or before the nominal expiry date of any

      The prohibition on paying employees engaging in any type of industrial action was amended to
      provide that the minimum period for which payment cannot be made is 4 hours, irrespective of
      the time that the industrial action went for.

      Wage setting

      The power to adjust wages has been removed from the AIRC and given to the Australian Fair
      Pay Commission (AFPC).

      All rates of pay, classifications and provisions in awards dealing with those matters are now
      removed from awards and contained in the Australian Fair Pay and Classification Scales (the
      Scales). The AFPC has the power to vary those Scales and introduce new Scales. The
      AFPC determines when it will review the rates of pay and the procedures it will adopt in doing


      The thrust of Work Choices is to make awards irrelevant and to encourage employers and
      employees to have their terms and conditions regulated by agreements.

      Work Choices further reduced the number of allowable matters by removing union picnic days,
      trade union training leave and restrictions on engaging independent contractors and labour
      hire workers from those matters that award can deal with.

      Work Choices also added a further round of simplification and rationalisation of awards.

      Importantly, once an employee has been removed from award coverage by either entering into
      an AWA or a form of collective agreement, the award that previously applied will no longer
      apply to that employee.

      If the agreement is subsequently terminated, the employees’ terms and conditions revert to
      the terms and conditions contained in the Standard and any protected award conditions.
      Protected award conditions which will apply are those protected award conditions which would
      have applied at the time that the agreement is entered into, not the protected award conditions
      in any rationalised or simplified award which may now cover the employee.

      How employers and employees will able to identify those terms and conditions applying as
      protected award conditions, given that awards are to be rationalised and simplified, is
      something that has yet to occur.

      Unfair dismissal

      The major changes to the unfair dismissal provisions introduced by Work Choices were an
      increase in the qualifying period from three months to six months, the introduction of the 100
      employee threshold and the exclusion of employees terminated for genuine operational

      An employee is unable to make an unfair dismissal claim if at the time immediately prior to the
      termination of their employment, their employer employed less than 100 employees, including

      the employee terminated and any casual employee engaged by the employer on a regular and
      systematic basis for at least twelve months.

      In calculating the number of employees, employees of related corporations as defined in the
      Corporations Act are also considered.

      Employees who are dismissed by reasons of or for reasons which include ‘genuine operational
      reasons’ are also excluded from making an application in relation to an unfair dismissal.

      Following the introduction of this exclusion there were a number of decisions of individual
      members of the Commission to allow employees who were terminated in what were
      considered redundancy situations, have their matters heard on the basis that the operational
      reason was not considered to be genuine as it did not provide a valid reason for the
      termination of employment. For example, in a case involving Village Cinemas a member of
      the Commission found that an employee whose employment was terminated when a cinema
      complex which he managed was closed was not dismissed for a genuine operational reason.
      This is because the Commission considered the employer could have taken steps other than
      terminating the employee.

      On appeal the Full Bench rejected this approach and said that once there was a genuine
      operational reason involved a determination of whether the employer’s decision in those
      circumstances was valid is irrelevant. As long as the employer’s reasons included a genuine
      operational reason, the validity of that decision could not be challenged in the Commission.
      The Full Bench also observed that whilst the circumstances in every case are different,
      generally the onus is upon the employer to produce sufficient evidence to the Commission that
      there was a genuine operational reason involved in the decision to terminate.

      Right of entry

      Work Choices significantly restricted the rights of trade union officials to enter work places.
      There is no right of entry to any work site where employees are covered by AWAs or by a non-
      union collective agreement except to investigate a breach of the agreement and only if the
      employee affected has provided written consent.

      Further, union officials are required to give the employer 24 hours notice of their intention to
      enter the premises to investigate the breach. Upon entry a union official must comply with an
      employer’s request as to where he can meet with the workers.

      Work Choices also introduced a fit and proper person test for granting permits and extended
      the grounds upon which permits can be revoked.

      Part 2 – What may happen if there is a change of Government – Labor party policy

      Reliance on Corporations power

      The ALP has indicated it will continue to rely upon the Corporations power to legislate directly
      in the area of industrial relations. It has also indicated that it will seek to have discussions with
      the States to see if they will refer their IR powers to the Federal Government. Indications from
      the State Labor governments are that the powers will not be referred.

      Australian Fair Pay and Conditions Standard

      ALP policy guarantees 10 statutory minimum conditions. Additions to current conditions are:

          ·    Parental leave able to be extended to 24 months by both parents taking 12 months
               leave or one parent requesting an additional 12 months;

          ·    A right for parents to request flexible work arrangements until their child reaches
               school age;

          ·    Community service leave;

          ·    Payment on public holidays;

          ·    Redundancy pay for work places with 15 or more employees; and

          ·    Long service leave.

      Of these the only significant addition is redundancy pay and redundancy benefits for those
      employees who currently do not have provision for redundancy in either an award, collective
      or individual agreement or a common law contract of employment. It is possible that moving
      to a single unified system of long service leave could also result in enhancements in long
      service leave benefits for employees in some States and Territories.

      Agreement making

      AWAs will eventually be scraped although existing AWAs will be allowed to run their full terms
      and businesses currently using AWAs will be able to introduce new agreements (called
      individual transitional employment agreements) for a two year period expiring on December
      31, 2009.

      ALP policy also will allow individual flexibility clauses to be included in enterprise agreements.
      These individual flexibility clauses would allow an employer and employee to come to an
      individual agreement on terms and conditions provided that there is no disadvantage to the
      employee compared to the collective agreement that would otherwise apply.

      Major emphasis is placed on collective bargaining rather than individual agreement making. If
      the majority of employees want to bargain collectively, the employer will be required to do so
      in good faith. Good faith bargaining obligations will be imposed upon all participants.

      Pattern bargaining will continue to be unlawful although multi employee collective bargaining
      will be allowed for low paid employees and employees who have not historically had access to
      collective bargaining, such as in the community services sector, cleaning and childcare

      Employer Greenfield agreements will be scrapped.

      Non-union collective bargaining will be allowed but only if that is what the employees want.

      Agreements will be assessed against relevant awards, employees having to be better off
      overall against the safety net (that is, reintroduction of a no disadvantage test).

      Prohibited content rules will be removed and the maximum nominal life span of an agreement
      will be reduced from five years to four years.

      Industrial Action

      The ALP will retain most of the provisions relating to industrial action introduced by Work
      Choices including the requirement for a secret ballot before protected industrial action can be
      taken and the prohibition on taking industrial action in support of pattern bargaining.

      Wage setting

      The Australian Fair Pay Commission is to be abolished along with Australian Industrial
      Relations Commission, Workplace Authority and Workplace Ombudsman. The functions
      previously exercised by all these bodies will be incorporated into a single body called Fair
      Work Australia. Fair Work Australia will have an independent judicial division along with an
      inspectorate division. Fair Work Australia is required to determine minimum wages every year
      with decisions to take effect from the first pay period on or after July 1 each year.

      Similar to Australian Fair Pay Commission determinations hearings will not be adversarial.
      Submissions will be invited and encouraged and Fair Work Australia will be able to
      commission and publish research.


      The ALP remains committed to simplifying and reducing the number of awards operating in

      Simplified awards will contain 10 minimum employment standards being:

          ·    Minimum wages;

             ·     Type of work performed;

             ·     Arrangements for when work is performed including hours of work, rostering, rest
                   breaks and meal breaks;

             ·     Overtime rates;

             ·     Penalty rates;

             ·     Provision for minimum annual wage or salary arrangement;

             ·     Allowances;

             ·     Leave loadings and arrangements for taking leave;

             ·     Superannuation; and

             ·     Consultation and dispute settling procedures.

Awards can also contain industry relevant detail to the 10 National Employment Standards.

Awards will contain a flexibility provision enabling an employer and employee at a workplace level to
agree on matters such as rostering and hours of work, all up rates of pay, provisions that certain
award conditions may not apply where an employee is paid above an exemption rate and
arrangements for employees to vary working hours to collect children from school without payment of
additional penalty rates.

Employees earning $100,000 or more a year will be considered to be award free. $100,000 is the
employee’s minimum ordinary time earnings and does not include other aspects of remuneration.

Fair Work Australia to be given power to make new awards and vary existing awards, thus test cases
would be able to be run on award conditions although limited to the allowable award matters.

Unfair dismissal

100 employee threshold and genuine operational reasons exclusions will be removed.

Particular measures introduced for small business for businesses with fewer than 15 employees,

    ·   Lengthening the qualifying period from 6 months to 12 months;

    ·   Provision of advice and assistance through Fair Work Australia;

    ·   The development of a fair dismissal code. The purpose of the code is to provide small
        business owners with clear information so they can easily understand their rights and

        obligations under law about dismissal. Where an employer complies with the code the
        dismissal will be considered to be a fair dismissal.

    ·   Where an employer has reported an employee to the police for suspected theft, fraud or for
        violence in the workplace, the dismissal will be a fair dismissal.

Right of entry

The existing right of entry provisions will be retained by the ALP although abolition of AWAs and
encouragement for collective bargaining means restrictions on entering workplaces regulated by those
types of agreements will be of lesser effect.

Part 3 – What about the Greens.

Many political commentators consider it is likely that the Greens will hold the balance of power in the
Senate. The Greens position on major elements of the ALP policy is as follows:

    ·   The Greens support legislation of a minimum standard of pay, 5 weeks annual leave and
        hours of work plus a comprehensive award system.

    ·   They support industry wide awards that give rights and entitlements in excess of the legislative
        minimum and which are determined by conciliation and arbitration before an effective and
        independent industrial tribunal.

    ·   The Greens want casual loading increased to a minimum of 30% and casual employees to be
        given the ability to convert to permanent part time work after three months.

    ·   They support paid parental leave.

    ·   The Greens want AWAs abolished and existing entitlements protected through common law
        contracts underpinned by relevant State and Federal awards or collective agreements.

    ·   The Greens propose that collective agreements be the primary means of regulating
        employment and would require employers to enter into collective agreements with their
        workforce unless a majority are opposed.

    ·   The Greens also want the right to strike recognised and protected by legislation and would
        abolish the requirement for secret ballots before industrial action.

    ·   The Greens support a much broader right of entry power for union officials with powers to
        recruit members, investigate breaches of the Act, awards or agreements, investigate OH&S
        provisions and other activities relating to strengthening unions.

    ·   The Greens would require employers to inform new and existing employees that they are
        entitled to join a union and provide information about the union responsible for that sector of

   ·   The Greens want all employees including casual, fixed term and probationary employees, to
       be able to challenge unfair termination of employment with reinstatement to be the remedy
       except in exceptional circumstances.


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