Fair Work Legislation Finally Passed by Senate

After considerable debate, on Friday 20 March 2009 the Federal Government finally secured the passage of its Fair Work Bill through the Senate. This means that the majority of the Fair Work Bill will commence as scheduled from 1 July 2009.

Unfair Dismissal Changes

As publicised, the stumbling block for the Fair Work Bill’s initial passage related to the proposed unfair dismissal laws and, in particular, the definition of a ‘small business employer’.

A compromise was finally reached to retain the definition of a small business employer at fewer than 15 employees, but that the basis for calculation would be on 15 full time equivalent positions. It is proposed that the number of full time equivalent employees will be calculated by averaging the ordinary hours worked by all employees in the business (excluding casuals who do not have regular and systematic work) over the 4 week period prior to an employee’s termination, and dividing that number of hours by 38.

This amended definition will apply on an interim basis until 1 January 2011, when it will revert to the Federal Government’s original ‘head count’ definition.

This compromise will be formally introduced as part of the Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009 (‘the First Transition Bill’), discussed below.

Further, the Government has agreed to an amendment to provide that the filing period for an unfair dismissal claim be increased from 7 days to 14 days.

Other Amendments to the Fair Work Bill

1. Better Off Overall Test – For the purposes of determining whether an enterprise agreement passes the Better Off Overall Test, FWA will be entitled to assume that if a class of employees would be better off under an enterprise agreement, then each employee in that class would be better off under the enterprise agreement.

2. Greenfields Agreements – There will no longer be a requirement for an employer to give unions notice of its intention to make a Greenfields Agreement. FWA must, however, be satisfied that a Greenfields Agreement is in the public interest.

3. Good Faith Bargaining – There will be an additional good faith bargaining requirement for a bargaining representative (which includes the employer) to recognise and bargain with the other bargaining representative (i.e. a union) for an enterprise agreement.

4. Union Right of Entry – These provisions were amended to limit a union’s power to require an employer to produce documents relating to a suspected contravention. This power will no longer automatically apply to documents relating to non-union members, and any required document must be directly relevant to the suspected contravention.

FWA will also now be able to restrict the rights of union officials if they have exercised right of entry laws repeatedly in a way that is ‘hindering, obstructing or otherwise harassing’, or is otherwise unduly disruptive to the employer.

5. Transfer of Business – The Fair Work Bill was amended to allow FWA to consider certain factors in determining whether transferring instruments will apply to a new employer. These include whether the transferred instrument would have a negative impact on productivity, or create significant economic disadvantage for the new employer.

The First Transition Bill

In addition to the Fair Work Bill, on Thursday 19 March 2009 the Government introduced the First Transition Bill. Whilst the purpose of the First Transition Bill is primarily administrative, it does introduce important transition arrangements that will commence on 1 July 2009, including the following:

1. The Workplace Relations Act 1996 (other than Schedules 1 and 10 dealing with registered associations) will be repealed from 1 July 2009. The First Transition Bill will introduce an interim bridging period, which will apply from that date until 1 January 2010 (‘the Bridging Period’).

2. All existing industrial instruments (including awards, NAPSAs and pre and post WorkChoices registered workplace agreements) will be recognised as transitional instruments and will continue to operate past their nominal expiry date until terminated or replaced.

3. The Australian Fair Pay and Conditions Standard (‘AFPCS’) will continue to apply to applicable transitional instruments for the Bridging Period, but will cease to operate from 1 January 2010. From that time, the NES will apply to all national system employers, including those employers who already have existing transitional instruments, under a ‘no detriment rule’.

4. Employees on individual statutory agreements (i.e. AWAs or ITEAs) may agree with their employers to enter into a conditional termination agreement. This agreement would allow these employees to vote on any new enterprise agreement, and upon the enterprise agreement coming into operation, their AWA or ITEA would automatically cease to operate.

5. During the Bridging Period (and until modern awards take effect on 1 January 2010) any enterprise agreements or variation agreements entered into would need to meet a No Disadvantage Test (‘NDT’) against the current reference instrument (i.e. current award).

6. From 1 July 2009, there will be a limited scope to vary an existing workplace agreement for the purpose of meeting the NDT. Non Greenfields Agreements will be subject to a 30 day time limit to lodge such a variation agreement (beginning 7 days after the Workplace Authority Director issues a notice stating that the NDT has not been met).

7. Employers will have 14 days from 1 July 2009 to lodge any approved (but un-lodged) workplace agreements or variation agreements.

8. The obligation under the NES for an employer to provide a new employee with a Fair Work Information Statement will only apply to employees who commence employment after 1 January 2010.

9. FWA will be allowed to make take home pay orders to provide a remedy where the introduction and application of a modern award would reduce an employee’s take home pay. However, take home orders will not be made where the reduction is minor or insignificant.

10. The Workplace Ombudsman will be abolished from 1 July 2009 and will be replaced by the Fair Work Ombudsman. All other industrial bodies will continue for the Bridging Period to finalise existing matters.

The First Transition Bill will now be referred to a Senate Committee for review.

A Second Transition Bill will be introduced into Parliament in the week commencing 25 May 2009. The Second Transition Bill will be more administrative in nature and will deal with consequential amendments on other Commonwealth legislation.

Author: Adrian Wong