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The Fair Work Act – What Does It All Mean?

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On 25 November 2008, the Fair Work Bill was tabled into Parliament. The Bill formed the substantive legislation necessary to achieve the policy aims outlined in Rudd’s April 2007 policy entitled ‘Forward with Fairness’. This Bill was passed through Parliament, with amendments, on 20 March 2009 and was given Royal Assent on 7 April 2009

The Fair Work Act 2009 (‘the Act’) commenced operation from 1 July 2009.

The Fair Work (Transitional and Consequential Amendments) Act 2009 (‘the transitional legislation’) operates in conjunction with the Act to prescribe how the Act is to be phased into operation.

Who Does the Fair Work Act Cover?

The Act covers all national system employees. National system employees are defined as employees of constitutional corporations, flight crew officers, maritime and waterside workers employed within Australia and all employees in the territories.

The Act does not specifically address employees of unincorporated employers in Victoria which are currently covered by the federal system by virtue of the referral of industrial powers exercised by the Kennett state government in November 1996. The transitional legislation currently provides that the ability for unincorporated Victorian businesses to be covered by federal awards and agreements will continue to operate.

Referral of powers legislation is currently being negotiated in other States to enable sole proprietors and partnerships in these States to also be covered under the federal system.

What Does the Act Cover?

The Act outlines provisions relating to:

A. Terms and conditions of employment, including:

  • The National Employment Standards
  • Modern Awards
  • Enterprise Agreements
  • Workplace Determinations (arbitration) and
  • Minimum Wages

B. Rights and responsibilities of employers, employees and unions, including:

  • Sham contractor arrangements
  • Protection against discrimination
  • Unfair dismissal
  • Unlawful termination
  • Industrial action
  • Right of entry and
  • Stand down

C. Compliance, enforcement and administration, including:

  • The establishment and powers of Fair Work Australia (‘FWA’);
  • The establishment and powers of the Fair Work division of the Federal Court and Federal Magistrates Court;
  • The establishment and powers of the Fair Work Ombudsman within Fair Work Australia.

Who is Fair Work Australia?

FWA has been established to replace:

  • the Australian Industrial Relations Commission
  • the Australian Fair Pay Commission
  • the Workplace Ombudsman
  • the Workplace Authority and
  • the Australian Building and Construction Commission

Fair Work Australia commenced operation on 1 July 2009, acting as a ‘super-agency’ which has functions in relation to most aspects of minimum terms and conditions of employment and employer, employee and union rights and responsibilities. Current bodies being replaced by FWA will continue limited operation during a bridging period between 1 July 2009 and 1 January 2010.

Minimum Wage Entitlements under the Act

As outlined above, FWA (constituted by a Minimum Wage Panel) will succeed the Australian Fair Pay Commission in its role to set a national minimum wage.

FWA must conduct an annual wage review each financial year and in doing so:

  1. may make determinations to set, vary or revoke minimum rates contained within modern awards and
  2. must make a national minimum wage order which shall apply to employees who are not covered by a modern award or enterprise agreement.

In addition to setting down provisions for establishing minimum rates of pay, the Act outlines method and frequency of pay provisions. These provisions act to override the provisions of the Victorian Workers’ Wages Protection Act 2007 which came into operation from 1 December 2008 to govern deductions from employees’ wages.

Both the Act and Victorian Workers’ Wages Protection Act 2007 operate to prohibit deductions being made from an employee’s pay except where the deduction is authorised in writing and is principally for the employee’s benefit, or under an enterprise agreement, modern award or other legislation.


The amendments under the Act, when passed, will operate as arguably the most significant change to industrial relations since 1904.

It is vital that employers familiarise themselves with how the Fair Work changes impact on their employment practices.  Where necessary, changes must be undertakennow to ensure that full compliance with the new requirements is achieved.

If you would like further information about how the Act impacts on your business, please contact the MST Workplace Relations Team on 03 8540 0200.


Author: Katie Sweatman