Government commences Fair Work Act reform

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28 February 2014

On 27 February 2014, the Government introduced the Fair Work Amendment Bill 2014 (Amendment Bill) into federal parliament. This In Brief summarises the main changes to the FW Act that will occur if the Bill is passed in its present form.

Greenfields agreements

The Amendment Bill proposes a number of changes to the greenfields agreement process intended to prevent employers from being compelled to agree to inflated wages and conditions and employment preference in order to avoid delays to a project.  These changes will improve the certainty around major developments and in particular major infrastructure projects that are critical to improved productivity and job creation.  The changes are:

  • the extension of the good faith bargaining requirements to single-enterprise greenfields agreements;
  • provision for an employer to apply to the Fair Work Commission (FWC) for an “agreement” to be approved where the parties are unable to reach agreement in a reasonable period following a three month negotiation period notified by the employer; and
  • an approval requirement that the FWC be satisfied that an “agreement” approved by the FWC in the circumstances above provides “for pay and conditions that are consistent with the prevailing pay and conditions with the relevant industry for equivalent work”.

Right of entry

The Amendment Bill proposes to wind back recent changes and further amend the right of entry provisions in the FW Act by:

  • abolishing the obligations on an employer or occupier to organise transport and accommodation arrangements to support the exercise of entry rights by permit holders at work sites in remote areas;
  • restoring former rules relating to the default location of interviews and discussions, meaning that permit holders must once again comply with reasonable requests by employers to conduct interviews or hold discussions in particular rooms or areas of a work site and to take particular routes to reach those areas;
  • broadening the power of the FWC to deal with disputes including those concerning the frequency of visits by permit holders to work sites for discussion purposes (the FWC would no longer be limited to making an order where satisfied that the frequency of entry would require “an unreasonable diversion of the occupier’s critical resources”); and
  • limiting the permit-holder’s entry rights to hold discussions to premises where:
    • the permit-holder’s organisation is covered by an enterprise agreement applying to work performed on the premises; or
    • the permit holder is invited by a person who works on the premises and is a member or prospective member of the permit holder’s organisation (the FWC will have power to issue an “invitation certificate”).

Transfer of business

In order to avoid applications having to be made to the FWC to avoid the transfer of industrial instruments between associated entities where an employee seeks out an opportunity in an associated entity, the Amendment Bill proposes that there will not be a transfer of business where:

  • an employee becomes employed by an associated entity of their old employer; and
  • the employee sought out that opportunity on their own initiative prior to the termination of their employment with the old employer. 

Individual flexibility arrangements

Amendments have also been proposed to improve the utility of individual flexibility arrangements by:

  • requiring enterprise flexibility terms to permit individual flexibility about all five minimum matters listed in the model flexibility term; namely arrangements about when work is performed, overtime rates, penalty rates, allowances and leave loading;
  • allowing for unilateral termination only upon 13 weeks’ notice (rather than the current 28 days’ notice);
  • including a legislative note to the effect that, in considering whether an employee is better off overall under the individual flexibility arrangement, benefits other than a payment of money may be taken into account; and
  • excusing an employer from contravening a flexibility term if the employer reasonably believed that the requirements of the term had been complied with.

However, the additional certainty and flexibility for businesses comes with  an additional administrative burden.  Employees entering into an individual flexibility arrangement will now be required to give a written statement that indicates why they believe an individual flexibility arrangement under a modern award or enterprise agreement meets their needs and leaves them better off.

The amendments will prevent the practice of making enterprise agreements with minimal capacity for individual flexibility arrangements because  new enterprise agreements made after the commencement of the relevant provisions would be required to include a flexibility term that allows for variation of all five minimum matters.. 

Protected action ballot orders

The Amendment Bill proposes that an application for a protected action ballot order will not be able to made until the employer is obliged to give employees notice of representational rights in bargaining (reversing the effect of the decision of the Full Federal Court in JJ Richards & Sons Pty Ltd v Fair Work Australia (2012) 201 FCR 297).

Annual leave and unpaid parental leave

The National Employment Standards (NES) currently require annual leave paid out on termination of employment to be paid at the rate that would have been payable if the employee had taken the period of leave.  This caused confusion in relation to annual leave loading, which some modern awards required to be paid during a period of leave but excluded from being paid on termination of employment (apparently in breach of the NES provision).

The Amendment Bill proposes that the NES will require annual leave on termination of employment to be paid out at the base rate of pay. 

Amendments will also make clear that annual leave entitlements will not accrue during a period in which an employee is absent from work and in receipt of workers’ compensation entitlements, even if this is permitted under the relevant State statute.  This will place all national system employees on workers’ compensation in the same position in respect of leave accrual.

It is proposed that employers will be prohibited from refusing requests for extended unpaid parental leave until they have given the employee a reasonable opportunity to discuss the request.  The Explanatory Memorandum anticipates that such discussions will be held in person or over the phone but not by email or text message.

Dismissal of unfair dismissal applications by FWC

The Amendment Bill proposes a more streamlined process in relation to the dismissal of unfair dismissal applications by the FWC.  The FWC will no longer be required to hold a hearing or conduct a conference when considering whether to dismiss an unfair dismissal application under section 399A (non-compliance with directions etc) or section 587 (no reasonable prospects of success etc). 

However the FWC must first invite relevant parties to provide further information that relates to whether the FWC should exercise its power to dismiss and consider that information before exercising the power.

Where to next?

The Explanatory Memorandum anticipates that there will be a Senate inquiry into the Amendment Bill and that the proposed changes will be reviewed as part of the “Productivity Commission review of the workplace relations framework” that is scheduled to commence this year.

The Bill is unlikely to be passed until after 30 June 2014, when the composition of the Senate changes and the Government has better prospects of securing passage of the legislation.


The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


Contacts

Heidi Roberts

Partner. Melbourne
+61 3 9672 3562

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Jack de Flamingh

Partner. Sydney
+61 2 9210 6192

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Janine Young

Partner. Melbourne
+61 3 9672 3254

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John Tuck

Partner. Melbourne
+61 3 9672 3257

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Nicholas Ellery

Partner. Perth
+61 8 9460 1615

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Stephen Price

Partner. Sydney
+61 2 9210 6236

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Ruth Nocka

Special Counsel. Sydney
+61 2 9210 6597

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Professor Anthony Forsyth

Consultant. Melbourne
+61 3 9672 3322

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Rosemary Roach

Consultant. Perth
+61 8 9460 1603

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