Gillard's reforms

The Rudd government's long awaited industrial relations reforms contain a number of important challenges for employers. Here's what you need to know...

The government last week tabled its long awaited industrial legislation into Parliament – the Fair Work Bill 2008. The most controversial part of the new bill is the enterprise bargaining framework – which includes good faith bargaining orders, compulsory bargaining with unions where there is majority employee support, an expanded role for arbitration to broker disputes and regulated multi employer bargaining for ‘low paid’ workers.

With Malcolm Turnbull becoming Opposition leader, the Coalition is no longer opposing the legislation as a matter of principle – declaring that ‘Work Choices is dead’. However, the Coalition has still indicated that it will scrutinise the bill closely and seek amendments it considers appropriate – although, in contrast to their position under Brendan Nelson, it does not seem this will include statutory individual contracts.

In reality, some significant aspects of Work Choices remain – such as the federal takeover of the state systems, secret ballots before industrial action and limitations on award content and unfair dismissal actions. But they have been balanced – both in the detail of the legislation and by a range of other changes.

Assuming the Coalition’s support is in fact forthcoming, the legislation will be passed by the Senate – probably with some amendments. This is despite the fact that the Greens believe the legislation does not go far enough. The government hopes that the legislation will be passed before Parliament rises for its autumn recess – the last sitting of Parliament before the budget sittings in May will occur on March 19, 2009.

Most of the new bill is intended to commence on January 1, 2010. Other things will converge with the new legislation’s start date – the award modernisation process should be (mostly) complete and new ITEAs (Individual Transitional Employment Agreements, which replaced AWAs) will no longer be available.

However, there are some important parts of the legislation which start early on July 1, 2009 – including the new enterprise bargaining framework and unfair dismissal laws.

There is still one important piece of the jigsaw missing – the transitional arrangements which are to be contained in the Fair Work (Transitional Provisions and Consequential Amendments) Bill, which will be released early next year.


The ten key points for employers

Unfair dismissals
Employees who are made redundant will be able to bring an unfair dismissal claim if they could have been redeployed – either within the employer or an associated entity. A redundant employee can also bring an unfair dismissal claim if the employer did not comply with consultation requirements in an industrial instrument. This provides significant scope for an employee to challenge their redundancy. Finally, the hearing process will be very different (with a hearing being able to be held during or after a conciliation conference and only on key issues) and lawyers can only appear with FWA’s (Fair Work Australia's) permission. Appeal rights are limited (from July 1, 2009).

Transmission of business
(or transfer of business as it will now be known)
In a transfer of business, transferring employees will be covered by the old employer‘s industrial instruments indefinitely (not limited to a 12 month transmission period). New employees in the business transferred may also be covered in particular circumstances. But most importantly, a transfer of business includes an outsourcing, restructure or other transaction involving use of assets (probably from 1 January 2010 - but possibly 1 July 2009).

Refusal to bargain with a union
and requirement to negotiate agreement
An employer who is negotiating an enterprise agreement cannot refuse to bargain with a union with one or more members. Furthermore, an employer who does not want an enterprise agreement at all can be compelled to negotiate (but not to agree) if a majority of employees want one (from 1 July 2009).

Good faith bargaining,
protected action and arbitration
The requirement to bargain in good faith and the ability of FWA to arbitrate a workplace determination on competing claims if there are serious and repeated breaches of such orders (provided some other requirements are also met). FWA may also arbitrate a workplace determination in enterprise bargaining if protected action is causing significant harm to any employee and (in most cases) the employer (from 1 July 2009).

Compulsory bargaining
and arbitration for the low paid
Regulated, multi-employer based bargaining for the ‘low paid’’ – which appears to largely mean employees employed on, or close to, the award and national employment standards (but could potentially extend well beyond this). Most importantly, this could lead to arbitrated resolution by the FWA of the unions outstanding claims – which is a fundamentally different type of arbitration than a safety net arbitration in accordance with minimum wage fixation principles. This could easily turn into massive, industry based bargaining and arbitration. Industries particularly affected are likely to include cleaning, retail, hospitality and child care (from 1 July 2009).

Injunctions to enforce awards
and enterprise agreements
A union or employee will be able to obtain an injunction preventing an employer breaching an award or enterprise agreement. This could be very, very significant. Examples could include a union obtaining an injunction preventing a restructure if consultation provisions or redundancy procedures in an agreement were not followed; an employee obtaining an injunction preventing their dismissal if a disciplinary procedure in an agreement was breached; or a union enforcing a status quo provision in a dispute resolution procedure. Importantly, the Federal Magistrates Court will be able to issue such injunctions – not just the Federal Court (probably from 1 January 2010, but possibly 1 July 2009).

AWAs and ITEAs
What do employers with AWAs and ITEAs do with new employees? Options include employing employees on modern awards; utilising individual flexibility arrangements (but only after the employees have started) and negotiating a collective agreement with a union or employees directly (from 1 January 2010). 8 Award modernisation: What changes to minimum terms and conditions will result from award modernisation from January 1, 2010 – especially for employees who are currently award free? Under the transitional bill, FWA will also be able to make orders to ensure that an employee does not lose take home pay as a consequence of award modernisation. How will this work? Does this mean, in effect, a highest common denominator?

Transitional questions
There are major questions with the transition. It appears that collective agreements and ITEAs being negotiated now will be subject to the national employment standards from January 1, 2010. This needs to be taken account in the drafting. Enterprise awards and NAPSAs (Notional Agreement Preservation State Awards) will be able to be modernised – but how will this work?

Increased right of entry powers
A union’s right of entry is now linked to either union membership (so they can enter to investigate a breach if they have a member who works on the premises) or union coverage (in the case of entry for discussions) – rather than the union being party to an applicable industrial instrument. So a union can enter premises even if the workforce is employed on AWAs or under a workplace agreement with another union. Unions can also require production within 14 days of any documents ‘relevant’ to a breach of the legislation or industrial instrument – not just wages records and not just records relating to union members (probably from 1 January 2010).

Gareth Jolly is a partner at Minter Ellison. This article is an excerpt from a briefing paper released by Minter Ellison.