a
national industrial relations system?
Sweeping new industrial relations laws
commenced in Australia on 27 March 2006 which will have the effect of bringing
between 70-85% of employees under one unified industrial relations system.
Previously, the industrial relations laws of the various states and territories
of Australia governed the employment relationship. The Australian Government
has introduced these changes on the premise that they will increase productivity
of Australian businesses and thus positively contribute to a strong economy.
Despite the positive effect these laws are
designed to have on employers, initially many have been left grappling with the
impact of these changes as there is a plethora of transitional arrangements.
Key areas of change include:
·
jurisdiction of employment and
industrial disputes and litigation
·
minimum terms and conditions of
employment employers are obliged to offer
·
the impact of the unfair dismissal exemption
on disciplinary processes and procedures
jurisdiction
and terms and conditions
There are three main types of transitional
arrangements which dictate how the new laws, which are amendments to the Workplace
Relations Act 1996 (Cth) (WR Act), will apply to employers.
employers
moving from the state to the federal system under industrial awards
These employers must be “constitutional
corporations”; that is trading, financial or foreign corporations.
Any industrial awards which govern terms
and conditions of employment of state employers’ employees will, subject to
certain limitations such as “prohibited content” and minimum standards
elsewhere in the WR Act, transfer across to the federal jurisdiction for a
maximum period of 3 years from 27 March 2006.
During the three-year transitional period
the employer may enter into a workplace agreement under the WR Act, either an
individual or collective workplace agreement). If employers do not enter into a
agreement before 27 March 2009, an appropriate industry-based federal
industrial award will be designated to apply to the employees.
employers
moving from the state to the federal system under industrial agreements
These employers must be “constitutional
corporations”; that is trading, financial or foreign corporations.
Any industrial agreements between these
employers and their employees will transfer across to the federal jurisdiction
and will continue to apply until they are terminated in accordance with the
legislation. These agreements are not subject to the minimum conditions under
the WR Act.
employers
moving from the federal to the state system
Because the Australian Government has
relied on the “corporations power” in the Constitution to amend the WR Act it
only applies to constitutional corporations. Therefore the WR Act as amended by
WorkChoices does not apply to any employers that were in the federal system
pre-WorkChoices but which were not “constitutional corporations”.
Therefore any employers that are not
trading, financial or foreign corporations will move into their respective
state systems unless they incorporate before the end of the transitional
period. Such employers will include individuals, sole traders, and
partnerships. Any industrial arrangements which applied to these employers’ employees
will continue to apply for a transitional period of five years.
pre-workchoices
federal employers
There is a fourth type of transitional
arrangement and that is for federal constitutional corporation employers. They
will remain in the federal system under their pre-WorkChoices award or
agreement on a similar basis to those arrangements applying to state employers
(that is awards will apply subject to certain limitations and agreements apply
until terminated, but obviously no transition period is required for either of
these instruments).
minimum
terms and conditions – the australian fair pay and conditions standard
WorkChoices’ Australian Fair Pay and
Condition Standard (AFPCS) now prescribes the
minimum wages and conditions of employment which apply to employees in the
federal system (that is, employees of constitutional corporations). In summary,
these minimum conditions are:
·
a federal minimum wage applies. It is
currently set at $AU12.75 per hour worked
·
a maximum of 38 ordinary hours of work
per week, plus reasonable additional hours
·
the equivalent of four weeks’ paid
annual leave for full time employees (pro-rated for part-time employees) which
accrues every four weeks, with an additional week for shift workers
·
10 days of paid personal/carer’s leave
for full time employees (pro-rated for part-time employees), with provision for
an additional two days’ unpaid carer’s leave and an additional two days of paid
compassionate leave per occasion (including both death and life-threatening
serious illness and injury)
·
52 weeks of unpaid parental leave
(including maternity, paternity and adoption leave)
There are penalties for breaching the
AFPCS.
The AFPCS cannot be contracted out of.
However, employers may offer more generous terms and conditions than the AFPCS.
exemption
from unfair dismissal
There are several changes to this
jurisdiction which include that terminations for operational reasons (such as
redundancies) can no longer be the subject of a claim, seasonal workers are now
also excluded as are employees with less than six months service. The most
hotly debated change however, is, the “small business exemption”.
Employers within the federal system with
100 employees or less are now exempt from federal unfair dismissal laws. The
number of employees includes employees of “related companies” as defined in the
Corporations Act 2001 (Cth). For example the
number of employees at the relevant time will include employees of holding
companies and subsidiaries.
Whilst this cause of action is now severely
restricted, employers should still exercise care when implementing terminations
of employment as employees may seek to rely on other causes of action such as
common law claims or other statutory remedies including unlawful termination
under the WR Act or pursuant to federal or state discrimination legislation.
transmission
of business provisions
These provisions primarily limit the period
during which certain industrial instruments such as awards and workplace
agreements will apply. Previously on a transmission of business, which
generally occurs as a result of a sale of business, employees who “transferred”
from the seller to the purchaser were indefinitely entitled to the same terms
and conditions of employment where the terms and conditions were governed by an
industrial instrument. Now these instruments will only apply for a maximum
period of twelve months.
Other changes in this area include that the
purchaser is required to notify employees and the relevant government body of
certain things or risk a monetary penalty.
other
changes
WorkChoices introduces a number of other
reforms including:
·
restricting the number of matters that
can be included in industrial awards
·
changes to agreement making and
settling of industrial disputes
·
restrictions in relation to industrial
action
·
limited rights of entry into
workplaces by third parties such as union
·
more onerous record keeping
obligations on employers
In addition, over the next few years, the
federal award system will be streamlined through the rationalisation and
simplification process.
the
future
It should be noted that several Australian
state governments and employee organisations have challenged the constitutional
validity of the legislation in the High Court of Australia. This hearing took
place in the second week of May. If the constitutional challenge is successful
then all or part of WorkChoices may be declared void on the basis the
Australian Government had no power to make the law. The High Court’s decision
is expected towards the end of 2006.
conclusion
As a result of WorkChoices more employers
will come within the federal system which now encourages employers and
employees to negotiate more directly with each other in relation to matters
which affect their relationship. Whilst a safety net of entitlements remains,
direct negotiation between employers and employees is sought to be achieved
through various mechanisms including:
·
reducing the number of allowable award
matters
·
simplifying the agreement-making
process
·
imposing strict requirements in relation
to industrial action and rights of entry into workplaces by employee
representatives
The Government anticipates that these
significant changes to the Australian industrial relations system will come as
a relief to employers as WorkChoices is touted as having the ability to deliver
productivity and efficiency improvements to business and flow-on of profit and
growth. This may be so, and only time will tell.
This
publication represents a brief summary of the law applicable as at the date of
publication and should not be relied on as a definitive or complete statement
of the relevant laws.
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