1. The Labor Reforms

In April 2007, The Labor Party released their IR policy Forward with Fairness, which detailed the changes a Labor Government would make to the Industrial Relations system. Since winning the Federal election in November 2007, they have further elaborated a timetable as to the implementation of these policies.

The Labor Government plans to achieve nationally consistent industrial relations laws for the private sector. It is envisaged that this will be achieved by relying on Constitutional powers to legislate national IR laws. Labor will also look to the State governments to cooperate by referring powers for private sector industrial relations.

This plan is aimed at reducing the complexity and confusion of the Australian Industrial Relations system which currently involves a number of different State jurisdictions overlaid by the Federal system. It is also intended to create certainty for both employers and employees in relation to the rights and obligations of both parties within the workplace.

Transitional arrangements will be put in place to ensure that employees currently covered by State industrial relations systems would not be disadvantaged.

Many of the intended reforms will be significant, and will naturally take time to structure and implement. Whilst some transitional arrangements are planned to come into force at mid 2008, the majority of the more significant reforms will not come into force until 1 January 2010.

existing employees whose AWAs terminate before December 2009; and

1. new employees commencing employment between the implementation of the Transition Bill and 31 December 2009.

3. Safety Net

Labor have indicated that they will also introduce a “two-pronged” safety net that will underpin collective enterprise bargaining and common law agreements.

Firstly, the Labor Government are planning to introduce 10 guaranteed legislated National Employment Standards to apply to all Australian employees. These standards are to contain entitlements for all employees across all industries and occupations. The standards will not be able to be removed or replaced.

The employment standards are as follows :

1. Hours of work (38 hours);

2. Parental leave (12 months unpaid leave for each parent);

3. Flexible work for parents;

4. Annual leave (20 days per annum);

5. Personal, carers and compassionate leave (10 days per annum);

6. Community service leave;

7. Public holidays;

8. Information in the workplace;

9. Termination of employment and redundancy; and

10. Long service leave.

Labor intends to release an exposure draft for those 10 National Employment Standards when the Transition Bill enters Parliament.

The second part to the Labor safety net concerns Awards. A further 10 minimum employment standards will be included in awards, as appropriate to the industries, occupations or enterprises to which they apply. What exactly these standards will be has not been announced as yet. Awards will be reviewed by Fair Work Australia every four years to ensure they remain relevant to the industry they cover.

Awards will be required to contain a flexibility clause that permits employers and employees to negotiate individual arrangements on certain matters, for example hours of work and rostering.

Labor also intends to promote flexibility in the use of Common Law Contracts. Common law contracts or agreements covering employees earning more than $100,000 per year will not be underpinned by Awards. This is aimed at enabling employers to contract out of award entitlements in respect of these particular employees. However, such contracts will need to comply with the 10 National Employment Standards.

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The Transition Bill will task the Industrial Relations Commission with this modernisation and simplification of Australia’s awards over almost a two-year period, to be completed on the 31st December 2009. Enterprise awards will continue and will only be reviewed at the request of the parties.

The Bill will that will legislate the new simplified Awards and the 10 minimum employment standards is scheduled at to become operational law from 1 January 2010.

4. Fair Work Australia

Labor plans to create a new body called “Fair Work Australia” which will act as a “one-stop-shop” in the industrial relations system. Under the current system, several different bodies perform adjudicative and regulative functions, such as the Australian Industrial Relations Commission, the Australian Fair Pay Commission, the Workplace Authority and the Workplace Ombudsman. These bodies will be abolished upon the introduction of Fair Work Australia, which will perform various functions including:

1. providing information and advice on workplace issues;

2. hearing and resolving unfair and unlawful dismissal claims;

3. approving collective agreements;

4. settling minimum wages and award conditions; and

5. assisting parties to resolve workplace disputes. Fair Work Australia is intended to commence operating on 1 January 2010.

5. Collective Agreements

Labor policy has indicated that the new IR system will place an emphasis on collective bargaining. If a majority of employees at a particular workplace want to bargain collectively, the employer will be required to do so in “good faith”. Under Labor’s policy, in non-unionised enterprises an employer and its employees will be able to bargain together to form a non-union collective agreement without any union involvement.

In considering whether a Collective Agreement should be approved, Fair Work Australia will be required to consider whether the agreement meets a “better off overall test”. The agreement will be required to meet the 10 legislated minima where there is no relevant award. Where there is an award, the test will be applied against both the legislated and award minimum standards. Collective agreements will have a maximum nominal term of 4 years (currently 5 years).

Furthermore, the content of collective agreements will not be restricted. Labor have indicated that they are likely to abolish the current restrictions relating to “prohibited content” in agreements. All collective agreements will be required to contain a flexibility clause allowing employers and an individual employee to make a flexibility arrangement about certain matters.

6. Industrial Action

Australian businesses have expressed concern that an Labor Government may mean a return to prevalence of union activity and industrial action.

However, Labor’s policy indicates that industrial action will only be protected in certain circumstances, and will have to be approved by employees in a secret ballot, similar to current provisions.

Industrial action will not be protected in the following circumstances:

Measures introduced or strengthened by Workchoices, such as the prohibition on payments to employees undertaking protected strike action will be retained under the Labor Government.

7. Unfair Dismissal

Employees will be eligible to bring an action for unfair dismissal unless:

• the employer employs 15 or more employees and the employee has been employed for less than 6 months;

• the employer employs fewer than 15 employees and the employee has been employed for less than 12 months; or

• the employee is not covered by an award and earns more than the applicable remuneration threshold (which is yet to be set).

Labor will abolish the exemption for employers with 100 employees or fewer that was introduced under Workchoices. Unfair dismissal claims will have to made within 7 days of the dismissal, and will be dealt with by Fair Work Australia.

Labor also intends to develop a Fair Dismissal Code to guide small business in meeting obligations under the new legislation.

Labor has suggested that these Unfair Dismissal measures could be introduced in 2008 if its main IR legislation is passed by Parliament.

8. Conclusion

The bulk of the reforms under the Forward with Fairness policy will not become operational until January 2010. The most immediate changes to Australian Industrial Relations law relate to the abolition of AWAs and the fairness test, as well as the implementation of ITEAs and the “no disadvantage test”, which should come into force in mid 2008, when and if the Transition Bill is passed by the new Parliament.