The New Fair Work Rules: Seven Key Changes That Could Affect You

21^st September 2009

The Fair Work Act 2009 (Cth) (the "Fair Work Act") came into effect on 1 July 2009.  Other parts of the legislation – including the new National Employment Standards – will commence on 1 January 2010.

The new legislation represents the end of the WorkChoices legislation.

The seven (7) key changes to the industrial relations landscape are:

1.    Agreement Making

From 1 January 2010 there will no longer be legislative provisions for the making of individual agreements.

Individual Transitional Employment Agreements (ITEAs) may still be made up until 31 December 2009 (with a nominal expiry date no later than 31 December 2009) and must still be lodged with the Workplace Authority.

2.    Dismissal

The Fair Work Act changes the unfair dismissal rules and provides for the Minister to declare a Small Business Fair Dismissal Code (the "Code").

From 1 July 2009, the Code applies to "small business employers", defined as employers with less than fifteen (15) full-time equivalent employees.

A person cannot bring a claim for unfair dismissal if the dismissal is by a "small business employer" and:

• is consistent with the Code; or
• involves an employee who has not completed the minimum employment period of one (1) year.

An employee who is not employed by a small business employer, is eligible to make an unfair dismissal application if they have completed a minimum of six (6) months employment.

Unfair dismissal actions involving a dismissal which took place before 1 July 2009 are still covered by the provisions of the Workplace Relations Act 1996 (Cth) (the "Workplace Relations Act").

3.    Good Faith Bargaining

The Fair Work Act introduces a requirement for parties to act "in good faith" when negotiating a collective agreement (now called an "enterprise agreement").

Under these provisions, bargaining representatives must meet certain requirements.  Fair Work Australia, which commenced operating on 1 July 2009, may make a bargaining order if good faith bargaining requirements are not being met.

4.    Minimum Wage Setting

The Australian Fair Pay Commission ceased to exist after completing its final wage review on 31 July 2009.

The new National Employment Standards ("NES") and minimum safety net wages (for example, wages in modern awards) will apply to all employees from 1 January 2010, including those that are covered by a transitional instrument (that is, an instrument made before 1 July 2009, or ITEAs made before 31 December 2009) and will prevail over a transitional instrument where the instrument is detrimental in comparison.

Each financial year from 2010, a Minimum Wage Panel of Fair Work Australia will conduct an annual wage review which will review modern award minimum wages and make a national minimum wage order.

5.    National Employment Standards

Employers and employees in the national workplace system will be covered by the NES from 1 January 2010.

Prior to 1 January 2010, the following provisions of the Workplace Relations Act will continue to apply:

• the Australian Fair Pay and Conditions Standard; and
• minimum entitlements in relation to meal breaks, public holidays, extension of parental leave to non-national system employers and notice of termination.

Under the new NES, all national system employees will be protected by minimum pay and employment conditions – a safety net that cannot be taken away.  The safety net consists of two (2) parts – the NES and modern awards.

On 1 January 2010, the NES will cover:

• maximum weekly hours;
• the right to request flexible working arrangements;
• parental leave and related entitlements;
• annual leave;
• personal, carer's and compassionate leave;
• community service leave;
• long service leave;
• public holidays;
• notice of termination; and
• redundancy pay.

6.     Enterprise Agreements

From 1 July 2009 Fair Work Australia took over the role of approving enterprise agreements from the Workplace Authority.

There are some changes to the matters that may be permitted in agreements. For example, deductions from wages when authorised by an employee.

The Fair Work Act also contains a new test – the "better off overall" test, which will apply from 1 January 2010.  This test will compare the terms of a proposed agreement against the relevant modern award to ensure that employees will be better off overall.

Note that for agreements entered into up until 31 December 2009, the "no-disadvantage" test under the Workplace Relations Act will continue to apply.

7.    Modern Awards

Modern awards are expected to be industry or occupation-based.  They are supposed to streamline and simplify thousands of awards that now exist. Modern awards contain the NES and may also include terms that represent the needs of a specific industry.  Examples include:

• minimum wages;
• types of employment;
• arrangements for when work is done;
• overtime and penalty rates;
• annual wage or salary arrangements;
• allowances;
• leave related matters;
• superannuation;
• procedures for consultation representation and dispute settlement;
• outworker terms;
• certain industry specific redundancy schemes;
• calculating ordinary hours;
• pieceworker provisions; and
• variations of allowances.

Modern awards can contain a flexibility clause which allows employers and employees to negotiate changes to meet their individual needs.

These modern awards cover employees who are already covered by awards.  They will not cover employees who earn more than a certain income, expected to be $100,000 a year (pro rata for part-time employees).  Consequently, common law employment contracts are expected to have a greater role for high income employees.

Issued by the Corporate & Commercial Group of Heidtman & Co. For further information please contact either David Heidtman, Michael Tzirtzilakis, Jenny Vu or Adam Mazzaferro.

Copies of this and earlier editions of E-Law, and other useful publications,
can be obtained from the Library section of our website - www.heidtmans.com.au.

If you no longer wish to receive E-Law @ Heidtmans, click here.