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Coalition releases “Policy to Improve the Fair Work Laws”

Submitted By Firm: Corrs Chambers Westgarth

Contact(s): John Tuck


John Tuck & Anthony Forsyth

Date Published: 11/11/2013

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On 9 May 2013, the Coalition released its industrial relations policy for the federal election to be held on 14 September.

“The Coalition’s Policy to Improve the Fair Work Laws” (Coalition Policy) essentially proposes to retain the current system of workplace regulation under the Fair Work Act 2009 (Cth) (FW Act) – with a number of “incremental and evolutionary changes” to be legislated within three months of a Coalition Government taking office.

The Coalition has committed to making no further changes to the FW Act until a review of the legislation is conducted by the Productivity Commission. The Coalition would then seek a mandate at the following federal election before implementing the review’s recommendations. The approach is likely to diminish industrial relations being a prominent election issue in September 2013.

In this In Brief, we examine the key aspects of the Coalition Policy, and explore the possible timing of its implementation if the Coalition wins the election in September.

Proposed Changes to the FW Act

Enterprise Bargaining and Industrial Action

The Coalition wishes to move to a system of “harmonious, sensible and productive enterprise bargaining”. Its main changes in this area would be as follows:

  • Requiring that protected industrial action can only be taken after “genuine and meaningful talks” have occurred between the negotiating parties. No time period is specified for these mandatory, pre-industrial action negotiations. However, the Coalition’s intention is to move away from the “strike first, talk later” approach that is accessible under the present laws, towards industrial action being a “last resort option when talks break down”. The Fair Work Commission (FWC) would retain oversight of the protected industrial action process, including secret ballot applications.
  • Ensuring that claims made in enterprise agreement negotiations are “sensible and realistic”, as part of the assessment as to whether parties are “genuinely trying to reach agreement”. Citing several examples of outlandish union claims in the maritime, resources and construction industries, the Coalition Policy proposes that the FWC would have to be satisfied (prior to granting a protected action ballot) that:
    • the claims made are not exorbitant or excessive – and are fair and reasonable – compared with conditions applying in the relevant workplace or industry;
    • the claims would not adversely affect productivity in the workplace.
  • Mandating consideration of productivity issues in agreement negotiations. The FWC would have to be satisfied, before approving an enterprise agreement, that the parties have at least discussed productivity issues (even though no measures to improve productivity may actually be included in the proposed agreement).

Greenfields Agreements

The Coalition (like many employers in their submissions to the 2012 Fair Work Act Review) wants to address problems which have arisen in the negotiation of greenfields agreements used for new business ventures and projects. Of particular concern has been the power of unions to effectively “veto” the commencement of work on a project, until their demands for wages and conditions are met.

In response, the Coalition Policy proposes that greenfields agreements would be:

  • Covered by the good faith bargaining rules applicable to other agreement negotiations under the FW Act.[1]
  • Required to be negotiated within a period of three months, after which the employer could request the FWC to approve the proposed greenfields agreement. Approval would be granted if the FWC is satisfied that the agreement meets the “better off overall test” (BOOT) and the “public interest test” under the current legislation; and provides for pay and conditions consistent with industry standards.

Unions would retain a role in representing workers in greenfield agreement negotiations, if the union in question covers the majority of workers to be employed on the site.

Individual Flexibility Arrangements

The Coalition is determined to make the system of individual flexibility arrangements (IFAs) under the FW Act more workable for employers and employees.

This would be achieved by removing the restriction on employment conditions that can be the subject of an IFA (currently limited to the terms specified in an enterprise agreement). Further, IFAs could be terminated by either party on 13 weeks’ notice (rather than 4 weeks’ notice presently).[2]

IFAs would still be subject to the BOOT, and the requirement that they be genuinely agreed between employer and employee.

Union Right of Entry

The Coalition Policy includes several proposals intended to make the right of entry provisions of the FW Act “sensible and fair”, including limiting union entry to the following situations where:

  • The union is covered by an enterprise agreement applying to the workplace or the union is a bargaining representative involved in good faith negotiations for a new agreement; and
  • The union has members in the workplace who have requested its presence.

In workplaces where a modern award, or an agreement not covering a particular union, applies, access will only be allowed if that union previously had a representative role in the workplace and the workers have requested the union’s presence.

The existing provisions relating to union right of entry for purposes of investigating breaches of workplace laws or work health and safety (WHS) laws, or for dispute settlement purposes, would remain in place.

The Coalition would also adopt the 2012 Fair Work Act Review recommendation to give the FWC power to resolve disputes about the frequency of exercise of entry rights by union officials. That measure actually forms part of the Fair Work Amendment Bill 2013 (FW Amendment Bill), currently before Parliament.[3]

However, the Coalition will oppose other provisions in the FW Amendment Bill which would extend union entry rights, for example by providing that the default location for discussions between a union official and employees in the workplace is the lunch-room; and facilitating union access rights in remote workplaces.

Fair Work Commission

The Coalition Policy states that the Coalition will “continue the improvement of the [FWC], reflecting the change programme which is currently under way”. This appears to be a reference to the “Future Directions” Strategy initiated by FWC President, Justice Iain Ross AO, through which the tribunal is seeking to improve its services and engage more closely with its stakeholders.[4] The Coalition’s emphasis on the need for “effective and consistent decision-making” relates to its past criticisms of some tribunal members who have frequently been overturned on appeal.

In addition, the Coalition has indicated that it will “[give] active consideration to creating an independent appeal jurisdiction” of the FWC. No further detail is provided in the Coalition Policy, leaving open questions such as whether this appeal body would be completely separate from the FWC; and whether some existing members of the tribunal would be appointed to the new appellate jurisdiction.

Fair Work Ombudsman Prosecutions of Small Businesses

As part of a package of measures to assist small businesses, the Coalition Policy proposes that these employers could be exempted from civil penalty prosecutions by the Office of the Fair Work Ombudsman (FWO) for underpayment claims – for example, if the employer’s error is not deliberate, and the employer had previously sought FWO advice on the same matter.

Underpayment Cases

The Coalition would allow employees (rather than the federal Government) to retain the interest on any unpaid entitlements recovered through FWO proceedings.

Recommendations of the 2012 Fair Work Review

The Coalition would legislate a number of the Review Panel’s “common sense” recommendations, which the Labor Government has not yet acted upon, including changes to the BOOT to allow non-monetary benefits to be taken into account; and various improvements to the National Employment Standards under the FW Act.

Other Proposals in the Coalition Policy

Workplace Bullying

The Coalition will support the new anti-bullying jurisdiction of the FWC (proposed in the current FW Amendment Bill), but only if these proposals are amended to:

  • Require a worker to seek assistance from an independent agency, before lodging a bullying claim with the FWC (although not stated in the Coalition Policy, this might include a WHS regulator). The Coalition is concerned to avoid the FWC “being swamped with claims that may be capable of otherwise being easily resolved”.
  • Allow bullying claims to be made regarding the conduct of union officials towards workers and employers.

Paid Parental Leave Scheme

While there has been some discord within the Coalition on this issue in recent weeks, the Coalition Policy restates its commitment to introducing a “genuine paid parental leave scheme” providing mothers with 26 weeks’ paid leave at their full wage or the national minimum wage (whichever is greater)[5] plus superannuation.

Regulation of Registered Organisations

Highlighting recent examples of alleged union corruption and misuse of members’ funds, the Coalition Policy proposes to increase protections for members of employer and employee organisations by:

  • Introducing stricter reporting/disclosure rules, and increasing penalties for breach, in line with the standards applicable under corporations legislation.
  • Creating a new Registered Organisations Commission to oversee unions and employer associations, and to deal with complaints from their members. The new body would be based in the Office of the FWO, and would assume the registered organisations functions currently performed by the General Manager of the FWC.

Australian Building and Construction Commission

The Coalition proposes to restore the Australian Building and Construction Commission, and abolish its successor (the Fair Work Building Industry Inspectorate). The federal Building Code 2013 and Supporting Guidelines[6] would be revisited, and the Coalition would “work with state governments who have put in place their own codes, to ensure consistency”.[7]

Road Safety Remuneration Tribunal

The Coalition would “urgently review” the recently-established Road Safety Remuneration Tribunal (RSRT), to determine whether there is any justification for a specialist regulator of safety and employment conditions in the transport industry. This is a response to concerns raised by large national employers (for example, in the retail sector) about the potential flow-on effects of the RSRT’s first determinations, to be handed down imminently.

Implications and Implementation of the Coalition Policy

The Coalition Policy is squarely aimed at reassuring voters that there will be no return to “Work Choices” under a Coalition Government. The Coalition has specifically stated that there will be no changes to the current unfair dismissal laws, and no re-introduction of Australian Workplace Agreements.

Employer groups have expressed concern that the Coalition has effectively delayed significant workplace reform until 2016 or 2017 – and in particular, that the Coalition Policy does not address burdens on business such as award penalty rates, unfair dismissal and general protection claims, and union-centred enterprise bargaining.

The overwhelming indication in all recent opinion polling is that the Coalition will win the 14 September election. If that occurs, what are the prospects that an Abbott Government will be able to quickly implement the proposals outlined in the Coalition Policy?

Despite the expected Coalition victory, electoral commentators do not expect the Coalition to gain control of the Senate.[8] In any event, the current Senators facing the half-Senate election on 14 September will continue to hold their positions until 30 June 2014. This would mean that, in order to meet its timeline of having its first round of amending legislation passed within three months of the federal election, the Coalition would have to obtain the support of the Greens (which seems unlikely unless some trade-offs were made on other policy issues).

Finally, the Coalition has indicated that it will support the measures in Labor’s current FW Amendment Bill, except those which conflict with the Coalition Policy. This means that it is likely that some form of the current anti-bullying proposals, and the “family-friendly” measures, in the FW Amendment Bill will take effect – possibly as soon as 1 July 2013. However, Labor will need the support of the cross-bench MPs in the lower house to secure support for the right of entry changes and protection of award penalty rates in the FW Amendment Bill (whether that support will be forthcoming is far from certain); and the support of the Greens for those proposals in the Senate (a more likely proposition). We will keep you updated on any developments in future Corrs In Briefs.

[1] This was in fact a recommendation of the 2012 Review, which has not yet been implemented: see here.

[2] The FWC has recently changed the model flexibility clause in modern awards to provide for a 13-week notice period for termination of IFAs made under awards: see Modern Awards Review 2012—Award Flexibility [2013] FWCFB 2170 (15 April 2013).

[3] See here.

[4] See here.

[5] Up to a maximum of $75,000.

[6] See here.

[7] See here for example.

[8] See for example ABC election analyst Antony Green’s blog here.

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