News & Events

Four ways the Fair Work Act is making business riskier for employers

By: Simon Billing

Submitted by Firm:
Corrs Chambers Westgarth
Firm Contacts:
John Tuck

Making decisions that affect employees is more risky than ever and the penalty of poor planning is conflict with unions and litigation in court.

Anyone who has been involved in running a business in Australia will know there has been a major re-regulation of the labour market. This occurred in 2009 through the introduction of the Fair Work Act. I am going to talk about four aspects of that re-regulation and four aspects that are key to the Fair Work Act.

Firstly, collective bargaining. Collective bargaining has become virtually mandatory for employers in Australia and that collective bargaining invariably now involves union representations.

Essentially the provisions have brought in unions, which in many industries have not been involved for many years. There is still to this day a union density rate of about 13 percent in the private sector. But the system now almost mandates that they be involved in collective bargaining and negotiating collective agreements in workplaces. In many cases the system also drags business into complex and costly litigation before the Industrial Tribunal or Fair Work Commission and the courts.

The second aspect that has affected the way we manage our workplace is the right of entry rules governing the basis on which union officials can come into your workplace and that is very closely attached to the bargaining arrangements.

Previously, a union official had to have a connection to your workplace by the organisation being a party to an agreement and the organisation having members in your workplace.

Now all that needs to be shown, subject to very light touch procedural requirements being met, is that the union is legally entitled to enrol members in your business. This has been further strengthened recently where if your business has an operation in a remote location you may also be required to pay for the transportation of the union official to the location where your workplace is and provide them with overnight accommodation. That came in the most recent changes to the Fair Work Act.

Thirdly, the Fair Work Act contains general protections provisions. The effects of the general protection provisions are to make almost any decision that you make that affects your employees reviewable by the Federal Court.

That drags employers into potential litigation every time they make a decision that could be said to adversely affect their employees. And, they face a reverse onus: essentially they have to show that the reasons they made the decision were not unlawful reasons and that drags business invariably into costly and time consuming litigation before the courts. This is far more time consuming than even the sort of litigation being conducted before the Industrial Tribunals and in an environment where unlike other commercial litigation, you almost never are in a position to recover your costs.

And finally, acquisitions and transferring of assets etc have become far more of a risk with respect to the transfer of employees via the transfer of business provisions that have been brought in. The position now is that whenever you transfer work whether by in-sourcing or outsourcing, let alone an acquisition or an actual transfer of assets, the industrial agreement transfers with the employees.

So what can business do? Business needs to plan, plan, plan and in that planning identify the risks associated with the strategy they want to embark upon or the decision that they want to implement and work out the best way to mitigate those risks. And that is only done by getting the best advice you possibly can. Because the alternative is the risk of highly adversarial disputation with unions or equally adversarial litigation in the courts.