Australia: Analysis: Fair Work Review

Last Updated: 14 August 2012
Article by Joe Catanzariti

Most Read Contributor in Australia, November 2017

Kate Ritchie, BRR Media

Hello and welcome to the BRR Legal Brief, bringing you the latest legal issues affecting corporate Australia. I'm Kate Ritchie.

Well last week we saw the review of the Fair Work legislation, Labor's industrial relations system. Joining me to discuss is Joe Catanzariti who heads up the Workplace Relations team at Clayton Utz.

Well Joe firstly I'd like to look at the Panel's overall impressions of the legislation and its impact on productivity.

Joe Catanzariti, Partner, Clayton Utz

Well let me put it first into context. This was a review that was planned within the legislation so it came as no surprise we're having a review. It's not like there was all this burning pressure in terms of problems with the system.

So what the Panel of eminent experts did is they came up with 53 recommendations. They also made comments about the fact that some of these things need to be tested yet in terms of judicial thinking, and all those reasons haven't come out yet, so they're looking at it as a snapshot of where it is right now.

They did comment however about productivity and to dispel any myths about it – in effect, yes, Australia's productivity has fallen, but they don't view the legislation as being responsible for anything to do with productivity.

Kate Ritchie, BRR Media

Well Joe you've mentioned 53 recommendations. What do you see as the key recommendations?

Joe Catanzariti, Partner, Clayton Utz

What I'd like to do is highlight just a few of them.

The first I'd like to highlight is really greenfields agreements. Now this is very important because we have an obvious boom within mining and construction within Australia. The Review Panel had a good look at this and they thought the legislation as currently drafted did lead to some anomalies in terms of greenfields.

To avoid the problem where you're negotiating a greenfields agreement and an impasse comes into being, they've put in a limited arbitration. So that's good – it means projects can't be stalled while all these things are dragging. That was the very first significant point and I think everybody can be quite happy about that sort of development.

The second thing that they dealt with was industrial action and this really relates to the JJ Richards decision, the issue being at what time can industrial action be initiated. It was the Review Panel's view that there needs to be bargaining; we can't have a situation where industrial action is happening and the cycle hasn't commenced. Again I would say commonsense prevails.

The third point is interesting because really it relates to the Barclays decision and it's unusual to have a High Court matter moving along and a Review Panel recommending, if you like how to fix the system. Of course whatever the High Court decides, it will decide on the law as it is. The Review Panel is talking about the future.

The Barclays matter is extremely important because what they're going to do if the recommendation is accepted is say in situations such as Barclays (the union official and performance management issues), they're not going to allow a tribunal to sort of second guess the honest intention of the employer. So they're going to go back to a subjective intention of the employer. If the employer is able to give reasons as to why it is they did act in relation to that performance issue it won't automatically follow that it must have been because the employee was a union official so it's redressing that sort of balance which I think is pretty significant.

The next matter I want to deal briefly with is individual flexibility agreements. Now there's a lot of discussion about individual flexibility agreements and whether they have been taken up a lot or they haven't. The Review Panel was concerned that there was an attempt in some agreements to bargain away individual flexibility agreements, so they've come down hard on that and they've said no we don't want that to happen. They've recommended that you can't actually bargain away an individual flexibility agreement.

Secondly they've changed the time limits from 28 days to 90 days on termination. That's also quite a good thing.

Finally, unfair dismissals. There's a lot of debate about unfair dismissals because clearly under Work Choices that was really a big debate. They're not going to the heart of unfair dismissals in the discussion points.

There are two recommendations. The first is really to link the general provisions powers of the legislation, the adverse action, etc to have the same sort of time limit as unfair dismissals. That's pretty good actually to have that sort of common approach because different time limits cause confusion for employers and for employees as well.

Secondly, and this has caused a bit of controversy in the media in the last couple of days, is they're talking about a cost jurisdiction being imposed where a party is vexatious or frivolous or doesn't settle the matter which could otherwise have been settled. That of course will cut both ways. I think you know in the end that's a sensible pragmatic recommendation.

Kate Ritchie, BRR Media

Well Joe you've mentioned some of the recommendations that you see as key. Were there any things that you think were left out that should have been addressed by the review?

Joe Catanzariti, Partner, Clayton Utz

Now we'll all have different views on that but the one area I think the business would want to have a bit more on perhaps is really the transfer of business provisions.

They've limited their recommendation to a very narrow area and it really deals with the related entity where an employee is voluntarily moving from one entity to the next. They've said well in that situation we should have all the complex transfer of business issues.

What they perhaps could have done is have a bigger debate on the sale, purchase, and all those other issues in transfer of business which are still very complex and very cumbersome, and come up with perhaps some more thinking on that. They've acknowledged it's complex but just haven't actually done anything about it.

Kate Ritchie, BRR Media

And Joe I'd like to look at arbitration. One of the issues for employers is access to arbitration during industrial action and of course last year we saw Qantas ground its fleet in order to terminate industrial action. What was the Panel's recommendations on this issue?

Joe Catanzariti, Partner, Clayton Utz

Well the Panel not surprisingly hasn't come out and said let's go back to an arbitration system. They specifically referred to the Qantas matter. It's acknowledged, and in general terms they felt well the system works. They have perhaps controversially recommended that the Minister's intervention ought to be re-looked at – should the Minister actually have the ability to interfere and stop it because it might be political interference?

But apart from that they're quite satisfied with the way the arbitral system kicks in in that sort of dispute.

Kate Ritchie, BRR Media

Well of course everyone wants to know what are the next steps. Do you think we're likely to see law reform in this area off the back of the review?

Joe Catanzariti, Partner, Clayton Utz

Well we are in an election cycle and clearly this is a review. Now the review doesn't mean that what the Panel recommends the Government has to endorse. It's no different to a review of any other piece of legislation and the Government will have to sit down and analyse it. It will no doubt discuss it with persons internally.

Then there will be a debate with stakeholders, there will be submissions and we've already seen in the last couple of days some employer groups come out with their own views of the review.

These things are going to take a bit of time. Then there will be negotiations with the independents. It may be that we don't get significant changes before the election cycle finishes.

Kate Ritchie, BRR Media

Okay something we will have to wait and see to see what happens with the review. Joe thank you so much for your joining us in the studio. And viewers thank you for joining us as well. We hope you can join us next week for our Legal Brief.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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