By Sam Eichenbaum,Lesley Maclou,Chris Mossman and Audrey
When the Rudd Government brought in the Fair Work Act
("Act"), it undertook to have a review of the Act after 2
years of its full operation. That review was conducted in the early
part of 2012 and the report has recently been released.
For decades now, employment and industrial relations issues have
been one of the major areas of difference between Australia's
main political parties. In addition, it goes without saying that
there are vastly different approaches to employment and industrial
relations issues between the forces of capital and labour.
Consequently, it ought to be no surprise that much of the reporting
of the review of the Act was focussed on the comments of leading
spokespeople for each of the differing camps. Meanwhile, the issues
of substance in the report seem to have been lost in the rhetoric
of the participants. That, unfortunately, has hidden some
When the Industrial Relations Commission was making modern
awards, it introduced into all modern awards a term that allowed
employers and employees to individually reach agreements about
matters that would modify the terms of those awards to suit the
circumstances of a particular worker and their employer. Such
"Individual Flexibility Agreements" were allowed,
provided that the end result was that the employee was better off
over all for having entered into the agreement. All Enterprise
Agreements must have a flexibility term. There is a model term that
would apply if the terms of the Enterprise Agreement don't deal
with it. Unions have vigorously resisted clauses like those in
modern awards or the model clause. The end result - in many
agreements negotiated with Unions the idea that there might be an
Individual Flexibility Agreement or arrangement is illusory.
The reviewers recommended changes to make it easier for
employers and employees to make flexibility agreements. These
the model clause is inserted in all agreements,
Individual Flexibility Agreements are lodged with the Fair Work
Ombudsman (but not that there be any approval process);
non-monetary benefits be taken into account in working out if
the employee is better off overall;
an employer that complies with these requirements has a defence
to a claim of breach of minimum entitlements if it can show that it
genuinely believed when it lodged the agreement that it passed the
Better Off Overall Test; and
the notice period to terminate an individual flexibility
arrangement be extended to 90 days.
These changes, if implemented, would go a long way towards
allowing employers and employees to reach an agreement which,
although not a statutory individual agreement in the same way than
an Australian Workplace Agreement was, nevertheless allows for
considerable scope for bargaining between employers and individual
The report recommends a number of changes to dismissal claims.
Firstly, it recommends bringing the time limit to file both an
unfair dismissal claim and a general protections dismissal claim to
21 days (compared to 14 days and 60 days respectively at the
moment). Secondly, in deciding a general protections claim (where
the employer has to show that none of the prohibited reasons was a
reason why it dismissed the worker) the subjective intention of the
employer should be the fact that determines why the employer did
what it did. Thirdly, Fair Work Australia (which the report
recommends should be renamed) should have the power to order a
party pay the other party's costs if the first party
unreasonably refused to settle the matter.
There are numerous other amendments recommended by the review.
Many of those changes proposed would address particular anomalies
that have arisen in the two years of the full operation of the Act.
For example, it was recommended that unless an award requires
otherwise, annual leave loading not be payable on annual leave paid
out on termination of employment. There was also a recommendation
that employees not accrue annual leave whilst they are absent on
Workers Compensation payments. Various other recommended changes
address problems identified, primarily by employers, in enterprise
bargaining. This includes giving Fair Work Australia powers to
intervene in negotiations of Greenfields Agreements where there has
been considerable discussions but no agreement reached between the
proposed employer and a Union that would have coverage of the
workers to be employed on the project.
All in all, the 53 recommendations of the panel provide a road
map for the Government to make amendments to the operation of the
Act that would improve it, with most of those improvements
providing benefits to employers or individual workers (as opposed
to Unions). It will be interesting to see how many of these
recommendations the Government proposes to implement and can get
through the Parliament.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).