Australia: Changes to the Fair Work Act: What does this mean for employers?

Last Updated: 20 December 2012
Article by Charles Power and Ashleigh Mills

Most Read Contributor in Australia, September 2016

When the Fair Work Act 2009 (Cth) (FW Act) was introduced into Federal Parliament in 2009 the Government committed to a full review of the FW Act within two years of its implementation. On 22 December 2011 an independent review was commissioned to fulfil this objective and its report – 'Towards more productive and equitable workplaces: An evaluation of the fair work legislation' was released in June 2012. While the terms of reference were wide-ranging, the report concluded that the FW Act was largely meeting its objectives and there was no requirement for wholesale change.

On Wednesday, 28 November 2012 the Fair Work Amendment Act 2012 (Cth) (Amending Act) was passed, implementing 17 of the 53 recommendations made by the Fair Work Australia Review Panel. Many of the changes introduced are technical and administrative in nature. A number of structural changes will be made to Fair Work Australia. For example, the name of the tribunal will change to the "Fair Work Commission" (FWC). The changes will commence 1 January 2013.

This article examines the more significant changes for employers in the areas of unfair dismissal and general protection laws and in relation to the scheme for making enterprise agreements.

Unfair dismissal and general protection laws

The FWC's discretionary power to dismiss unfair dismissal applications will extend to circumstances where an applicant has, without reasonable excuse, failed to attend a FWC conference, failed to comply with a FWC order or discontinued an application after agreeing to terms of settlement. This new power will supplement the FWC's existing power to dismiss an FW Act application if frivolous, vexatious or without reasonable prospects of success.

The FWC will have power to order costs against a party and/or their representative where they have caused the other party to incur costs by an 'unreasonable act or omission'. This would apply, among other circumstances, where a party has unreasonably failed to discontinue a proceeding or failed to agree to terms of settlement that could have led to the discontinuance of an application. Similarly, a strong deterrent for lawyers and paid agents in avoiding the pursuit of speculative unfair dismissal claims is introduced by a new provision which provides for adverse cost orders against a lawyer or paid agent, even if the lawyer/agent has not formally been granted or has not sought permission to represent the party before the FWC.

The time limit for lodging both unfair dismissal and general protection claims has been aligned at 21 days (altering the current time limit of 14 days for unfair dismissal claims and 60 days for general protection claims). This will eliminate the current practice in which claimants make an unfair dismissal claim, discontinue at the conciliation conference and then lodge a general protections claim against their ex-employer. The FWC will retain its existing discretion to accept late applications if it is satisfied that there are exceptional circumstances (although as the cases to date have shown, this discretion is rarely exercised).

Enterprise agreements

The changes made by the Amending Act are relatively innocuous and in many respects codify tribunal rulings regarding the operation of aspects of the FW Act.

For instance, the Amending Act operates to put the invalidity of opt-out clauses beyond doubt. 'Opt-out' clauses in enterprise agreements permit employees covered by an enterprise agreement to enter into an individual arrangement with their employer that will result in the agreement ceasing to apply to the employee. The FWA Full Bench in Newlands Coal v CFMEU ([2010] FWAFB 7401) approved the inclusion of such a clause in an enterprise agreement. This ruling was reversed by the Full Bench in CMFEU v Queensland Bulk Handling [2012] FWAB 7751, which unanimously held that the availability of opt-out clauses undermined 'bargaining certainty' and introduced an element of flexibility into the legislative bargaining scheme that was neither intended, nor protected by the FW Act.

Following the Amending Act, opt-out clauses will now be prohibited in future enterprise agreements, while existing opt-out clauses have been rendered unenforceable. However the introduction of the prohibition will not affect a person who has elected to opt out of an enterprise agreement under an opt-out provision before 1 January 2013.

The Amending Act also makes it clear that a union official (or a union) cannot act as a bargaining representative for one or more employees where those employees would be ineligible to join the union. This is so even if the official is purporting to act in a private capacity rather than as an official of the union. This closes the loophole arising from various FWA rulings which would allow an official of a union to act as a bargaining representative for one or more employees who are ineligible to be members of the union by asserting that the official is acting in their personal capacity. The change is considered necessary to help facilitate bargaining and avoid unnecessary litigation and potential demarcation issues as unions seek to gain representation privileges over employees whose work coverage rights lay with a rival union.

The Amending Act has clarified that an employer can only make an enterprise agreement with 2 or more employees – not a single employee as suggested by the FWA Full Bench in AMWU v Inghams ([2011] FWAFB 6106, [30]).

The FW Act requires an employer to give a written notice to each employee to be covered by a proposed enterprise agreement informing them of their right to be represented in bargaining for the agreement by a bargaining representative. The form of the "notice of employee representational rights" is prescribed by the Fair Work Regulations. The Amending Act makes it clear that the notice must contain only the content prescribed by the Regulations and no other content (except that which the Regulations require an employer to insert or omit). It is important for employers embarking an enterprise bargaining process to ensure this notice is served on employees in the correct form because failure to do so may undermine the capacity of FWC to approve the agreement once made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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