Australia: The Federal Coalition's quick move to introduce IR changes

Last Updated: 26 November 2013
Article by Brett Feltham and Mandi Xu

In our previous article (Workplace relations policy - what are the Federal Coalition's plans?), we highlighted the key changes that the Federal Coalition propose to introduce into Federal Parliament, as part of its industrial relations policy, within three months of taking power.

Now only two months after winning the Federal election, the new Federal Government has begun introducing some of those industrial relations changes...

Re-establishing the Australian Building and Construction Commission

The Building and Construction Industry (Improving Productivity) Bill 2013 and the Building and Construction Industry (Consequential and Transitional Provisions) Bill 2013 (BCI Bills) were introduced into Federal Parliament on 14 November 2013. The BCI Bills seek to re-establish the Australian Building and Construction Commission (ABCC).

The Government has committed an additional $35 million in funding over four years to the re-establishment of the ABCC. If the BCI Bills become law, the ABCC will replace the Office of the Fair Work Building Industry Inspectorate, and it will have significantly broader powers to regulate and enforce compliance with relevant industrial laws in the building and construction industry.

The BCI Bills retain some of the provisions contained in the Fair Work (Building Industry) Act 2012 (Cth), which currently regulates the building and construction industry. However, many of the industrial relations changes sought to be introduced by the BCI Bills are built on the previously abolished Building and Construction Industry Improvement Act 2005 (Cth). Those changes include:

  • narrowing the definition of "protected industrial action" to exclude action taken with persons who are not protected for the action
  • re-introducing prohibitions against unlawful industrial action
  • re-introducing industry specific prohibitions against coercion and discrimination – similar prohibitions are currently contained in the Fair Work Act 2009 (Cth) (FW Act)
  • making project agreements unenforceable. On many major sites the unions and head contractors involved enter into project agreements. Subcontractors wishing to work on the project are often required to adopt and comply with the terms of the project agreement, even if they differ from the provisions of an enterprise agreement. The result is that often all significant terms and conditions of the employment relationship between subcontractors and their employees are determined by processes to which they have not been involved in and which can make it pointless for them to engage in genuine enterprise level negotiations with their employees, and
  • requiring the Fair Work Commission (FWC) to keep the ABCC informed of any matters before it that involves a building industry participant or building work, and the outcome of any such matters.

The BCI Bills also introduce changes that were not part of any predecessor legislation. These include:

  • expanding the definition of "building work" to include the supply and transport of building goods to be used for building work. However, this new definition is not intended to extend to the manufacture of those goods
  • clarifying that the geographical scope of the ABCC's jurisdiction covers building works carried out offshore on any ships or resources platforms in Australia's exclusive economic zone or waters above the continental shelf
  • introducing a prohibition against unlawful picket action – unlawful picket actions include intentional blockages of access to building sites and/or ancillary sites, which would reasonably be expected to intimidate a person accessing or leaving any such sites. For a picket action to be unlawful, it must also be motivated for a particular purpose, which includes supporting or advancing claims against a building participant in respect of the employment of employees or the engagement of contractors, or advancing the industrial objectives of a building association
  • reversing the onus of proof applicable to civil proceedings for a contravention of the prohibitions against unlawful picketing, coercion and discrimination so that, for example, employees and unions will be presumed to be industrially motivated unless they can prove otherwise
  • broadening the ABCC's powers, including the power to compel witnesses to attend an examination or to produce documents relevant to an investigation, to intervene in court and FWC proceedings, to delegate its compulsory examination functions to a deputy commissioner (or senior employee), and to award a wide range of remedies (including injunctions), and
  • imposing significant penalties for contravention of prohibitions against unlawful industrial action (including unlawful picket action), coercion and discrimination. A maximum fine of $34,000 will apply for individuals and $170,000 for unions. The BCI Bills clarify that where multiple contraventions are alleged, proceedings may be commenced in relation to any or all of those allegations, a person may only be held liable for one pecuniary penalty for the same conduct, and a relevant court may issue a single civil penalty for multiple contraventions.

Changes for registered organisations

Also on 14 November 2013, the Government introduced the Fair Work (Registered Organisations) Amendment Bill 2013 (RO Bill) into Federal Parliament. The RO Bill proposes to make various changes to take effect from early next year:

  • establish an independent authority, the Registered Organisations Commission, with powers to monitor and regulate registered organisations (to replace the FWC in this role). The Government will establish this agency within the Office of the Fair Work Ombudsman, but the Commission will exercise its functions independently. This particular change is to operate from 1 July 2014
  • amend requirements for officers of registered organisations with respect to the declarations of personal financial and other interests, and amend related voting and decision-making rights
  • require registered organisations to disclose the remuneration of their top five officers in the head office and any branches
  • change the rules for officers of registered organisations in relation to disqualification and ineligibility for office
  • strengthen financial accounting, disclosure and transparency obligations for registered organisations, and
  • increase penalties and introduce criminal offences for breaches of officers' duties.

The Government has stated that the amendments on disclosure and reporting obligations, criminal offences for serious breaches of officers' duties, and increased civil penalties will broadly mirror those that apply to companies and their directors under the Corporations Act 2001 (Cth).

Under the RO Bill, new criminal penalties will apply where an officer does not comply with the Commission's new investigation powers or for serious breaches of officers' duties. Serious breaches of officers' duties may occur where officers fail to exercise their powers or discharge duties in good faith and for a proper purpose, or use their position or information obtained while an officer to gain advantage for themselves or someone else.

Greenfields bargaining and right of entry changes

On 15 November 2013, the Government also announced its intention to introduce amendments to the FW Act in early 2014, with amendments to greenfields bargaining and trade union right-of-entry laws set to be introduced first in the new year. This announcement reaffirms part of the Federal Coalition's pre-election industrial relations policy.

The Government considers the current model for negotiations over enterprise agreements for new projects (greenfields agreements) to be flawed, and that it results in delays in construction projects.

The Government proposes to fix this problem by allowing businesses to take their proposed greenfields agreements to the FWC for approval if negotiations over such agreements are not completed within three months after the commencement of those negotiations. The FWC will then have the power to make and approve such agreements subject to those agreements satisfying strict tests, including the "better off overall test".

The Government is also committed to paring back existing union rights of entry laws to those modelled on the pre-Fair Work regime. In particular, the Government made clear it will remove the changes introduced by the former Federal Labor Government that require employers to facilitate union access to remote sites and make lunch rooms the default meeting place for union visits.

Other superannuation and tax changes

In addition, earlier that week, the Government introduced the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 (MRRT Bill) into Federal Parliament, which also contains changes to superannuation laws.

If the MRRT Bill is passed, the superannuation guarantee rate increases introduced by the former Federal Labor Government will be delayed by two years (see our previous e-alert). As a result, the superannuation guarantee rate will not increase to 9.5% until 1 July 2016 (rather than 1 July 2014) and will not reach 12% until 1 July 2021 (rather than 1 July 2019).

Under the MRRT Bill, the Government also proposes to remove measures that reduce tax on superannuation contributions for low income earners with earnings of less than $37,000 a year.

A practical difficulty that the Government faces with respect to the MRRT Bill is that in order for its proposed superannuation and tax changes to pass, the Senate must also approve its proposed abolition of the new mining tax, previously introduced by the former Federal Labor Government. This is because the former Federal Labor Government had originally introduced the mining tax together with the superannuation guarantee rate increases and tax concessions for low income earners under one piece of legislation.

What do employers need to do?

The Government's proposed industrial relations, superannuation and tax changes will likely face delay as the Greens have the balance of power in the Senate until 1 July next year. Both the Greens and Labor have indicated they will resist these changes proposed by the Government, and they have referred the BCI Bills and RO Bill to a Senate inquiry.

Employers should keep up to date with these legislative developments to prepare their businesses for these changes as and when they become law.

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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