Australia: Fair Work Act Amendments set to become law

The Coalition Government is close to obtaining the passage of the first of several workplace reform Bills introduced into Parliament since it took office in September 2013.

Once passed, the Fair Work Amendment Act (FW Amendment Act) will implement changes to several aspects of the Fair Work Act 2009 (Cth) (FW Act), most importantly the provisions relating to greenfields agreement-making and protected industrial action ballots.

However, several other changes sought by the Government in its original Bill – including new restrictions on union right of entry and easier processes for the making of individual flexibility arrangements (IFAs)1 – had to be jettisoned in order to obtain support for the Bill from cross-bench senators.

The amended Bill has been passed by the Senate, and is awaiting consideration by the House of Representatives (which will likely occur in the next sitting week, commencing on 9 November 2015). Once the Bill is passed by the House of Representatives, most of its provisions will take effect on the day after it receives Royal Assent.

In this In Brief, we examine the main provisions of the FW Amendment Act and the compromises the Government has made to secure its passage.

Greenfields Bargaining

The original Bill sought to change the current process for making greenfields project agreements, to address the concern that unions can simply hold out for a deal on their terms. The main change sought by the Government was to enable an employer to seek approval of a proposed greenfields agreement within a reasonable period after the expiry of an initial three-month negotiation period.

The Government agreed to Senate amendments to the Bill, so that the three-month negotiation period has been extended to six months. FWC approval of the employer's agreement after that time will be subject to the better off overall test; and a requirement that the agreement includes pay and conditions consistent with those prevailing in the relevant industry.

In addition (and as proposed in the original Bill), greenfields agreement negotiations will be subject to the good faith bargaining obligations set out in section 228 of the FW Act.

Protected Action Ballot Orders (PABOs)

The FW Amendment Act will finally implement a change which employer groups have been pushing for over the last few years, and which was recommended by the Fair Work Act Review Panel in 2012:

  • Employee bargaining representatives (usually, a union representing the relevant employees) will not be able to apply for a PABO – the first step in the process of taking protected industrial action in support of bargaining claims – until the employer is obliged to issue a notice of representational rights to the employees.
  • The practical effect of this requirement is that where an employer does not agree to a union request to commence collective bargaining, the union must obtain a majority support determination from the FWC – rather than being able to instigate the process for taking protected action.

This change reverses the effect of the Full Federal Court decision in JJ Richards and Sons Pty Ltd v Fair Work Australia.2

Unpaid Parental Leave

Under the National Employment Standards (NES) provisions of the FW Act, an employee may seek an additional 12 months' unpaid parental leave on top of their initial 12-month period of such leave.

The FW Amendment Act will require employers to give employees a reasonable opportunity to discuss a request for the additional period of unpaid parental leave, before refusing the request. It is intended that these discussions should be held in person or by phone, rather than by email or text messages.

Interest on Unclaimed Monies

The FW Amendment Act will require the Fair Work Ombudsman (FWO) to pay the applicable amount of interest on unclaimed monies which are payable to an employee in respect of their previous employment with an employer (where those monies have been paid to the FWO on the employee's behalf).

Provisions Dropped from the Original Bill

As indicated above, a number of provisions in the original Bill were abandoned by the Government as part of the negotiations to obtain cross-bench support for the Bill in the Senate. These included provisions relating to:

  • Union right of entry: proposed amendments would have repealed the former Labor Government's provisions facilitating access by union officials to remote work sites; and making workplace lunch rooms the default location for union meetings. More importantly, the original Bill also proposed significant new limits on union entry to premises for discussion purposes.
  • IFAs: the original Bill included proposals to enhance the utilisation of IFAs under enterprise agreements, including requiring IFAs to cover (as a minimum) working time, overtime and penalty rates, allowances and leave loading; and providing for unilateral termination of an IFA on 13 weeks' notice rather than 28 days (these changes were proposed by the 2012 Fair Work Act Review Panel).
  • Transfer of Business: an amendment would have clarified that there is no transfer of business for purposes of Part 2-8 of the FW Act where an employee moves to an associated entity of their old employer, at the employee's initiative.
  • Annual leave entitlements: the original Bill proposed to clarify two aspects of annual leave entitlements under the NES. First, that payment out of annual leave entitlements on termination of employment should be at the employee's base rate of pay, and should not include annual leave loading. The Full Federal Court recently ruled to the contrary,3 so that at present, annual leave entitlements must be paid out the rate payable if the employee had actually taken the leave. Secondly, that annual leave entitlements should not accrue while an employee is absent on workers' compensation, even if applicable state legislation provides for this. As a result, for now, the position under state law remains applicable (for example, in Queensland and NSW workers continue to accrue annual leave under the NES while in receipt of workers' compensation payments).4

Implications for Employers

The passage of the FW Amendment Act will be a welcome development for employers in the resources and construction sectors in particular. The new process for greenfields bargaining should provide a circuit-breaker in negotiations over project agreements. Further, the six-month negotiation period adopted through the Senate amendments probably provides a more realistic time-frame than the three-month proposal in the original Bill.

The change to the PABO process makes it harder for unions to take protected industrial action as a mechanism to compel an employer to engage in collective bargaining. The requirement to first obtain a majority support determination imposes a higher threshold of employee support, than is required for obtaining a PABO.

On the other hand, many employers will no doubt be disappointed that the proposed changes to the right of entry and IFA provisions have not been passed into law.

Overall, though, the Government's prospects of obtaining support for its stalled legislative reforms appear to have been enhanced by Malcolm Turnbull's replacement of Tony Abbott as Prime Minister.

This could see agreement being reached with cross-bench senators on measures including the legislation restoring the Australian Building and Construction Commission and enabling the Coalition's new Building and Construction Code to take effect5 (if that legislation, voted down in August, is re-introduced into Parliament).

Footnotes

1 See our previous In Brief at: Government commences Fair Work Act reform
2(2012) 201 FCR 297.
3Centennial Northern Mining Services Pty Ltd v CFMEU [2015] FCAFC 100 (23 July 2015).
4See e.g. Anglican Care v NSW Nurses and Midwaves' Association [2015] FCAFC 81 (5 June 2015).
5See: Back to the future - ABCC set to return under Building and Construction Industry (Improving Productivity) Bill and Abbott Government releases new Construction Code

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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