Australia: HR & IR Update: Coalition Announces Work Choices Changes

Last Updated: 12 December 2007
Article by Gareth Jolly

Yesterday, the Honourable Joe Hockey MP, Minister for Employment and Workplace Relations, announced that the Coalition will make further changes to the Work Choices system if it is re-elected.

While some parts of the announcement have come as a surprise, it is true to say that they do not represent substantial changes to the Work Choices System.

The changes are as follows:

Minimum Entitlements

  • Double the annual leave at half pay: employees, with the agreement of their employer, will be able to take double their annual leave at half pay. The purpose is said to be to enable more parents to spend school holidays with their children. However, as this is only by agreement, it does not represent a significant change;
  • 12 months’ parental leave for both parents: both parents will be allowed to take up to 52 weeks’ unpaid parental leave. This would include both parents being able to take leave at the same time. At present, both parents must divide the 52 weeks’ parental leave between them and, except for one week around the birth this cannot be taken simultaneously. However, it appears that the parental leave must still be taken within 12 months of the birth of the child;
  • Grandparents’ leave: Grandparents will be entitled to take one week of unpaid leave when a grandchild is born to assist the parents in caring for their newborn child. In addition, grandparents will have the right to take up to 52 weeks’ unpaid leave unless they are employed by a small business (100 employees or less).

Implications for Employers

Coalition workplace relations policy

  • The award rationalisation process is the most significant issue for employers. It will be particularly significant for any employee who is currently award free, but in an award regulated industry. This is the case, for example, with a number of banks and insurers.
    • On a more general level, the award rationalisation process will be of significance because of the changes to minimum conditions which will be inevitably involved and the danger of a ‘highest common denominator’.
    • For unionised employers, the prohibition on prohibited content in side deals will be very important. It is not clear whether this will mean that prohibited content in current side deals become invalid.
    • The changes to right of entry laws and new laws concerning union officials’ conduct will be especially important in the building industry.

    ALP OH&S Policy

  • The most immediate impact will be felt by applicants, and would be applicants, for self insurance under the Comcare system – with the proposed moratorium.
    • At the very least, the review process is likely to result in increases to Comcare benefits. This will also be very important to self insurers under Comcare.

    Award Rationalisation

    As we predicted in our HR & IR Update of 15 October 2007, the award rationalisation process will start in earnest.

    The Government has also indicated that there will be common rule industry awards for all employees in industries traditionally covered by awards – including employees on state awards.

    Importantly, in some industries, there are a significant number of employers, such as those in banking and insurance, which are largely award free. This is because those industries have traditionally been regulated by federal awards without any state counterpart awards – and (for one reason or another) many employers have never been made a party to the federal awards.

    The extension of awards to these employers may have significant consequences – especially if their employees’ current conditions are different to the awards. It may also have the effect of extending the reach of unfair dismissal laws to some employees who are currently award free, but earn more than the unfair dismissal threshold (currently $101,300).


    Union officials who have had their right of entry permits revoked will be disqualified from holding an office in the union.

    Union officials will have to meet the same standards of behaviour expected of company directors under the Corporations Act 2001 and will be subject to similar sanctions.

    This is particularly interesting. For example, under the Corporations Act, a director must exercise their powers in good faith in the best interest of the corporation and for a proper purpose.

    The sanction, in the case of a serious breach, is a fine of up to $200,000 – which is much higher than the penalties under the Workplace Relations Act for individuals.

    In a similar vein, unions will be subject to the same level of scrutiny as a publicly listed company – in particular, in relation to the use of union dues and ensuring they are not used for improper purposes.

    Finally, under Work Choices, ‘prohibited content’ cannot be included in workplace agreements (e.g provisions for the deduction of union dues etc). This has led to unions doing ‘side deals’ – contained in common law agreements and deeds. These side deals will no longer be able to include prohibited content. It is not clear whether this will mean that prohibited content in current side deals become invalid.

    And there will be a prohibition on a union applying illegitimate pressure to an employer to make a side deal.

    Workers Compensation

    For employees in the federal workers compensation system, the death benefit payable will be increased from $219,000 to $400,000 and weekly payments to dependent children will be increased from $72 to $110 per week. This is much higher, for example, than the lump sum death benefit under the New South Wales workers compensation scheme.

    Building and Construction Industry

    Union officials wanting to enter building sites must advise the Australian Building and Construction Commission (ABCC). In addition they must notify the occupier of the site and the relevant employer.

    There will be an additional $7 million funding over four years for the ABCC to assist small to medium businesses to become code compliant and increase its presence on construction sites.

    Additional Funding

    There will also be additional funding for the Workplace Authority and Workplace Ombudsman to assist in protecting young workers.

    The ALP’s Workplace Health And Safety And Workers Compensation Policy

    The workplace policy debate in the federal election has, as expected, focused heavily on industrial relations. In comparison, occupational health and safety (OH&S) and workers compensation have received comparatively little attention in the debate.

    Recently, however, the ALP released its workplace health and safety policy – with some significant changes to OH&S and workers compensation being flagged if it wins the next election.

    The key features of the policy are:

    • the development of nationally consistent OH&S laws;
    • a review and reform of the Comcare system;
    • a moratorium on companies seeking to self insure under Comcare;
    • seeking to streamline the state workers compensation systems for multi-state employers; and
    • establishing an independent national body to lead the reform and implementation.

    The Current System Of Occupational Health And Safety Regulation In Australia

    The majority of private sector employers in Australia are covered by state occupational health and safety (OH&S) and workers compensation legislation which, in some respects, differs significantly from state to state.

    From time to time, the utility of a national workers compensation and OH&S scheme has been mooted. For example, in 2004 the Productivity Commission handed down a report which argued strongly for the harmonisation of Australian workers compensation and OH&S laws.

    Since 1992, it has been possible for some private sector employers to obtain a licence to self insure for workers compensation purposes under the Federal Comcare scheme – that is, private sector employers who are competitors of a government business. This has only been utilised by private sector employers in the last few years. The High Court upheld the constitutionality of the arrangements this year.

    Last year, the Coalition changed the law so private sector self insurers are covered by the Commonwealth Occupational Health and Safety Act 1992 – instead of state OH&S legislation.

    What Will Change If The ALP Wins The Election?

    The ALP policy raises three main concerns about the extension of the Comcare scheme to private sector employers:

    • lesser employee entitlements under Comcare than under state systems;
    • alleged gaps in the enforcement capabilities between the state based schemes and Comcare; and
    • uncertainty in the interaction of state and federal OH&S laws at workplaces under the control of Comcare licensed employers.

    The ALP policy promises a review and overhaul of the current Comcare scheme. While it does not indicate that private sector employers will be excluded from Comcare, there will be a moratorium on companies seeking a self insurance licence until the review is complete.

    The ALP has also said it will re-negotiate a Memorandum of Understanding with the states to ensure the Comcare and stated based authorities work co-operatively, irrespective of their coverage under Commonwealth and state OH&S legislation.

    While the policy does not advocate for a Commonwealth rehabilitation and OH&S system using the Corporations power in the constitution, the centrepiece of the ALP policy is the ‘harmonisation’ of state and territories OH&S laws within five years of coming to office.

    The ALP proposes that the federal and state governments work together to establish nationally consistent OH&S laws and streamline the application of workers compensation schemes to multi-state employers.


    If the ALP wins the election, the operation of the Comcare scheme is likely to change dramatically, although probably not immediately.

    A national OH&S scheme (or at the very least, consistency between state OH&S and workers compensation legislation) has been mooted for some time. However, it is a complex issue and there are divergent views on what shape a model system would take.

    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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