Australia: Employment Law Update

Kevin 07 and WorkChoices

On 28 March 2008, the Rudd Government's Workplace Relations Amendment (Transition to Forward with Fairness) Act came into force. The Act does not attempt to overhaul the workplace relations legislation in one go, as the Howard Government did with its WorkChoices legislation, but rather implements the first stage of Labor's election commitments.

The Act phases-out AWAs, provides for interim individual agreements until the end of 2009, restores a no-disadvantage test and starts the award modernisation process.

AWAs made and lodged before the commencement date, or made before commencement and lodged within 14 days, will operate until terminated or replaced. However, after the commencement date, AWAs can no longer be made. The commencement date is 28 March 2008.

A new type of workplace instrument is proposed the Individual Transitional Employment Agreement (ITEA), with a complex set of rules about its application. ITEAs can only be used by employers who had at least one employee on an AWA prior to 1 December 2007. ITEAs can continue to operate until 31 December 2009.

The Howard Government's "fairness test" which has applied to AWAs since 10 May 2007 has been replaced by a no-disadvantage test for both ITEAs and new collective agreements. The no-disadvantage test will compare proposed workplace agreements to a reference instrument, such as an award.

ITEAs for new employees commence on being lodged with the Workplace Authority Director but cease to operate if they fail the "No Disadvantage test" in which event the parties would revert to the employment instrument that applied before the ITEA was lodged.

The Act also removes the "protected award conditions" provisions thus enabling all allowable award matters to be used as the basis of the "No Disadvantage test."

The Act foreshadows Labor's other election promises, including a new safety net of National Employment Standards, award modernisation and the creation of Fair Work Australia. The rollout of legislation enacting these reforms will continue during 2008.

10 National Employment Standards

Labor has proposed 10 National Employment Standards, to replace the Howard Government's Australian Fair Pay and Conditions Standard, covering:

1. Hours of work, mandating a 38 hour week, with reasonable additional hours.

2. Parental leave guaranteeing 12 months of unpaid leave, plus the right to request up to an additional 12 months of unpaid leave, which can only be refused on "reasonable business grounds".

3. The right to request flexible working arrangements for parents until their child reaches school age, refusal only permitted on reasonable business grounds.

4. Four weeks' paid annual leave.

5. Ten days' Personal / Carers leave, plus 2 days compassionate leave, plus 2 days unpaid leave for family responsibilities.

6. Community Service Leave, for example, unpaid leave for participation in State Emergency Service and paid leave for jury service.

7. Public holidays.

8. Employers must provide all new employees with a Fair Work Information Statement which contains prescribed information about the employee's rights and entitlements, including the right of the employee to choose whether to be or not to be a member of a union and where to go for information and assistance.

9. Termination of Employment & Redundancy, including minimum notice of termination and minimum redundancy pay.

10. Nationally consistent long service leave entitlements.

The Standards will apply to all Australian employees regardless of their industry or occupation from 1 January 2010. The Standards will operate in addition to award provisions.

The Standards cannot be removed or replaced.

Award Modernisation

The Government has requested that the Australian Industrial Relations Commission (AIRC) take the lead role in award modernisation. The objectives for award modernisation include ensuring the instruments are simple to understand and easy to apply.

The AIRC will have two years to create modern awards to be ready to commence on 1 January 2010. Together with the National Employment Standards, modern awards are intended to guarantee a safety net of minimum wages and conditions for workers covered by the award system.

By 30 June 2008, the Commission has been asked to consult with industry and identify a list of priority industries or occupations to undergo the award modernisation process by the end of 2008 (likely to include clerical, retail, manufacturing, mining).

Award modernisation provisions will also restore the no-disadvantage test. New agreements will only be able to override award entitlements provided the agreement means employees suffer "no disadvantage".

Modern awards may contain "ten allowable matters" which can be tailored to the needs of the industries, occupations or enterprises they cover. The ten matters are minimum wages, type of employment (part time, casual, flexible working arrangements), information concerning hours of work, overtime, penalty rates, allowances, leave and leave loadings, superannuation, dispute settling procedures and provisions for minimum annualised wage or salary arrangements (based on patterns of work in a particular industry).

Awards may build on and also provide industry detail on the 10 National Employment Standards for industry specific matters (e.g. additional entitlements to notice of redundancy, parental leave etc).

The operation of modern awards will not extend to employees traditionally outside awards (e.g. managerial employees). From January 2010, awards will not apply to those employees who earn over $100,000 and who agree to terms and conditions under the new system. It is not yet clear what will be required for such an employee to opt out of the award based system.

Labor's retention of WorkChoices

Whilst the Labor party's mantra pre and post last years Federal election was to "rip up" WorkChoices, this is not in fact the case. The fine print of Labor's policy published from early in 2007 has promised to retain a number of aspects of WorkChoices and other reforms introduced by the Howard Government since 1996.

The most significant and surprising areas where there will be little or no change relate to industrial action and to union right of entry issues.

Labor's stated policy supports being "tough on industrial action". Mandatory secret ballots of employees will still be required in order for industrial action to have legal protection. Similarly, Labor will retain prohibitions on industrial action taken in pursuit of pattern bargaining.

Therefore, industrial action will only be protected if it:

  • is taken during a bargaining period for a new collective agreement;
  • is supported by a secret ballot of employees;
  • is within good faith bargaining processes; and
  • does not constitute pattern bargaining.

Labor will also retain the ability of parties to issue proceedings directly in the Federal Court seeking orders to stop unprotected industrial action. This is a different approach for Labor. Prior to WorkChoices, the parties had to seek a certificate from the AIRC before commencing proceedings in the Courts, arising out of unprotected industrial action.

Labor also supports and will retain the secondary boycott provisions in the Trade Practices Act.

Right of entry laws regulate the ability of union officials to enter workplaces and meet with employees. Labor will retain the "fit and proper person" test introduced under WorkChoices. This means that union officials obtaining a right of entry permit from the AIRC must be found to be fit and proper persons to hold such a permit.

Labor also supports requirements that employees cannot enter premises without giving proper notice to the employer concerned and that union officials entering premises must follow the employer's reasonable directions whilst they are on site.

The above matters represent a significant shift to the right in Labor policy.

Fair Work Australia

On 26 April 2007 Julia Gillard announced the Labor party's plan to create a new organisation "Fair Work Australia", a "one-stop shop" for employers, industrial organisations and the public to approach regarding employment issues. It was proposed that Fair Work Australia would be responsible for:

  • Providing information and advice to employers and employees through phone services and "shop front" centres located in city, regional and suburban areas;
  • Facilitating good faith collective bargaining;
  • Approval of the resulting agreements;
  • Resolving unfair and unlawful dismissal claims;
  • Assisting parties to resolve workplace grievances;
  • Ensuring employers comply with workplace laws, including minimum wage conditions, awards and other agreements;
  • Overseeing mandatory secret ballots required prior to industrial action under Labor's new regime;
  • Setting national minimum wages; and
  • Regulating unions and other industrial organisations.

While transitional legislation has already been passed, the government has proposed 1 January 2010 as the date on which Fair Work Australia is to commence operating.

Who will make up Fair Work Australia?

The Prime Minister has stated that at least part of Fair Work Australia will be judicial officers to deal with the dispute resolution parts of the organisation. He has also hinted that the organisation may include former heads of employer organisations, independent economists and he would not exclude the employment of former union officials.

How will they be chosen?

In the interests of fairness and getting the right people for the job, it has been suggested the Minister for Employment and Workplace Relations would only be able to make an appointment to Fair Work Australia, after the proposal has been assessed by senior officials from both the Department of Education, Employment and Industrial Relations, Australian Public Service Commission, and each State and Territory Department of Industrial Relations that wish to participate. The Minister will then be required to consult with the opposition spokesperson for industrial relations and the head of Fair Work Australia prior to making any recommendation about appointments to cabinet.

Fair Work Australia is set to replace the Australian Industrial Relations Commission, Office of the Employment Advocate, Office of Workplace Services and the Fair Pay Commission. It is yet to be seen how the finer mechanics of an organisation which includes both the regulator, investigator and arbitrator will work given that the full Bill is not due to be released to the public until as late as 2009.

Regardless, the introduction of Fair Work Australia will drastically alter the way that industrial relations laws have been applied for over 100 years.

Collective Bargaining the good faith requirement

It would be fair to say that collective bargaining and collective agreements are the cornerstones of the Federal Labor government's new industrial relations system.

Under this system where a majority of employees wish to collectively bargain, their employer will be obliged to bargain with them in good faith.

At the outset of the bargaining process, employers will be required to inform their employees of their right to choose to be represented in the bargaining process.

Fair Work Australia will be able to provide guidance to the bargaining parties during the bargaining process and to assist where an employer disputes the level of support for collective bargaining in its workplace.

Unlike the current WorkChoices provisions which prohibit certain content in workplace agreements, under Labor's substantive legislation the bargaining parties will be able to reach agreement on any topic as long as:

  • the terms of their agreement are lawful;
  • their bargaining is conducted in "good faith";
  • the employees who will be covered by the proposed collective agreement are better off overall against the safety net; and
  • a majority of employees vote in favour of the agreement.

Labor's policy statement describes "good faith bargaining" as a means of encouraging and assisting employers and employees to consider the issues central to bargaining and to work efficiently towards making an agreement.

Examples of "good faith bargaining" include:

  • attending and participating in meetings at reasonable times;
  • disclosing relevant information in a timely manner;
  • responding to proposals made in a timely manner;
  • giving genuine consideration to the needs of the other parties and providing reasons for responses; and
  • refraining from capricious or unfair conduct or conduct that undermines freedom of association or collective bargaining.

"Good faith" bargaining will not mean that parties will be expected to make concessions or enter into an agreement where they do not agree to the terms of a proposed agreement. Fair Work Australia will be able to assist bargaining participants to bargain in good faith and will have the power to make orders where they are not bargaining in good faith.

Labour's intention is to reduce the regulatory burden relating to collective bargaining in order to enable parties to do so freely. Once an agreement has been made then no industrial action can be taken during its term.

If the parties cannot reach agreement then they will be able to:

  • agree to end the bargaining process (in which event the existing arrangements will continue to apply);
  • jointly request Fair Work Australia to help them reach agreement / to determine particular matters that remain unresolved;
  • take protected industrial action (which is discussed separately in this newsletter).

Job applicants with criminal records obligations on recruitment agencies

A recent decision handed down by the New South Wales Court of Appeal reminds employment agencies to undertake all appropriate checks of potential employees' criminal history before referring them to an employer.


Mr Peter Monie together with his wife and son sued the Commonwealth Employment Service (CES) for damages to their business and health after an employee shot Mr Monie 4 times.

The employee, Mr Winsor, left school at age 12 years. By March 1993 he had 41 criminal convictions recorded against his name. In the previous 4 years he had spent almost 2 years in jail. He was released on 14 December 1992. Three months later he attended the Inverell office of the CES and enquired about an advertisement for a farmhand. The CES referred Mr Winsor to Mr Monie and after a brief interview Mr Monie offered Mr Winsor a job.

Importantly the CES had not informed Mr Monie of Mr Winsor's criminal past.

On 15 June 1993 whilst Mr Monie was in his home on the farm, he was shot 4 times by Mr Winsor.

At first instance the trial judge Barr J found the Commonwealth had breached a duty of care to take reasonable care to avoid or minimise the risk of injury that Mr Winsor posed to Mr Monie. Barr J found a reasonable person referring an ex-offender with a violent and criminal history to a prospective employer would create a foreseeable risk of injury. As such, the CES owed a duty of care to Mr Monie. The standard of care would have been met if the CES had informed Mr Monie of Mr Winsor's criminal past, or not referred Mr Winsor at all, or if the CES was reasonably certain the ex-offender did not pose any "special risk" to the prospective employer.

However, Barr J also found that Mr Monie, his wife and son had voluntarily assumed the risk of Peter Monie being shot.

The Court of Appeal agreed that the CES was in error in failing to disclose Mr Winsor's criminal past (with consent) or not to refer him for employment.

The Court of Appeal held the CES had breached its duty of care.

Mr Monie was awarded $238,750.00 in damages plus interest. His wife was awarded $50,000.00 damages plus interest. The Court ordered a retrial of the son's case.

The lessons learned from this decision are that where a recruitment agency is aware that a prospective employee being referred to a client has a relevant criminal record, this must be revealed to the prospective employer with the applicant's consent. A relevant history will usually include offences relating to both dishonesty and violence.

If consent is obtained and the criminal history is revealed to the prospective employer and the employer agrees to take on the employee despite this information, liability can be absolved.

Unfair dismissal new procedure proposed

Parts of the Australian Labor Party's policy promoted under the banner "Forward with Fairness" have now been implemented into law.

An aspect which has not, and which remains less well understood, is the proposal for a new procedure for conducting hearings into alleged unfair dismissals.

The uncertainty about this proposal relates not just to the content of the procedure, but the timetable for its implementation. In that latter respect it appears that the Australian Industrial Relations Commission (AIRC) will continue to deal with unfair dismissal allegations for the time being, but that in 2010 a new entity Fair Work Australia will be responsible for the investigation of such claims.

The thrust of Labor's policy in relation to unfair dismissals is articulated as the attainment of "a simpler unfair dismissal system which balances the rights of employees to be protected from unfair dismissal, with a need for employers to manage their workforce and to ensure a faster, less costly and less complex process for all."

Clearly the emphasis is on outcomes. That emphasis is intended to be secured through the abandonment of established procedures for resolving contested claims.

Expeditious resolution is intended to be secured in part through the implementation of a requirement that a claim for unfair dismissal must be lodged within 7 days of the dismissal followed by a summary, inquiry procedure.

The procedure as Labor describes it in its published policy statements provides that once an application is made Fair Work Australia will review it and require the parties to attend a conference to determine the matter.

A Fair Work Australia team will attend at a work place and conduct a procedure which is intended to ascertain all of the relevant circumstances surrounding the dismissal, test those claims, make an immediate ruling upon them, and determine an appropriate remedy.

The proposal articulated by Labor explicitly excludes formal written submissions, cross examination or formal hearing. Although a party may have a representative or support person present, recourse to legal representation is not contemplated. Fair Work Australia will conduct this inquisitorial process itself requiring the parties to answer questions raised by it about the facts and circumstances surrounding the dismissal.

Reinstatement will be the primary remedy, unless reinstatement is not in the interests of one of the parties. Compensation may be ordered in those circumstances.

In the present AIRC system, a hearing follows a conciliation conference intended to explore the prospects for resolution in an informal and cost effective way.

The difference with the new proposal is that there will be no discrete conciliation mechanism, and the new approach will not incorporate a process designed to require pre-hearing disclosure of matters asserted by each party to be relevant to the decision to dismiss. Nor will it adopt the more formal hearing procedure we are used to, when conciliation is unsuccessful.

The shift to an inquisitorial process and away from an arbitrated outcome is an interesting one. It is not one which is commonplace in the Australian legal system or at large, in circumstances where there is a contest between parties, let alone a contest' which relates to something as important to both parties as the management of employment issues.

Confidence in the process is also important. There is a risk that a process which occurs behind closed doors at the place where the dismissal occurred [and not symbolically detached from it], lacking a public face, will have no opportunity to earn public confidence. Anecdotal evidence of the conduct of the system' will not be easily rebutted no matter how inaccurate or fanciful. Confidence in the system intended to regulate alleged unfair dismissals is an important matter and the present proposals risk losing such confidence.

In a nutshell, the proposal appears to emphasise results. This risks a serious detriment to the procedural side. The concept of procedural fairness is well understood. It is a concept which recognises the importance of adherence to a process that affords parties an opportunity to be heard as critical to the attainment of just and fair outcomes. Care must be taken to ensure that an emphasis on outcomes is not permitted to obscure the importance of procedure in the fact finding process and the determination of merit.

We have already developed procedures which, broadly speaking, provide a robust methodology for ascertaining the true state of affairs, generating confidence in the decisions which are made. A specialist tribunal within the AIRC, properly resourced, would be well equipped to provide access to expedited hearings carried out in public. This public process would promote public confidence and fulfil the educative role incidental to the Tribunal's primary role.

It seems likely that further discussion and debate about the proposal as it is presently drafted will expose some of these deficiencies in a way which promotes a reconsideration of the proposal. The risk, if the proposal is not revised, is that speedy resolution and simplification may come at an unintended price.

Stressed ambulance officer loses half million dollar payout

In May last year, media reports discussed the half million dollar payout to a Queensland ambulance officer who sued the Queensland Ambulance Service for a psychological injury he suffered in the course of his employment.

The Queensland Ambulance Service (QAS) has now successfully appealed the decision.

The decision confirms that employers in the health industry have a duty to ensure that appropriate systems are in place for recognising signs of workplace stress in employees exposed to traumatic events. It also illustrates that an employer will only be liable for an employee's loss if the employee can identify what steps the employer ought to have taken, and that those steps would have avoided the loss.

The facts

The plaintiff, Mr Hegarty, worked as an ambulance officer in rural Queensland stations. After 15 years as an operational officer, he was diagnosed with post-traumatic stress disorder and obsessive compulsive disorder, brought about by years of exposure to traumatic and brutal events in the course of his employment, often involving people he knew in the small towns.

He sued his employer, the Queensland Ambulance Service, alleging it failed to provide him with sufficient counselling and/or psychological support or treatment, given it knew the traumatic nature of the events he had to respond to over the course of his career. He argued that if a sufficient system had existed, his senior officers would have been able to recognise the early signs of psychological dysfunction in time for him to obtain appropriate treatment.

The Court of Appeal decision

After losing in the Supreme Court, the QAS appealed to the Queensland Court of Appeal, saying that even if a more appropriate program had been in place, the plaintiff's supervisors could not have been expected to recognise the plaintiff's psychological dysfunction.

The Court of Appeal agreed. It found that while the plaintiff complained about the traumatic nature of his duties and requested transfer to a larger town, his complaints were equivocal and were often not made to the same officer. The plaintiff's performance did not decline and he did not tell anyone at work that he was suffering nightmares, flashbacks and other symptoms.

In fact, the plaintiff was awarded a medal for exemplary service at the very time that he was alleging his superior officers should have recognised that he was not coping.

For these reasons, the court held that, even if senior officers had been given more appropriate training, in the circumstances outlined above there was insufficient evidence to alert senior officers to the plaintiff's psychological problems.

This decision warns of the dangers of 'litigation hindsight', particularly in view of the many difficulties of knowing when and why a particular person will develop a psychiatric condition.

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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