Australia: Workplace Relations Update

Last Updated: 26 September 2008


  • Agreement Making
    In relation to enterprise bargaining and collective agreement making, the Government has confirmed that it will remove some of the limitations and restrictions on collective agreement making that were introduced under WorkChoices, whilst still retaining a number of WorkChoices era amendments.
  • Industrial Action
    As is the case under WorkChoices, protected industrial action will remain available to employees and employers during enterprise bargaining and industrial action taken by employees will still need to be approved by a secret ballot.
  • Unfair Dismissal
    Consistent with WorkChoices, the proposed unfair dismissal regime will apply to all employers covered by the WorkChoices.

Agreement making

In relation to enterprise bargaining and collective agreement making, the Government has confirmed that it will remove some of the limitations and restrictions on collective agreement making that were introduced under WorkChoices, whilst still retaining a number of WorkChoices era amendments.

Key amongst the proposed changes are:

  1. the loosening of the allowable content rules for collective agreements; and
  2. the introduction of good faith bargaining.

It is anticipated that these changes will commence on 1 July 2009.

Allowable content

WorkChoices prohibited certain content being included in collective agreements, such as payroll deductions for union membership and leave for occupational health and safety training where it is conducted by a union.

The Government's proposed changes will enable employers and employees to bargain over an expanded range of matters. Deductions from salary for any purpose authorised by an employee such as salary sacrifice or deduction of union dues will be able to be included in an agreement.

The concept of prohibited content under WorkChoices will be removed. However, the proposed regime will retain the requirement that collective agreements must be limited in their scope to "matters pertaining" to the employment relationship. These words were given a narrow reading in the High Court's 2004 Electrolux decision, which resulted in content, such as restrictions on the use of labour hire by employers, in otherwise valid pre-WorkChoices certified agreements being rendered void. The High Court also found that industrial action in support of matters outside the employment relationship was not protected. The Government's proposed changes will retain this principle. If terms in agreements do not meet these criteria, they will be void and unenforceable.

Certain matters will remain off limits for inclusion in collective agreements. These matters, which will be known as "unlawful content", include terms that:

  • breach unlawful termination and freedom of association laws;
  • require the payment of a bargaining services fee to a union;
  • are discriminatory;
  • provide remedies for unfair dismissal to persons who have not served the applicable qualifying period (i.e. 6 or 12 months); and
  • purport to authorise industrial action during the life of the agreement.

Fair Work Australia will not approve agreements that contain unlawful content.

Good faith bargaining

The notion of good faith bargaining represents a considerable conceptual shift from WorkChoices in that it allows, in certain circumstances, for an employer to be compelled to bargain collectively with employees, or more likely, their union.

The Government has indicated that the good faith bargaining obligations will be:

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

Good faith bargaining obligations will be triggered where it is established that a majority of employees seek to bargain for a collective agreement. Fair Work Australia will be able to determine whether there is majority employee support by whatever method it considers appropriate, such as a ballot or a petition.

If Fair Work Australia determines there is majority employee support for pursuing a collective agreement, the employer will be required to bargain collectively with the relevant employees. The employer will then also be required to notify employees within 14 days of their right to be represented. Union members will automatically be entitled to have their union represent them in the bargaining process.

The Government however has confirmed that compulsory arbitration will not be a feature of good faith bargaining. This provides some consolation for employers who could otherwise potentially face Fair Work Australia stepping in and directing that a collective agreement be made and contain certain matters sought by a union without the employer's agreement.

Implications for employers

There will be a wider range of matters over which employers and employees can bargain, however the Government's retention of the "matters pertaining" principle will impose some restrictions on the content of agreements.

The introduction of compulsory good faith bargaining obligations on employers may increase the time and cost of agreement-making and could lead to pressure being placed on employers to make concessions.
by Andrew Maher

Industrial Action

As is the case under WorkChoices, protected industrial action will remain available to employees and employers during enterprise bargaining and industrial action taken by employees will still need to be approved by a secret ballot.

In a similar manner to WorkChoices, a bargaining period can be suspended or terminated by Fair Work Australia, however Forward with Fairness will also allow Fair Work Australia to suspend a bargaining period in circumstances where the industrial action is protracted and causing significant harm to the relevant employer and employees. In limited circumstances, Fair Work Australia will be able to determine a settlement for the bargaining participants.

Any industrial action taken:

  • outside of a bargaining period;
  • before the expiry of an enterprise agreement;
  • where parties are not acting in good faith; or
  • in support of pattern bargaining

will not be protected industrial action, and Fair Work Australia will be required to determine whether the industrial action is protected within 48 hours. Fair Work Australia will be required to make interim orders if it is not able to comply with the 48 hour requirement. This requirement is equivalent to the obligations currently imposed on the AIRC.

If an employee is engaged in unlawful (i.e. unprotected) industrial action, the employer will be required to withhold 4 hours pay from the employee (or an amount of pay equivalent to the duration of the industrial action if it extends for more than 4 hours), which is currently the case.

However, if an employee is engaged in lawful (i.e. protected) industrial action, the employer will only be required to withhold an amount of pay equivalent to the time the employee was engaged in the industrial action. This is a significant change from the current regime where there is a blanket requirement for an employer to withhold a minimum of 4 hours pay from an employee for any industrial action (protected or otherwise).

Further, Forward with Fairness will qualify what is to occur when an employee engages in protected industrial action which is not a strike (for example a work ban, work to rule, or a go slow). Employers will be given a choice whether to pay the employee their full pay or to deduct an amount of pay from the employee proportional to the duties the employee has refused to perform.
by Michael Cooper

Unfair Dismissals

Who is covered by the new unfair dismissal laws?

Consistent with WorkChoices, the proposed unfair dismissal regime will apply to all employers covered by the WorkChoices. The new provisions will remove the current exemption for employers with less than 100 employees. This means that employers with less than 100 employees will no longer enjoy immunity from unfair dismissal claims from 1 July 2009.

The new unfair dismissal regime will introduce special arrangements for employers with less than 15 employees (small businesses). These provisions are:

  1. a doubling of the qualifying period from 6 to 12 months before which an employee can make a claim for unfair dismissal; and
  2. the introduction of a Small Business Fair Dismissal Code (Code) that if followed by the small business employer will prevent a dismissal from being unfair.

For small businesses to comply with the Code they must provide an under-performing employee with a valid reason for the dismissal based on the employee's conduct or capacity to do the job, prior to dismissal explain why the employee is at risk of being dismissed and provide the employee with a reasonable chance to rectify the problem. Multiple warnings will be unnecessary and warnings do not need to be in writing.

A reasonable chance to rectify the problem may require the small business employer to take steps to assist the employee, for example through the provision of additional training.

What is an unfair dismissal?

Consistent with WorkChoices, an unfair dismissal will be a dismissal that is "harsh, unjust or unreasonable". A dismissal will not be unfair if an employee is dismissed:

  1. as a result of a genuine redundancy or;
  2. without notice or warning when the employer believes on reasonable grounds that the employee's conduct was sufficiently serious to justify summary dismissal.

Exclusions from unfair dismissal

Consistent with WorkChoices, the qualifying period of 6 months will apply to all employees, preventing employees from making an unfair dismissal claim during the first 6 months of their employment. In the case of small businesses, this qualifying period will be 12 months.

Seasonal employees and those employed on a fixed term contract for a specified time or task will be excluded from making an unfair dismissal claim.

Genuine redundancies will also be exempt provided that the role ceases to exist and is not refilled by another employee. Employers will still be required to prove the genuine nature of any redundancy based terminations.

Process for unfair dismissal claims

Under the new regime an employee must make an application within 7 days of the dismissal to Fair Work Australia (the current provisions specify 21 days).

Fair Work Australia will use informal dispute settling procedures such as making inquiries and discussing issues with the employer and employee and holding informal conferences with the parties in an attempt to reach a mediated resolution.

Legal representation will only be permitted in limited circumstances and advice may need to be sought on a case by case basis in this regard.

Fair Work Australia will have the power to make decisions without the need for full public hearings. Public hearings will only take place where particularly complex issues are disputed.

Changes to the remedies available to employees for unfair dismissal

Consistent with WorkChoices, reinstatement and capped compensation of up to 6 months' pay remain available. However, under the new regime reinstatement will be the default remedy unless it is not in the interests of either of the parties.

Implications for employers

Employers will need to review their current policies and procedures to ensure that from 1 July 2009, they are compliant with the new unfair dismissal regime and may wish to consider training for their managers or human resources officers managing conciliation conferences.Those employers who fall within the small business category will also need to implement the Code.

With the removal of the "100 or less employees" exemption, the issue of managing disciplinary and dismissal matters appropriately has once again become crucial to avoiding liability and business disruption.
by John-Anthony Hodgens

Kathryn Dent t (02) 9931 4715 e
Mark Sant t (02) 9931 4744 e
Ian Dixon t (03) 9252 2553 e
Dan Feldman t (03) 9252 2510 e
Steven Troeth t (03) 9612 8421 e
John-Anthony Hodgens t (07) 3231 1568 e
Nicholas Linke t (08) 8233 0628 e

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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