Australia: "Federal Government Introduces "Fair Work Bill 2008""

Last Updated: 4 December 2008
Article by Peter Punch

On 25 November 2008 the Deputy Prime Minister Julia Gillard introduced into the Federal Parliament the Federal Government's "Fair Work Bill 2008", which is the Government's main legislative vehicle for replacing what is left of the Howard Government's "WorkChoices" legislation.

The 575 page Bill will obviously require some time for all interested parties to fully digest. But our preliminary examination of the Bill leads us to make the following observations (some firm, some necessarily tentative).

The Bill mainly follows "Forward with Fairness" ALP Policy

The Bill appears in most respects to be consistent with the "Forward with Fairness" Policy ("FWF") the then Labor Party Opposition announced in August 2007 prior to the Federal Election in November that year. Nevertheless, a careful scrutiny of the Bill will reveal some matters of detail that were not embraced within FWF, or actually are not in conformity with it. No doubt these matters will come under examination in the Senate Enquiry that will commence in early 2009.

The Bill does not cover transitional matters

While the Bill is very substantial in size, it is not difficult to follow, is written in relatively clear "plain English", and is immensely less complex than its "WorkChoices" predecessor. However, it does not deal with transitional matters, which we believe will be addressed in a separate Bill. The transitional arrangements will no doubt give rise to complexity and debate, and perhaps for that reason the Government has sought to produce a "clean" Bill for the new system, to keep the focus on that new system (not what might be endless debate on transitional matters). Also of course the Bill does not deal with registration and accountability of registered organisations – the provisions relating to them at this stage remain untouched in Schedule 1 to the current Act. That is an area of the law that seems at this stage unlikely to change to any significant extent.

A period of IR peace to break out?

Recently Professor Ron McCallum (Australia's leading industrial law academic and internationally renowned in employment law scholarship) expressed the view (perhaps it was more of a hope) that with the passage of the Bill through the Parliament

"We would have finished this period of chop and change industrial relations which began with the Industrial Relations Act 1989 and will end – hopefully with the Forward with Fairness Act of 2009 ... this 20 years of siege warfare winner take all narcissistic politics may be over for a while and we can all get on with a true role of Labor Relations Law – which is to provide a bedrock of rules to allow employees to work fairly for a fair day's pay, for employers to receive their labour and remunerate them with adequacy, fairness and dignity".

We are sure that all practitioners and stakeholders in workplace relations in this country will be hoping that Professor McCallum proves to be right. The legislative activity in the last ten years (and most particularly the controversial and even chaotic two years of the WorkChoices regime) have made the task of advising and decision making in workplace relations a fraught and difficult process. But we believe that the signs are there that a period of relative stability and certainty may be upon us soon – that is, the Federal Opposition has indicated that it will not oppose the Bill in so far as it implements the Government's mandate (and of course the Bill is in most respects of that character) and most employer groups (while not openly supportive of the Bill) have indicated that they can either work with or cope with its provisions (with a few exceptions that will no doubt be addressed during the coming Senate Enquiry).

The Bill covers "National System employers"

The Bill's fundamental basis of coverage is "National System Employers", which is an expression defined by reference to the scope of the Commonwealth Parliament's constitutional authority. In essence the Bill has the same coverage as the existing "WorkChoices" regime - that is, (in substance) Commonwealth Government employees, employees in the Territories, and (most importantly) employees of the overwhelming majority of corporations, leaving State Government employees, sole traders/partnerships and some employees of "non trading" corporations still within the State jurisdictions (except probably in Victoria). This is an approach which is more limited than that foreshadowed by FWF, which proposed that there be a national system of workplace relations for all private sector employers and their employees.

Clearly the Government has decided to proceed with the Bill on the basis of the existing Federal constitutional authority, leaving for later (perhaps 2009 or 2010) the question of whether those residual categories of employees still within the State systems will ultimately come into the national system through agreement with the States. To a considerable extent the question of agreement with the States for a truly national system remains a "work in progress" and early resolution of the issues there seems unlikely.

And of course, there still remains the lingering uncertainties about whether "not for profit" corporations (such as incorporated religious schools and welfare agencies) are IN or OUT of the national system.

Limited return of compulsory arbitration

An important element of the Bill is "Workplace Determinations", to be found in Chapter 2 Part 2-5. This does appear to go beyond the Government's mandate but a consideration of the terms of the Bill make it clear that workplace determinations by Fair Work Australia (i.e. compulsory arbitration of unresolved industrial disputes) will not be routine. We believe that the inclusion of such a "last resort arbitration" mechanism will assist parties in dispute to either reach agreement more quickly or at least reach agreement when agreement may not otherwise be possible - and that may be the enduring value of such a mechanism being in place.

Return of unfair rights to most of the workforce

The new unfair dismissal regime is much as was expected from FWF but the provisions for quick and efficient resolution of unfair dismissal claims, while certainly there in the Bill, nevertheless leaves Fair Work Australia with a considerable amount of room to decide, in appropriate cases, to conduct matters in accordance with what might be regarded as the "traditional" hearing process (with legal or paid agent representation) and public hearings etc. It would seem however that the mechanisms for dealing with unfair dismissal matters given to Fair Work Australia will give it an opportunity to quickly deal with matters lacking in substance somewhat more efficiently than the "pre WorkChoices" regime allowed. Only through experience of this new system in operation can we make a proper assessment as to whether the problems with the old pre-WorkChoices unfair dismissal system (with its unfortunate characteristic of lengthy proceedings and the payment of "go away" money by employers) will re-emerge. But bearing in mind that the Bill does restore some measure of unfair dismissal rights to about 50% of the workforce deprived of any rights in that regard by WorkChoices, it is difficult to argue with the fundamental justice of the reforms. No doubt there will be a great deal of attention given by employer groups to assessing the performance of Fair Work Australia's members in ensuring that the deficiencies of the pre-WorkChoices system do not become significantly evident again.

Flexibility clauses in awards and agreements

The Bill provides for "flexibility clauses" to be required in modern awards and enterprise agreements, and that accords with FWF. But we are sure that the unions will be disappointed that there will be no outside scrutiny of such agreement prior to them taking effect (as was the position prior to WorkChoices). Nevertheless any such agreements are required to be "genuine" and to leave the employee better off.

Disappointment for the union movement?

The unions will also be disappointed in other aspects of the Bill - for example, unfair contract remedies in NSW and Queensland remain suppressed in respect of national system employers, and all "high income employees" (those on earnings over $100,000 indexed from August 2007) are excluded from modern awards. Nevertheless on the other hand unions will have wider right of entry rights and important rights in relation to collective bargaining generally, bargaining in good faith and enterprise agreements.

Transmission of business – big change proposed

FWF did not deal with "transmission of business" matters at all. The Bill however does propose significant changes to the existing law, in particular by eradicating the concept of "transmission of business" as developed by the High Court in the cases of PP Consultants and Gribbles Radiology and instead substituting a focus on a transfer of employee's work (ie a test more aligned with the Full Federal Court decision in the North West Health Care case). Moreover, outsourcing is itself to be recognised in this respect. We are sure that this matter will attract attention in the Senate – it was not a matter addressed in FWF so the "mandate" issue does not arise; the proposals will have to be thrashed out on their merits.

More information to come...

It remains to be seen what will happen to the Bill in the Senate Enquiry process – much will survive, but in certain areas (some mentioned above) there may be the need for compromise by the Government.

Carroll and O'Dea's Employment and Industrial Relations Group will be monitoring developments with the Bill and will provide update client bulletins when needed. We will also be conducting client briefings at our various offices in the New Year, once we have clarity about the contents of the legislation.

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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